Corruption and Banking
29th April 2009
By Charles Wanguhu
Corruption only offers two instances for regulators to step in: at the looting stage where the individuals may seek bribes, dispose of public resources or subvert funds. In an ideal world they are then charged and any monies returned. The second stage is at the laundering stage, where the monies are placed into the financial system either by depositing in a bank or placing in the capital markets. The regulators can step in and require full disclosure of means in which the wealth was acquired. The latter stage is also referred to as the recovery stage. Beyond the two instances it is usually assumed a lost cause as the actual tracing and recovery of assets is rendered almost impossible with the ease at which monies can move from jurisdiction to jurisdiction in the modern global economy.
Corruption and Banking are two intrinsically linked activities as proceeds from corruption inevitably are laundered into the financial system. In a new report Undue Diligence Global Witness, the human rights and environmental campaign group has accused some of the world’s largest banks including HSBC, Barclay’s among others of complicity or facilitation of corruption. The report available here goes on to blame the Banks action for the looting of revenues from some of the worlds poorest people and condemning them to poverty.
The Looting and Laundering (L&L) is viewed as one of the major challenges in regulation of the banking industry not only in developing countries but also the developed world. Banks have for long under the guise of secrecy laws refused to disclose their account holders and the monies held in many accounts in the many varied tax havens.
The report goes on to give examples of siblings of corrupt leaders who have been able to circumvent the sanctions placed on their parents by opening varied accounts in various capitals and used the same to launder their ill gotten wealth.
In the current financial crisis and for the immediate future it seems that bankers continue to be the favourite pet hate and at every turn we are reminded of their pocketing a quick buck with disregard to any morals.
