This archive report was first published on 27 November 2019.
Published on November 27, 2019, Lord Peter Hain's presentation at the State Capture Commission in Johannesburg, South Africa, has sparked a crucial debate on the role of global banks in facilitating corruption, fraud, and money laundering in Africa.
As a keen observer of the commission's deliberations, I was struck by the compelling evidence presented by Lord Hain, which debunked the notion that global banks are paragons of virtue when it comes to transactions with African governments.
My attention was drawn to the summary of Kenya's external debt register, which revealed a disturbing trend: the increasing presence of second-tier European banks on the register. These banks, often described as the periphery of the global capital markets, have been lending heavily to African governments, including Kenya.
The rate at which these peripheral banks are supplanting traditional multilateral institutions, such as the Trade and Development Bank (TDB), is alarming. TDB, formerly known as PTA Bank, has been acting as a lead syndicate bank in several large transactions with Kenya, earning fat fees in the process.
While I am not suggesting that all commercial banks on the external debt register are engaged in wrongdoing, the revelations from the State Capture Commission in South Africa have significant implications for Africa. The notion that global banks are clean and above board has been debunked, and it is time for African governments to take a closer look at their dealings with these banks.
A case in point is the Standard Bank Plc scandal in Tanzania, where the bank and its subsidiary, Stanbic Ltd, were found to have increased the arrangement fee for a sovereign note private placement to accommodate kickbacks and backhanders for corrupt government officials.
Standard Bank Plc, now known as ICBC Standard Bank Plc, quickly snitched on its Tanzanian partners in crime and negotiated a deferred prosecution deal, insulating themselves from court charges. This is a classic example of how global players and banks employ tactics to keep spreading the false narrative that Africans are corrupt.
As Lord Peter Hain so aptly put it, these global brands are vultures who have rushed to the continent to suck blood and cash in on the chaos in domestic money markets.
