The Looting Machine by Tom Burgis – reviewed by Desné Masie

[Elisabeth Janaina]

The Looting Machine by Tom Burgis – reviewed by Desné Masie
Posted on March 19, 2015 by AfricanArgumentsEditor

LootingMachine2Tom Burgis’ The Looting Machine is a rollercoaster
read. Filled with vignettes on spooks, smugglers and kleptocratic
warlords with suitcases of cash, it reads like a crime thriller, while
at the same time being a well-researched, accessible account of the
extractives industry; the privatisation of power in Africa and its
impact on the continent’s people. This portrayal of the intersection
of business and politics, and its potentially corrupting influence may
also explain the paradox of rising GDP growth coupled with increasing
inequality – a key problem in the era of ‘Africa Rising’.

Each chapter of The Looting Machine deals with a different country and
a particular issue in its political economy, but some main unifying
themes stick out. For example, the impact of the ‘resource curse’,
hollowing out the economies of developing countries. Burgis also
tackles the much-debated role of China in Africa, as globalisation
atomises power to new sites of influence and capital. Additionally, he
is concerned with the impact of financial secrecy, and potentially
inequitable tax practices on developing economies; and how this
facilitates rent-seeking.

This is all tied together by Burgis’ argument for the pervasiveness of
the so-called ‘Queensway Group’, incorporated in Hong Kong, which is
depicted throughout the book as a sort of global corporate mafia with
the shadowy middleman Sam Pa as its kingpin. Crucial to Pa’s modus
operandi on the continent, according to Burgis, is his leveraging of
‘guanxi’ (关系), the system of social networks and influential
relationships that facilitate business and other dealings. The
monetisation of such political relationships is also depicted by
Burgis in the multi-million-dollar bankrolling of the Kabila dynasty
by the businessman Dan Gertler in the Congo, the enrichment of South
Africa’s politically-connected black oligarchs, the Futungo in Angola,
and the involvement of Beny Steinmetz in Guinea.

Having been a financial journalist myself, I am amazed at how far
Burgis has gone in untangling the web of corporate structures
sometimes used in international financial chicanery. For example, at
the Marange diamond fields in Zimbabwe, he assumes the bearing of a
diamond trader in order to get through a checkpoint into a mining
zone. And indeed, the book begins with a candid foreword about Burgis’
treatment for post-traumatic stress disorder as a result of some of
the awful things he had seen on the continent – most notably a
massacre in Jos. It is imagery like this, juxtaposed with private jets
and gleaming corporate boardrooms from London to Luanda, that
underscore the book’s insights.

Due to the continent’s egregious inequality, the rich in Africa can
live in an insulated poverty-free bubble. In visiting the slums of
Angola and the townships of Johannesburg, Burgis has therefore made a
concerted effort to find the truth behind annual financial results and
stock prices.

Financial journalism is usually one of the cushier parts of the
profession, with meetings normally taking place in plush hotels and
restaurants or corporate HQs. Working at a premier title, the average
day generally consists of a reporter flitting from meeting to meeting
with CEOs and their PR minders sprinkled with corporate gifts and
briefings with the Finance Ministry and regulators. The capture of
financial journalism can therefore be corrupting for all parties
involved, and the importance of the support of the Financial Times
newsroom for investigative work such as this, and its practice of
picking up the bill for lunch, cannot be understated.

However, while it is undoubtedly important to expose corporate
malfeasance and stamp it out, I do think that journalists also
contribute to a particular narrative of sensationalist bad news. I
would really like to see more stories and books about what is working,
and could be done better in globalised supply chains, such as this,
also in the FT, about the Dutch company Fairphone, which was incubated
near London’s Silicon Roundabout in Bethnal Green.

Burgis begins his book with the balancing caveat that there are
definitely some businesses which have a positive impact on Africa, and
later he is at pains to point out that not all financiers or bankers
are shady. However, The Looting Machine is by no means a glowing
account of the role of business in Africa. An informant laments to
Burgis that foreign business people think that in Africa anything
goes, and that they therefore do things in Africa that they would not
consider back at ‘home’.

Burgis obliged me by answering some questions on the role of business
and international finance in economic and human development in Africa.

DM: It would seem that you are ambivalent about the altruism and
outcomes of Corporate Social Responsibility (CSR), where initiatives
such as “community development” and the Kimberley process have
(unwittingly) contributed to, and incentivised conflict, malfeasance
and money laundering amongst kingmakers and power-brokers. Have I
understood correctly?

TB: Yes I think that’s broadly it. Also that CSR can be used to mask
corporate abuses such as trade mispricing and tax evasion.

DM: What do you think could be done about financial secrecy and
aggressive corporate tax avoidance? How can developing countries in
particular fight for their interests in contracting?

TB: One option would be for governments to decline to do business with
companies registered in tax havens.

DM: Mineral beneficiation seems to have worked well in Botswana … What
do you think of new mining legislation in South Africa in this regard,
and mining legislation such as the Zambian mining tax and the pros and
cons of these for developing countries?

TB: Focussing on beneficiation makes a lot of sense. Why should that
value accrue elsewhere? SA-made catalytic converters would be a
success story. Protectionism is a dirty word but without tariffs how
do you protect nascent domestic industries? On Zambia, the tax take
has been so minimal in the past (circa 2-3 per cent) that no one could
in good faith object to an increase, I would say. The difficulty is
managing that added revenue to stop it causing havoc as resource rent
often does.

DM: You say that the corporatisation of politics has replaced
ideology, and the politicisation of corporate life through the
accumulation of ‘guanxi’ is expressed through the monetisation of
networks, parallel states and rent-seeking. What in your opinion can
be done?

TB: The hardest question of all. These are transnational networks that
float beyond the reach of national institutions that might call them
to account – judiciaries, parliament etc. It’s part of the
simultaneous globalisation and privatisation of power. No simple
answer. But somehow the balance of power has to become more local
again.

DM: Who is this book aimed at and what do you wish them to take away from it?

TB: A general, engaged reader. No prior expertise of Africa required.
Thriller fans and politicos equally welcome! The idea is to prompt
debate, not prescribe lots of (far-fetched) solutions.

DM: I am amazed at the personal toll and obvious risk to your life
that came with this book, the quality of which makes the amount of
work, the information you have accumulated and the quality of the
research quite obvious … Why? What did you wish to achieve by writing
this book?

TB: The point of journalism is to call power to account, and I hope
the book does that in some small way. The personal toll you mention is
real, but far smaller than that endured by many of the people I wrote
about.

DM: I think it was really important to highlight the complicity of
both westerners and Africans as regards the human and environmental
cost of these issues. The insatiable need for cheaper and faster
smart-phones has made us turn a blind eye to human rights abuses both
in Africa and China. How could we encourage businesses, politicians
and consumers to understand the long-range positive impact of
sustainable business and addressing inequality meaningfully? Why do
you think there is so much apathy about this? Is the problem too big
to tackle, or is there no turning back as one of your protagonists
says?

TB: It’s odd that western consumers insist on knowing the origin of
their coffee but not of their copper. There’s been some progress on
tagging minerals from eastern DRC, though that process also creates
new trouble.

DM: You talk about China in Africa and have been criticised for
comparing China’s rise in Africa to neo-imperialism – although in the
book you do critique Western imperialism – what would you say to these
critics? Do you wish to clarify your opinion on China’s role in
Africa?

TB: Both true in different countries. There’s certainly a neo-colonial
approach (as encapsulated by Sanusi) but it’s also understandable that
China’s largesse is understandable compared with centuries of
exploitation.

DM: I was astonished to read about the alleged pervasiveness of the
business interests of Sam Pa via the Queensway group, and it is a
theme that runs through most of the book. Is he the only such
mega-player from China or are there are other corporations and groups
of which you are aware of operating on the continent, and that you can
talk about?

TB: There are lots of other middlemen but he looks like the biggest.

DM: Any closing thoughts on globalisation?

TB: Was the pope perhaps right – globalisation as a way to enslave nations?

Dr Desné Masie is a former Senior Editor for the Financial Mail and
was the Corporate Relationship Manager for the Royal African Society.
Her doctoral thesis evaluated the effects of news media in financial
markets and on corporate reputation.
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