WHEN GLOBALISATION ENABLES FISCAL TERMITES
VICTOR C. ARIOLE writes that Nigeria is a haven for ‘termites’ through bribery, mispricing, and money laundering
The challenge of the current unstable world order is consciously not knowing how to post flux and trade items in debit or credit side so as to be able to locate surplus or deficit and be decisive on where to extract taxable income, either for individuals, corporate bodies or even Nations and it is a decisive function of the accounting profession. Somehow it is turning out to be creative accounting.
Delivering his inaugural lecture as Accounting and Taxation expert in Ade Ajayi Auditorium of University of Lagos, chaired by the Vice Chancellor Prof Folasade Ogunsola, Professor Olatunde Julius Otunsanya, head of Accounting Department summed up the current world order’s quid pro quo as enablement of fiscal termites – making nations unable to perform optimally as well as transparently.
Fiscal termites affect all nations including the most developed ones seen in G7 – USA, UK, France, Canada, Italy, Germany and Japan, all, the block group that makes decision in IMF and World Bank. USA alone owes over $36trillion and the government is shut down for over 40 days for fiscal deficit that runs in the range of 1.8 to 2.2 trillion dollars. For France, the European Union’s worst hit, it is almost the same deficit like USA with a lower population of 80 million compared to USA of over 340 million. Nigeria’s own deficit is about $90 billion with a population of over 220 million. However, for USA and France, deep in observing what goes on in tax havens and how they relate to their economies, such deficits are picked up by their big companies making big profits both in and off shore – big techs and energy companies. One percent of the population makes more than 99% of the population hence Accounting profession and accountability are nuanced or weighed heavily on the intangible than the tangible. Elon Musk for example is accounting for almost a trillion dollar worth in USA where the government” shut-down is merely about removing Obamacare and Supplemental Nutrition Assistance Programme (SNAP) in which about 40 million Americans rely on, which is less than $130 billion annually. The same in France where companies like Bollore and Energy giants are allowed to operate in tax avoidance that runs over $16billion annually.
Tax avoidance, tax evasion are what Professor Olatunde Otusanya elaborates in his lecture and sees it as fiscal termites that create endless cycle of underdevelopment. While developed countries could ignore such termites as they strengthen their individual companies operating as multinationals in the global sphere, Nigeria’s government that seems to be emulating them, do that in closing their eyes to Nigerians who stash away the national riches abroad. “… It can be seen that political power in Nigeria since its independence, has been strongly dominated by the Northern elite and by the military (Six military Generals – Gowon, Murtala, Buhari, Babangida, Abacha, Abdusalam). As a result the scramble for central and regional power has been a major issue illustrating the emergence and continuous development of fiscal termites in both socio-political and economic life in Nigeria”, so asserts Prof. Otusanya. Even in civilian regime, Buhari, a General, elected as President perpetuated fiscal termites by making nonsense of CBN.
To Prof. Otusanya, the use of offshore and tax haven avenues to stash away Nigerian riches in which more debit items are posted to Nigeria with no matching credit side is seen in the way Nigerian mineral resources are exploited with excessive tax avoidance and tax evasion. Using multi-national companies – the supply side of corruption – anti-social practices leading to fiscal termites are perpetrated via bribery, mispricing, transfer pricing, commodity – backed loans and money laundering. Using just one man as example, Prof. Otusanya traces his linkages to: The Blind Trust, Siemen AG, Currency Trust Company, Lets Go Ltd, Sima Holiday Ltd, Citibank, Chevy Chase, Wachovia Bank, Eagle Bank, Sun Trust Bank, China Castle Inv. Ltd., The Gade Foundation, etc., to American University and AUN. In all, creative accounting was at work to siphon Nigeria’s wealth to tax havens and abroad.
There could be nothing wrong in such linkages if the posting of the credit side comes to Nigeria in the form of tax, which is what most developed countries monitor as regards their nationals and expect them to be available in the nation at least once every six month. In Nigeria’s case such nationals live mostly abroad and perpetuate fiscal termites on Nigeria. Nigeria has had a First Lady who literally lived in Dubai, celebrates her birthday there, carry out her functions there by inviting fellow sub-national first ladies, deepening the havoc of fiscal termites.
Such activities make globalisation doubtful as it seems to be promoting mostly capital flight from poor countries and it is mostly enabled by multi-national companies or individuals fronting for them like Russian Wagner group or even the recent group that paid $50 million ransom in Mali to free an emirate Prince trapped in Gold mining and Gold shipping activities in such poor country like Mali.
Reading what is churned out yearly as “International Accounting Standards”, designed outside the sphere of poor countries, it is evident that one of the key traditional principles of accounting, the matching principle or consistency principle are in disarray. It has also enabled fiscal termites; and it was clearly seen when reconciliation for Paris club and London club of over $36 billion debt recorded for Nigeria could not find matching debit and credit sides to the tune of over 18 billion dollars. Nigeria is on the march again with over $90 billion debt, and for sure the debit and credit sides are very cloudy, another portending fiscal termites.
Ariole is a
Professor of French and Francophone Studies,
University of Lagos.
