This weekend, The Economist—building off information discovered by Task Force member Global Witness—released an extensive feature on the operations of the “Queensway syndicate,” a corporate partnership centered around the trade of oil from Angola to China. Through a series of shell companies, family relations, and personal ties dating back to the Cold War, a network of Chinese and Angolan business-people purportedly dominate many African resource markets, generally doing so through illicit means.
In order to gain access to valuable mineral resources across the African continent, the syndicate allegedly promised developmental aid, generally in the form of infrastructure development, which is crucially needed in many of these under-performing economies. However, many of those purported promises have turned out to be empty:
Zimbabwe is still awaiting even a fraction of its promised infrastructure. Guinea never received the 100 public buses that were meant to arrive within 45 days of the 2009 deal.
The situation in Angola is more complicated, though also disappointing. Chinese contractors have built some housing and railway lines and the projects were at first financed by the syndicate. Signs saying “China International Fund” appeared on construction sites. But in recent years they have been replaced by those of other Chinese companies.
By allegedly reneging on compensation to these countries, the syndicate exacerbates the extreme poverty most people in these countries face, who see little if any of their nation’s wealth returned to them. Compounding on the situation, many places Queensway does business—such as Guinea or Zimbabwe—have governments that mistreat their citizens, and who directly benefit (the syndicate purportedly gave Guinea’s military dictator a helicopter in exchange for resource concessions) from the wholesale theft of their country’s resources.
Currently, developing countries have little ability to check the powerful influence that entities like the syndicate hold over their industries. However, concerted efforts by the G-20 and other organizations to push country-by-country reporting policies, especially in the developing world, would provide new tools to attempt to rein in that influence.
This piece is an essential, in-depth study of how corrupt firms acquire control of markets through illicit means, and the disastrous consequences that developing countries face as a result of that drive for profit. The full story, available here, is a must-read.
Disclaimer: Unless specifically stated to be the views of the Task Force, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Task Force on Financial Integrity & Economic Development.