Even the biggest supporter of the EU at times has to pause and ask why it is so keen on double standards. It blacklists poor African countries for money laundering, not rich countries.
- The latest scandal in Brussels has the EU Commission giving up on an effective EU public prosecutor’s office. The stumbling block is the Maltese government.
- The EU Commission has produced a list of countries whose financial regulations it disapproves of. Notably, this list did not include any EU member states.
- Rich states can lobby and bully the EU commission to be kept off the EU black list. But poor black nations with no clout in Brussels have no such luck.
- When it comes to impoverished black African countries, the EU Commission can get tough and prove its mastery of double standards.
- Transparency International and others are not convinced that merely listing nations makes any difference in fighting money laundering.
- Actually working with countries to improve their financial transparency standards, as the OECD does, is much more effective.
The latest scandal in Brussels is the European Commission giving up on an effective EU public prosecutor’s office.
The newly created European Public Prosecutors Office (EPPO) will carry out criminal investigations into corruption, VAT fraud and theft from the EU budget.
Soft on Malta…
The stumbling block is the Maltese government. Malta is a country whose politics is legendary for being crooked.
It is now trying to undermine the EPPO by refusing to nominate local prosecutors who are not tainted.
The reason is self-evident. Despite it pleading betterment, Maltese politics remains mired in the fallout from the assassination in 2017 of the journalist Daphne Caruana Galizia. She had been investigating corruption involving the island’s ruling elites and the business world.
As an EU member state, Malta has the power of veto over key EU decisions, such as setting up new institutions. It thus first tried to block the EPPO being set up. Now the government has nominated lawyers who are seen as political puppets and insists that no others are available.
Instead of standing up to the Maltese political bosses, the European Commission says it will weaken the recruitment standards to find any lawyer able to do EPPO work on the island.
Tough on Africa
But when it comes to impoverished black African countries, the European Commission can get tough and prove its mastery of double standards.
The Financial Action Task Force (FATF), set up by the G7 and hosted by the OECD, is the world standard setter for trying to raise financial regulation standards to stop money laundering and even financing of terrorism.
The Financial Action Task Force, based in the OECD’s headquarters in Paris, is the acknowledged global expert body and regularly chastises governments that fail to meet its standards.
The FATF has a black list, and a dark gray and light gray list. Government officials are called in and told to improve or they will descend down to the black list which means legitimate investors may chose not to lend or place money in such dodgy jurisdictions.
The EU’s black list
The EU Commission decided to produce its own list of countries whose financial regulations it disapproved of.
Naturally this did not extend to EU member states like Cyprus which is the money laundering centre for Putin oligarchs and shady Russian firms.
Luxembourg, long a center for name-plate firms set up by lawyers to hide money from tax authorities, was untouched — nor was Malta.
Instead, the European Commission has chosen to get tough with mainly poor black African or Asian countries with little or no clout in Brussels.
The EU only has one list — a black list and ignores the nuanced FTAF categories based on working with government to raise standards.
The U.S. and Saudi Arabia
Last year, the European Commission was due to include on its 2019 black list the United States and Saudi Arabia due to the blatant use of U.S. dependencies in the Caribbean to hide illicit cash and Saudi’s general indifference to Western rule of law values.
The United States and Saudi Arabia kicked up a political-diplomatic storm and the European Commission collapsed and no list at all was published in 2019.
Targeting poor black nations
This year, more than half of the EU black list nations are poor majority black nations. Those like Ghana, Barbados, Zimbabwe or Mauritius have seen tourism and exports collapse because of COVID 19.
Being put on the EU black list means they lose major inward investment funds thus driving them into deeper poverty and despair.
The FATF has carefully avoided putting all these countries on its black list. FATF officials, for example, have worked with Mauritius civil servants to introduce already 53 out of 58 requirements to prove a clean financial services sector.
But in Brussels, none of this counts. Rich states can lobby and bully the Commission to be kept off the EU black list. But black nations don’t count in the curious double standards world inhabited by the European Commission.
In the end campaigners linked to outfits like Transparency International are not convinced that listing nations makes any difference.
Illegally obtained money finding its way into normal economic activity has grown not decreased since the G7 set up FATF and the EU started publishing its partial black list.
Until the United States, member states of the EU and other democracies take real action to clean up their financial sectors, especially the political-money nexus, beating up on poor black nations will make little difference.