Saturday, July 4, 2020

Fact-checking Botswana government response to EU blacklisting

It is now common cause that Botswana has received a letter from the European Union giving the country a heads-up that they will be blacklisted later in the year .Botswana forms part of an African quartet that includes Zimbabwe, Ghana and Mauritius.The addition of the countries to the list means that companies in any of them are prohibited from receiving new funding from the European Union.

The updated list is set to come into force in October this year. Banks in Europe and other financial and tax firms are obligated to inspect more closely their clients who have any dealings with countries on the list, according to EU law. Clearly Botswana is considered a high-risk jurisdiction. And this has not been well received by Botswana authorities. For them it is a slap in the face. They feel the reforms the country has had to undertake especially over the course of last year, many of them at great speed are not being acknowledged by the European Union. Indeed the country has made some reforms, many of them enforced by the fear of being blacklisted which has now come to pass. But clearly those laws and reforms have not been enough.The good thing about European Union is that it clearly spells out what it perceives to be lacking and how it can be addressed.

More crucially, the European union gives countries time during which to normalize the defects identified Botswana Government has since the announcement been throwing tantrums, just falling short of effectively casting aspersions not only on the decision by the EU but also on the motives of the block. Botswana Government argues that the decision by European Union fails to take into account the progress the country has made since the last communication on the matter. Botswana Government should grow up, man up and act responsibly on such sensitive issues. This is a governance and financial decision, but it is also a diplomatic issue.It needs to be dealt with soberly and with dignity. European Union is a rules-based organisation. It cannot succumb to emotional blackmail which is a game Botswana is trying to play.

Taking head on a wealthy, world-class institution the size of the European Union which is made up of 27 countries can only hurt Botswana in the end.In fact a contest with the European Union is the one that Botswana will lose even before it begins.There is no evidence to suggest bias against Botswana on the part of European Union.By the way this decision has long been in the making.Luckily for Botswana, it will only come into effect in October.So instead of throwing tantrums, authorities should work hard to correct the identified anomalies.

Botswana government should simply do what is right, which is to put in place solid infrastructure to fight money laundering and also close tight the possible leakages for being the originator or facilitator of terrorism finance. According to the European union the countries on the list pose a significant threat to the financial system of the Union.In its press release, the European Commission which is the Executive arm of European Union said they found “strategic deficiencies in their anti-money launderingThe intention, according to executive Vice President of European Commission is to stop dirty money entering the EU financial system.The current behavior by Botswana Government is an exact replica of how the country used to behave when France annually blacklisted it as a tax haven. Botswana Government is only used to receiving international accolades. The country and government are simply not used to tough treatment in the international space. Every time it is hit by hard truths from the international community, the temptation is to recoil inside and like a spoilt child give in to endless brooding.

Every time it faces such challenges, Botswana Government does not know how to act or react.This behavior first surfaced a few years ago when a London based NGO called Survival International cornered Botswana Government over removal of Basarwa from the Central Kalahari Game ReserveIt is crazy for Botswana to feign surprise at being blacklisted.What has come to be accepted in the country where money laundering is accepted as normal cannot be allowed in serious and self-respecting financial jurisdictions. Time after time authorities here have turned a blind eye to red-flags, including warnings from the United States department of state. People bring in loads of cash that find easy access into Botswana financial system. The origins of this money are never known nor are the sources. In the same way, these people have easy way out by carrying loads of money out of Botswana to unknown destinations.Botswana has to become a responsible player in the international order, respecting its responsibilitiesand its obligations if it is to be taken seriously.The last two years have seen frantic and often chaotic. But they served a good purpose which was to highlight how far short as a country we were of meeting international finance regulatory standards.

What EU is doing to Botswana is painful. And it will be for some time. But there is no short cut about it. Celebrations will come if the country obliges and does the right thing.

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Sunday Standard June 28 – 4 July

Digital copy of Sunday Standard issue of June 28 - 4 July, 2020.