By Samuel Muhindo
The African Center for Media Excellence (ACME), in partnership with the Thompson Reuters Foundation, is currently conducting intensive training for journalists on reporting illicit financial flows (IFFs). The training attracted participants from different parts of the country. Samuel Muhindo, a journalist with The Observer, revisits his experience during the training.
Unlike most emails that announce regrets, the warm email from ACME delivered Easter gifts early. “You have been selected to be part of the training on illicit financial flows’ the email reads in part.”
On Monday, March 27, 2023, the group of ten was taken through a dry run on illicit financial flows. The dry run in the form of objective questions was aimed at helping the course facilitators get to know their new participants in the class. With a deep sigh, Rachel Mugarura, one of the course instructors, graciously accepted her assignment. “By the close of business today, everyone shall have an idea of what IFFs are,” Mugarura quipped in. She added that although the discussion sounded detached from the beneficiaries, IFFs were happening right under our noses.
From her preamble, I understood that the line of people involved in illicit means of moving money wasn’t restricted to the corrupt leaders stashing their loot in tax havens but to the global giants who were also stashing their profits in tax havens. She noted that the prime goal of the course was to equip journalists, whose enormous watchdog role expects them to be able to detect any illicit financial tendencies on both small and large scales.
Participants were taken through the statistical and graphical representations of how much Uganda and Africa lost to illicit financial flows. Exploiting the legal loopholes within international trade, some companies were making multibillion-dollar transactions without making any tax payments to small economies like Uganda. These multinationals had mastered the art of incorporating their companies in their tax havens. Several of these companies had opted to move to either the Netherlands, Seychelles, or Mauritius in Europe.
How did they exploit the loophole, and how could we catch them? Everyone in the room kept asking. Teddy Nannozi was there to quench the enormous thirst for knowledge. She noted that countries like Uganda, out of goodwill, had signed double taxation agreements with the European countries to encourage international trade. In the long run, the double taxation agreement has become prohibitive for the taxation of profit-making companies.
Nnannozi noted that some companies had also exploited the liberties within Uganda’s taxation regime. She said, “It is not common to find a company presumably making losses on paper, yet it is making profits by any standards. To beat the law, some of them shall hide their profits in the form of payments of humongous administration costs or royalties to their parent companies based in tax havens. The gold mine for information is always in their financial statements. Here, companies always tell us what they spent on, what their profits, losses, and bad debts were, etc.”
Nnannozi led the journalists through the best ways of reading and identifying anomalies in financial statements. Intermittently, the impact of aid and other forms of foreign direct investment in Africa from the global north and its returns from Africa were discussed.
At the end of the programme, participants did a post-course quiz to evaluate their performance. Results showed that majority of us had grown our body of knowledge on illicit financial flows.
It goes without mentioning that the five-day training provided a forum for discussions on how to achieve better investigative stories. As the audiences evolve, the choice of system thinking as a modality through which stories can be told is commendable. To most of us, the training was timely as Uganda is in the spotlight over its oil and other international resources.