The Future of CDC

Evidence from Dotun Oloko

1. I am writing in response to the request by the International Development Committee (IDC) for submissions on the future of CDC. In the run up to the 2007 elections in Nigeria there was a lot of public speculation about the motives of the Economic and Financial Crimes Commission (EFCC) in seeking to prosecute public officials who had allegedly looted the public purse. Some of these officials were serving State Governors who had immunity from prosecution which would expire at the end of their tenure. As a concerned Nigerian involved in the video industry, I decided to make a documentary on the EFCC and its operations. In October 2007, the EFCC published a counter affidavit in response to claims made by a former Governor that it was attempting to prosecute. The EFCC affidavit named an international fund manager and several Nigerian companies for their role in the criminal activities of the former Governor. Further research on my part revealed that the fund manager was making investments on behalf of CDC and other Western Development Finance Institutions (DFIs). It also turned out that the same fund manager had also made investments in several of the Nigerian companies named by the EFCC. I then decided to delve further and establish how an international fund manager charged with making investments on behalf of DFIs had become so involved in a group of companies allegedly involved in the criminal activities of a corrupt PEP.

2. I have made a joint submission with The Corner House to the Committee’s earlier inquiry into the work of DfID, highlighting broad concerns over CDC. This second submission, made on my own behalf as a Nigerian citizen, highlights the impact that CDC’s investments are having in Nigeria. I would like to thank the committee for the opportunity to submit evidence and trust that this will help in developing a brighter future for CDC.

Summary

3. In this submission I will be looking at CDC’s portfolio in Nigeria and seeing how it reflects CDC’s investment policy. I will also be comparing CDC to other similar institutions like DEG the German DFI and largest of the European DFIs (see table 1 below) and the Overseas Private Investment Corporation (OPIC) the US government DFI. I will attempt to provide an insight into the impact that CDC’s investment policy and portfolio companies have had in Nigeria. I will be looking at the issues, challenges and characteristics particular to Nigeria and how these have affected CDC’s investments. I will then go on to make some recommendations on how some of the issues raised can and should be addressed with reference to the different approaches adopted by other DFIs. My submission will conclude with a verdict on CDC’s performance and future.


Table 1 (Million €) [1]

DFI

Country

Total Portfolio 2009

(Million €)

Portfolio compounded annual growth rate 2001-2009 (%)

Govt. injections (‘01-‘09) as a share of ‘09 portfolio (%)

Avg. net profit after tax ‘07-‘09

Avg. ROE ‘07-‘09

(%)

Debt / equity ratio 2009

Share private ownership 2009 (%)

Bio

Belgium

261

42.0

132

2.2

1.1

0.0

<1

CDC

UK

3,349

7.5

0

314.0

11.1

0.0

0

Cofides

Spain

482

23.2

0

2.2

4.4

0.1

39

DEG

Germany

4,701

9.5

0

28.5

2.5

1.7

0

FinnFund

Finland

403

10.1

7

8.6

8.5

0.7

<1

FMO

Netherlands

4,598

11.5

4

71.0

6.1

1.9

49

IFU

Denmark

528

-3.6

-79

35.0

7.5

0.0

0

Norfund

Norway

635

26.7

79

27.8

5.4

0.0

0

OeEB

Austria

149

108.9

24

0.5

10.1

9.7

100

Proparco

France

2,184

12.2

9

22.7

7.6

2.8

41

BMI-SBI

Belgium

18

-9.3

0

0.4

1.1

0.0

37

SIFEM

Switzerland

284

14.4

78

-

-

-

100

SIMEST

Italian

701

14.0

0

5.9

4.2

-

24

SOFID

Portugal

3

-25.0

0

-

-

-

40

Swedfund

Sweden

232

14.0

54

3.0

1.6

0.2

0

EDFI

EDFI

18,527

10.0

7

521.8

6.7

Notes:

Portfolio: Includes book value plus undisbursed commitments, also includes funds managed for the governments that are not on the DFIs‘ balance sheets, i.e. for FMO and COFIDES.

Portfolio growth rate: Four European DFIs were established after 2001, and their results are not included for the full period: BIO (2001), SIFEM (2005), OeEB (2008) and SOFID (2007).

Data on average profit and ROE are 2006-2008 for CDC, OeEB, SBI-BMI and SIMEST; these data were not available for SIFEM and SOFID.

Government injections: Equals total government injection between 2001-2009 divided by total 2009 portfolio; BIO total injections for 2001-2009, worth € 346 million, have not yet been fully invested.

Average ROE: Return on equity equals Net profit/(equity-net profit).

IFU/IØ includes IØ, which is being phased out.

Debt / equity ratio: equals total debt/equity


CDC

4. CDC is the first Development Finance Institution (DFI) in the world and began life in 1948 as the Colonial Development Corporation with a statutory mandate to assist colonial territories in the development of agriculture and other resources. Over the years its roles and functions have evolved and DFID presently views CDC as being at the

" forefront of DFID's efforts to harness the private sector's potential to contribute to development" [2] .

5. Since 2004 CDC has been functioning exclusively as a fund of funds and the profitability of investing via private equity funds is best illustrated by looking at CDC’s net asset value which has grown by some 52% from UK£1.6bn in 2005 to UK£2.5bn in 2009. Furthermore as shown in Table 1 above, CDC’s average net profit after tax between 2007 and 2009 at €314,000,000 was more than the sum of all the other European Development Finance Institutions (EDFIs). CDC’s average return on equity at 11.1% was also the highest and it had no debts. So all in all one can pretty much say that CDC was outperforming its contemporaries on financial returns.

6. However CDC’s overwhelming financial performance created some unease in light of its development mandate and prompted the statement quoted above as CDC was deemed by the DFID Secretary of State and other critics to have become more focussed on financial gain and drifted away from development impact [3] . I agree with this assessment by the Secretary of State and other critics, which can be supported by a review of CDC’s investee companies in Nigeria listed in Table 3 below.

Nigeria

7. A review of the companies in the table shows that the CDC investee companies are mostly made up of the leading companies in their respective sectors and are also amongst the biggest companies in the country. With the exception of the 2 microfinance institutions and the payphone services company, the remaining 31 companies are mostly market leaders or specialist service providers with little or no competition in their relatively underdeveloped sectors. UAC is one of the biggest and oldest conglomerates. Ocean and Oil is the biggest indigenous oil company, Dorman Long is an engineering colossus, Cornerstone and Continental Re are amongst the leading insurers, ABC is a leading transporter. MTN leads the super profitable mobile telecommunications market. Table 2 with data extracted from the 2009 ranking by Africa Report [4] shows that the CDC investee banks are amongst the biggest in the country and continent. Many of these companies already had private international and national investors prior to the CDC investment. The heavily oversubscribed IPO of the banks [5] demonstrates clearly that the CDC Private Equity (PE) funds were in fact competing with private international and local investors to invest in the banks that already had access to the international financial market.

8. It can be argued that the CDC investee portfolio is the result of the PE fund ethos of seeking to maximise the return on investment. Richard Laing of CDC is quoted in an online article [6] as saying

"What we have in common with other LPs [Limited Partners] is that we actively seek top-quartile funds, but those funds have to operate in our target markets........ Our aim is to get the best returns from each of the funds in which we invest - that is the ultimate confirmation that the underlying businesses are sustainable and profitable."

9. Given that all the funds are seeking to maximise return it is not surprising to find the CDC portfolio concentrated in oil and gas and capital markets. This portfolio on review has everything to do with seeking profit for the national owners of the businesses and their foreign partners and very little to do with the development of the indigenous community as a whole. The most popular sectors as shown in Table 4 are Oil and Gas and Banking with 18% each. It is universally acknowledged that the oil and gas sector is one of the most corrupt in the world leading to the development of policy reforms such as the Extractive Industries Transparency Initiative (EITI) to address the myriad of issues raised by unscrupulous foreign businesses and individuals and individuals colluding with corrupt Political Exposed Persons (PEPs) to exploit the natural resources of the host countries for their benefit and at the expense of the ordinary citizens [7] . It is therefore instructive that this is the sector with the most number of CDC investee companies in Nigeria, all of whom have parent companies registered offshore.

10. The insidious use of offshore arrangements to evade tax and launder money has been widely publicised. For example in its 2009 report, "Undue Diligence: How banks do business with corrupt regimes", Global Witness make copious references to how offshore companies and financial centres were used extensively by every single dictator featured in the report. The report concluded that

"Corruption is not just something that happens in developing countries when bribes are paid and money is looted: it is also something that happens in the world’s major financial centres and offshore financial centres when financial institutions and corporate service providers do not care enough about who they are doing business with."

11. In this CDC portfolio the fact that all of the companies in the oil and gas sector have offshore parents allows them to take advantage of the questionable arrangements referred to earlier.

Oil and Gas

12. Ocean and Oil (OandO) has been accused by the UK’s Private Eye [8] of engaging in crude offshore arrangements that effectively allow it to exploit the weak tax systems and institutions in Nigeria to avoid paying tax. The company was also cited by Nigeria’s Economic and Financial Crimes Commission (EFCC) for its role in the money laundering activities [9] of a corrupt Nigerian PEP who is presently awaiting extradition to the UK from Dubai to face several money laundering charges [10] . It is instructive that CDC’s fund manager, Emerging Capital Partners (ECP), made its investment in OandO after the EFCC affidavit was publicised widely in print and electronic media in Nigeria.

13. Notore Chemicals is another controversial CDC investee company with roots in the Oil and Gas sector. The company was named by the EFCC in the affidavit mentioned previously as a front company for the allegedly corrupt PEP awaiting extradition to the U. K. CDC’s fund manager ECP was a founder investor in Notore in March 2007 at a time when the company and the corrupt PEP were under investigation by UK and Nigerian authorities. Despite the EFCC going public with its affidavit in December 2007, ECP continued with the investment and even increased its shareholding.

Banking

14. In the Banking sector which is equally as popular with CDC fund managers with 18% of CDC investee companies in Nigeria as shown in Table 4, CDC fund managers made equity investments in the leading banks following a wholesale restructuring of the banking sector that forced the banks to increase their capital base. This prompted a flurry of mergers and IPOs that resulted in oversubscription for the bank shares. Effectively CDC fund managers were competing with Nigerian citizens and institutions for the shares and depriving local citizens and institutions of the golden opportunity to generate personal wealth and income by buying into the banks. The CDC fund managers could have opted to provide loan capital as was the case with the German DFI, DEG that provided Diamond Bank with loan capital while CDC’s fund manager opted for equity capital in the same bank. The critical distinction between loan and equity capital is that loan capital makes it possible to promote the development of the bank while leaving the equity with the Nigerian shareholders.

15. A review of the CDC investee banks shows that Oceanic and Intercontinental were named in the aforementioned EFCC affidavit in 2007 shortly after the CDC fund managers made their investments. These two banks went on to form the core of distressed banks that in August 2009 forced the Governor of the Central Bank of Nigeria (CBN) to act to save the banking system from collapse. CBN audits had revealed weaknesses in the corporate governance and non-performing loans portfolios of some banks which collectively shook the Nigerian economy and resulted in the CBN injecting billions of dollars to bail out these failed banks. [11] It is instructive that the representatives of the CDC fund managers in these two banks did not appear to have noticed or addressed the shortcomings revealed by the CBN audits.

16. These are just some examples of how fund managers investing CDC funds have invested in controversial companies unbefitting of a DFI with a mandate to promote development.

Table 2: 2009 Africa Report Ranking of CDC Nigerian Investee Banks

Bank

Rank in Africa

Rank in Nigeria

Zenith

12

1

Intercontinental

15

3

Oceanic

21

6

Diamond Bank

30

8

GTB

32

9

FCMB

71

16


Table 3: CDC Investee Companies in Nigeria as at 2009

Investee Company

Type

Fund

Tax data as at 2009

AB Microfinance

Microfinance Institution

CDC

n

Alvac Company Limited

Cash Management Services Provider

ACA

n

Andchristie Company Limited

Payphone Services

Not Known

n

Associated Bus Company (ABC) Limited

Inter State Public Transporter

ACA

y

C & I Leasing PLC

Finance Company

Aureos

n

Capsea Marine

Oil and Gas Service Provider

ACA

y

Continental Re

Insurance Provider

ECP

y

Cornerstone Insurance

Insurance Provider

ACA

n

Diamond Bank

Bank

Actis

y

Dorman Long Engineering

Engineering Services

ACA

n

DWC Drilling

Oil and Gas Service Provider

ACA

n

E-Tranzact

Online Payment Service Provider

ACA

n

FCMB

Bank

Helios

n

Fountain Springville Estate

Property Development

Not Known

n

GTBank

Bank

CDC

n

Gulf of Guinea Energy Limited

Oil and Gas Service Provider

ACA

n

Helios Towers Nigeria Limited

Telecommunications Service Provider

Helios

n

Intercontinental Bank

Bank

ECP

y

Johnnic Communications West Africa Ltd

Integrated Media and Entertainment

ACA

n

MIC Microfinance Bank Ltd

Microfinance Institution

CDC

n

Mouka Limited

Mattress manufacturer

Actis

y

MTN Nigeria Communications Limited

Telecommunications Service Provider

ACA

y

Notore Chemical Industries

Fertiliser Producer

ECP

n

Ocean & Oil Investments Ltd

Oil and Gas Service Provider

ECP

y

Oceanic Bank International plc

Bank

Ethos

n

Orwell (Oil & Gas) Nig Ltd

Oil and Gas Service Provider

Not Known

n

Outsourcing Services Limited

Security Outsourcing Company

ACA

y

Private Networks Nigeria Ltd

Telecommunications Service Provider

Aureos

n

Resourcery Limited

Information Technology

ACA

y

SEP Pharma Ltd (Hygeia)

Pharmaceutical and Healthcare Services

ECP

y

Swift Networks Ltd

Telecommunications Service Provider

ACA

n

UAC

Industrial Conglomerate

Actis

y

Virgin Nigeria

Airline

ACA

n

Zenith Bank

Bank

Not Known

n


Table 4: Sector breakdown of CDC Investee Companies in 2009

Sector

Number

%

Oil and Gas

6

18%

Bank

6

18%

Telecommunications

5

15%

Financial Services

4

12%

Microfinance

2

6%

Information Technology

2

6%

Banking Services

1

3%

Airline

1

3%

Pharmaceutical and Healthcare

1

3%

Engineering

1

3%

Manufacturing

1

3%

Media

1

3%

Property Development

1

3%

Security

1

3%

Transport

1

3%

34

100%

Imbalance

17. A closer look at the CDC investee portfolio reveals an absence of schools, hospitals, farms and other sectors that are equally important for the development of any economy especially a developing one like Nigeria but perhaps not as profitable as the capital markets, oil and gas and big conglomerates favoured by CDC fund managers. Based on all the points raised earlier it can be argued that the PE funds approach adopted by CDC has resulted in a portfolio concentrated at the high end of the market where only the privileged few have access. This assessment is supported by the National Audit Office’s (NAO) conclusion in its 2008 Report on DFID oversight of CDC quoted below

"CDC has invested in a wide range of businesses and has mainly concentrated on larger, established, enterprises in sectors such as power generation, retail banking and agribusiness..."

"CDC’s Investment Policy for 2004-2008 required investments that sought to offer a commercial rate of return compatible with the risk being undertaken....... There are no criteria agreed with DFID by which CDC balances commercial and wider benefits, such as opening up and developing new markets for private equity investment."

18. It should be noted that in the Nigerian context the oil and gas sector would have to be included in this general NAO assessment. This concentration on larger established businesses has resulted in an imbalanced and skewed portfolio abandoning the other sectors and businesses lower down the ladder to continue to struggle unsuccessfully for access to capital. The PE fund approach has instead resulted in development finance funds competing with the international private sector to invest in the biggest and more lucrative companies that more often than not already had access to the private international finance market. This imbalance is further exacerbated by the failure to agree criteria that balance commercial and wider benefits.

19. The NAO report also states that

"Fund managers we interviewed questioned the ability of a "fund of funds" business to secure the breadth of development benefits that DFID hopes CDC can deliver."

20. It is quite clear from reviewing the Nigerian portfolio that CDC’s fund of funds approach has failed to deliver the wide breadth of developments that all DFIs ascribe to.

Trickle Down Theory

21. It is also quite evident that the trickle down theory put forward by those who argue that advancing capital to the top strata will eventually trickle down the pyramid is not supported by the evidence on the ground. Ordinary businesses and individuals are still complaining about lack of access to finance and prohibitively high interest rates despite the flow of capital into the banks. [12]

22. The Palms Mall was described as a successful investment which Actis exited in 2007 [13] . However by 2010 the mall workers went on strike in protest at working conditions and poor pay [14] .

23. The banking crisis prompted by the near collapse of the severely mismanaged banks including CDC investee banks Oceanic and Intercontinental resulted in mass sackings of ordinary bank workers. [15]

24. The cases cited above are just some examples of how the trickle down theory has not materialised in practice in Nigeria with the privileged few with access to capital reaping substantial benefits while the majority continue to suffer restricted access to finance and a worsening of their situation especially when compared to the opulence on display by those with access to finance.

Tax Havens

25. Private equity funds are usually set up in offshore tax havens even though the actual investment decisions and day to day running of the funds may take place in other jurisdictions. One of the reasons put forward for this arrangement is that the collective nature of the fund with investors from different jurisdictions makes it expedient to locate in tax neutral jurisdictions to avoid paying tax twice [16] . However, offshore tax havens are coming under increasing criticism because they are commonly associated with tax evasion and money laundering. In his April 2010 report, "Investments for development: Derailed to tax havens", Richard Murphy asserts that DFIs can actually avoid double taxation by promoting changes in the laws in the host country without going through tax havens. It is noteworthy that in a randomly selected sample of Africa focussed funds listed in Table 5 below all the funds are registered in the offshore jurisdiction of Mauritius.

26. CDC is a prolific user of offshore tax havens both directly and indirectly through its fund managers. For example in the Public Accounts Committee report on DFID oversight of CDC it was recorded that as at 31 December 2008 CDC had investments in 72 subsidiaries, many of which were investment holding companies and of which 40 were in Offshore Financial Centres (OFCs). Mauritius was the most popular destination with 18 subsidiaries. ECP, a leading Africa focused CDC sponsored fund manager, has claimed that it set up an offshore vehicle in Mauritius in order to get more protection for its minority rights than available under the law in Nigeria where its investee company, Notore was located.

27. However in his report referred to earlier Richard Murphy asserted that tax havens "are the conduits through which illicit financial flows leave developing countries". The report goes on to argue that tax havens have such a harmful effect on developing countries that DFIs should stop using OFCs as places through which they invest.

28. In a 2009 Global Financial Integrity (GFI) report, "Illicit Financial Flows from Africa: Hidden Resource for Development" showed that the Africa region lost more through illicit financial outflows than it received in official development assistance (ODA). The ratio was highest amongst fuel exporters and in West and Central Africa [17] . Tax havens are at the centre of the shadow financial system being used for illicit financial flows out of the emerging countries into the Western economies. It is particularly significant and damning that the outflows outstrip the inflows and consequently developing countries are left worse off by the system.

29. The GFI report also identified that the outflows were in the forms of money laundering, bribery and tax evasion by corporations. A breakdown of these outflows on a global level estimated that

Tax evasion 60 to 65 %

Criminal proceeds from activities such as drug trafficking, etc 30 to 35 %

Proceeds of bribery and theft by government official 3 %

30. The report speculated that figures for Africa were likely to follow the same pattern. However as far as development impact and finance are concerned, criminal proceeds from activities such as drug trafficking, etc should be discounted because these are the proceeds of private criminal elements that are present in all countries. Most criminals have a natural tendency to move their illegal funds out of their home countries as part of the money laundering process regardless of where they operate. For development impact analysis it is more pertinent to concentrate on those areas where the emerging economies are uniquely and severely disadvantaged and damaged. These sectors are commercial tax evasion and proceeds of theft by government officials, where the illicit outflow goes only one way, which is out of the poor countries into the richer countries. Large corporations are able to take advantage of corrupt influence and underdeveloped tax and legal structures to evade tax. Corrupt government officials and PEPs are similarly able to take advantage of underdeveloped social and political structures to divert public resources for their private benefits. This is the money that should be going into developing the poor economies that is being used to illicitly enrich the richer nations even further.


Table 5 – Cross sample of DFI sponsored private equity funds using Tax Havens

Fund

Actis Africa Agribusiness Fund

ECP Africa Fund II

Aureos Africa Fund

Capital Alliance Private Equity II

Registered Address

Mauritius

Mauritius

Mauritius

Mauritius

Fund Manager

Actis

ECP

Aureos Capital

African Capital Alliance

Head Office

UK

USA

UK

Nigeria

Size

US$93m

US$523m

US$381m

US$100m

Objectives and Goals

To invest in the African Agribusiness sector

To invest in numerous sectors throughout Africa

To invest in medium sized enterprises located in Africa

To invest in businesses located in West Africa, principally Nigeria.

Term

N/A

10 years

N/A

10 years

Instruments

Equity

Quasi equity

Equity

Quasi equity

Convertible debt

Equity

Quasi equity

Equity

Quasi Equity

Format

N/A

Closed end

Closed end

Closed end

Control

Majority or minority positions

Majority or minority positions

Not known

Majority or minority positions

Investors

Sole

Multiple

Multiple

Multiple

Deal Size

US$4m to US$15m

US$15m to US$50m

US$2m to US$10m

US$3m to US$15m

Exposure

Country: Max 50%

Sector: Max 33%

Transaction: Max 20%

N/A

N/A

High Level Corruption

31. There can be no doubt that high level corruption is the greatest threat to emerging countries. Nuhu Ribadu, the former head of the EFCC, testified [18] before the United States House of Representatives Committee on Financial Services that, "In 80% of the grand corruption that takes place in Africa, the money is kept somewhere else, enabled by systems of poor regulation that allow abuse by those looking for ways to profit."

32. In his testimony before the same committee, Raymond Baker, Director of GFI, stated that, "This massive outflow of illicit money from developing countries is the most damaging economic condition hurting the global poor......drains hard currency reserves, worsens income gaps, cancels investment, . .... contributes in a major way to the environment in which corruption thrives."

33. The scale of this type of illicit flow is best illustrated by comparing inflows from CDC funds to companies alleged to have been fronts for Ibori with outflows reported in his criminal investigation.

Table 6: Ibori related inflows and outflows

Inflow

Outflow

ECP share of Notore [1]

US$22,410,256

Funds seized re Ibori’s Bombardier jet [1]

US$20,000,000

Diverted Celtel Funds [1]

US$37,000,000

Tax Avoidance [1]

US$70,000,000

ECP investment in Oando [1]

US$35,000,000

Theft from Public funds [1]

US$98,000,000

Total

US$57,410,256

US$225,000,000

34. According to these figures

· the outflow is almost 4 x the inflow

· tax avoidance using OFCs accounts for 31% of illicit outflow

· theft of public funds accounts for 69% of illicit outflow

35. One could speculate that for the African region the GFI breakdown would probably be on the lines

Commercial Tax evasion 27%

Criminal proceeds from activities such as drug trafficking, etc. 13%

Proceeds of bribery and theft by government official 60%

36. Details available from a UK police affidavit of 30 July 2007 revealed that the funds for the purchase of a Bombardier Challenger jet were transferred through a collection of offshore investment holding companies located in tax havens such as Mauritius, British Virgin Islands, Gibraltar and Panama and allegedly co-ordinated by Ibori’s UK lawyer. The affidavit also revealed that the highest value transfers were made via the offshore companies while the lower value transfers were made direct to various UK bank accounts. The types of figures being transferred directly to the UK accounts ranged from £70,000 to £300,000 while the sums being transferred from the offshore companies ranged from US$249,000 to US$4,700,000.

37. This would suggest that tax havens are being used as money laundering super highways for the movement of large amounts of money that may be more difficult to move through standard bank transfers. This view is further supported by revelations from UK court transcripts of the June 2010 trial of some Ibori associates in the UK which showed that on several instances Ibori had problems making transfers to accounts with different banks including American International Depositary Trust (AIDT) in Colorado and Royal Bank of Canada (RBC). RBC was unable to accept a transfer of $933,000 because it could not complete its due diligence until Ibori allegedly arranged for fake documents to be sent. Similarly the account at AIDT was closed because of inability to supply documents required to complete due diligence investigations.

38. The extent to which corrupt PEPs have come to recognise tax havens as key partners in their money laundering activities is best underscored by the fact that Parabola, identified by the London MET as one of Ibori’s alleged front companies, was registered in Mauritius in April 1999, one month before Ibori assumed his position as Governor. It is also significant that Parabola’s management services’ company is the Mauritius based International Management, whose registered offshore companies include at least 35 ACTIS and 28 Aureos companies. In its court affidavit, the London MET alleges that U$$4.7 million was transferred from the Parabola International (Mauritius) account for the purchase of Ibori’s US$20 million jet.

39. In light of the fully recognised harm that tax havens and secrecy jurisdictions do to developing economies through their well known propensity to facilitate the illicit outflow and secret inflow of money from and into the poor regions there can be no justifiable reason for any DFI using them or investing in funds that are located in OFCs. Using tax havens to deliver development finance is like using infected surgical tools to perform an operation to remedy a non-life threatening condition that should result in a better quality of life for the patient. However while the patient may possibly live a long and fruitful life with the existing ailment, he or she will most certainly die from complications arising from the infected tools.


Market Failure

Failure to add commercial value

40. One of the supposed benefits of development finance is the commercial value that the international investors bring to the investee companies by virtue of their expertise which is supposed to help the business grow. While their presence is no guarantee of success, it is nevertheless expected that such people will commit to making the investment work over a reasonable period of time.

41. It is instructive that in the 2007/2008 financial year that the ECP led the consortium made its investment in Intercontinental, the bank declared an exceptional dividend of NGN13.5 bn (US$89,000,000 app.) [19] . This was the last dividend the bank declared before its crash in August 2009.

42. Two of the largest banks bailed out were CDC companies. It could be argued that the CDC fund managers ignored all the red flags alerting them to the weaknesses in corporate governance. Both of the banks, Oceanic and Intercontinental had been named in the 2007 EFCC affidavit for their roles in Ibori’s alleged money laundering crimes. The suspicious loans that were highlighted in the 2007 affidavit became the largest non-performing loans that brought about the banks’ distress in 2009.

43. These included the non-performing: NGN 32,392,951,000 (US$ 210 million app.) Oceanic loan to Notore; NGN 4,300,000,000 (US$ 28 million app.) Oceanic loan to Ascot Offshore; and NGN 44,670,080,228.83 (app US$ 300 million) Intercontinental loan to Ascot Offshore.

44. CDC fund managers invested in the banks despite the criminal allegations that subsequently escalated and brought the banks into distress. On this evidence the fund managers failed to improve the corporate governance structure of their investee companies and ECP subsequently bailed out rather than attempt to rectify the situation. The adverse impact of this failure is reflected in the

· NGN 620 billion (US$4.1 bn app.) of public funds that the CBN injected into the banks [20]

· Crash in the share prices and subsequent loss to the investors including the DFI sponsors

· Job losses in the sector as a result of the crisis [21]

· Reputational damage to the industry

· Liquidity crisis brought about by the loss of confidence in the sector

· Knock on effect for other business sectors with restricted access to finance

45. Development finance without genuine social benefits for the host community is exploitation. Development finance that seeks to pass off benefits for the corrupt few as aggregate benefits for all is exploitation. It is thus of concern that DFI sponsors, including CDC, have apparently failed to prevent the funds in which they invest partnering with allegedly corrupt leaders of the host economies in the wilful exploitation of the resources of the host economies.

Failure of Due Diligence

46. Recognising the damage that high level corruption does to development DFIs require their representatives to conduct extended due diligence on all the parties related to a project to protect against the reputational and financial damage that could result from doing business with corrupt PEPs. For example in its "Toolkit for Fund managers", CDC states that

"CDC’s fund managers must consider business integrity issues carefully when they undertake due diligence on prospective portfolio companies. Fund managers are also expected to review the adequacy of the due diligence and compliance policies of potential portfolio companies, including their AML, anti-corruption and KYC policies."

47. It is therefore disconcerting to note the alarming rate at which CDC fund managers in Nigeria have invested in companies mired in controversies and criminal investigations both before and during the life of the fund’s investment. In all the cases cited in this submission there was significant information in the local public arena to alert the funds at the time of their investments. These are just some of the examples of instances where fund managers have acted in complete disregard of the publicly documented controversies involving their portfolio companies. The quality of due diligence performed in such instances can be measured by the accompanying failures to address any of the issues that were dominating the public arena at the time of the investment.

Comparative Screening Procedures

48. There are essentially two levels of screening with development finance. The first is at the fund level when the DFIs are considering the funds that they wish to invest in. While CDC and OPIC are regular users of private equity funds, DEG appears to be a sporadic and intermittent user of private equity funds, so for comparison purposes I have looked at the OPIC and CDC screening procedures for fund managers. It should be stressed that this comparison only assesses the procedures as laid down on paper: it makes no judgment as to how the procedures are actually implemented.

49. From outset the OPIC screening process was an open one which began with a public "Call for Proposals," when fund managers or investment professionals are invited to submit proposals to establish a fund. The "Call for Proposals" will usually spell out the guidelines for applicants and the procedure to be followed during the selection process. OPIC will then stipulate the minimum level of information that the proposal must contain. This usually includes [22]

General Information name, address, those sponsoring the formation of the fund, contact details

Investment Strategy target size of the fund, transaction size, investment process, etc.

Economic the variables and benchmarks for assessing the economic development

Development Strategy impact of the fund

Team key personnel, ownership and organisational structure, etc.

Track Record cash flow records of current and previous deals or funds if applicable

Fundraising fundraising strategy, GP commitment, other prospective or committed investors, fund structure, etc.

Other references, certifications, and other supplemental information. For example OPIC has sometimes required a copy of a complete due diligence report on a recent investment and on an investment that has not met expectations.

50. However in 2009 OPIC introduced a closed element to its selection process which allowed it to commit funds to successor funds of existing successful fund managers [23] . So in effect OPIC now uses a combination of open and closed processes for allocating funds.

51. While OPIC started from a position of open competitive screening and introduced a closed element, CDC started from a closed private process to introduce an open public element. In the early years of its life as a fund of funds CDC did not screen its fund managers as it was committed to using its internally generated fund managers. However over the years as CDC began to utilise other fund managers and reduce the proportion of funds committed to Actis and Aureos. CDC now has an open invitation to other fund managers to apply to it for funding [24] and it periodically issues specific invitations [25] . The format of the invitation follows the same principles as the OPIC "Call for Proposals" and requests broadly the same set of information from the applicant. However OPIC’s calls go into more detail on the selection procedure, information required, assessment criteria and supplementary information. OPIC has an extensive list of mandatory information that it specifically requires from applicants while CDC allows applicants more discretion in the level and detail of information that they provide.

52. The second level of screening in development finance takes place at the project level, where the fund managers or DFIs assess a particular project or company prior to making an investment decision. By virtue of the PE fund system, DFIs as LPs are not involved in the screening of their portfolio companies so the DFI screening process is determined by its operational policy.

53. Since 2004, CDC no longer makes any direct investments and does not engage in any screening at project level. OPIC for its part only makes direct investments in US individuals or enterprises looking to develop an overseas project. Such projects need to satisfy various criteria laid down by OPIC which include: being in a country that OPIC is allowed to do business with; been unable to get private sector support; not being within a prohibited sector; agreeing to uphold International Labour Organisation worker rights standard. [26] DEG however, is able to make direct investments in German individuals and businesses looking to develop overseas projects as well as national citizens and businesses in the countries that DEG operates in, so this analysis is restricted to the process that DEG applies in screening its projects.

54. DEG has a public and transparent screening process that applies to all of its projects including infrastructure and financial sector projects, private equity funds and productive project companies. This project rating process is known as GPR and applies throughout the lifetime of a project. [27] The rating is primarily based on four benchmarks namely: long term profitability; developmental effects/sustainability, DEG’s strategic role and return on equity.

55. The rating is based on a weighted aggregate index where a project can score a maximum of 500 points. Long term profitability and developmental effects carry a maximum of 150 points each while the remaining two carry a maximum of 100 points each. The aggregate mark is then rated according to a 6 level quality grouping starting with projects scoring 320 points or more ranked highest and those scoring less than 160 points ranked lowest.

56. The screening process is outlined below and begins with a Clearance in Principle (CiP) where projects are initially assessed on a preliminary GPR basis to establish whether they meet DEG requirements. Suitable projects then receive a CiP and the screening moves on to the next stage which includes due diligence and structuring. Projects that successfully pass the CiP and due diligence are then executed. The screening process continues during the lifetime of DEG’s participation in the portfolio management stage and a GPR assessment is carried out every two years for each project.

The Screening Process

GPR-CiP GPR appraisal GPR-PM GPR-concluded projects/

(ex-ante) (ex-ante modified) (ex-post) in individual cases:

Lessons learnt

Source: DEG Corporate – Policy Project Rating (2010) report

Recommendations

Tax havens

57. Given that one of the objectives of development finance is to help the host country to escape the shackles of poverty and underdevelopment through economic growth and sustainable wealth creation, then using tax havens to deliver the finance is a wicked travesty. This is because the delivery process allows for stealing and laundering more than 4 times the amount of FDI as stated earlier while others like Tax Justice Network put the ratio even higher at 10 to 1 [28] . Consequently no matter how successful the investments are for the Western investors, the overall effect for the host community is increased opportunities for corrupt PEPs to launder larger amounts of illegally acquired national wealth. Consequently the first and primary recommendation of this submission is an immediate moratorium on the use of tax havens in the delivery of development finance. Given that the volume of stolen funds being laundered through tax havens far exceeds the amount of investment being routed through them, the practice should be stopped immediately until tax havens can improve their records on money laundering.

58. CDC has often claimed it acts as a catalyst for driving private sector investment into developing economies and as such it should now act as catalysts for stopping the routing of development finance through tax havens by unilaterally prohibiting its fund managers from

· Having offices in tax havens

· Routing funds through tax havens

· Setting up Special Purpose Vehicles (SPV) or shell parent companies in tax havens

· Investing in portfolio companies that have more than a set limit of shares held in tax havens

59. CDC should prohibit any involvement in tax havens in the same way as it prohibits investment in gambling or pornography or other such activities that may very well be legitimate but are considered socially unacceptable because of the negative impact that they have on society in general. Norway has taken the lead by requesting that Norfund stops investing in tax havens [29] . As shown in Table 1, Norfund had the sixth largest portfolio while CDC the third largest had a portfolio that was greater than the sum of Norfund’s and the 9 other DFIs below it. There can be no doubting the impact that a self imposed moratorium by CDC would have on the use of tax havens in development finance.

Sanctions

60. In light of the recognised harm that corruption and money laundering have on the developing economies, DFIs and their sponsoring governments should impose stiffer sanctions for IFIs that knowingly or unknowingly become involved in such cases. A central record should be kept of the number of times that IFIs have acted for or represented companies that were subsequently named as conduits in successful money laundering prosecutions in any jurisdiction. Any IFI that has a specified number of cases listed against it should be automatically disqualified from handling any CDC funds. Any financial institution or intermediary found to have allowed an account to be opened and subsequently used for money laundering should face automatic charges with increasing penalties for repeat offences. The soft touch self regulation approach is not working and as such there should be mandatory sanctions for recorded transgressions regardless of origin or circumstance.

Multiple Options

61. There are many challenges facing development finance and a singular approach does not provide the flexibility required to tailor solutions to multi-faceted issues. Private equity funds have demonstrated a tendency to eschew investment in SMEs in preference for the bigger projects that offer more profit for less risk. This is underscored by the fact that the aforementioned NAO report found that SME funds accounted for 4% of the value of CDC’s portfolio. This compares unfavourably with the 33% that DEG committed to SME financing in 2009. On this evidence the DFI that utilises PE funds the least is shown to be the biggest provider of finance to the crucial SME sector in the developing world while the DFI that utilises PE funds the most is the least provider of funds. PE funds are usually set up to maximise profit and given that the return on investment (ROI) from larger projects outstrip SME financing, these funds are naturally inclined towards big project financing.

62. In 2009, OPIC committed approximately 15% of its funds to PE funds with DEG committing even less and both DFIs relying more heavily on other methods of delivering development finance. The Secretary of State for International Development has stated that he intends CDC to move away from an exclusive focus on PE funds. This submission would encourage greater use of direct investment and financing. OPIC and DEG make more use of direct investment and financing as options and channels for delivering development finance. The DEG approach of making direct financing available to investors throughout its regions is highly recommended as it allows for greater access to the under-supported SME sector which lies at the heart of economic growth and sustainable development.

63. There is also evidence to suggest that multiple options result in wider spreading of portfolios. The 2009 investment activities of OPIC that uses a variety of options reveals a wide spread of portfolio companies and projects that include housing, schools, low income mortgages, microfinance, SME lending and private equity. The value of these activities ranged from US$4,441 to US$250,000,000.

64. Multiplicity contrasts sharply with CDC’s unitary fund of funds approach where the sponsors commitment and influence ends at the fund level and the GP has sole responsibility for investments at project level. This may explain why in a list of over 600 investee companies, CDC does not boast one school and its agricultural holdings are mainly inherited from its post fund of funds era.

65. It is therefore the recommendation of this submission that DFIs need to maintain multiple options for delivering development finance in order to fulfil their development mandate.

Regional Offices

66. DFIs should also maintain representative offices in the regions in which they operate so as to be able to monitor their projects and investments more closely and better understand the environment and culture in which they are located. DEG has been able to demonstrate effectively that regional presence allows for a more comprehensive monitoring and analysis of investment projects. Its Corporate Policy Rating System is a world leading programme that allows for a credible and transparent assessment of development impact in a manner that is significantly enhanced by the reliable information gathering system directly from the regions. This is in stark contrast to the fatally flawed approach used in the production of the CDC 2009 Development report that relied extensively on unverified self-certification in an unidentified sample of fund managers and investee companies and the complete discretionary assessment by those compiling the report. Without any regional offices, staff and significant commitment of resources, it would not be possible for CDC to produce a reliable and comprehensive DEG style rating. So a proper understanding and measurement of the impact of DFI requires first hand reporting from the regions.

67. Regional offices are necessary to effectively monitor global investments and DFIs are duty bound to engage in closer monitoring of their investments to reduce the financial and reputational risks attached with making or becoming associated with corrupt investments in regions known for high level corruption and abuse of political power. While there may be short term benefits from engaging in corrupt activities in the long run such businesses and enterprises collapse under the weight of the corruption as evidenced by the collapse of Intercontinental and Oceanic banks. While the financial intermediaries and middlemen often walk away with their short term rewards even when investments fail and the shareholders and capital providers are invariably left to carry the full impact of the loss through their lost capital. It is therefore in the interests of DFIs to closely monitor their fund managers and investee companies as well because they lose disproportionately more from failed investments than their fund managers.


Conclusion

68. Development finance involves the highest levels of government in all the participating countries and is highly influential in determining the direction in which emerging countries evolve. A process that has zero tolerance for corruption and money laundering sends out a strong message that these practices would not be tolerated by the global financial system. Conversely a system that has high tolerance for corruption and money laundering sends out the wrong message to the corrupt PEPs and unscrupulous intermediaries that look to exploit the process for illicit financial gain. This submission has shown that the current process for delivering development finance facilitates the illicit flow of capital out of the developing countries at a rate at least 4 times more (others put the figure much higher at 10 times more) than the amount channelled in through DFIs. Consequently there can be no argument for continuing to deliver development finance in the way that it is being delivered at present through tax havens.

69. In conclusion CDC would be better served in employing a multi-faceted model for delivering development finance that has zero tolerance for corruption, is seen to have zero tolerance for corruption and can be shown to have zero tolerance for corruption. Tax havens have the highest tolerance for corruption in all financial and geographical jurisdictions and as such should be factored out of development finance for it to have any significant impact in promoting growth and development in the emerging economies. Once tax havens have been factored out of development finance then a combination of options and delivery mechanisms that promote and rely extensively on direct investment that favours SMEs and monitoring by DFI employees based in the regions should maximise the impact of development finance in the regions.

70. While CDC’s investment policies and practices may have been financially successful for CDC, its executives and fund managers, it is quite clear to see that in developing countries such as Nigeria, the country and the majority of its citizens have paid dearly for the failures in this policies and standards of practice with job losses, public revenue lost through tax evasion, publicly funded bail outs, illicit capital flight through the tax havens that the fund managers use to route their investments into the country.


Appendix

List of the amounts found to have been allegedly illegally transferred out of Delta State accounts by former Governor James Ibori and his associates plus the $15,0000,000 (Fifteeen million US dollars) cash used in a spurned attempt to bribe Ribadu, the head of the EFCC

Count

Date

Amount (NGN)

1

01/03/2004

5,000,000.00

2

10/11/2004

1,000,000.00

3

01/03/2006

20,000,000.00

4

02/10/2003

60,000,000.00

5

28/08/2003

90,000,000.00

6

24/07/2003

42,000,000.00

7

28/06/2004

4,900,000.00

8

04/06/2003

90,500,000.00

9

10/12/2003

30,150,000.00

10

28/04/2004

14,989,000.00

11

02/01/2004

22,000,000.00

12

17/05/2004

20,000,000.00

13

06/05/2005

7,000,000.00

14

29/01/2004

2,000,000.00

15

29/01/2005

5,567,000.00

16

07/06/2006

2,877,400.00

17

06/04/2005

3,203,940.00

18

07/04/2005

5,985,000.00

19

21/06/2006

5,000,000.00

20

03/02/2005

6,000,000.00

21

29/08/2006

14,000,000.00

22

19/09/2003

20,000,000.00

23

07/08/2006

10,000,000.00

24

26/10/2006

7,000,000.00

25

26/10/2006

11,000,000.00

26

26/10/2006

9,000,000.00

27

26/10/2006

9,000,000.00

28

26/10/2006

10,000,000.00

29

26/10/2006

10,000,000.00

30

26/10/2006

4,500,000.00

31

09/02/2006

40,000,000.00

32

26/10/2006

9,000,000.00

33

07/02/2007

20,000,000.00

34

26/10/2006

10,000,000.00

35

26/10/2006

20,000,000.00

36

26/10/2006

3,000,000.00

37

14/02/2006

2,800,000.00

38

09/02/2007

10,000,000.00

39

09/02/2007

20,000,000.00

40

08/02/2007

30,000,000.00

41

14/02/2007

500,000.00

42

26/10/2006

10,000,000.00

43

13/02/2007

4,650,000.00

44

12/02/2007

4,300,000.00

45

13/02/2007

4,700,000.00

46

12/02/2007

4,500,000.00

47

14/02/2007

3,000,000.00

48

13/02/2007

4,400,000.00

49

07/02/2007

30,000,000.00

50

07/02/2007

40,000,000.00

51

17/02/2007

20,000,000.00

52

06/02/2007

4,800,000.00

53

06/02/2007

18,000,000.00

54

05/02/2007

15,000,000.00

55

28/12/2006

25,000,000.00

56

05/01/2007

25,000,000.00

57

05/01/2007

20,000,000.00

58

20/12/2006

20,000,000.00

59

28/12/2006

23,000,000.00

60

22/12/2006

17,000,000.00

61

07/08/2006

10,000,000.00

62

19/12/2006

50,000,000.00

63

15/07/2006

641,500,000.00

64

09/04/2003

4,000,000.00

65

24/04/2003

14,000,000.00

66

03/06/2003

28,300,000.00

67

16/06/2003

20,000,000.00

68

26/06/2003

2,000,000.00

69

01/09/2003

15,000,000.00

70

23/10/2003

16,500,000.00

71

03/12/2003

20,000,000.00

72

10/12/2003

10,000,000.00

73

23/10/2003

8,000,000.00

74

28/01/2004

5,700,000.00

75

17/06/2004

20,000,000.00

76

08/07/2004

29,720,000.00

77

16/09/2004

5,000,000.00

78

05/10/2004

10,000,000.00

79

10/05/2005

5,545,000.00

80

13/06/2005

5,860,000.00

81

15/06/2005

10,000,000.00

82

20/07/2005

10,000,000.00

83

29/07/2005

12,800,000.00

84

17/06/2005

20,000,000.00

85

15/07/2003

5,000,000.00

86

24/07/2003

16,500,000.00

87

03/10/2003

5,000,000.00

88

31/12/2004

240,000,000.00

89

31/12/2004

270,000,000.00

90

31/12/2004

260,000,000.00

91

31/12/2004

230,000,000.00

92

31/12/2004

250,000,000.00

93

31/12/2004

220,000,000.00

94

31/12/2004

280,000,000.00

95

31/12/2004

280,000,000.00

96

31/12/2004

230,000,000.00

97

31/12/2004

230,000,000.00

98

31/12/2004

260,000,000.00

99

31/12/2004

250,000,000.00

100

19/11/2004

1,000,000.00

101

22/11/2004

1,000,000.00

102

31/12/2004

5,000,000,000.00

Sub total

10,003,747,340.00

USD value as at 1/12/07

$83,453,600.00

103

25/04/2007

$15,000,000.00

TOTAL

$98,453,600.00


[1] Source – The Growing Role of the Development Finance Institutions in International Development Policy by Dalberg Global Development Advisors (July 2010)

[1]

[2] See DFID website at http://www.dfid.gov.uk/About-DFID/Who-we-work-with/CDC/

[3] See Secretary of State’s written statement at http://www.dfid.gov.uk/Media-Room/Speeches-and-articles/2010/Written-statement-to-the-House-of-Commons-on-reform-of-CDC-Group-plc-/

[4] Africa Report 2009 ranking available at http://www.theafricareport.com/rankings/top-200-banks.html

[5] See Intercontinental bank’s UK website at https://www.icbuk.com/index.php/pages/parentbank/

[6] See AltAssets article at http://www.altassets.net/private-equity-investor-profiles/by-region/asia/article/nz7292.html

[7] See “Fighting Corruption in a Global Economy” by Peter Eigen available online at http://www.entrepreneur.com/tradejournals/article/163153339.html

[8] See Sahara Reporters article on UK’s Private Eye investigation into tax avoidance by a CDC investee company available online at http://www.saharareporters.com/news-page/uk-newspaper-detail-how-oando-made-its-whopping-quarterly-n31-billion-profit-dodging-taxes?page=1

[9] See EFCC October 2007 affidavit available online at http://nigeriavillagesquare.com/forum/main-square/14200-ibori-efcc-state-details-sworn-affidavit-saharareporters-exclusive.html where section 16 xxix names several CDC investee companies, Celtel, Oando, and Notore while Oceanic and Intercontinental are named in other sections.

[10] See Next newspaper article at http://234next.com/csp/cms/sites/Next/Home/5631663-146/dubai_court_extradites_ibori_to_london.csp

[11] See CBN advertorial available online at http://www.cenbank.org/OUT/PUBLICATIONS/PRESSRELEASE/GOV/2009/ADVERTORIAL_18082009.PDF

[12] See Next newspaper article at http://234next.com/csp/cms/sites/Next/Home/5508142-146/story.csp

[13] See CDC website at http://www.cdcgroup.com/The%20Palms.aspx

[14] See P. M. News article at http://pmnewsnigeria.com/2010/08/02/workers-shut-down-shoprite/

[15] See newspaper article at http://allafrica.com/stories/200912220085.html

[16] See the supplementary memorandum from DFID on EV24 of the Public Accounts Committee Report on DFID oversight of CDC available online at http://www.publications.parliament.uk/pa/cm200809/cmselect/cmpubacc/94/94.pdf

[17] See Table 2 of the GFI report, “Illicit Financial Flows from Africa: Hidden Resource for Development” available online at http://www.gfip.org/storage/gfip/documents/reports/gfi_africareport_web.pdf

[18] See full testimony online at http://www.cgdev.org/doc/Opinions/Ribadu_corruption_05-19-09.pdf

[1] Based on figures in EFCC October 2007 affidavit available online at http://nigeriavillagesquare.com/forum/main-square/14200-ibori-efcc-state-details-sworn-affidavit-saharareporters-exclusive.html where section 16 xx refers to US$ 46 million paid for 39% of the company. Further investigation by the author of this report revealed that the 39% in fact referred to a 19% share by ECP and 20% by Egyptian Fertiliser Company (EFC). The 19% share came to US$22,410,256.41 affidavit goes on to name Notore as a front company for James Ibori, the twice convicted former governor of Delta State.

[1] See BBC article http://news.bbc.co.uk/1/hi/world/africa/7035427.stm on the UK police’s successful application for a restraint order on assets and funds traced to Ibori. The Bombardier jet bought on behalf of Ibori is valued at US$20,000,000 online at http://en.wikipedia.org/wiki/Bombardier_Challenger_300

[1] See Sahara Reporters article available online at http://www.saharareporters.com/news-page/london-mets-charges-against-yaraduas-pps-david-edevbievictor-attah-henry-imashekka-and-ibo

[1] See Sahara Reporters article on Private Eye investigation into tax avoidance by OandO available online at http://www.saharareporters.com/news-page/uk-newspaper-detail-how-oando-made-its-whopping-quarterly-n31-billion-profit-dodging-taxes?page=1 The figure quoted is based on Private Eye’s estimate of US$7 million per year tax avoidance for an estimated 10 year period from 2000 to 2009.

[1] See ECP website at http://www.ecpinvestments.com/news/1602.xml

[1] Based on the total Naira sum of NGN10,003,747,340 of the transferred amounts listed in the EFCC charges levelled against Ibori in the Federal High Court in Kaduna, Nigeria, 2007. See full list in appendix.

[19] See Intercontinental Bank Annual Report 2008 available online at http://www.intercontinentalbankplc.com/portal/investors/annual_reports.php

[20] See Bloomberg news article at http://www.bloomberg.com/news/2010-07-27/nigeria-central-bank-s-sanusi-says-investors-have-bid-for-bailed-out-banks.html

[21] See News article at http://www.chairmanking.com/layoffs-for-christmas-nigerias-banks-to-sack-5000-this-week-massive-retrenchments-continue-in-the-nigerian-banking-sector-20091221/

[22] Details of an OPIC Call for Proposals available online at http://www.opic.gov/investment-funds/calls-for-proposals/global-technology-innovation-fund/questionnaire

[23] ECP Africa Fund III is an example of a successor fund that OPIC committed to without a public call for proposals http://www.opic.gov/sites/default/files/docs/ecp_africa_fund_III_pcc.pdf

[24] See CDC website at http://www.cdcgroup.com/fund-managers.aspx

[25] See example of an invitation at http://www.cdcgroup.com/uploads/28november2008.pdf

[26] See OPIC website at http://opic.gov/doing-business/investor-screener

[27] Copy available from DEG website at http://www.deginvest.de/EN_Home/About_DEG/Our_Mandate/Development_Policy_Mandate/GPR-Brief-Description-Englisch_02-2010.pdf

[28] See the Tax Justice testimony in a Channel 4 Dispatches documentary, “How the rich beat the taxman” available online at http://www.channel4.com/programmes/dispatches/episode-guide/series-72/episode-1

[28] See also http://www.taxresearch.org.uk/Blog/2008/07/07/corruption-norway-turns-the-spotlight-on-tax-havens/

[28]

[29] See EIB: funding development through tax havens by Stephen Gardner available online at http://blogs.euobserver.com/gardner/2009/08/25/eib-funding-development-through-tax-havens/