How to conceal a heist: A guide to looters, scammers and corruption mandarins

By Baikòlia-ò-Bamung’ò

Summary: Public funds looters are running amok. Looting may be easy, but it requires some sophistication to conceal looted funds. This easy offers an advisory on mechanisms within realm of international public finance looters may explore to conceal their loot and evade taxes.

You’ve just looted Eurobond. Or Covid-19 funds. Where would you hide the money? Would you put it in the bank? Maybe stash it under your mattress?  Please. That’s amateur thinking, for small-time looters such as county governors. This is a legal guide to public finance thieves on how to hold looted money and not have it seized by asset recovery agencies like fool’s property.

The tricks and tactics to conceal a heist are broad. They touch not just on financial regulations, but also on global corruption, crime, and even assassination. This essay is a guide to looters on how to conceal looted funds.

From Eurodollars to Eurobonds: Ungodly pact of the Allies

Prior to World War II, global finance was relatively unregulated. Money flowed rapidly among nations; it destabilized currencies and caused poverty and widespread social unrest, both factors in the outbreak of the war.

Years later, with victory in sight, the Allied powers turned their attention to preventing this situation from arising again. To this end, they decided that the value of national currencies would no longer be determined by market fluctuations. Instead, they would be tied to the US dollar, the value of which was pegged to US gold reserves, a stabilizing force.

The Allies also agreed that in the future, money would only be allowed to travel overseas in the form of long-term investments. Risky, short-term international investments were strictly prohibited. It was a bold and effective move – but it wasn’t to last.

These new international financial regulations worked well for a time. But before long, bankers started exploiting loopholes in the new laws. For example, although the US government oversaw American banks and regulated their loans to ensure stability, it couldn’t interfere with dollars that were stored overseas. As a result, London bankers could do what they liked with the dollars they controlled – the British government simply didn’t care. 

This uprooted currency became known as eurodollars, and it could flow among countries just like in the old days. This was the first blow to the stable postwar framework.

Not long afterward, eurodollars were joined by an even more daring financial innovation, known as Eurobonds. These new bonds were different from investments of the past. Through clever planning and artful negotiation with European authorities, bankers gave this new type of investment a whole host of attractive features. For a start, the profits earned on Eurobonds were tax-free – but that’s not all. 

In the past, institutions that issued bonds had to record the personal details of those buying them. Eurobonds did away with this restriction. In fact, Eurobonds weren’t tied to individuals at all; issuing institutions simply gave buyers a coupon to be redeemed when the loan’s term had elapsed. This made them enormously appealing to individuals seeking to hide wealth.

This situation was a far cry from the ideals that the Allies had advanced at the end of World War II. Instead of reining in the world of global finance, their new regulations inadvertently ushered in a new, more aggressive market – and money went global as never before.

Advice to looters: Use the loot proceeds to invest in Eurobonds. 

The haven of the offshores and the allure of Nevis

Offshore havens are perfect hubs for financial crimes and corruption. As any embezzler knows, the best place to stash ill-gotten gains is offshore, in a jurisdiction with favorable laws and financial discretion. Offshore havens are perfect hubs for financial crimes and corruption.

However, haven like British Virgin Islands or Cayman’s highlands are no longer very safe. Explore somewhere, a country like Nevis, a small Caribbean island with a population of just 11,000. Why Nevis?

When Nevis gained independence from Britain in the 1980s, a group of American lawyers led by a man named Bill Barnard had the ear of the island’s leader, Simeon Daniel. In just a few years, Daniel and these lawyers transformed Nevis into the ideal place to stash secret assets.

How did they do this? Well, Nevis no longer recognizes the judgments of foreign courts, so any attempt to get at someone’s assets has to be conducted within the island’s own legal system. That means posting a $100,000 bond just to begin your case. And if more than a year has elapsed between the offense and the day you file the papers, the court will dismiss your claim.

Before you get that far, though, you need to figure out whether or not the assets you’re after are in Nevis. But the island has a “confidentiality ordinance” that prohibits sharing financial information with anyone who can’t prove their right to hear it.

Island of Nevis, a offshore haven,

Intimidate, kill, when necessary

Nevis isn’t an anomaly, either. Around the year 2000, the British island of Jersey made headlines when Financial Management Company Ltd (FIMACO), a mysterious company based on the island, attracted the attention of Russian Prosecutor General Yuri Skuratov.

FIMACO was a Jersey company founded in 1990. The Company has gained fame as a result of a series of scandals related to the IMF loan funds, operations on the Russian debt market and the issue of obtaining commission income from operations with the state currency reserve. Skuratov noticed that FIMACO had received tens of billions of dollars from his country’s central bank. But as far as he could ascertain, the company served no purpose whatsoever. It was a shell. 

Skuratov suspected that the funds sent to FIMACO were being funneled back to central bank officials through other channels. This suggested widespread corruption in the central bank, with officials using the hidden funds to finance lavish lifestyles.

Skuratov went public about FIMACO, and not long after he did, state-controlled TV broadcast footage of a man resembling him cavorting happily with a pair of prostitutes. The pushback seemed to confirm his suspicions. Skuratov was fired not long after, and his successor abandoned the investigation. Corrupt rulers enrich themselves in some of the world’s poorest places.

Silence them!

One of the remarkable things about kleptocracy, the rule of the corrupt, is that it has an irritating knack for overcoming national borders.

Corruption doesn’t respect national borders. Want an example of corruption reaching across borders? Well, it would be hard to find a clearer one than the 2006 murder of UK resident Edwin Carter, also known as Alexander Litvinenko. Litvinenko, a former KGB agent, died of polonium poisoning in London in November 2006. 

Now, polonium is not found in the natural world, meaning that Litvinenko had almost certainly been deliberately poisoned. Why? Well, before he emigrated to the UK, Litvinenko exposed a secret Russian government organization dedicated to assassinating troublesome politicians and businessmen.

Alexander Litvinenko on his deathbed. For fear of our safety, we don’t know the second gentleman, but we suspect he is a saint

When he arrived in London, Litvinenko continued to share information about kleptocrats with private investigators. The information he provided on one dangerous Russian magnate and politician led to the collapse of a multimillion-dollar deal the man was planning. And that, it seems, is what sealed his fate.

Within two months, Litvinenko was dead. All signs indicated that two acquaintances of his, who visited him in London just before he fell ill, were responsible for the murder. But the men had returned to Russia by the time Litvinenko died, and their government refused to cooperate with the British investigation.

In fact, one of the suspects, a man named Lugovoy, was soon awarded a medal for “services to the Fatherland,” and also won a place in the Russian parliament. As if this weren’t enough, he sent one of Litvinenko’s friends a T-shirt reading, in slightly awkward English, “Polonium-210 . . . nuclear death is knocking your door.”

It seemed clear that the the the order to murder Litvinenko had come from high up in the Russian government. This wasn’t an isolated incident, either – there have been many other murders in the UK with indications of Russian involvement. But while national borders have failed to stop these crimes, they do pose obstacles to investigations. So far, Russian authorities have refused to play ball.

Increasingly, it seems that there’s no such thing as a safe place to expose the crimes of kleptocrats.

Manipulating America’s obstinacy on FATCA

The era of Swiss financial secrecy is over, but new problems have emerged. In 2007, a banker named Bradley Birkenfeld earned himself a forty-month prison sentence and banked over $100 million in a single move. 

What did Birkenfeld do? He told American authorities about his involvement in a huge Swiss tax evasion scheme that deprived the US Treasury of $100 billion in tax revenue every year. As a whistleblower, Birkenfeld was entitled to a portion of that money. But because he wasn’t fully honest about his own actions, he also wound up in jail. 

In the past, Swiss banks had cooperated with their clients to hide assets from US authorities. But after Birkenfeld’s revelations, everything changed.

In light of Birkenfeld’s revelations, the United States drew up new and more stringent regulations for dealing with overseas banks. These banks would no longer be trusted to ensure that their clients paid taxes. Instead, Congress passed a law requiring all foreign financial institutions to reveal the names and assets of the US citizens on their books. If banks refused, they faced a tax of 30 percent on any investment income gained in the United States.

The Act came into operation in 2015, and it’s already eradicated some common types of tax evasion. But the new system is far from perfect.

Navigating the Common Reporting Standard

Take the Common Reporting Standard, or CRS, the crown jewel in the system that takes on hidden assets all over the world. In many ways, it’s a step in the right direction. In the past, governments swapped financial account details only on request. Now, countries participating in the CRS do so automatically. This makes it far easier to identify anyone trying to evade taxes.

But there’s a problem. As we’ve seen, ill-gotten gains flow out of some of the world’s poorest nations at an alarming speed. But even with a mountain of financial information at their disposal, many of these countries simply can’t scour databases in search of financial wrongdoing.

What’s more, one powerful country doesn’t release data in accordance with the CRS. And it’s not a typical tax haven: it’s the United States.

Nevada, here we come, with our loot!

Although foreign banks have to tell the United States about their American clients, American banks don’t have to return the favor. This makes the United States an increasingly attractive tax haven. Many US states are becoming international tax havens.

Some countries are notorious tax havens – Switzerland, obviously, and the Cayman Islands. But when looking for a place to stash ill-gotten billions, few looters would think of the US state of South Dakota. 

But they should. Why? In a word: trusts. A trust involves passing your assets to a trustee, an individual or institution that follows the instructions you laid down when you made the agreement. Before the 2007 Swiss banking scandal, South Dakota’s trustees held $32.8 billion. Just a decade later, they held $226 billion – a sevenfold increase in ten years!

South Dakota isn’t the only state that’s abusing trusts. In fact, it’s another state that really pioneered the practice: Nevada.

Imagine you’re a billionaire and you’re trying to figure out how to pay as little tax as possible. You’ve heard good things about the laws in Nevada – but what exactly does the home of Las Vegas offer someone in your financial position?

Well, first of all, Nevada allows you to create trusts that last 365 years. In the United States, if you use a trust to pass assets to a descendant, you only pay taxes on those assets when the trust ends. When a trust lasts for three and a half centuries, so does your tax avoidance.

And it gets better. It’s common practice for island tax havens such as Nevis and Jersey to make it incredibly hard for creditors to go after assets, and Nevada is much the same. If two years have passed since you put your assets in a trust, they’re untouchable. 

So if you go through a divorce and your ex-husband tries to claim a portion of the billions in your trust, wish him good luck! No creditor has ever managed to extract assets from a Nevada trust.

Finally, Nevada can keep your billions just as secret as Swiss banks used to. If you give a non-US citizen any formal power over the trust – for example, the power to change the trustee – then for tax purposes, it’s a foreign trust. This means that the United States legally can’t share information about it with foreign governments. 

And if it’s registered with an American trustee, then it’s simultaneously American, according to the Common Reporting Standard. And the CRS, of course, is the one to which the United States doesn’t subscribe.

Advice to looters. In short, Nevada might just be the safest place in the world for your looted billions.

When money went global, the rich and dishonest saw an unprecedented opportunity to protect and conceal their wealth. Because laws stop at borders but money doesn’t, vast riches can be siphoned off into jurisdictions with financial secrecy and laws favorable to hiding cash. This leaves governments and regulatory bodies with little option but to chase money around the globe.

However, use these legal mechanism, you will have your billions safe.

Are you a stoic? The Allure of stoicism

1. Saint Rita of Cascia

The schedules of saints Judas and saint Rita must be busy.  Saint Judas, the patron saint of desperate cases and lost causes and Rita of Cascia, the patron saint of sterility, abuse victims, loneliness, marriage difficulties, parenthood, widows, the sick, bodily ills, and wounds, embody the tempests human being go through in the journey of life.

The question of how to live has been alive in every culture, religion and society. How should we tackle life’s challenges? And how should we face up to the ultimate challenge, reality of our mortality?

Throughout history, religious leaders, scientists and philosophers have tried to answer the question: how can we live a good life? How should we deal with life’s problems, react to adversity and prepare for death?

Saint Rita of Cascia, patron saint of sterility, abuse victims, loneliness, marriage difficulties, parenthood, widows, the sick, bodily ills, and wounds,

2. Etymology of Stoicism

Stoicism, a philosophy of ancient world, offers lessons on these aspects, on the practicalities of living a good, virtuous life, foregrounding friendships and handling daily frustrations.

Marcus Aurelius, a Roman emperor popularized it. Marcus, the emperor-philosopher, wrote his most famous work, Meditations, as a personal guide for his own self-improvement.

Stoicism is often misunderstood. When we say someone is stoical, we imply they are rather passive; tolerating what comes to them without question or emotion. But in reality, Stoicism is not at all passive, and it is not about suppressing emotion. It is about what we can do to lead a good life.

Marble burst of Emperor Marcus Aurelius, a leading stoic

For a nervous flyer fretting turbulence, a dieter struggling to shift stubborn pounds, many of us expend energy on things we cannot change.

Epictetus taught.  We must make the most of what we can control. And accept what isn’t in our power to change. This sentiment is widely known, but less widely followed. What is in the power, or control, of the nervous flyer?

What can he do to prevent an in-air catastrophe? A little. He can choose whether his trip is necessary, and if so, which airline to choose. What he cannot do is control or influences anything once in the air.

By now, he must accept the circumstances he is given, in this case, relying on his pilots, air traffic controllers, the weather and other factors outside his control. To fret further is a waste of energy.

This shouldn’t be seen as encouraging passivity. Rather it provides powerful instruction to focus on the things you can influence.

You are due for a promotion. You think you have performed well. But you continue to agonize about the office politics that could get in the way or colleagues who may provide competition.

A better approach would be to think like a Stoic. Satisfied you have done what is in your power to do, wait and accept the news calmly, whether good or bad.

Socrates, who heavily influenced Stoics and Western thinking, provided a model, albeit an extreme one. When a political opponent accused Socrates of impiety and eventually had him condemned to death, Socrates could have escaped thanks to helpful and loyal friends.

But he refused, telling his upset friends that he had to uphold his moral duty to accept the law and the justice system, despite its blatant misuse. We don’t get to bend the rules on the occasions when they don’t favor us, he argued. He accepted his death to maintain his integrity, to the cost of his friends and family.

Living with virtue was important to the Stoics. But what exactly did they mean when they talked of a virtuous life? There are four aspects of virtue – temperance, courage, justice, and, most importantly, wisdom.

These concepts of virtue have been fairly consistent throughout philosophical and religious history. Thomas Aquinas’s system of “heavenly virtues” kept the four Stoic ones and added faith, hope and charity.

Massimo Pigliuci’s book, How to be a stoic, that inspired this essay.

3. Cato and the inevitability of death

Cato was a senator in Rome and unusually committed to moral virtue. When he became a military commander, he marched, ate and slept alongside his men, who loved him for this.

He was also incorruptible. As administrator and tax collector for the island of Cyprus, he refused opportunities to enrich himself, as was normal at the time. Instead, he dutifully and honestly collected taxes to be sent back to Rome.

When Julius Caesar declared war on the Roman Republic and attempted to secure dictatorial power for himself, Cato fought him to defend the Republic, its institutions and values. Eventually, facing defeat, he killed himself rather than be captured, which would have handed Caesar a propaganda victory.

As the historian Plutarch describes it, Cato stabbed himself but did not immediately die. He lay bleeding, his bowels hanging out of his body. His doctor tried to save him, but Cato – seeing his physician’s intentions – tore out his own bowels and died. In death as in life, Cato was a model of virtue: sacrificing himself to avoid giving his morally contemptible opponent any political advantage.

Cato’s example may feel a little extreme, but for Stoics, that was part of the point. Inspired by the grueling experiences of people like him, we can surely conjure up the courage to rise to the challenges in our own lives.

Few of us are as willing to face death as Cato. Indeed, many of us have a nagging fear of death. It is understandably troubling to consider the reality that one day; your consciousness will no longer exist.

Statue of Cato the Younger, a honorable man, about to kill himself.

Epictetus did not share these fears. He said, “I must die, must I? … if soon, I dine now, as it is time for dinner, and afterward when the time comes I will die.”

Stoics calmly thought about death. Why does wheat grow, Epictetus asked. Is it not simply so that it can ripen and later be harvested? He was saying that, just like wheat and all living things, we humans grow, ripen – or mature – and eventually die.

To pray for a man not to die is, Epictetus said, to pray for them not to ripen. We regard it as normal that wheat is harvested or dies and give it barely another thought. The only difference between wheat and us is that we are capable of reflecting on our own mortality.

But this does not change the reality; just because we have consciousness, and wheat does not, why should we waste time and energy fearing our deaths?

Stoics argued that you should constantly remind yourself of the impermanence of things, including humans. This way, you will better accept death and better appreciate life.

Epictetus said that, when it comes to things and people to whom you are attached, you should remind yourself of their nature. When you kiss your wife or child, he said, tell yourself you are kissing a mortal. You won’t be so upset if they are taken from you.

This seems a little shocking at first. But what Epictetus is teaching is not that we should be indifferent toward humans. Rather, he is suggesting two things.

Firstly, we face the reality that our loved ones are impermanent. And secondly, for this very reason – that our partners or children may die – we should regularly remind ourselves that they are precious.

We should, according to Stoics, take mortality seriously. But instead of finding stress in anticipation of death, we should find care and appreciation in life. Pause and reflect; put yourself in the shoes of others, and you will better handle provocation and misfortune.

In modern life, it is easy to be provoked to anger or frustration by any number of day-to-day irritations, from an insulting colleague to the inconsiderate passenger in a matatu eating smelly food.

If you break a glass, one you are a little fond of, you might react with some small sadness or irritation at your clumsiness. But were you to see a friend breaking a glass, you might quickly say “bad luck, never mind” and then think nothing more of it.

There’s a lesson in the way we react to others’ small misfortunes. We should accept our own misfortunes with greater equanimity.

So next time someone is rude to you, and anger starts to rise inside you, stop for a minute. Reflect on your situation, and put it in the context of others’ misfortunes, and you may find you can remain calmer amid the misfortunes of life.

4. Friendships

How many true friends do you have? In an age of social media connectedness, it can seem that the word “friend” is somewhat vague. Friends and acquaintances are often confused.

Ancient Greeks were lucky enough to have a richer vocabulary than we do, and the philosopher Aristotle talked of three types of friends, only one of which the Stoics regarded as important.

First, friendships of utility. These relationships based on mutual advantage. You and your favorite hairdresser, you are not friends as such, but you get along, chat about your lives, and, of course, you both benefit from the relationship. So are some work colleagues.

Second, friendship of pleasure. Your drinking friends, the girls you go out for a drink with. We’d call them friends, but the relationship doesn’t have to be particularly deep, it just has to bring some pleasure in the here-and-now.

Third, friendship of the good. We might call friends in this category our true or closest friends – the people with whom we find an affinity in personality that doesn’t require a business relationship or a mutual hobby for support. These ones, we are tolerant to their weaknesses.

Only the friendships of the good deserve to be called friendships. They would not deny the importance of the others but class them as preferred indifferent: perfectly reasonable things to have, but less important than the virtuous aspects of your life.

What do you do when you are with friends? You should, Epictetus argued, speak less about gladiators, sports and foods, and more about the important things in life.

We don’t talk much about gladiators today, but we do spend a lot of time talking about sports stars, actors and other celebrities. For Epictetus, such subjects were banal and empty. It may be easier to chat about Beyoncé’s latest album than, say, the pursuit of a good life. But Stoics weren’t much concerned with what was easy, preferring what was rewarding and virtuous.

Where conversations are about challenging topics, over time, you might find friendships more rewarding.

Stoicism can guide us toward a better life. In accepting what we can and cannot control, focusing on behaving with virtue, and by reflecting carefully on emotions and experiences, we can make better decisions and live a more virtuous life.

From Slavery to Racism: Unearthing Forgotten History of Black Experience.

By Thura Nira

1. Recalling the Ages of extremes for black experience

When you delve deeper into the historical context, you’ll discover that the distinction between “us” and “them”, between a white nation and their black counterparts, is illusory. Sadly, the Black people’s role in history of these nations is often overlooked or forgotten.

Yet, an identity dichotomy of the “us” versus “them” has recently been sweeping. The revisiting of narrative of identities often results into revisionism of historical contexts. The people of African descent have become deeply intertwined in the history of the western world, and it’s increasingly impossible to tell a credible version of that history without referencing the black experience.

This essay offers an analysis of the historical context of the black experience by reviewing a Book by David Olusoga: Black and British: A Forgotten History.

Cover of Olusugo book, which inspired this essay

2. The Agony at Garden of Bunce, the Mouth of Sierra Leone River

There’s an island at the mouth of the Sierra Leone River. It is called Bunce Island. This island contains the ruins of a fortress that, for over a century, was at the heart of the British slave trade in Africa.

From that fortress, tens of thousands of enslaved Africans were shipped to plantations in the Caribbean and the Americas. Between 1618, which marked the rise of the British slave trade, and 1807, when the country abolished it, Britain was the premier slave-trading nation in the Atlantic. Half of all the millions of Africans carried into slavery in the eighteenth century were transported on British ships.

Nonetheless, Britain’s role in the slave trade is often glossed over or ignored. This is evidenced by the fact that Bunce Island itself remained forgotten for generations. It wasn’t until the 1970s that archeologists rediscovered the site and identified it as a major British slave fortress in West Africa, a site that the historian Joseph Opala called the “Pompeii” of the Atlantic slave trade.

Even today, most British people have a far clearer picture of American slavery than they do of their own country’s involvement in it. This is compounded by the fact that historically, British plantations were located in the West Indies, in places like Jamaica and Barbados, far away from the British populace residing in Britain.

Bunce, the Island of no return. Photo: courtesy

3. The Victorious Company of Horatio Nelson

But black people were not just victims of the British slave trade. They were also important actors in British history. The explorer Francis Drake’s famous mission to circumnavigate the globe in 1577 included four Africans as part of his crew. And in another journey to Panama, Drake formed an alliance with mixed-race Africans known as the Cimaroons in order to outwit the Spanish in Central America.

 Black sailors accompanied Admiral Lord Horatio Nelson, renowned for his defeat of Napoleon’s French navy in 1805, during his battle against the French at Cape Trafalgar. Among those who served under Nelson that day were 18 men who were born in Africa and another 123 who were born in the West Indies.

One African and six West Indians served directly under Nelson on his ship HMS Victory. In fact, Nelson’s Column, the landmark in central London that commemorates his achievements, includes a brass relief depicting a black sailor standing near Nelson at the moment of his death at Cape Trafalgar.

Both as victims and as actors, black people have been central to British history. It’s high time their story is heard. Tudor and Elizabethan England’s attitude toward black people was complex and contradictory.

Admiral Nelson and his solders in a battle.

4. Blacks in the age of Tudors

Historical records provide us with only the faintest glimpses into the lives of black people living in England between the years 1485 and 1603, when the Tudors – including the famous Queen Elizabeth I – ruled.

The glimpses are fleeting, but point to the fact that most black people in Tudor England were employed as domestic servants, occupying the lower social rungs.

Nonetheless, a tiny handful of black Britons reached the very top of Tudor society. Among them was John Blanke, who probably came to England as part of the entourage of Catherine of Aragon, who had arrived from Portugal in 1501 to marry Arthur, Prince of Wales.

Blanke became a trumpeter in the Tudor court. When, following the death of Arthur, Catherine married Henry VIII, Blanke performed at the celebrations marking the birth of Prince Henry, the second child born to Henry and Catherine.

During the period preceding the rise of the Atlantic slave trade, attitudes toward black people were complex and contradictory. This is reflected in the work of the most celebrated playwright of the Elizabethan age, William Shakespeare.

Before racism. John Blanke, a jester in Catherine of Arragon’s court.

5. From Othello, Moor of Venice to the Prince of Morocco, the Black ‘Devil’

Shakespeare’s play Othello, about the “moor of Venice” – a black man who becomes a high-ranking general in the Venetian army – points to the ambivalences in the Elizabethan view of people of African descent. 

On the one hand, the play’s fixation on Othello’s dark skin and his exotic origins reflects Elizabethan anxieties around blackness. Othello marries, then murders, his white wife, Desdemona. This violent and tragic end to the marriage between a black man and a white woman points to Elizabethan fears about interacial mixing.

On the other hand, Shakespeare depicts Othello with empathy and nuance. He is valiant, dignified, and honorable, in stark contrast to Iago, his evil subordinate, a white Venetian who harbors destructive hatred for Othello and who leads him to mistrust Desdemona. 

With the rise of the slave trade, however, any nuanced views of black people, along with any empathy, would disappear altogether. A burgeoning slave trade led to the hardening of racist ideologies.

Othello and Desdemona

6.The days before Granville Sharp and William Wilberforce

In 1637, out of a population of 6,000, there were only 200 enslaved Africans in Barbados. By 1680, there were 38,000 enslaved people on the island, vastly outnumbering the white slave-owning class. 

This drastic increase in the number of enslaved people points to the rapid expansion of the slave trade during the second half of the seventeenth century. This expansion had grave consequences for relations between white and black people. Prior to the rise of slavery, society was divided along class lines – white indentured servants, for instance, occupied the lower rungs of the social hierarchy along with black people.

In 1661, however, Barbados sugar planters passed the Barbados Slave Code. For the first time, this code drew a distinction between “white” servants and “negro” slaves. All white men of all classes were given rights that were denied to all black people.

“White and negro” became the new dominant categories, thus splitting society along racial lines. As such, the rise of the British slave trade was accompanied by the rise of a racial ideology that stratified society according to white and black.

While many black people were condemned to slavery in British colonies abroad, by the mid-1700s, there were also between 3,000 and 4,000 black people living in Britain.

Most of these black Britons lived extremely constrained lives as enslaved people or low-ranking servants. During the first half of the seventeenth century, black servants even became a status symbol favored by the privilege.

William Wilberforce

7. ‘Father! Father! Why have you forsaken me!’

Wealthy slave owners liked to pose with enslaved people for portraits. In George Stubbs’ 1759 painting Henry Fox and the Third Earl of Albemarle Shooting at Goodwood, for instance, a young black man holds the reins of his master’s horse. In Joshua Reynolds’ Portrait of the Prince of Wales, another young black man in elaborate livery adjusts the grand costume of the Prince of Wales himself.

In a cruel practice, some of the enslaved people who lived in England during this time were marked out as human property by brass or copper collars that were padlocked around their necks. The extent to which black people were dehumanized under slavery is reflected in an advertisement put up by the goldsmith Mathew Dyer. In the ad, Dyer offers his services to produce “silver padlocks for Blacks or Dogs.”

The rise of slavery and the racist ideology that accompanied it, therefore, drastically constrained the lives of black people both in the colonies outside of Britain and inside Britain itself. 

8. A bow to Lord Mansfield! The Mansfield Judgment of 1772

One day in London in 1772, James Somerset, an escaped slave, arrived at the doorstep of an abolitionist named Granville Sharp. For over 20 years, Somerset had been enslaved under Charles Stewart in the colony of Virginia.

In 1769, Stewart brought Somerset with him to London. Two years later, Somerset escaped but was recaptured by Stewart. Having managed a second escape in that same year, Somerset sought Sharpe’s aid in helping him maintain his freedom.

Sharp took Somerset’s cause to the British courts. While slave-dependent British colonies such as Virginia and Barbados had evolved clear laws designed to protect the slave system and to ensure the rights of slave owners over slaves, Britain had not.

This meant that when slave owners brought slaves on to British soil, their legal rights over their slaves were unclear. Could an enslaved person continue to be held in captivity on British soil, if Britain had no explicit law authorizing slavery? Did slave masters have a right to have escaped slaves in Britain forcibly returned to them?

Granville Sharp, along with a team of other advocates and lawyers that he assembled to defend Somerset, argued that Charles Stewart had no rights over Somerset now that Somerset had escaped from him on English soil. Stewart’s lawyers argued that Somerset was legally Stewart’s property, and as such, he should be forcibly returned to him. 

The court case was presided over by Lord Mansfield, an esteemed judge who found himself at the center of a national drama. The court gallery was packed with spectators at each session, and the proceedings were reported in all the major newspapers.

When both sides rested their cases, Mansfield took a month to reach his verdict. He ruled that because, unlike the colonies, there was no “positive law” affirming slavery on British soil, “the black must be discharged.” That is, James Somerset was a free man; Charles Stewart could not force him back into slavery.

To those who heard it and read about it later, the judgment seemed to grant freedom not only to James Somerset but also to all enslaved black people in Britain. Although the exact scope of Mansfield’s ruling has always been subject to debate, at the time, the popular understanding of the judgment – particularly by enslaved people and their abolitionist supporters – was that all those in England were free. 

Whatever Lord Mansfield’s intentions, his ruling constituted one of the first and most important victories for enslaved black Britons against their masters. 

Inspiration of the Somerset v Steward case.

9. The massacre by the crew of Zong

In 1781, the Zong, a slave ship, sailed from Accra, in Ghana, with 442 enslaved people on board – twice the number a ship of that size was designed to carry. After a series of navigational errors by the crew, which led to the ship spending more time at sea, freshwater supplies began to run low, and disease spread among all those on board.

To preserve supplies and ensure that at least some enslaved people reached Jamaica alive, the crew of the Zong undertook a terrible action. They cast 133 of the most diseased and frail captives overboard, into the ocean.

The events aboard the ship only came to public attention in 1783, when the owners of the Zong filed an insurance claim for the loss of “cargo,” demanding 30 British Pounds for each captive the crew had thrown overboard. When the cold financial reasoning behind the massacre came to light, there was public outrage.

The Zong massacre, along with reports of other terrible aspects of the slave trade, were key to galvanizing the abolitionist movement in Britain. That movement, which began as a campaign by minority religious groups, was formally born in 1787.

That year, nine Quakers and Evangelical Christians, including the abolitionist campaigner Granville Sharp, formed themselves into the Society Effecting the Abolition of the Slave Trade.

An illustration of the Zong Massacre

10. Black Masters in the abolitionist campaign.

Former enslaved people, Olaudah Equiano and Ottobah Cugoano, both wrote autobiographies that became bestsellers. Along with others, they formed the group the Sons of Africa, which was made up of people who had experienced slavery or were descended from slaves. Members of this group travelled the country, speaking about the horrors of the trade. 

The abolitionists waged a highly successful public campaign, pioneering, for instance, the use of the mass petition. Between 1787 and 1792, 1.5 million British people signed petitions against the slave trade, out of a population of 12 million. The abolitionists also deployed the boycott as a weapon, blacklisting rum and sugar produced by enslaved people.

It was through the tireless efforts of both black and white abolitionists that, in 1807, the Slave Trade Act was passed in parliament. This bill officially ended the nefarious trade. It took another 26 years of abolitionist campaigning for parliament to pass the Slavery Abolition Act in 1833, though. This second bill went beyond the first by ending slavery all together. All enslaved people in British dominions were set free in 1838

Despite abolishing slavery, Britain continued to be economically complicit in American slavery.

11. Eli Whitney Invention and its impact on slave trade

In 1792, Eli Whitney, a school teacher in Savannah, Georgia, invented a simple machine that separated useless cotton seeds from the valuable cotton fiber in which they were trapped. This process had previously been done by hand in a laborious procedure that slowed down the cultivation and harvesting of cotton. Whitney’s cotton gin – “gin” being short for “engine” – reduced the time it took to separate seeds from fiber by a factor of eight.

Whitney’s invention transformed the economics of cotton production. The invention gave American cotton slavery – which many had assumed would slowly decline – a terrible second wind. In the wake of Whitney’s cotton gin, more and more planters turned to the lucrative business of cotton cultivation. As a result, in southern states such as Louisiana, Alabama, and the Carolinas, the demand for slave labor rose. 

This growth in the production of cotton led to a merging of interests between American slave owners and British manufacturers. Cotton from American plantations was shipped to northern British towns such as Manchester, Lancashire, and North Cheshire, which, during the Industrial Revolution, became the boom towns of cotton manufacturing. Between 1848 and 1858, the proportion of cotton that came from the United States into Britain never fell below 73 percent, and climbed as high as 97 percent.

Three decades after abolishing slavery and half a century after abolishing the slave trade itself, Britain was up to its neck in American cotton slavery.

Indeed, the extent to which Britain was embroiled in southern slavery became apparent with the outbreak of the American Civil War in 1861. The war dealt a massive blow to the British economy. By 1862, 70 percent of the cotton industry labor force in Britain was out of work because of disruptions in cotton cultivation in the southern United States.

It was for this reason that many large northern manufacturing towns, such as Liverpool, supported the southern Confederacy in the Civil War. The British government itself took a position of neutrality, refusing to support the Union forces of President Abraham Lincoln against the Confederacy – despite having outlawed slavery in its own dominions.

Slaves in a cotton field

12. The rise of colonialism and control of African territory

In 1884, the British and Foreign Anti-Slavery Society held an “anti-slavery jubilee” in London to celebrate 50 years since the abolition of British slavery. Three months later, on the other side of Europe, the Berlin Conference of 1884 was convened.

It involved diplomats and politicians representing the “Great Powers” – European countries such as Britain, Germany, France, and Belgium, among other states. This conference – which did not include a single African representative – was aimed at dividing up the continent of Africa among the Great Powers.

It marked the beginning of the “Scramble for Africa” – the period in which European colonial rule over the continent spread exponentially. In 1870, 90 percent of the continent was under African rule, and only 10 percent under European control. By 1900, the opposite was true – Europeans controlled 90 percent of the continent.

During that period, nine million square miles of land were added to the European empires. No country was more successful in the scramble for Africa than Britain. By 1900, one in three Africans was a British subject. This added up to 45 million new subjects.

The rapid increase of Britain and other European powers in Africa was made possible by technological advances. Shallow-drafted, steam-powered riverboats turned Africa’s rivers into highways along which European powers could penetrate the continent’s interior.

Medical advances, and the development of quinine, in particular, allowed Europeans to survive in tropical regions without succumbing to diseases such as malaria, which had seen off their predecessors. The final element was the development of the Maxim machine gun, a piece of military technology that allowed small numbers of European soldiers to overwhelm enormous African armies.

Berlin conference of 1884

13. The nexus of the rise of colonialism and the rise of social Darwinism.

Charles Darwin’s Origin of the Species, which presented the theory of evolution by way of natural selection, was published in 1859. Colonizers, to affirm their own dominion over “lower” races used Darwin’s theory. The act of conquest itself was taken as proof of the superiority of Europeans.

As such, a harder, more biological view of race emerged. This was reflected in the popularity of “human zoos” during this period. In these colonial exhibitions, “natives” from the colonies were displayed for the entertainment of British and other European audiences.

Colonialism, therefore, marked a new chapter in the relationship between Britain and African peoples – one in which Britain nonetheless continued to exploit and dominate. 

However, Lincoln’s Emancipation Proclamation, issued on 1 January 1863, which emancipated all American enslaved people, changed everything. After that declaration, the American Civil War was explicitly understood as an armed struggle against slavery. Finally, Britain aligned itself behind the north, seeing the emancipation of southern enslaved people as the final realization of its abolitionist mission. 

The honorouble President Abe.

14. The abuse of black ‘clansmen’

During World War I, one million Africans were recruited as “carriers” – porters carrying supplies to British troops fighting the Germans in Africa. Nairobi, the capital city of Kenya, has a region still named in honour of these carrier corps.  Of those, at least 100,000 died during the war.

In Europe itself, the British War Office refused to allow black men to fight against the Germans. While the War Office created a special regiment for black servicemen – the British West Indies Regiment, or BWIR – it was used as a labor battalion to support white troops.

British authorities believed that allowing black soldiers to fight white men, including the German enemy, would undermine racial prestige, which would, in turn, threaten British control over black subjects in the colonies.

Despite the War Office restrictions, some black people did manage to circumvent the military color barrier. The most famous black British soldier to serve in the war was William Tull, whose grandfather had been a slave in Barbados.

Tull achieved the rank of second lieutenant – a rank that technically should have been impossible for a black Briton to achieve, given that army regulations stipulated that all candidates for officer rank must be of “pure European descent.” On the Western Front, he led white soldiers into combat against the Germans. In March 1918, he was killed in combat in France. 

In spite of their support and contribution to the war effort, black troops were treated with disdain in the aftermath of the conflict. For instance, no black troops were allowed to march in the victory parade that was held in London in 1919 to mark the defeat of the Germans.

In fact, the end of the war led to a massive backlash against black people. Returning white soldiers were resentful toward black servicemen, particularly because peace brought with it major competition for jobs. As such, black people who had found work during the war because of labor shortages were systematically dismissed after the war to make way for demobilized white men.

African carrier corps

15. The Murder of Charles Wootton and the birth of racism

In a case similar to the murder of George Floyd, killed by racist police in Minneapolis by kneeling on his neck, so was Charles Wootton killed. In 1919, racial tensions escalated to such a degree that black people were routinely attacked by white mobs in cities such as Glasgow, London, and Liverpool. This culminated in the lynching of Charles Wootton, a black sailor from Bermuda, who had served in the Royal Navy during the war.

In 1919, he was set upon by a white mob in Liverpool, which drove him to jump into the water to save himself. As he was floundering, the mob threw stones at him, one of which struck him on the head, causing him to sink and drown.

Racism became much less acceptable in the aftermath of Hitler’s defeat, especially given the atrocities committed in Germany in the name of racial ideology. Nonetheless, in Britain, racism continued to persist in subtle ways. For instance, while there was a massive postwar shortage of workers in the country, the British government was reluctant to allow black workers from the colonies into Britain. 

Still, black workers found their way there. The arrival of the Empire Windrush – a ship carrying Jamaican immigrants – in London in 1948 marked the beginning of a boom in migration from the West Indies over the next decade.

Between 1,000 and 2,000 West Indians entered Britain in 1948, but by 1956 this number would peak at 56,000. This migration was partly driven by a hurricane that devastated Jamaica in 1951 and destroyed the livelihoods of many of its citizens, thus forcing them to look for better prospects abroad. 

These new migrants faced a great deal of discrimination in Britain. In 1958, for example, violence erupted in the city of Nottingham when white men in a bar objected to a black man and a white woman sitting together.

Clashes in the Notting Hill neighbourhood of London also followed, with white mobs attacking black people and their homes. And yet, while black people were, by and large, the victims in these disturbances, politicians dubbed the violence “riots” and blamed black migrants.

Politicians capitalized on the violence to appeal for immigration controls. In 1962, Parliament passed the Commonwealth Immigrants Act, which curtailed immigration. Further restrictions followed in 1968 and 1971.

In the media, politicians affirmed the need for these controls. In a 1978 interview, Margaret Thatcher, not yet prime minister, insisted that the British populace was “swamped” by immigrants. Given that, at the time, immigrants made up only 4 percent of the population, such a characterization was an exaggeration. 

In reality, black people’s long relationship to Britain – forged largely through the oppression of slavery and colonialism – meant that they were far from some politically imagined “alien horde.” Their fates, and their lives, have always been deeply tied to Britain. 

People of African descent are entirely central to the history of the British Isles. While Britain’s story is shaped deeply by those Africans it enslaved during the transatlantic slave trade, as well as the African and Caribbean peoples it colonized, their influence is often set at the margins of British history.

Black Britons were not only victims of British dominance; they were also actors who fought to end the horrors of the slave trade as well as defend Britain against its enemies. Ultimately, the story of British history cannot be told without them. 

16. My Dear People, Be wary of biases in mainstream telling of black history. 

When you read a history book. Or watch a historical documentary. You probably take what you read or hear to be the full story. However, mainstream historical accounts often sideline the stories of marginalized peoples and populations.

When you dig deeper, you will often discover that the groups that seem to be in the margins of history are, in fact, at its very heart. So always pay attention to who is telling history and be vigilant for hidden stories. 

Primary Reference:

           David Olusoga:Black and British: A Forgotten History.

The author is a Senior Writer with the Gatuyuriana. His interests include blasting fake revisionism of history

Statue of Dedan Kimathi Must Fall


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By Baikolia-O-Bamung’o

THERE, in the centre of Nairobi city, stands erected an extremely gruesome and a highly repulsive statue, of a gun wielding ruffian. Dedan Kimathi. The gory glorification of bloodshed of years gone, illustrates the rogue side of slanted and incompetent revisionism of history.

Dedan Kimathi is an imposter. He was nothing but a butcher of the innocents and architect on the massacre of the harmless. Venerating him as a national hero, is nothing but a delusion and a worst form of national psychosis.

Historical revisionism, has led to the so called founding fathers of the nation, such as Kenyatta, finding centre space in the national dialogue. But luckly, consensus has built, that these were nothing but founding villains, with Kenyatta now ably carrying the tag of a leader into death and darkness.

It is this toxic revisionist history that has glorified Mau Mau as front runners to independence, instead of what they actually were, a gang of thieves, savages and cold blooded murderers.

There is something wrong with this country. Seemingly,  the easiest way to accumulate fame and ascend to pinnacles of power is engineer some political violence?  We have seen some people. Some people we know. But whose names we have forgotten. They were propelled to power by crimes against humanity charges.

Mau Mau, were they fighting for Kenya or for Kikuyu nationalism? Did they even care about Kenya? Countries which did not have militancy agitation, such as Uganda and Tanganyika, gained Independence before Kenya. Hence, Mau Mau were a nuisance, not a aide, to independence efforts.

There is a book. It is by Professor Caroline Elkins book, Britain’s Gulag:The Brutal End of Empire in Kenya. She romanticizes Mau barbarity.

Sadly, facts betray her. Mau Mau, a bunch of cowards, could not face other soldiers. They resulted into a cowardly tactic of raiding and butchering fellow Kikuyu kinsmen,  who disapproved their scoundrel savagery.

The only notable thing Mau Mau ever did was raiding Lari station to loot armour. In the end of their savagery, it is only 12 British soldiers had died. But thousands of Kikuyu kinsmen died.

If Dedan Kimathi was alive today, he would certainly be facing crimes against humanity charges, for breaching ALL the Geneva conventions.

Dedan Kimathi was a hero of not shade. His statue at the town center is a symbolism of ignominy and a fallacy of history. It must fall.

Nevertheless, the grandees of Kikuyu nationalism wants continuity of this historical farce as a tool for continued state capture. It is why you will hear them saying. “Tulipigania Uhuru.” “We will not give them power.” As if Kenya an intellectual property. To decide whether to hold solely, or to share.

A true liberation of the country should start by debunking these historical myths. We should stop venerating goons and savages of all kind. Both the living and the dead. Mau Mau were nothing but bunch of savages, crooks, and criminals. The Statute of Kimathi, must fall!

The writer is an historian and an enemy of bogus revisionism of history

Why the Year 2020 is Moving Too Fast

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Photo: Courtesy

BEAUTY, the adage goes, lies in the eyes of the beholder. Nevertheless, research indicates, individuals bestowed with certain physical features are more likely to be perceived as having beauty. These features are having a facial symmetry, oozing youthful looks, and a general form that does not deviate from the norm. These, will get one more right swipes on tinder.

FACE, is the reception of a human being. By it, we know the moods a person, their health status, and the age. Baikulia-O-Bamung’o, a consultant for this journal, has a gift. He can estimate one’s age, with admirable degree of accuracy, with a single stare on the face.

BUT, the face is not static. The appearance of the face, and neck typically, changes with age. Loss of muscle tone and thinning skin gives the face a flabby or drooping appearance. Equally, as one ages, the skin pores widen, the skin develop crevices, the looks lose their glare, with a gradual decrepitude, waste and decay. The face loses its plump, smooth surface.

CLEOPATRA, the majestic queen from Macedonia, who reigned over Ptolemaic Kingdom of Egypt, was on verge of unleashing the elixir of mortality, which would have deterred bodily decay as one ages, but she will get entangled in fatal romance with Mark Antony, the successor of Caesar.

PERCEPTION, of time, is one thing that changes as one ages. A 21 year old lass will drown with glee when offered an employment contract of one year, and the period will look like eternity. Then give e a 28 year old woman same offer, and there may be snide, at the brevity of the offer.

OLDER people perceive time as moving faster. That is, the rule. There are psychology effects. It often leads to accumulation of regrets. It also has occasions sighs, that one has not accomplished much, to justify their years. Perhaps, its its nudges life keeps offering. Mind time and clock-time are two totally different things. They flow at varying rates.

WHY, now, has this year 2020 moved so fast? Has it? Please check your age! But you can speed up the time. How? Venture, and create more memories.

Kenya should adopt Proportional Representation electoral system

By gatuyu t.j

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Just look at the Kenya’s National Assembly. It is composed of 349 Members. These comprise of 290 members elected from single member constituencies across the country. There are 47 women representatives elected from each of the 47 counties. There are 12 members nominated to represent special interests – youth, persons with disabilities, and workers.

You have noted. This number is too big to debate in one chamber. Why all this number, when the number of days that MPs attend Parliament and committee proceedings, is just 3?. The size alone is too big to allow for thorough debates.

There are 67 Senators. There are over 2,200 MCAs. Kenya has over 2,600 representatives. This is a ratio of about one representative to about 16,000 Kenyans. This is raising questions as to whether Kenyans are over-represented. If one looks at both the county and national levels, then there is need to recognize the sentiments about over- representation.

The Constitution of Kenya 2010 retains the majoritarian system of elections (First-Past- the-Post or FPTP).

The Yash Ghai CRCK report states. During the constitutional review process, there were mixed views on the kind of electoral system that should be used.

While some were in support of retention of the majoritarian system, others called for Proportional Representation (PR), where members of the National Assembly are elected through party lists as opposed to single member constituency system that is currently applied. Others recommended a representation system that has either both elements (FPTP and PR) or Mixed Member Proportional Representation (MMPR).

An ideal electoral system should ensure or promote representation of the people and all major interests in a political system. The system operating in the framework of a republic should, therefore, be as inclusive as possible by making it possible for as many of the divergent interests and concerns as possible to be represented.

Identifying these interests is critical to ensure no one interest group dominates the rest, as this would be unrepresentative and undemocratic.

There are a number of challenges with the majoritarian system. These include a lack of incentive for candidates to cooperate with their parties, ethnic voting patterns and ethnic considerations that lead to exclusion of smaller voter groups, gerrymandering of constituency boundaries to favour certain candidates, disadvantage to smaller parties, among other factors.

While most of these challenges could still manifest in PR system in a different form, the focus on individual candidates and ethnicity, to the exclusion of other factors, led to favouring of larger parties and ethnic personalities who are perceived as strong politically.

The majoritarian system have their benefits.  The system, for instance, encourages accountability since the candidates are directly accountable to their voters (as opposed to a political party). A balance between majoritarian and PR system of elections is ideal.

Therefore, there should be first past the post seats. There should also be an additional seats filled through a system of Proportional Representation, in accordance of votes a party garners in an election. This way, part of the members would have been directly elected through the constituencies and a part of them through the party lists.

The Kenyan Constitution does not have an option of mixed member or proportional representation. Yet, there is credible evidence that Proportional Representation System or Mixed Member Proportional Representation system is good for societies such as Kenya that are deeply divided along ethnic and other social lines.

The 12 seats (out of a total of 349) left for nomination of special interest groups are hardly enough to accommodate the diversity of the Kenyan society. It is not adequate to represent the interests of all groups in a constituency. FPTP is also not good for national cohesion, because it encourages individuals (FPTP) to mobilise support along clan, religious and ethnic lines. It encourages parties to form on basis of these cleavages.

In the long term, Kenya should consider adopting either a pure PR system or a Mixed Member Proportional Representation System in order to allow all groups equitable chance of representation.

The current system results in exclusion of certain groups, particularly those who do not support the winning individual. The proposed options will strengthen the institution of political parties and provide equal opportunities for all groups to be represented. This proposal will also allow for adequate and effective representation of ‘Special Interests’ than is the case at present

The End of the Last God of the Gaps -And the Downfall of Religion

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Insignias of Religions

Early humans had a relationship of wonder with their universe, especially with phenomena they couldn’t rationally understand. To solve these mysteries, the ancients created pantheon of gods to explain anything. We ended up with a god of thunder, tides, earthquakes, volcanoes, infertility, plagues, love, among others.

Thus, wherever there were gaps by ancients in understanding the world around them, they filled those gaps with God. This typically led to phenomena of the ‘God of the Gaps.’ However, as scientific knowledge increased, gaps in understanding of the natural world gradually disappeared, so pantheon of gods began to shrink. As gaps in understanding narrowed, gods that were created to fill a void in understanding shrunk.

But these gods did not ‘go gentle’. It is always a messy process for a culture to abandon its deities. Spiritual beliefs are etched deeply on peoples psyches at a young age by—hammered by parents, teachers, religious leaders. Hence, it becomes difficult to disengage from such beliefs without leaving a portrait of deviance in the wake, or suffering a social backlash. Religious shifts occur over generations, often with bloodshed.

As the gods of the gaps vanished, Zeus, the god of all gods, from whose image Abrahamic religions (Christianity, Islam, Judaism) are fashioned, has proved resilience despite the narrowing gaps in understanding of the universe.

Zeus, the most feared and revered of all the pagan deities, has resisted his own extinction, and mounted a violent battle against the dying of his own light, precisely as had the earlier gods Zeus had replaced.

The resilient of Zeus has presented unprecedented illogical scenarios. Unlike before, how can we have modern human minds, that is capable of precise logical analysis, and yet simultaneously permits acceptance of senseless religious beliefs that should crumble beneath even the slightest rational scrutiny?

We have an otherwise enlightened society. We have people admirable mental aptitude. Yet, they suffer no shame feeding their children harebrained junk such as christian analogies of the Resurrection, the Virgin Mary, Noah’s Ark, the parting of the Red Sea, heaven, and hell. How can an otherwise intelligent mind take mythologies, hook, line and sinker.

How can a modern rational individual, be an adherent to a religions that hosts wild claims—humans rising from the dead, miraculous virgin births, vengeful gods that send plagues and floods, mystical promises of an afterlife in cloud-swept heavens or fiery hells?”

Initially, it has been because even with modern rationals, there are still gaps in appreciation of nature, and Zeus has to fill such void. Secondly, wherever Zeus has been threatened, he has been spread by the brute of violence and political dominance. It is why the two leading religions, Christianity and Islam, were spread through conquests, bloodshed and by brute force of political dominance.

These arsenals are no longer viable. There is no society which is invading another to spread religion. The growth of science and advent of globalization has caused immense knowledge spread, hence closing the gap of understanding, held by Zeus.

Hence, without tools of dominance and with increasing closure of gaps of understanding. Science has filled huge void that was there. In this case, Zeus, the last God of the gaps, cannot be sustained. This will eventually lead to the collapse of the religions.

 

 

Why Governor Waititu is Right in Resuming Duty

Governor Waititu in Court.

Governor Waititu is right in resuming his duties. The power of people holding elected offices is derived directly from the people. That is why there are established mechanisms for removing them from office.

In canons of statutory constructions, there is the golden rule. A judicial official should not give meaning to a provision of a statute that results into an obnoxious results.

Assume a governor without a deputy, like Sonko, or both governor and their deputy are charged, would the county remain without leadership? The speaker of the assembly cannot assume because there is neither vacancy nor inability to act.

By asking the governor not to attend to his duties, it amounts to technically removing him from office through back door. If a governor can be removed from office by a resident magistrate, it makes a complete mockery of democracy.

Where a governor is charged, it forms a ground of removal from office, the process that is outlined.

The difference between the president and a governor, is the president is given a constitutional immunity from any prosecutions.

This doesn’t mean presidents don’t commit acts of thievery or other malfeasance. But is is logical to ring fence them from disruptions of prosecutions.

The court order barring Waititu from discharging his duties is not constitutionally grounded. Waitutu’s power is derived directly from the people of Kiambu, and only the People of Kiambu, through their MCA’s, can initiate a process of removing from office.

The enthusiastic resident magistrates should exercise some restrains, and not issue court orders, whose header is an invitation to dishonor them.

An alarming precedent. Asking the governor to keep away from office is asking him to abdicate his constitutional duties and obligations to serve his electorates.

Why the Treasury’s appetite for betting taxes is no solution to gambling problem

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By gatuyu t.j

Drawing parallels between financial markets investing and gambling is an analogy disliked in the world of finance. Yet, at a basic level, gambling and investing are identical activities, both involving wagering an outcome in an environment of uncertainty.

Speculator investors buy stock for the same reasons that gamblers bet on a certain football teams to win or choose lottery numbers. Both have same illusions. Whereas in financial markets the goal is to beat the market, in gambling the goal is to beat the odds.

Notably, investing in instruments such as derivative markets has the same potential for negative externalities as gambling, yet it has been accepted and even embraced as the newest way for investors to act either rationally or irrationally in the capital markets.

With these similarities, why does society view investing and gambling differently?

Regulators characterise investing as an enterprise of skill in which those who are diligent may earn deserved rewards, while gambling is an enterprise of chance that encourages lazy and untalented people to divert useful capital with undeserving few reaping ill-gotten gains foolishly lost by vast majority. This divergence is paternalistic, more triggered by classes of people participating and profiting in these activities.

Henry Rotich, the Treasury Cabinet Secretary, has in almost every budget speech lamented at how betting has created negative social effects to the young and vulnerable, before imposing, often hurried and haphazard, tax measures. There has been an observable heightened frenzy to control betting industry through tax measures. This is visibly creating a hostile environment for the sector’s operations.

The proposed excise duty adds to the heavy tax burden in the sector. This includes a 15 per cent betting tax levied on gross gaming revenue, 30 per cent corporation tax on profits, and 20 per cent withholding tax deducted winnings.

There are some notable anomalies with these tax measures. Betting is a form of entertainment. Levying entertainment taxes is a mandate of the county governments. Were counties to enact laws to impose entertainment taxes from betting revenue, it would add to this taxation burden.

Arguably, the betting tax currently levied by the national government, save perhaps for online betting activities, is unsupported constitutionally.

Again, subjecting the gross winnings of a player to 20 per cent withholding tax is inconsistent with best tax practice, for it creates a higher tax burden for the players. This withholding tax ought to be levied on net proceeds, after amount staked is deducted from winnings.

For tax accounting, the amount staked should be deemed to have been wholly and exclusively used for the production of this taxable income and deducted.

Further, charging betting tax on gross gaming revenue and later levying corporation tax is unjust and double taxation. Gross gaming revenue is equivalent of “sales”, not “profit”.

Corporation tax is levied on taxable profit in the company’s accounting year after expenses are deducted. As earlier argued, if betting tax has to be levied, it is the county governments that ought to charge it under the heading of entertainment tax.

Lastly, the proposed excise duty on amount staked is what is known as the Pigouvian tax. The purpose of a Pigouvian taxes is to force private markets to internalise the social cost of an activity and reduce negative externalities. It has been effective in areas such as reducing environmental pollution or controlling certain harmful consumptions.

For Pigouvian taxes to be effective in the gambling industry, there is need to appreciate the two consumer types. These are the price-sensitive recreation gamblers and price-insensitive problem gamblers.

Generally, consumption levels of recreational gamblers are disproportionately reduced by increase in cost while problem gamblers are to a bigger extent cost-insensitive. The consequence is recreation gamblers may exit the leisure and leave problem gamblers to fund the tax, bringing about inequity of incidence.

Since problem gambling triggers negative externalities, Pigouvian taxes should be applied for forms of gambling popular with problem gamblers.

Applying it across board will not achieve optimal results because negative externalities are not uniformly spread. Hence, the proposed excise duty will be a blunt tool as a Pigouvian tax.

The trend of taxing betting firms in Kenya betrays that these high, duplicating taxes are more of intention to capture economic rents than maximise economic welfare.

However, even without benefit of econometric model, the multiple taxes in Kenya’s betting sector have possibly reached the peak of the Laffer curve. A Laffer curve illustrates that revenue will increase with rate of taxation until a certain point, where further increase in tax rate will lead to drop in revenue collected.

The Treasury should therefore be sincere and drop the pretence that it is using taxation as deterrence on gambling. Such admission will enable it to create a fair tax regime with features of allocative and distributional efficiency. This will probably enable betting firms to create shared values with their customers and promote industrial competitiveness, hence enhanced revenue.

Equally, any betting tax policy initiative should not be made in a domestic vacuum. As we learn from game theory, it has to grasp possible moves of betting players relocating to offshore jurisdictions if there are significant tax savings of doing so.

This essay was first published in the Business Daily. Available Here

 The Author is the Managing Editor of the Gatuyuriana Journal

Rigid financial rules can stifle innovation

 

Governor
Patrick Njoroge, Central Bank of Kenya Governor

By gatuyu t.j

The microfinance banks in Kenya are not doing well. A report by the Central Bank of Kenya (CBK) reveals their gradual decline in profits from Sh549 million in 2015 to a loss of Sh731 million in 2017.

The CBK, in a consultative note, has formulated regulatory proposals to redeem the sector. These include enhancing corporate governance, increasing capital and liquidity requirements and reducing reliance on deposits and borrowed funds.

In summary, the CBK solution is more and more regulations. This regulatory philosophy needs to be revisited. For excessive, prescriptive, regulatory interventions in financial sector do cause market distortions and stifle innovations. Regulatory enthusiasm in addressing market failures often trigger government failures.

The goal of financial regulation is to ensure the triple objects of financial stability, consumer protection and market integrity. Each of these objects ought to be pursued on structure of a bigger picture as this essay illustrates.

Ensuring financial stability is an essential goal. However, when regulators pursue financial stability as the only overarching goal, financial institutions may become overly risk averse and refrain from discharging their intermediation functions, restraining economic growth.

Prescriptive regulations may make financial institutions consider that compliance with rules is all that is expected of them. In such a case, they may not make efforts to improve their products or services to best suit the interests of customers, limiting the financial industry’s contribution to the growth in national wealth.

The rules must allow flexibility on banks to periodically improve their services. As regulators pursue triple objects, they should not sacrifice bid for better services by market players, effective intermediation and normal market vigour and innovation.

A cursory look at the Kenya’s banking industry reveals a sector with multiple equilibria.

We have some banks making huge profits while others are struggling. A sector with multiple equilibria is ripe for disruption as the market strives for efficiency gain to a better equilibrium.

However, an efficiency shift requires change in strategy. Where prescriptive rules overhang, like in Kenya, they hinder operational flexibility. The effect is that no institution is willing to change their strategy, as the first mover from inefficient models can become disadvantaged and often becomes a prey to dominant firms, creating the prisoner’s dilemma scenario.

The result is that no bank exits from the strategy. Smaller banks are more disadvantaged as they hold on into inefficient business models. That is why supervisory approaches have to be consistent with the ultimate goal of regulation. A way the CBK can create financial stability in banks is addressing vulnerabilities in the financial system.

As successive collapse of Dubai Bank, Imperial Bank and near collapse of Chase bank illustrates, a bank’s failure has domino effects on other lenders due to the inter-connectedness. But the management of the bank may not take this potential spill-over into consideration due to information asymmetries.

Depositors may not have enough information to distinguish good banks from bad ones, yet bad lenders may cause runs on good ones. This is the danger of information asymmetries.

In promoting better services, market forces may not necessarily foster competition towards better services. This is because financial institutions have varying asset management capabilities or their dedication to customers’ interests may not be properly appreciated by customers due to, again, information asymmetries and bounded rationality, limiting differentiated growth of firms.

The question which may arise from this narrative is how the CBK can minimise government failures while addressing market failures. Sadly, the current supervisory approach by CBK on banks, as espoused in among others, prudential regulations, majorly based on compliance checks and asset quality reviews, may no longer be effective.

Mechanical and repetitive application of rules makes the industry to be obsessed with compliance with the letters of the rules (focus on form), backward-looking review of the evidence of the past (focus on the past) and analysis of details and elements (focus on elements).

Focus on forms, rather than substance, makes it easier for bankers to defend their lending decisions by referring to collaterals and guarantees than by presenting bankers’ own views on borrowers’ future business prospects. This promotes complacency on the sustainability of banks’ business models.

Where a banks regulator spends much time criticising specific past incidents of misconduct, they may fail to discuss whether firms meet the changing needs of the customers. The CBK should expand its supervisory approaches from a backward-looking, element-by-element compliance check with formal requirements to substantive, forward-looking and holistic analysis and judgment. This would ensure banks better contribute to the ultimate goal of regulation. To this extent, CBK can adopt a supervisory approach with three pillars.

The first pillar is the enforcement of minimum standards. Such includes accounting standards on loan classification, loan write-offs and loan loss provisioning, capital adequacy requirements, rules on consumer protection and market integrity, internal controls, all as a precondition for adequate business management.

The second pillar is the dynamic supervision. On this, the CBK would avoid imposing a one-size-fits-all solution across the industry by developing approaches to engage in constructive two-way dialogue with an individual financial institution and explore solutions tailored circumstances.

The third pillar is promotion of disclosure and engagement with financial institutions to encourage them to adopt best practices. Basel III, the international framework for prudential supervision of banks, recommends these three pillar approach.

The Author is the Managing Editor of Gatuyuriana and financial markets specialist

NOTE: This essay was first published in the Business Daily. Available here https://www.businessdailyafrica.com/analysis/ideas/Rigid-financial-rules-can-stifle-innovation/4259414-5060636-2cg30o/index.html