Multinational Corporations (MNCs) and Corruption in Africa Zekeri, Momoh Global Network for Peace and Anti-corruption Initiative (GNPAI) Nigeria

Abstract

Multinational corporations (MNCs) are key actors in contemporary International economic relation. Moreover, the motivations for Multinational corporations (MNCs) in Africa have generated debate in the literature.

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Corresponding author:
Zekeri Momoh, National Coordinator, Global Network for Peace and Anti-corruption Initiative
(GNPAI), Jos, Nigeria
E-mail: momohzekeri@gmail.com
Multinational Corporations (MNCs) and
Corruption in Africa
Zekeri, Momoh
Global Network for Peace and Anti-corruption Initiative (GNPAI)
Nigeria
Abstract
Multinational corporations (MNCs) are key actors in contemporary International
economic relation. Moreover, the motivations for Multinational corporations (MNCs)
in Africa have generated debate in the literature. The aim of this study is to identify the
dimensions of Multinational corporations (MNCs) involvement in corruption in Africa.
However, secondary data such as text books, Journals and Internet sources were used
in this study. Besides, content analysis was employed in its analysis while the
Oligopoly theory was adopted. Also, it was observed that some Multinational
corporations (MNCs) in Africa such as Halliburton in Nigeria, Mabey & Johnson in
countries such as Ghana, Madagascar, Angola, Mozambique and South Africa among
others have been involved in various corrupt practices in some countries in Africa in
collaboration with corrupt government officials. Lastly, to combat corrupt practices
involving Multinational corporations (MNCs) and government officials in Africa
requires concerted efforts from both the home and host country.
Keyword
Corruption, multinational corporations (MNCs), government officials, Africa,
international collaboration
Introduction
Multinational corporations (MNCs) are also referred to as Multinational
Enterprises (MNEs) Transnational Corporation (TNCs), or Transnational
Enterprises (TNEs) in the literature. Moreover, Multinational corporations
(MNCS) are key actors in the international system whose activities cut across
their home countries. Besides, MNCs have consistently grown in scope and
influence as a result of globalisation aftermath of the World War II.
However, the origin of MNCs can be traced to late nineteenth century, in
the words of Mclean and McMillan (2009) states that MNCs have become
common only from about 1890. Although, MNCs engagement are mostly
found in agriculture, mining and extractive activities but since the 1950’s
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MNCs have been associated with manufacturing of goods. The evolution of
MNCs in contemporary times partly is as a result of reaction to emerging
increase in barriers in international trade and level of state intervention in
economic activities. These factors necessitated international firm to
manufacture goods locally that were initially exported, in order to remain
relevant and maximize their market share at local market.
Nevertheless, MNCs have been involving in the politics of their host
countries across the globe especially in developing countries where they have
masterminded the over throwing of some government considered to undermine
the interest of their home countries like in Nicaragua in 1989, Chile in 1970’s,
Iraq in 2003, Sudan in 1971 and Nigeria in 1976, among others because of
their ability to transfer huge capital from their home countries to their host
countries. Secondly, tax concessions received from their host countries have
made MNCs the key actors in the contemporary international economic
relations. Thirdly, the economic and financial power of MNCs made it possible
for them to manipulate consumer tastes and entrench materialist values through
the development of brands (Klein, 2000 cited in Spero & Hart, 2007).
The growth of MNCs have made them dominate most of the global
markets such as General Motors, which has an annual revenue that is almost
equal to the combined GDP of Ireland, New Zealand, Uruguay, Sri Lanka,
Kenya, Namibia, Nicaragua and Chad. One advantage of the MNCs in recent
times has all over the world is the capacity to relocate it capital and production
to other parts of the world which has made MNCs arguably to escape most
state control (Spero & Hart, 2007).
However, considering the influence MNCs have in contemporary era of
globalisation, Africa countries serve as a source of cheap labour and low
production cost without resisting them from providing long term investments
or relocate the decision making power from their home country to Africa
(Heywood, 2007). In addition, considering the vulnerability and subtlety of
most African states to the influence of MNCs, most MNCs operating in Africa
often engage in a number of corrupt dealings in their host countries that are
against the terms and condition for their operations.
It is against this background that this study seeks to provide empirical
evidences of how Multinational corporations (MNCs) have been involved in
corruption in Africa.
Growth and Development of Multinational Corporations
The origin of multinational corporation can be traced to late 19th century, in
which their activities focused on agriculture, mining and extractive ventures,
but since 1950’s MNCs have been associated with manufacturing of goods
(DFID, 2000a; Dicken, 1998; Jenkins, 1987, 1992; Potter, Binns, Elliot &
Smith). In 1985, the United Nations identified 600 multinational in the fields of

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manufacturing and mining, with annual sales in excess of US $1billion.
Besides, these MNCs generated more than 20 per cent of the total production
in the global market and an estimated 40 per cent of total trade globally now
take place between the subsidiaries of MNCs and their parent companies
(Corbridge, 1986; DFID, 2000a; Hettne, 1995).
The growth in the number of MNCs globally and in their operations has
progressed steadily after the Second World War. The increase has been very
considerable since mid-1970s. Between 1968 and 1969 the number of MNCs
originating from 14 developed countries was 7276 (Ietto- Gillies, 2014).
However, by 1998, there were about 19,000 MNCs, which accounted for 25 to
30 percent of the GDP of all market and for 80 percent of the trade in
managerial and technical skills (Cohen, 2000).
In 1980s and 1990s, for instance, despite the changes in the volume of FDI
over the years, FDI has increased tremendously than trade. From 1973 to 1995,
annual FDI outflows multiplied more than 12 times (from US$25 billion to
US$315 billion) while the value of merchandise experts multiplied by 8.5
times. About a third of the total global trade consist of intra-firm trade within
MNCs, another third consist of MNCs export to non-affiliate, and the
remaining third consist of trade among national (that is, non-MNCs) firm
(Cohn, 2000: 274; Dunning, 1993, (UNCTAD, 2001; Potter et al., 2004). The
World Investment Report (UNCTAD, 2012) estimates the total number of
MNCs all over the world to be 103,786.
Similarly, Lanz and Miroudot (2011) assert that the emergence of global
value chains and the expansion of activities of MNCs have increased the value
of intra-firm trade flows. Despite growing attention from policymakers, few
data are collected on trade transactions between related parties. They added
that available evidence suggests that intra-firm trade represents a significant
share of international trade but differs widely across countries and industries.
In 2000, top fifty MNCs had revenues estimated at over US$50 billion
each, and the largest-Exxon Mobil- had revenues of over US$ 210 billion.
Also, the sales of each of the top 10 MNCs in 2000 were over US$120 billion,
than the gross domestic product (GDP) of at least 170 countries (Wolf, 2002).
Also, in 2000, FDI grew by 18 per cent, to US $1.3 trillion, although such
flows were driven by more than 60,000 MNCs with over 800,000 affiliates
abroad (Potter et al., 2004: 150).
According to UN study conducted in 1985, nine largest US oil MNCs had
crude oil operations in 40 countries in 1938 and in 96 countries in 1967. Its
subsidiaries in all petroleum-related activities increased from 351 to 1442.
Also, between 1961 and 1971, 460 United States MNCs were established,
11061 Operation oversee, and only 2,703 of these MNCs were in developing
countries (UNTC, 1985).
According to Cohen (1981), South Africa has long been a base for the
operations of MNCs, and even today, two-thirds of its direct investment is still
coming from abroad. It continues to represent the centre of gravity for MNCs
operation in Africa. Nevertheless, recent decades have witnessed a rapid

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increase in the penetration of MNCs to the economy of the African continent,
often with a predominance of the negative effects (Cohen, 1981: 70).
Furthermore, the numbers of Multinational corporations (MNCs) in Africa
has increased over the years in various sectors of the African economy such as
manufacturing, production and service sector. Meanwhile, some Multinational
corporations (MNCs) still have their headquarters located in developed
countries such as USA, Britain, Canada and host of other western countries.
Moreover, quite a number of them have relocated their headquarters to Africa,
especially in South Africa due to cheaper labour among other considerations.
On the whole, various elements have contributed to the growth of MNCs
and their activities worldwide, notably among are (a) the developments in
transportation and in communications technologies and costs, (b) the
organisational innovation within large companies and institutions, (c) the
favourable political environment after the Second World War, and (d) the
liberalisation and privatisation programmes of many developed and developing
countries over the years. Besides, elements (a) and (b) have made control at a
distance possible. They have led to lower costs, including the cost of inventory
holding, while the other four elements together, greatly facilitated and
encouraged companies to invest abroad (Ietto- Gillies, 2014).
Literature Review
Multinational Corporations and Corruption
The MNC as an Agent of Change for host-country Institutions; FDI and
Corruption examine how the presence of MNC may shape the institutional
environment of corruption over time. Their findings show that foreign direct
investment generates positive spillover effects on the institutional environment
of host countries. But their study does not focus on the relationship between
Multinational corporations’ and in corruption in Africa (Kwok and Tadesse,
2006).
Jones (2011) in his study “Multinational corporations and the Foreign
Corrupt Practices Act: A legal look at transnational business” reviews the
history and parts of the FCPA, its effectiveness, and its current and future
impact on American Multinational Corporations. His findings show how the
U.S. government has shown a willingness to investigate and bring actions
against corporations whose presence in the U.S. is limited only to some
representation in the capital markets. However, his study focuses on US
Foreign Corrupt Practices Act and not the dimensions of Multinational
corporations’ involvement in corruption in Africa.
Zhu (2014) in his work “MNCs, Rents and Corruption: Evidence from
China” examines the consequences of MNC activities on corruption by
conducting a case study on China. His study revealed that provinces with more
MNC activities have a significantly higher level of corruption. However, Zhu

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study does not focus on the dimensions of Multinational corporations (MNCs)
involvement in corruption in Africa.
Nwanne (2014) study of the “U.S. Multinational Corporations in Countries
with Low Corruption Perception Index” reviewed the existing literature and
examined the findings of the U.S. Department of Justice on select U.S. MNCs
in violation of the Foreign Corrupt Practices Act (FCPA). His study shows that
bribery as instrument of business practice has adverse impact on the
multinational corporation, the host country, and the home country. The Foreign
Corrupt Practices Act has been instrumental to controlling the U.S. businesses
in bribery conducts abroad. Nevertheless, Nwanne’s study does not examine
the nexus between Multinational Corporations and corruption in Africa.
It is against this background that this study seeks to provide empirical
evidence of dimensions of Multinational Corporations (MNCs) involvement in
corruption in Africa.
Theoretical Framework
There are various perspectives to the study of the growth of Multinational
Corporations (MNCs) and its impacts on the sovereign states. The evolution of
MNCs has attracted attention of scholars, and researchers across various fields
in the social science such as Political Science, Economics, Sociology,
Geography, etc. O’Brien and Williams (2007) assert that three approaches to
the study of MNCs have been produced within the purview of the social
sciences, “profusion of disciplinary, interdisciplinary and cross-disciplinary
research”. They posit that the Economic approaches such as Product Cycle
Theory and OLI model tend to emphasise the market characteristics that have
given rise to the decision to invest abroad, while the organisation perspectives
give more emphasis to the decision-making structure of the firm, and that the
motivational perspectives provide explanations in terms of the individual and
the belief systems they hold. Lastly, the growth and development of modern
MNCs can be viewed from the perspectives discussed above.
Nevertheless, scholars have developed a number of theories to explain the
growth, as well as the impact of MNCs on the state. These theories can be
grouped into two broad categories, namely liberal, structuralist and radical
theories. One of the alternative theories of MNCs to the Liberal theories of
MNCs is the structural theory developed by Susan Strange, whose postulation
about MNCs shift from the decision of MNCs to major structural changes in
the international economy (Strange, 1991, 1994). Strange identifies three major
structural changes that have accelerated international production-falling real
cost of transport and communication: development of new financial instrument
(Spero & Hart, 2007). Susan Strange argues that structural changes in
technology, communications, and finance created the conditions for growth of
MNCs. Susan Strange further assert that a rapid increase in technology spurred
by the revolution in information technology has quickened the pace for
globalised production; increased capital mobility has facilitated dispersion of

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industry and changes in the knowledge structure have made trans-border
communication and transportation cheaper and faster (Spero & Hart, 2007).
The radical theory to study of MNCs focus on centralisation and
concentration or capital, to provide explanation for the growth of transnational
production (Spero & Hart, 2007). Stephen Hymer, a leading proponent of the
radical/Marxist theory of MNCs in his seminal work “The International
operation of national firms (1976) argues that the dominance of America
business ventures abroad arose from the Oligopolistic business structure.
Similarly, Stephen Hymer in his later work titled “The Multinational
Corporation: A Radical Approach” (1979) drew on the Lenin’s theory of
imperialism and gave more attention to systemic factors and emphasised the
uneven development of capital (Spero & Hart, 2007: 181).
One of the Liberal theories to the study of MNCs is the Product Cycle
Theory that was developed by Raymond Vernon (1966) in his work
“International Investment and International Trade in the Product Cycle” which
provided the justification for the expansion of American business overseas.
Vernon (1966) argues that firms through advancement in technology are able
to gain competitive advantage in the American local market. He asserts that at
the initial stage, these firms would be able to sell their goods and services
overseas. He further argues that, the importers of American products will begin
to acquire the needed technology and commence production of these goods
locally, thereby producing their products at a cheaper rate than the imported
goods into the American market, since they do not pay for the cost of
transportation of the goods. Thus, in order to protect the products produce by
the American firms, American firms would be forced to set up factories
overseas. Lastly, at the stage of the product Cycle, foreign firms will
commence the production of cheaper products than the American firms and
begin to export their product to the American Market (O’Brien & Williams,
2007: 180-181).
Spero and Hart (2007) in their explanation of the product cycle theory
assert that firms expand abroad when their principal product become ‘mature’
in domestic markets. During the initial or rapid growth stage of product
commercialisation, the firm attempts mainly to respond to domestic demand.
As growth tapers off, the firm may begins to book for new sources of demand
in export markets. Eventually, domestic demand begins to fall as the market is
saturated and new firms begin to challenge the earlier entrants to the market,
and thus the firm books ways to protect its revenues and profit, by establishing
foreign subsidiaries with lower factor cost, so as to remain competitive in the
home market and to garner better access to foreign market. As overall demand
for the product moves toward zero, the firm will try to move on to new
products or attempts to create new advantages by altering the product (Spero &
Hart, 2007: 129). However, the product cycle theory was developed to explain
changes over time in FDI on the part of the manufacturing firms, and was

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never put forward as a general theory of MNCs or FDI. Also, the product-cycle
theory pointed to its inability to explain non-American FDI (Spero & Hart,
2007).
OLI model is another liberal theory that was developed by John Dunning,
who is one of the prolific writers on MNCs. According to Dunning, the OLI
model draw it strands from economic and managerial factors, which was used
to developed a comprehensive theory (Dunning, 1973, 1981, 1988). OLI is the
acronym for ownership, location, internationalisation. The OLI model focuses
on the decision to invest abroad with emphasis on characteristic and the
desirability of the foreign location. The OLI mode has become the most widely
accepted theory of FDI among Economists (Either, 1986). OLI model is seen
as an expansion on the internationalisation theory (Spero & Hart, 2007).
However, the Obsolescing bargain theory is closely related to the product
cycle theory. According to the Obsolescing bargain theory, a firm that has
invested in a host, country (or abroad) starts with a good bargaining position
with the host of the host country’s government because of firm-specific
advantages such as advanced technology, access to capital, markets, and to
finished product. Besides, once the firm has made investment, the bargaining
benefits may slowly shift to the host country. The technology brought into the
host country may mature and become more easily accessible to host country’s
firms, and the country will in turn learn how to gain better access to global
capital markets and to finished products markets. Lastly, the host governments
will attempts to negotiate more favourable terms with the foreign investors
(Moram, 1974; Spero & Hart, 2007).
Also, the Oligopoly theory of foreign investment asserts that MNCs are
more abroad to exploit the monopoly power they possess through factors like
unique products, marketing expertise, control of technology and managerial
skills, or access to capital (Hymer, 1976; Kindleberger, 1969; Spero & Hart,
2007: 130). Spero & Hart (2007) assert that in the battle for profits and market
share, firms engage in Oligopolistic competition the more overseas, as part of
their overall competitive strategy. They added that firms more aggressively
exploit a new foreign market in the hope that their action will give permanent
advantage over their competitors. They further assert that a company whose
competitors have just entered the foreign market might be forced to go
international as a defensive strategy, in order to block their opponent’s move or
at least prevent the competitor from gaining a survival-threatening advantage.
It can be argued that most MNCs in their bid to have considerable advantage
over their competitors overseas, often result in various corrupt practices that
negate the terms and conditions of their operation in their host countries.
On the whole, the Oligopoly theory is consistent with the OLI model in
that the OLI model asserts that a firm must have some sort of market power
derived from firm- specific advantage (usually based on the firm’s special
knowledge). Many Oligopolistic industries are populated with precisely this
type of firm. What Oligopoly theory adds to the OLI Model is the idea that the
timing of entry into specific foreign markets may depend upon the timing of

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entry of a given firm competitors. It is against this background that the
Oligopoly theory of foreign investment which asserts that MNCs are more
abroad to exploit the monopoly power they possess through factors like unique
products, marketing expertise, control of technology and managerial skills, or
access to capital, is adopted for this study. As MNCs in their bid to exploit the
monopoly power they possess in Africa, they engage in corrupt practices.
Dimensions of Multinational Corporation Involvement in Corruption
in Africa
The proliferation of MNCs in Africa has raised significant questions on how to
deal with the impact of MNCs on Africa’s development (Cohen, 1981: 72). We
are aware of the debate between scholars, from the left and right political
spectrum on the motivation of the MNCs in Africa. Scholars from the right
political spectrum see MNCs as agents of development on one hand, while on
the other hand scholars from the left political spectrum sees MNCs as agents of
imperialism.
Cohen (1981) posits that scholars from the right political spectrum or what
he calls the defenders of the MNCs “point out that MNCs provide scarce
capital, provide equally scarce technology and know-how which provide
access to export markets; and contribute through the taxes paid and the
employment created to local development” (Cohen, 1981: 68). However, this
assertion has been challenged by scholars from the left political spectrum that
the assertions that MNCs provides scarce capital has been debunked.
Therefore, there is no transfer of real resources or capital, rather capital to set
up their business where there is no local capital in their host country. Secondly,
the outflow of capital is often greater than the capital invested.
For instance, MNCs that operated in Latin America from 1960 to 1968, for
each dollar of the net profit generated was based on the investment that was 80
percent financed from the local sources, but only 21 percent of this profit
remained in the country. Thirdly, that the assertion that MNCs helps their host
country to gain access to the international market, has also been debunked on
the ground that “actively discourage export in line with their global marketing
strategies” (Cohen, 1981). Lastly, there was an instance, when some of the
activities of MNCs had negative impact on Africa developmental process.
In contemporary time, there is an on-going debate on the activities of
Multinational corporations (MNCs) in Africa. One perspective holds it that
Multinational corporations (MNCs) are agents of development, another
perspective has it that Multinational corporations (MNCs) are agents of
imperialism, and the third perspective are of the opinion that the activities of
MNCs in Africa should be held with mix-feelings. However, studies conducted
by Corbridge (1986), DFID (2000a), Hettne (1995), Dicken (1998) and
Dunning (1993), among others have shown that the activities of Multinational

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corporations (MNCs) are indispensable in contemporary era of globalisation.
Therefore, our study supports the position of the third perspective which holds
mix-feeling on the activities of Multinational corporations (MNCs) in Africa,
in recent years.
Despite the existence of anti-corruption laws at the domestic level globally,
some government hitherto continue to shield MNCs that engage in corrupt
practices overseas. According to the new African Magazine report (2009)
entitled “who promote corruption in Africa?” asserts that the most
notorious example of some governments shielding their companies that
corrupt foreign national in Britain especially by Tony Blair’s government
in an investigation by the British serious fraud Office (SFO) into a “slush
fund” in Saudi Arabia, amounting to billions of dollars, that was
established by the British armaments production company (BAE) (New
African, 2009: 10). – PLS rephrase
International corruption is not peculiar to activities of MNCs in Africa
alone as MNCs have been involved in various corrupt scandals across the
globe. For instance, during the 2003 Iraq war, the document recovered showed
that high ranking UN, French, Chinese, Russian officials (and America oil
companies) illegally profited from the UN’s $64 billion oil-for-food program
that was supposed to ease the civilians’ plight caused by economic sanctions
on Iraq in the 1990s. A Swiss company under investigation for suspected fraud
in the Iraq-oil-for-foods program lambasted the United Nations for
“mismanagement and poor oversight” of the oil-for-foods program in Iraq
(Goldstein & Pevehouse, 2008: 239-240).
Moreover, Siemens AG, a multinational engineering company based in
Germany, admitted that it used an estimated 1.3 billion Euros illegally in
elaborated bribe-and-kickback system to win foreign contracts across the
globe. For instance, between 2002 and 2006, it was reported that Siemens AG
slush funds, off-book accounting and suitcases full of cash were used to bribe
officials in countries such as Argentina, Bangladesh, China, Iraq, Israel, Libya,
Mexico, Nigeria, Russia, Venezuela and Vietnam, among others.
Subsequently, in December 2008, Siemens AG admitted to have paid to US
and European authorities, an estimated $1.6 billion in fines, an amount as
unprecedented as the number and scope of global investigation into Siemens
AG wrong doing (Cross Road Magazine, 2012: 12).
Also, two former managers of state owned Bank of China Ltd, Xu Chaofan
and Xu Guejun, who used their casinos to launder some estimated at $485
million which they siphoned from a Bank branch in Southern Guangdong
province in the mid-2000s through the aid of corporation in Hong Kong and
Canadian as well as US banks, and later fled to the United States were in May,
2009 caught in Las Vegas and were sentenced to more than 20 years in prison
for financial fraud and other crimes by a US Federal Court (Cross Road
Magazine, 2012: 12).
Importantly, the famous case prosecuted against the French oil company,
Elf, by Eva Joly according to Otusanya, Lauwo and Adeyeye (2012) indicates

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that MNCs had engaged in corrupt practices in developing countries. For
instance, in 1995, Lockheed Corporation was charged for paying $1 million to
an Egyptian official to facilitate the sale of aircraft to Egypt. Lockheed
Corporation pleaded guilty and was fined $24.8 million, a figure representing
double the amount it made on the transaction. One of the corporation’s
executives pleaded guilty and was fined $125 000 and jailed for 18 months.
Conglomerate Baker Hughes Incorporated pleaded guilty to three charges of
corruption and was fined $44 million for hiring agents to bribe officials in
Nigeria, Angola, Indonesia, Russia, Uzbekistan and Kazakhstan. Also, that
Baker Hughes paid approximately $5.2 million to two agents while knowing
that some or all of the money was intended to bribe government officials of
state-owned companies in Kazakhstan (Otusanya, Lauwo and Adeyeye, 2012:
9-10).
Cross Road Magazines (2012) in its report entitled “Corruption: A
controllable Disease?” states that in the 1990s, Vladimiro Montesinos, the
heads of Peru’s intelligence service managed a web of corruption, which
involved drug trafficking, arms trade and other transgressions. A large payment
of the proceeds from his illegal scheme was laundered through shell companies
and transferred to banks outside Peru. Montesino’s fate was sealed when he
caught bribing an opposition legislator on Videotape, which aired on a local
station. He fled Peru in 2000. When Montesino was captured in 2001 by
Venezuelan authorities working with US and Peru law enforcement agencies
and was convicted by a Peruvian Court,” and more than $18 million and asset
were recovered from Montesinos (Cross Roads Magazine, 2012: 12).
However, one aspect of the negative impact of MNCs on Africa economy
is corrupt practices perpetrated by MNCs in Africa. Although, Heywood
(2007) posits that supporters of MNCs have “highlighted their efficiency and
capacity to spread prosperity and opportunity around the globe” on the
contrary, critics of MNCs viewed them as “agent of corporate global
domination, exploiting the vulnerable, subverting democracy and spreading
mindless consumerism (Heywood, 2007: 149). Corruption is another means of
influence over host governments, and cannot be overlooked. Nobody knows
the full extent to which MNCs use payoffs, kickbacks, gift, and similar
methods to win the approval of individual government officials, may be more
desperate for income, but corruption also occurs regularly in rich industrialised
countries. For example, in the early 1990s the Bank of Commerce and credit
International (BBCI) was found to have operated a vest illegal worldwide
network of money laundering, fraud, and corruption (Adams & Frantz, 1992;
Goldstein & Pevehouse, 2008).
A British company called Mabey & Johnson (M & J), an engineering
company, specialises in supplying and building bridges in over 100 countries
such as Ghana, Madagascar, Angola, Mozambique and Jamaica. Mabey &
Johnson supply of bridge equipment consist of standardised and

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interchangeable component that can easily be transported after manufacturing
site is located at Lydney in Gloucestershire, England with 160 employee and
manufactures an estimated 20,000 tons of bridging components yearly. The
corrupt case involving M & J was described by British serious fraud office
(SFO) as “a landmark case”. Mabey & Johnson, on 25 September 2009,
pleaded guilty, at the Southwark crown court in London to Charges of bribing
government officials in Ghana, Madagascar, Angola, Mozambique and
Jamaica (New Africa, 2009; Momoh, 2015b: 150).
According to Otusanya, Lauwo and Adeyeye (2012), Balfour Beatly, a
leading UK-based construction company, agreed to pay a penalty of £2.25
million in relation to certain payments irregularities in respect of a major
project in Egypt. Also, Aon, an insurance company, made suspicious payments
to third parties amounting to approximately $2.5 million and €3.4 million.
After investigation, Aon was fined £5.25 million by the UK Financial Services
Authority (FSA), for failing to establish and maintain effective systems and
controls of countering the risk of bribery and corruption (Otusanya, Lauwo and
Adeyeye, 2012: 9-10).
In addition, the Mabey & Johnson company received fines amounting to
6.6million ponds and was ordered by the presiding Judged of Southwark
Crown Court in London on 25 September 2009, to pay “reparations”
amounting to 658,000 pounds which has been described as rarely in recent
time, especially on cases of corruption involving developed countries and
developing country (New African, 2009: 12). Furthermore, the Ghana and
Jamaica contracts were the contract that serious fraud office (SFO) used to
indict the Mabey and Johnson company whose overseas contracts were secured
by the UK’s Export credits guarantee Department (ECGD), a statutory body
whose role is to benefit the UK economy by assisting exporters of UK goods
and services win business overseas, and help UK companies invest abroad by
providing “Insurance and reinsurance against losses”.
Otusanya, Lauwo and Adeyeye (2012) in their study posit that in 2007,
three wholly-owned subsidiaries of Vetco International Ltd. plead guilty for
violating the foreign bribery provisions of FCPA in connection with the
payment of approximately $2.1 in bribe. The company agreed to pay a total of
$26 million in criminal fines. Paradigm B. V., Dutch Company based in
Houston admitted that it and its subsidiaries made or promised corrupt
payments to officials of state-owned gas and oil companies to obtain business
in Kazakhstan, Mexico, China, Indonesia and Nigeria.
In a New African Magazine report (2012) entitled “who promotes
corruption in Africa?” states that Mabey & Johnson company from December
1994 to 18 August 1999, used the Ghana Development Fund and associated
accounts to pay bribes directly to named Ghanaian public officials amounting
to 470,792.60 pounds. In Angola, M & J company gave bribe to Angola
Official of Empresa Nacional de pontes (National Bridges Company)
amounting to $1,257, 452. 22, two Land Rover defender four-wheel vehicles
costing 28,646 pounds bought from the UK and shipped to Angola. Other

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payments to National Bridges Company were 50,145 dollar and 13,000 dollars.
The other bribe paid to other public officials was 23, 000 dollars.
Similarly, Mabey & Johnson was equally said to have paid bribe to former
Madagascar ambassador to the United States in a note from an M & J manager
to another stated “We have now been notified by the Order (for the bridge).
The full FOB value will be 1, 131, 123 pounds. For his assistance, we wish to
pay (Madagascar’s ambassador to the United States) $10, 000.” In the same
vein it was alleged that M & J bribed appointed public officials in Angola,
Bangladash, Madagascar and Mozambique (New Africa Magazine, 2009: 15-
16).
In South Africa, it was alleged that BAE system and other weapon
companies were involved in the biggest arms deal which involve the sale of
hawk and Gripen warplanes for 1.6billion pounds. The London Guardian
Newspaper alleged that the BAE systems “secretly paid a $12million
commission into a Swiss bank account” in a deal which led to Tanzania buying
a controversial military radar system. Similarly, the London Guardian
Newspaper also revealed that 500,000 pounds was discovered in Tanzania’s
infrastructure Minister’s Jersey offshore account. Though, he denied that the
Money came from BAE system, but he did not argue over its existence and was
later forced to resign (New Africa Magazine, 2009: 16; Momoh, 2015b).
Moreover, effort by the South Africa Legislature to conduct an
investigation into the alleged bribery Scandal Involving BAE systems and
other weapons firms in South Africa was frustrated. The New Africa Magazine
(2009) asserts that the investigation into the deal was blocked, according to a
former ANC Members of the legislature, who claimed that he “was driven” out
of the ANC for spearheading the legislative inquiry into the arms deal scandal.
In Nigeria, between 1994 and 2002, there was an investigation conducted
that revealed that Halliburton Co-executive, Albert Jack Stanley pleaded guilty
for “orchestrating more than $180 million in bribe to top government officials
in order to secure contracts. In the Halliburton bribery scandal, it was alleged
that some government officials like Late General Sani Abacha (40 million US
Dollars), Dan Etete (2.5 million US Dollars), M.D. Yusuf (75,000 US Dollars),
Grety Overseas UK Riser Brothers (120,000 US Dollars), Abdulkadir Abacha,
(1,887,000 US Dollars), General Abdulsalami Abubakar and Chief Don Etiebet
(37.5 million US Dollars), Prince N.A Bayero (600,000 US Dollars), Zertasha
Malik Grety Overseas (Risers Brothers) (600,000 US Dollars), Edith Unuigbe
(290,000 US Dollars), Messr Shinkafi and Aliyu Glosmer (Risers Brothers) (74
million US Dollars), Chief Olusegun Obasanjo, Atiku Abubakar, Gaius
Obaseki and Funsho Kupolokun (74 million US Dollars), Bodunde Adeyanju
(5 million US Dollars), Ibrahim Aliyu, Urban Shelter Intercellular (11,700,000
US Dollars) and M.G. Bakare (3,108,675 US Dollars) (Ajero, 2010: 42 cited in
Osumah & Aghedo, 2013: 91-92).

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According to the UNDP Thematic Program on Anti-corruption, Africa lost
an estimated US $100 billion yearly to corruption. While the United States
reported that Africa lost an estimated US $148 billion yearly to corruption;
between US $20 to US $40 billion is lost due to the payment of bribes to
government officials (Momoh, 2015a, 2015b). Similarly, Sullivan (2012: 9)
asserts that the global prevalence of corruption is indicated by the world
Bank’s conservative estimates of the annual total of bribes paid worldwide ($ 1
trillion) and economic losses to developing and transitory countries due to
corruption (between $20 billion and $40 billion a year).
On the whole, a critical analysis of empirical evidence of corruption
provided in this study shows that they are motivated by Multinational
Corporations (MNCs) that operates in Africa. However, we did not dispute the
facts that most Multinational Corporations (MNCs) have contributed
significantly to economies of their host countries but their involvement
recently in corruption across the African continent have shown that the time
has come for both the home and host countries to revisit the activities as well
as terms of operations of Multinational Corporations (MNCs) in their territory.
Conclusion
As demonstrated by the foregoing, Multinational Corporations (MNCs)
emerged on the international scene since the 19th century. Although, the
concept Multinational Corporations (MNCs) has been interchangeably used as
Transnational Corporation or Multinational Corporation, in the literature,
corruption perpetrated by Multinational Corporations (MNCs) is a global
phenomenon. However, our focus in this study is on Africa in which huge
resources are lost to corruption as both corrupt government officials and
Multinational Corporations (MNCs) made economic fortunes out of illicit deals
between the duos. We argued that Multinational Corporations (MNCs) indulge
in corruption in Africa by offering bribes to government officials of the host
countries in order to secure contracts. It is on the basis of our arguments that
we offer the following recommendations as measures to curb corrupt practices
involving government officials in Africa and Multinational Corporations
(MNCs)
Recommendation
One of the challenges affecting the fight against corruption at the international
level is the attitudinal dispositions of some state actors. In this regard, we
recommend that state actors must change their attitudes that encourage MNCs
to engage in corrupt practices overseas, to one that promotes transparent
transactions abroad. Also, the media and Civil Society Organizations (CSOs)
has significant role to play in this regard by acting as whistleblowers of corrupt
practices engaged by MNCs for public criticism and necessary legal actions
taken by both the host and home countries.

Zekeri
93
Secondly, home countries of MNCs must ensure that they monitor and
possibly review the activities and other dealing of their MNCs abroad in order
to discourage their involvement in corrupt practices.
Moreover, local and international civil society organisations should
pressurize their government (at the domestic level) to ensure that there is
transparency and accountability in governance. This will in addition involve
the government at the domestic levels to review the terms of contract and
business activities engaged by MNCs annually in order to ensure that state
officials as well as staff of MNCs do not indulge in corrupt practices.
Corruption is a phenomenon that is too big for any individual, group,
organisation or country to tackle alone. Therefore, partnerships that are drawn
from expertise and resources of all partners are vital in the global fight against
corruption. For instance, collaboration between the Swiss and Nigerian
government helped to recover the stolen Abacha loot. In 2004, US after
forfeiting transferring Arnoldo Aleman’s Nicargua former President stolen
money and assets estimated at $ 2.7 million in the United States that was meant
to be used for education project was refunded to the Nicargua government.
Similarly, the UK partnership with Nigeria government led to the prosecution
of Chief James Onanefe Ibori over allegations of corruption and was later
jailed. The Xu Chaofan and Xu Guojun casino scandal with support from
China, Hong Kong and US government and Vladimiro Montesinos corrupt
case in Peru that involved the assistance of Venezuela, United States,
Switzerland, Cayman Island, Luxembourg and Mexico was rewarding.
Therefore, cross national synergy among countries should be encouraged by
countries that are committed to fight against corruption.
Furthermore, international agreements, such as the United Nations
Convention Against Corruption, the Organization Economic Cooperation and
Development (OECD) Anti-bribery Convention, Africa Union Convention on
Preventing and Combating Corruption among others will help create the
required platform for countries across the globe to collaborate the attempt to
reduce cases of corruption involving MNCs in Africa.
Anti-corruption conventions can help foster consensus against corruption
and allow these countries to share best practices while putting pressure on
government to act on their anti-corruption commitment. Sullivan (2012) asserts
that for international cooperation to be effective, ultimately each country must
translate broad anti-corruption goals into concrete polices and enforcement.
Many governments are trying to overcome bureaucratic walls separating
different agencies involved in anti-crime and anti-corruption efforts. Some
countries have engaged in international cooperation and coordinated their anti-
corruption efforts with others. More intra-and inter-governmental cooperation
on all levels is needed (Sullivan, 2012:10). This initiative is highly
commendable.

Journal of Management and Social Sciences 5(2)
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Finally, great responsibility lies with both the home and host countries of
Multinational Corporations (MNCs) to annually or bi-annually review the
activities and terms of operations of the various Multinational Corporations
(MNCs) at home and overseas in order to ensure that they do not engage in
illicit transactions. Similarly, bidding process for contracts by host countries
especially in Africa should be made transparent as much as possible and
government officials who indulge in corrupt practices should be punished.
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