Mystery of Mobutu's millions

A topic once close to my heart resurfaced this past week, thanks to the Swiss president, Micheline Calmy-Rey. On a visit to the capital of the Democratic Republic of Congo, once known as Zaire, she raised the subject of Mobutu Sese Seko's bank accounts.

Switzerland, she said, was keen to return the money deposited by the late dictator. In fact, if the Kinshasa government doesn't set the legal wheels in motion, the Swiss will be obliged to return the cash to his family in December 2008.

What prompted heated discussion in the Congolese media was the figure mentioned by Calmy-Rey: $6.6m. Six million, for the man who chartered Concordes to fly friends to his palace in the jungle and treated the central bank as his personal account? Joseph Kabila, the serving head of state, was heard to mutter that he'd been expecting at least $1bn. Shouldn't it actually be $5bn? asked Congolese commentators.

I was surprised no one went for $14bn, the figure routinely bandied about during Mobutu's rule. Since his overthrow in 1997, the mirage of an unclaimed Mobutu fortune has shimmered on the horizon. But while it's safe to assume his family will never go hungry, we are almost certainly talking millions, not billions, here.

I went into this in detail back in 1998 for my book on the Leopard's 32-year reign. I expected to spend the year talking to Congolese lawyers assigned by the new government to track Mobutu's money, liaising with western firms specialising in financial recovery, probing a complex network of Cayman Island shell companies.

It didn't turn out that way. There were no Congolese lawyers on the case, let alone western experts. The Swiss, desperate to clean up their reputation after the scandal over Holocaust survivors' assets, had frozen Mobutu's accounts and seized a villa near Lausanne. But their faxes to Kinshasa requesting guidance went unanswered. The government didn't want to know.

The more I probed, the more I doubted the existence of any huge hoard. Diplomats who served in Kinshasa in his final years pointed out that Mobutu had been having problems maintaining his personal jet. He could barely afford to pay a mercenary force hired to fight the approaching AFDL rebels, and raided his election war chest to cover the bills. Would a man with bulging accounts have hesitated to tap them at such a moment of crisis? It seemed unlikely.

Increasingly, I began to believe the presidential aides and close relatives who had sat at Mobutu's side. "A lot of money went through Mobutu's hands," said one who bore the charming nickname The Terminator. "But it didn't stay." To remain on top, Mobutu needed to buy the loyalty of his generals and governors with a steady supply of fat brown envelopes. If they didn't get their money, they were ready to go solo.

The other inescapable conclusion was that while Congo had certainly been destroyed by the pillaging of its diamond, cobalt and copper industries, this had hardly been a one-man job. The biggest disservice Mobutu did his country was to set a terrible example to his heads of industry, ministers and army generals. If he drank pink champagne, so did they. He milked state coffers ruthlessly for funds; they did the same with their companies, ministries and regiments. Raping the economy was established as the reward for reaching the top. And by the end, the US Treasury reported that the pupils were far outstripping their teacher.

Many of those players, far cannier in matters financial than a man dismissed as an "economic spastic" by the CIA station chief who befriended him in the 1960s, are now back in Kinshasa, having re-entered politics and made their accommodations with the former rebels who toppled Mobutu. The latter have proved no slouch in the looting department themselves, trading Congolese mineral concessions like so much freshly baked bread.

No wonder no one in Kinshasa is in any hurry to recover Mobutu's small change, given the far larger amounts many members of the Congolese elite hold in their own foreign bank accounts. Whether it's six million, one billion or four billion, I suspect Ms Calmy-Rey will find that no one bothers to take up her invitation to reclaim the Leopard's old takings.

This article first appeared in the 30 July 2007 issue of the New Statesman, Brown v Cameron. Game over?

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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.