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Transparency International calls for accountability in Madagascar’s lychee market

Requests for legal action sent to Madagascar and France over possible corruption

10 November 2022 – Today, Transparency International and its chapter Transparency International – Initiative Madagascar sent submissions to France’s Parquet National Financier (the national financial prosecutor’s office) and Madagascar’s Pôle Anti-Corruption (anti-corruption court) calling for investigations into possible criminal actions by companies and individuals involved in the Malagasy lychee trade. The reports detail a number of allegations into possible corruption on the part of French companies and citizens and of Malagasy organisations exporting to the EU – that these countries cannot continue to ignore.

For over a decade, a select few have maintained control over crucial lychee exports with little transparency or accountability, as potential violations slipped under the radar. Transparency International conducted research into this opaque trade and found evidence of numerous potential infractions, including foreign bribery, unlawful agreements, tax fraud, laundering and concealment of such offences.

The “Groupement des Exportateurs de Litchis” (GEL) is a private association the Malagasy government has granted the authority to manage all lychee export campaigns since 2011. Without an apparent open tender process, GEL gave just two French companies exclusive export rights to the EU from 2011 to 2021. According to Transparency International’s research, the French companies, in turn, have seemingly paid dues to the GEL – despite the organisation’s membership consisting of exclusively Malagasy companies. This could be evidence of bribery.

Moreover, “The Litchi Trading Company Ltd” (LTC), has been set up by the GEL as a commercial intermediary between the GEL and French companies – further limiting transparency. LTC’s beneficial owners and profits are unknown to the public, despite its critical role. This company is also based in the notoriously untransparent Mauritius – which was listed on the EU’s list of high risk tax countries until January of this year. At the very least, Transparency International’s submissions warrant further investigation into the French companies, Malagasy organisations and individuals involved.

The opaque actions of these organisations have significantly impaired this industry in Madagascar. Malagasy farmers earn less while European customers pay more for lychees that have dropped in quality without fair competition – all to the benefit of just a select few influential actors. Consequently, lychee exports to the EU have dropped by nearly half since 2008, as importers turn to other countries with better quality, lower prices and more opportunity. This deprives the Malagasy economy of a key source of income.

Ketakandriana Rafitoson, executive director of Transparency International Madagascar, said:

“Most profits of the lucrative lychee trade between Madagascar and the EU are concentrated in the hands of a few powerful and politically-connected individuals – at the expense of tens of thousands of small-scale lychee producers and collectors who do not get their fair share. We call on the French and Malagasy authorities to investigate and take appropriate measures to bring justice, fairness and transparency to the lychee sector.”

When major multinational companies gain undue influence in foreign markets, it deals major blows to vulnerable public institutions and economies. Such foreign bribery is not only an issue in Madagascar. This is why enforcement against foreign bribery is crucial. Transparency International’s 2022 Exporting Corruption report released last month found that enforcement against bribery of foreign public officials is at a historic low, with just two countries actively investigating and charging infringements in line with their share of exports.

Gillian Dell, head of conventions at Transparency International, said:

“Governments have a responsibility to their own citizens and the global community to stop corporations from making illicit deals and paying for undue influence in foreign markets. Such abuses threaten economic stability and the livelihoods of people and communities everywhere. We urge France and Madagascar to serve as models for the world to show companies that corruption has consequences.”