9. WOULD WIDESPREAD CORRUPTION MAKE A WELL-REGULATED, LEGAL MARKET VERY DIFFICULT?

Corruption infects the entire rhino horn supply chain, from the crime scene through the smuggling transit route to the consumer countries. It embraces wildlife professionals, law enforcement agencies, customs officials, and many more, from low-level functionaries to people in positions of great power. In this context, would the operation of a legal, transparent, and well-regulated market be possible?

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NO TRADE

Proponents of a legal trade often downplay corruption, but it is a major concern. In a legal trade environment, the spotlight would focus keenly on South Africa, still home to most of the world’s surviving rhinos. Widespread corruption and the country’s poor governance record weaken every aspect of society.
The pro-trade lobby’s concept of a “transparent” central selling organization (CSO) regulating rhino horn trade is little more than a pipe dream. Using the CSO of the global diamond industry as an example of how this might work is naïve and misleading as illicit diamond trading continues throughout the world, with conflict or “blood” diamonds still entering the market. If the comparatively well-resourced diamond industry can’t curb this, it is unlikely that a horn CSO would fare any better. As long as endemic corruption persists, criminals will forge documents and bribe and coerce officials to pass illegal horn through legal channels, resulting in illegally procured horn being fraudulently sold as a legal commodity. Although highly regulated, Japan’s ivory market provides an example as illegal imports remain a reality.
A legal trade environment could help match supply and demand by swiftly reacting to market conditions, but only if illegal trading proved insignificant. This is unlikely to be the case. Too little is presently known about possible market dynamics to predict and/or enable such nimble maneuvering.
Furthermore, a legal trade could cause a spike in poaching and stockpiling by cash-rich crime syndicates playing a long game instead of suppressing stockpiling.
If revenues from horn sales do provide increasingly effective protection for rhinos, it is reasonable to expect that rhino numbers would grow. The unintended consequence might be that it becomes more and more challenging to protect the increased population and that, perversely, poaching would become easier and, therefore, more attractive to criminals.

PRO TRADE

It is accepted that corruption could impede the smooth functioning of a legal trade. However, a legal trade would bring the sale of horn into the open and would be transparent and tightly monitored at every level. One way to successfully regulate trade is via a central selling organization (CSO).

  • All sales would be conducted through the CSO, volumes would be controlled, and the legal provenance of horn would be assured.
  • The CSO would act as a broker funded through a commission structure and could be owned pro rata by the rhino owners.
  • All owners would be obliged to participate through the organization to avoid independent selling against its interests and those of its members.
  • Monthly sales could be held where horn would then be offered to a selected range of registered buyers at a particular price per parcel on a “take it or leave it” basis. It would not be an auction.
  • All horn would be appropriately marked and have a DNA signature. Payment would be made to the certified suppliers, and the horn immediately dispatched to the purchasers.
  • There would be no room for the laundering of illegal horn or corruption. With robust permitting systems in place and technology like the RhoDis DNA database to track and identify the movement of horn, any laundering activities would be minimal.
  • The balance of supply and demand could also be closely monitored to allow horn producers to react swiftly to changing market conditions.
  • A regular, uninterrupted supply of horn matching demand would reduce incentives to stockpile on the part of criminals.
  • Revenues from legal sales would pay for increasingly effective protection of rhinos, whether state or privately owned, thereby reducing poaching by driving up the cost to criminals of hunting down rhinos.
  • It has been suggested that if southern Africa sold 1,200 horns a year, it would inject as much as US$96 million into the regional economy.

Trading partner countries would need to agree to close down their illegal trade. There would, of course, be some illegal trade, but in the face of a powerful CSO, this would be negligible compared to the current situation. Although the CSO’s initial strategy might be to lower the price of horn to flush out speculators, the longer-term objective would be to sell as much horn as is sustainably possible at the highest price.

Rhino Review: No trade vs pro trade Question 9
Ross Harvey & Colin Bell

Rhino Review: No trade vs pro trade Question 9
John Hanks