The frequency of exposures and the political impact of corruption scandals appear to be increasing all over the world, says Gideon Rachman in the Financial Times.
Despite their holier-than-thou aura, he notes that bankers, lawyers, real estate agents and PR firms in the US, UK and EU often share in the proceeds of corruption.
As former US vice-president Joe Biden was reported to have said, at a Defend Democracy conference in Copenhagen, globalisation has deepened rifts, divorced productivity from labour and created less demand for low-skilled labour:
“When people see a system dominated by elites and rigged in favour of the powerful they are much less likely to trust democracy can deliver”.
The most recent example of corruption highlighted on this website follows:
After an initial denial (left, Financial Times), Economia confirmed that in an official response to the French government dated 30 March 2017, a HMRC official noted that Lycamobile is “a large multinational company” with “vast assets at their disposal” and would be “extremely unlikely to agree to having their premises searched”, said the report.
The letter from HMRC to the French government added, “It is of note that they are the biggest corporate donor to the Conservative party led by Prime Minister Theresa May and donated 1.25m Euros to the Prince Charles Trust in 2012”.
This is an ongoing saga: in 2016 Economia noted: “The Tories have come under fire for continuing to accept donations of more than £870,000 from Lycamobile since December, while it was being investigated for tax fraud and money laundering”.
Many senior British politicians have taken bribes and many ministers and civil servants move to lucrative positions with companies who have benefitted from legislation supported by these new colleagues – through the revolving door.
The unspoken ethic:
- In South Africa president Jacob Zuma was compelled to resign because of corruption scandals.
- Dilma Rousseff, the President, was impeached in Brazil in 2016.
- The Atlantic Council, whose largest funders include the United Arab Emirates, the Abu Dhabi National Oil Company, Airbus Group SE, Crescent Petroleum & the Foreign & Commonwealth Office of the United Kingdom describes the ruling United Russia party as the “party of crooks and thieves”.
- Narendra Modi came to power in India with a pledge to crack down on corruption among the elites. He has since abolished about 80% of the country’s currency, in an effort to ruin the black economy.
- In China, President Xi Jinping’s anti-corruption drive has seen more than 100,000 officials arrested.
- Mariano Rajoy has been forced to resign as prime minister of Spain after seven years in office, following a scandal in his political party.
- Malaysia’s ruling party lost power after allegations that the prime minister, Najib Razak, had embezzled vast sums.
Rachman believes that corruption has become more common and also easier to expose:
“The globalisation of business and finance opened up opportunities to make corrupt profits in fast-growing emerging economies.
“Industries that often need official involvement, such as natural resources and infrastructure, are particularly lucrative targets. There are contracts to be awarded and development projects that need official approval. And the money for bribes can always be deposited offshore.
“But such malpractice can be exposed. Strong, independent prosecutors and judges such as Brazil’s Sérgio Moro and South Africa’s Thulisile Madonsela have done heroic work in driving forward anti-corruption investigations. Press freedom in Brazil and South Africa has also been critical in keeping up the pressure on corrupt politicians. Even when the national media are muzzled, the internet provides an alternative medium for airing corruption allegations. The “Panama Papers”, which detailed the offshore financial affairs of many prominent politicians, was the result of an international journalistic project and based on hacked documents”.
He adds that new forms of international co-operation and transparency have also made would-be crooks more vulnerable to exposure. Changes in the Swiss laws on banking secrecy — made under pressure from the US — were crucial to allowing Brazilian prosecutors to uncover the proceeds of corruption. International investigations by the Swiss and Americans also kept up the pressure on Malaysia’s Mr Razak.
Lasting progress, Rachman writes, requires strong institutions that can survive changes in the political climate:
- independent courts and prosecutors with training and resources;
- a press that cannot easily be bought off, jailed or killed;
- efficient civil servants who cannot be fired at the whim of a corrupt boss.
He points out that if any of those elements are removed, corruption seeps back into the system.
The “clean hands” investigations in Italy in the early 1990s swept away many powerful figures — and were seen as a watershed. But Rachman cites the case of Silvio Berlusconi, tried 22 times on charges ranging from tax evasion and bribery to corruption and association with the Cosa Nostra. He was convicted of tax fraud in an Italian court and sentenced to four years’ imprisonment – served as community service – but has now been cleared to stand for election as prime minister once again.#
Following our tenth entry: MP Andrew Gwynne, who successfully introduced the Debt Relief (Developing Countries) Act and worked long and hard to get justice for those who received contaminated blood through the NHS, we turn to Botswana, after reading an obituary by Emily Langer in the Independent. Her subject was Ketumile Masire – a statesman who described himself as ‘a farmer who has been drawn into politics’.
A summary with added links and photographs
Masire herded cattle before enrolling in a primary school at 13 and receiving a scholarship to attend a high school in South Africa that trained many leaders of the first government of independent Botswana. When his parents died he supported his siblings, becoming a headmaster. He later earned a Master Farmers Certificate, and having saved enough money to buy a tractor and became a successful farmer.
He served on tribal and regional councils and was a founder and secretary-general of the Botswana Democratic Party, now the country’s leading political party. He once travelled 3,000 miles of the Kalahari Desert to attend two dozen meetings over two weeks.
After serving as minister of finance and development planning and Vice President, Ketumile Masire became President of Botswana (1980-1998): roads and schools were built, healthcare improved, access to clean water expanded, farming techniques advanced and life spans extended.
The discovery of diamond reserves had transformed the country’s prospects and Masire continued to use the revenues for the public good after the death of his predecessor Seretse Khama.
He became ‘a model leader in a model nation on a continent where poverty, corruption and violence had crushed the hopes of many for stability and prosperity’.
After leading Botswana through a drought that persisted for much of the 1980s, he shared the Africa Prize for Leadership awarded by the Hunger Project in recognition of the food distribution efforts that helped the country avoid starvation during the crisis.
Though South Africa was Botswana’s major economic partner, Botswana opposed apartheid. “He had to walk a fine line in a really rough neighbourhood,” said Chester Crocker, a former US assistant secretary of state for African affairs. “He had to get along with everybody, without sacrificing his principles.”
After leaving office, in addition to tending the cattle on his ranch, Masire advised other African leaders and chaired an international panel that investigated the Rwandan genocide of 1994. He made important contributions to peace efforts in Congo and, more recently, Mozambique. He established a foundation which seeks to improve agriculture, governance and children’s health in the region.
He once said: “We have a saying in Botswana: A man is never strong until he says what he believes and gives other men the chance to do the same. I am proud to say without a doubt – we are a strong democracy.”
A more chequered account of his life is given in Wikipedia..
Anne sends a link to the ‘shameful’ news that the 50 biggest US companies have more money stashed offshore than the entire GDP of Spain, Mexico or Australia, collectively keeping about $1.3trn (£0.91trn) in territories where the money does not count towards US tax, according to a new report by Oxfam.
Several readers have sent material about the Panama Papers but until now they have not been mentioned on this site – because, as Žižek writes: “The only truly surprising thing about the Panama Papers leak is that there is no surprise in them:
“Didn’t we learn exactly what we expected to learn from them?”
He highlights the ‘shameless cynicism’ of the existing global order and our shame for tolerating their power. In Vox.Com Tara Goshan elaborates:
“Corruption is not a contingent deviation of the global capitalist system, it is part of its basic functioning . . . The papers demonstrate how wealthy people live in a separate world in which different rules apply, in which legal system and police authority are heavily twisted and not only protect the rich, but are even ready to systematically bend the rule of law to accommodate them”.
She points out that, after many years of pressure on Swiss banks to reveal information about rich Americans who hide their money offshore, the U.S. is resisting new global disclosure standards; wealth management experts are now helping the world’s rich move accounts from places like the Bahamas to Nevada, Wyoming, and South Dakota. Goshan quotes Peter A. Cotorceanu, a lawyer at Anaford AG, a Zurich law firm, in a recent legal journal:
“How ironic—no, how perverse—that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour. That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.”
The Labour Leader Jeremy Corbyn responded to the prime minister’s statement to the House of Commons about his tax affairs:
“I’m honestly not sure Mr Speaker that the Prime Minister fully appreciates the anger that is out there over this injustice.
“How can it be right that street cleaners, teaching assistants and nurses work and pay their taxes yet some of those at the top think the rules simply don’t apply to them.
“The truth is, is that the UK is at the heart of the global tax avoidance industry. It’s a national scandal and it’s got to end”.
Anne comments on the focus away from this international scandal, sending a link to the news that today the Security Council holds an open debate on counter-terrorism.
Will the attention of the 99% once again be successfully distracted by the political-corporate alliance?
In 2010 Ian Foxley (Lieutenant Colonel, British Army, retired) became a Saudi-based employee of GPT Special Project Management, a subsidiary of Airbus. GPT provided secure communications systems to the Saudi national guard under an agreement between the MoD and the Saudis.
Arabian Business reported way back in 2011 that a source at the SFO told the paper a preliminary investigation was underway into claims of corruption, noting that the £2bn ($3.2bn) communications contract was one of the largest awarded in recent years by Saudi Arabia.
In a report of evidence given to the Parliamentary Commission on Banking Standards it was recorded that Mr Foxley had discovered documentary evidence of gross irregularities, and attempts to cover them up, within GPT and the SANGCOM Project which he reported to EADS Group Compliance, the UK MoD and the Serious Fraud Office. The Financial Times [April 28th] added that he discovered gifts to Saudi military officials and illicit payments routed through the Cayman Islands and provided evidence of the questionable transactions to an MoD official overseeing the project.
As the MoD informed his bosses at GPT that he had raised concerns, he left Saudi Arabia. In 2012 other MoD/Saudi irregularities were exposed. Though the UK Serious Fraud Office began a corruption investigation in 2012 and arrested and questioned six people in 2014 including current and former GPT employees and former MoD officials, no one has been charged.
The Ministry of Defence (housed above) decided to hold back parts of the material to be released to Richard Brooks, a journalist at Private Eye magazine, after his freedom of information request. Mr Brooks, who has reported on the alleged corrupt transactions related to a contract to equip Saudi Arabia’s national guard, told the three-judge panel on the tribunal that the refusal to reveal the information amounted to a cover-up.
Ian Foxley (FT May 18th) describes this as a battle between the correct implementation of UK law in exposing and fighting alleged corruption or the continued official concealment of “legacy commercial issues” in order to propagate overseas trade, writing, “It is a real contest between God and Mammon, morality or money, copper or conscience. At question are the values and principles of a number of government departments through a real litmus test of their integrity”.
He asks two questions:
- Should we allow civil servants to try to use UK law to favour overseas potentates and avoid offence to those who might otherwise offer us contracts, jobs and oil?
- Why should the law applied to individuals not apply also to corporates and government departments?
And ends: “We cannot, and must not, allow our government departments to be complicit in or wilfully blind to corporate corruption. So, if our new government maintains it is fighting for UK business, that’s great — but let it be honest business not dirty deals mired in a legacy of corruption”.
In 2012, Ian Foxley and Peter Gardiner, who blew the whistle on BAE a decade ago, formed Whistleblowers UK.
A ‘favour culture’ must be restricted to those at the top – shame on anyone from the minority communities who usurps the privilege of their betters
The Attorney General Dominic Grieve is alleged to have said that some minority communities “come from backgrounds where corruption is endemic . . . where they have been brought up to believe you can only get certain things through a favour culture . . . and it’s not acceptable”.
He is said to have continued: “As politicians these are issues we need to pay some attention to”.
But the tone is set at the top in this country, where:
- the revolving door regularly and shamefully swings between government and advisors and the corporate word – then vice-versa;
- politicians, their family members and friends, gain employment in this corporate world;
- politicians and corporate management are regularly rewarded and even promoted after failure and
- MPs and noble Lords have been videoed – more than once – offering to take money in return for influencing legislation?
Set an example at the top: dissolve the political-corporate alliance.