Transparency Thailand Newsletter, January 2015

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Published on Tuesday, 17 February 2015 04:47
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Political corruption: an imminent threat to national development  

The prevailing corruption cases involving politicians around the world reflects the imminent threat corruption imposes on the nature of democracy and development. Over the past six months, politicians while working as prime ministers, top government officials, and legislators committed various crimes detrimental to the stability of the nations they served, and the well being of those who elected them. They betrayed public confidence, looted public coffers, organized mass killings of protesting civilians, partnered with mafia and drug lords, took bribes and kickbacks, and thwarted efforts to investigate them. Most of these politicians are still walking free, out of jail or maybe have never been to one.

These comes at a time when most governments still conceal data helpful in fighting corruption despite G7 and G20 leader’s resolution seeking that such information be made available since it is instrumental in the fight against corruption. Myanmar, Mali and Haiti rank the least transparent countries in the Open Data Barometer, a global index of government data.   Top five countries which have shown greater transparency are the UK, US, Sweden, France, and New Zealand. Improving transparency on government data can help reduce corruption and improve public services. However, this is not enough since by nature corruption crimes in which politicians engage in show that society at large is running dry of values. 

People’s trust in elected politicians is diminishing in Australia after recent governments failed to put in place strong measures for accountability and public service delivery. Australia is facing three major corruption related challenges namely: (1) lack of freedom of information; (2) absence of in dependent broad based anti-corruption commission; and (3) political donations.  Efforts by the public and civil society groups to pressure legislators to enact laws to address these problems have failed. To a large extent, legislators have passed evasive laws that avoid addressing these issues. The desire to maintain secrecy, a weak anti-corruption commission, and unregulated political donations remain avenues to corruption in the country.

Some governments have tried to tackle political corruption. Thai legislature impeached former Prime Minister Yingluck Shinawatra over corruption clouding the rice scheme. New York Assembly Speaker Sheldon Silver was charged for receiving $4 million in bribery and kickback schemes.  Authorities also seized $3.8 million in proceeds tied to the alleged corruption.  Silver man is one of the most powerful politicians in the state for more than two decades. He has been an Assembly man since 1994.Former Virginia governor Robert McDonnell was also jailed for two years with more two years of probation for taking bribe from a business man. McDonnell becomes the first Governor in Virginia to be jailed for taking sweetheart loans and lavish gifts from the entrepreneur. McDonnell received $50,000, a gift of $ 15,000 while a corporation he ran alongside his sister received $70,000 from the businessman.

Ramat Gan city Mayor and city officials in Israel were arrested over election fraud. The accused police say created a system of favor and reward to people from both within and without the municipality. Police investigation also showed that Yisrael Zinger, the Mayor and five others were also involved ion money laundering. In the election fraud charges, Zinger is said to have asked a media organization to campaign for him, with assurance that he would give the organization advertisement contracts after winning the election. In another case, the Court in Israel said that new developments into investigations show that more people will be investigated in relation to the Yisrael Beiteinu party. This follows a request by the prosecution to extent the detention of suspects some of whom are officials of the party. Similarly, the mayor of Rome has ordered a review of city contracts after police investigations revealed that politicians collaborate with city criminals in corrupt activities.  Italy which is ranked one of the most corrupt countries in Europe   by the Transparency International Corruption Index has criminal networks in which capital mafia pay politicians in order to win and control public contracts.  More than 37 people are under investigations.

In Tanzania, President Jakaya Kikwete sacked Land and Housing Minister Anna Tibaijuka for taking $1 million from a business man.  Tibaijuka is the highest government official to face sacking over recent corruption dealings hat has strained relations between donor and the government.  On 17 December 2014, Attorney General Werema resigned for authorizing illegal transfer of $120 million to an energy firm. Elsewhere,Cameroun’s former finance minister Polycarp Abah Abah was sentenced to 25 years in prison by a special criminal court for   embezzling &11 million which he used to buy a string of houses and cars.  The court will also seize 30 properties, eight vehicles, three tractors, and a bank account worth 26 million Francs.

The worst government performance in the fight against corruption occurred in Turkey. In December 2013, the police chief heading the financial crimes unit conducted an operation in the capital Ankara.  The operation was intended to arrest corruption suspects and prepare them for trial.  32 suspects were arrested in the operation, among them sons of three government ministers, a mayor, an Iranian gold trader married to a Turkish pop star, a real estate billionaire, and the head of the largest state run bank listed on Turkish stock exchange.  Prosecutors alleged that the suspects were a network extending to the inner circle   President Endogan traced back to 2003.  Endogan who was prime minister then denied the allegations and termed the arrests and prosecution a coup attempt orchestrated by his former political ally. Finally, the case was closed. Some of the police officers involved in the investigations were dismissed while others resigned.  This is case of a politicized fight against corruption. Not much comes out.

What followed recently was perplexing. Turkish Parliament voted against sending four former ministers to court. In what appears protecting politicians in the inner circle of the ruling Justice and Development Party, politicians used their majority vote to thwart attempts to try and investigate further corruption allegations involving top Turkish politicians since 2013.

Meanwhile, Ex-Ukraine President Viktor Yanukovych is wanted by Interpol for embezzling millions of public funds when he was president.  Yanukovych was ousted by protests and fled to Russia.  Now he has been put on the Interpol’s wanted red list.  In another public coffer looting scheme,an opposition law maker was arrested in India on suspicion of stealing funds from a multi-billion dollar Ponzi scheme that collapsed in India.  The scheme was a state based consortium of private companies running collective investment plans.  It collected about $ 4 billion from depositors before it collapsed in April 2013.

Police conduct disheartening in the war against corruption

Taking bribes, abuse of power, brutality, and extra-judicial killings are becoming the new indentify of the police service in many nations.  The role of the police to enforce the law, uphold it, and maintain order is increasingly challenged by the vices police officers exemplify when they discharge their duties daily in the streets. The way police officers handle matters of crime prevention, investigation, and law enforcement is in itself inconsistent with the values and norms of fighting corruption, let alone what the police service or police force was meant for. It is basically self defeating.  

Police across England and Wales have been ordered to review about 2,000 corruption cases after concerns were raised indicating that the cases were not properly investigated.  Police records show that near half of the cases in the hands of the police IN 2014 were not fully addressed.  In that year, police had 3070 cases. Out of these, no further action was taken on 1685 cases. Majority of these cases were related to crime, drugs, and corruption.

In the US, elite anti-narcotics cops take bribes and smuggle drugs.Approximately 0.8 million pounds of marijuana is seized on its way to the streets every year. Even though the US spends about $ 240 million a year in war against drugs along the Mexico Border, the initiative is hindered by elite anti-narcotics officers who take bribes and smuggle drugs from Texas to the other parts of the US.  Similarly, Eight Cops charged with Anti-drug mission in Australia were arrested over corruption. The officers working with Southern Suburbs drug squad have been arrested over corruption. This follows investigations by the Independent Commission against Corruption.

In what appears a case of official corruption in the Philippines, police raid in Bilibid Prison revealed that drug lords in there, were living like Kings. They lived in luxury cells enjoyed expensive whisky brands, and had stripper bars where sex workers sneaked into the prison performed.   Police found 20 air conditioned “villas” and stripper bars were built for the convicted drug lords who has also access to cash.  Bureau of Corrections Chief said he was unaware of the structures build for drug lords in the prison. This shows that even after sentencing it is difficult to get justice. Bilibid Prison is one of the maximum security prisons in the country, meant for hard core criminals.

In Thailand, former and serving high ranking police officers have been arrested in the ongoing internal police investigations into corruption cases. The suspects will be charged with a range of charges including bribery, abuse of power, and extortion.  During one of the investigations, police seized property approximately worth 10 billion baht (£194m).  Reforms undertaken by the current government involves fighting corruption. In a similar case, Police in India have suspended 563 police officers after receiving 50,000 complains from the public.  Of these, 28 cases were related to corruption prevention.  Furthermore, departmental enquiries show that 856 police officers were involved in corruption. Meanwhile, two police officers have been jailed in Rwanda for killing anti-corruption activist Gustve Makonene. The two face a 2 year jail term for killing the activist who was found dead in July 2013. Makonene was working for Transparency International near the border of Rwanda and Congo, a war torn region rich in minerals and illegal trade.  Apart from comprehensive reforms in the police force, an all inclusive approach to sustaining the changes made and establishing a new ethical practice in the police is essential.  

Corruption in the sports arena: a worrying trend with fundamental future implications

It all began with the controversial bidding of the 2018 and 2022 world cups. What has been over the years complains falling on deaf ears was finally amplified in a case major stakeholders in the sports world believed was a scandal.  This scam will be remembered in the sports history as an incident that shaped the way governance in the sports arena will be conducted.  Its significance is that it is one single sports event that has attracted immense global political attention, to an extent that not only multiple investigations are conducted, but also legislations in order to allow for political intervention in sports. This will mark a major shift from the traditional FIFA policy of state non-interference in sports. Here is a highlight of how this case will shape future sports.

FIFA has asked Swiss Police to launch investigations into the awarding of hosting rights for the 2018 and 2022 world cups to Qatar and Russia. FIFA believes that there is evidence showing that bribes were given during the bidding process. In the past, laws governing FIFA required autonomy and limited government intervention into sports affairs. This case, if found true will bring to public discourse the need to balance between autonomy and accountability in non-state driven public affairs.  

After MPs in Brussels accessed secret documents on Football Association, they are mounting pressure on FIFA to reform.  Already a proposal is out seeking reforms towards new FIFA.The European Parliament, legislators have also called for fundamental changes in FIFA and subsequent investigations. To carry out further investigations and reforms; an independent reform commission will be set with protection for whistle blowers.  This follows an earlier incident where US attorney Michael Garcia who was a co-investigator into the scam resigned after Hans-Joachim Eckert his ethics counterpart refused to publish the report on the findings in full. The Serious Fraud office in the UK will also consider evidence from the Swiss Attorney General in order to determine whether to open an investigation into FIFA corruption in the UK.   The Serious Fraud office is inviting whistle blowers to furnish the office with other necessary information.

In China, obsession for gold medals puts pressure on athletes to do all they can at all costs in order to win gold medals. This has eventually led to match fixing scandals and cheating in sports.  Since 2009, four judges, 13 footballers and nine officials have been jailed for match fixing scams.The Danish government is also calling for a special court to take care of crimes occurring in the sports arena.  If established the court will deal with cases such match fixing and other forms of corruption.  The proposal now a bill awaiting discussion and possible legislation will also include provisions for more resources for the police to investigate corruption in sports, as well as hefty penalties. Match fixing is increasingly a common corrupt practice in Europe.  

Corporations now taking over the corruption drive

Tax evasion, fraud, bribery, smuggling of minerals, and money laundering; multinational companies are doing almost anything they can to maximize their profits. It appears ethics or obedience to the rule of law does not matter anymore. What has happened over the recent past is a clear indication that some multinational companies are determined to use corrupt means to exploit wealth in countries where they do business.  

Global financial integrity report shows that about $ 1 trillion is stolen from developing and emerging economies each year.  This money is stolen through corruption, tax evasion, and crime.  Developing countries also lose more money through illegal financial flows than they gain through foreign aid and foreign direct investments. Due to this among other factors, illegal financial flows out of developing countries are growing faster than global economy.

UN study group says Africa loses about $ 50 billion (44 billion Euros) every year to tax fraud and organized crime.These crimes include illicit financial flows, international corporations evading tax, and trafficking of minerals. Large financial corporations are the biggest culprits says group leader Thambo Mbeki. In Europe, European Union’s Green party is pushing for tax evasion probe following revelations that hundreds of tax evasion deals have been undertaken by companies in Luxembourg. More than 188 EP MPs supported the proposal seeking the EU Parliament to vote on the issue. Luxembourg ranks high in tax evasion deals among EU nations. 

Recently, French industrial group Alstom SA pleaded guilty to paying more than $75m in bribes to government officials around the world and agreed to a $772.3m fine, the largest penalty by the US Department of Justice for foreign bribery. As a result,Poland may charge more people in a case involving two former managers of Alstom polish unit, for giving bribes to public servants in order to win contracts. Poland’s decision follows the UK Serious Fraud Office to charge   officials of Alstom’s Britain subsidiary who the UK say were responsible for paying up to  $8.5 million in bribes to government officials in India, Poland, and Tunisia.  

In a similar case, French company Total will face trial over claims of corruption related to Iranian contracts   since 1990s to early 2000s. This follows a coordinated effort between the US and French criminal justice systems which last year saw Total pay 398.2 million to settle US criminal and civil allegations that it had paid bribes to win contracts in Iran.  US authorities claim that between 1995 & 2004, total paid & 60 million to induce an Iranian government official to help the company obtain lucrative development rights in three oil and gas fields related to the South pars project.  

In the Banking sector, Thailand and Philippines-based "boiler rooms" laundered cash worth hundreds of millions of US dollars through Hong Kong's banking system over the past decadeInvestigations shows that banks helped the boiler rooms kingpins in what investigators believe is a violation of money laundering regulations.

 

Resource links

Politics and Corruption

http://www.ft.com/intl/cms/s/0a8989c6-8934-11e4-9b7f-00144feabdc0,Authorised=false.html?

http://www.haaretz.com/news/national/.premium-1.635020

http://www.bloomberg.com/news/2015-01-08/turkey-s-corruption-probe-turns-into-plot-and-power-for-erdogan.html

http://www.bbc.com/news/world-europe-30777844

http://www.reuters.com/article/2015/01/20/us-governments-data-transparency-idUSKBN0KT1IS20150120

http://news.yahoo.com/york

http://hosted.ap.org/dynamic/stories/A/

http://theconversation.com/its-hard-for-voters-to-trust-leaders-who-wont-promise-true-integrity-34710

http://www.trust.org/item/20141204153933-59mqn/?source=search

http://www.jpost.com/Israel-News/Top-Ramat-Gan-officials-arrested-in-major-corruption-election-fraud-scandal-384700

http://af.reuters.com/article/topNews/idAFKBN0KO0GW20150115

Police and Corruption

http://uk.reuters.com/article/2015/01/23/uk-rwanda-corruption-idUKKBN0KW0RD20150123

http://indianexpress.com/article/cities/delhi/563-officers-suspended-after-police-receive-nearly-50000-complaints/

http://www.9news.com.au/national/2014/12/19/19/10/secrecy-surrounds-corruption-case-against-adelaide-drug-cops

http://www.theguardian.com/world/2014/nov/25/thai-senior-police-officer-corruption-charges

http://www.rollingstone.com/culture/features/americas-dirtiest-cops-cash-cocaine-texas-hidalgo-county-20150105

http://www.theguardian.com/uk-news/2015/jan/30/police-forces-ordered-review-2000-cases-alleged-corruption

 

Sports and Corruption

http://uk.reuters.com/article

http://www.reuters.com/article/2015/01/27/us-china-sports-corruption-idUSKBN0L007420150127

http://www.telegraph.co.uk/sport/football/world-cup/11255607/Fifa-corruption-Criminal-probe-may-be-launched-in-UK.html

http://www.theguardian.com/

www.reuters.com/article/2014/11/17/us-china-corruption-idUSKCN0J118Z20141117A

 

Corporations and Corruption

http://www.scmp.com/business/money/article/1681719/hong-kong-banks-caught-boiler-room-money-laundering-schemes

http://www.nytimes.com/2014/11/26/business/international/total-to-face-trial-over-claims-of-graft-tied-to-iran-contracts.html?_r=1

http://www.reuters.com/article/2014/12/31/alstom-bribery-poland-idUSL6N0UF0XI20141231

http://www.ft.com/intl/cms/s/0a8989c6-8934-11e4-9b7f-00144feabdc0,Authorised=false.html

http://news.yahoo.com/fraud-organised-crime-costing-africa-billions-per-174039241.html

http://washpost.bloomberg.com/Story?docId=1376-NI6CUQ6VDKHX01-40BM3URFT1SIP5P6PUJ5J8OQUE

http://www.theguardian.com/global-development-professionals-network/2014/dec/16/illicit-financial-flows-asset-recovery-versus-fraud-prevention

 

 

 

 

 

 

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