Transparency Thailand, Newsletter, March 2015
How the UK handles international corruption
Usually, huge sums of money illegally acquired by public officials is hidden in foreign accounts or used to purchase assets abroad. In the recent times, this type of corruption has gained the attention of anti-corruption agencies, governments, and civil society movements. Some of these corruption officials have purchased property in the UK. In response, the UK has in the recent past adopted strategies that make it difficult for corrupt officials to travel to, immigrate, purchase or enjoy assets and services purchased using money illegally acquired from public coffers. Here is one such a case.
James Ibori was an ex-governor of Niger-delta state in Nigeria. Niger Delta is the largest oil producing state in the country. While serving as governor, Ibori embezzled US$ 250 million which he hid in UK banks. He used the money to purchase luxury houses, expensive cars, and other luxuries. He took his children to UK’s most expensive boarding schools. He spent his leisure time in expensive hotels, travelled first class, and later bought a private jet worth US$ 20 million. His monthly credit card bills amounted to approximately US$200,000 in personal spending.
Metropolitan police investigated his case, obtained evidence, arrested Ibori and prosecuted him. Even though investigations took quite long trails over time, they were successful.
The antagonist in the war on corruption: Cases of power and scandals
In the recent months, grand corruption has been much a focus. From the US to China, Brazil to South Africa, high ranking state officials and politicians are reported getting away with public funds. It appears politics, defined as who gets what, when and how; has attained new meaning. Politicians and high ranking state officials are doing all they can to get it all by corrupt means. Two major challenges emerge from this experience: (1) The power politicians and senior state officers have over national resources indicate a significant risk such that what belongs to the public stands endangered; (2) It is challenging and complex to fight corruption when the state machinery that you are supposed to rely on is in the hands of or is significantly influenced by those who benefit from corruption. This article seeks to show in highlights, the amount of money siphoned by politicians and high ranking officials in the recent years. The figures reported in this article do not account for all the money these politicians may have taken, but only what was reported at a given time. The article will also show highlight of cases exemplifying the difficulties faced by those who fight corruption around the world.
Frank Vogl in his book Waging war on Corruption: Inside the Movement fighting the Abuse of Power (2012) notes that by 1994, it took a bribe worth the following in order to get a government contract: 5% of $200,000 for a senior official in government; 5% of $2 million for permanent secretaries or director generals; 5% of 20 million for a minister; and 5% of $200 million for the head of state. Vogl obtained his information from experiences of business people in Asia and Africa. Below is a list of estimates showing public funds heads of states/government, ministers or senior government officials got away with, or paid in bribes. These individuals held high positions in government, had long and successful careers in government, and had background in law, politics, business, and media. They had one thing in common; their access to power was instrumental in the corruption they were involved in.
Philippines: Ferdinand Marcos (President, 1966-86) took between $ 5 billion and 10 billion
USA: Sheldon Silver (Speaker New York National Assembly, 1994-2015) received $6million
Congo: Mobutu Sese Seko (President, 1965-1997) took between $4 and 6 billion
Italy: Silvio Berlusconi (Prime minister, 1994 to 1995, 2001 to 2006 and 2008 to 2011) paid $ 4 million bribe
Israel: Ehud Olmert (Prime minister, 2006-2009; minister, 1988, 1992, 2003, 2006) received $600,000 in bribe
South Africa: Jacob Zuma (President, 2009-2015), took $24 million
Nigeria: General Sani Abacha (President 1993-98) took $ 380 million & 700 million. Switzerland froze the money and returned it to Nigeria
Tunisia: Zine El Abidine Ben Ali (President 1987- 2011), took $161 million
Iran: Mohammad Reza Rahimi (vice president, 2009-2013) took $300,000
Cameroun: Polycarpe Abah Abah (Minister, 2004-2008) took $11 million
Senegal: Karim Wade (Minister, 2000-2012), took $230 million
Usually, fighting the antagonist in the war against corruption is not just a complex issue, but also a risky one. It takes boldness and sacrifice, strategy, decisiveness, faith and courage to take back what the antagonist has taken, control, or to even tackle the antagonist. The following cases show some of the challenges realized in the fight against corruption.
Expensive politics in Nigeria cripples accountability and breeds corruption
“Godfather” is the name used in Nigeria to describe powerful individuals who control politics in the country. Usually it refers to an individual, male, who holds a higher position in government or society, and has made personal commitment to protect another individual, considered in need of protection at a given time. The one in need of protection believes that this Godfather will always protect him/her. In this faith, whether good or bad, one acts. However, God fathers are not volunteers, philanthropists, or spiritual people exercising kindness, love or mercy. In Nigerian politics, Godfathers are contracted at a very high cost, one that has over the years transformed Nigerian politics into one of the most expensive enterprises in the world, with a type of democracy that works like the market.
Nigerian law makers earn $2 million a year. This is four times what the US president earns. Besides, whoever wins presidential election in Nigeria has a lot of influence and control over how $ 70 billion oil revenue is used every year. To obtain party ticket in order to campaign for a legislative seat, one pays $ 10,000 as expression of interest fee. The one who wins will then forfeit half of his income as a lawmaker. This money goes to the “God father” the political patron who controls and distributes political power in the country. This is why elections in Nigeria have less to do with democracy and development. The one who wins an election is the highest bidder, one who dug deep in his pocket bought the party ticket, and later bought votes. In such a political system, public participation is not intended to improve the living conditions of the people. It is politics based on pure market practices: auctioning party tickets; paying 50% interest fee to ones Godfather; and buying millions of votes which the poor are ready to sell at any given monetary price. This is partly why politicians and high ranking officials take as much as they can from public treasury, in order to save more in preparation for the next election.
The fear of naming corrupt individuals in Kenya
“Some forces in this country” is a phrase that expresses fear. The fear of naming corrupt individuals is a reality in Kenya. Kenya has a past, a prevailing present where activists disappear, die in accidents, or are shot. Some people think these could be assassinations. It is rare to find in Kenyan history, an activist who died in old age.
In 2003-2004, the government of Kenya awarded 18 contracts to Anglo-Leasing Company Ltd., a British firm registered in Liverpool. The company was to supply Kenya with a wide range of services and equipment from a forensic laboratory to a navy frigate and jeeps. The contracts cost 500 million Euros, about 16% of the government’s expenditure that year. However, the services were never delivered. William Bellany, US ambassador to Kenya at the time argued that this money, siphoned through this contract scam, was enough to supply every HIV positive Kenyan with antiretroviral for 10 years. In 2005, John Githongo, the whistle blower in this scandal, went into exile. Githongo was Permanent Secretary for Governance and Ethics at the time he exposed the scandal. He did not feel safe. In March 2015, about 11 years later, 13 individuals were charged in court for orchestrating the scam. Media reported that businessman Deepak Kamani, serving senator, several former government officials, an American and a Briton. What makes the Anglo-Leasing scandal a major issue, is not only its magnitude, or the fact that a later government is acting on a decade long case; but the fear of naming those involved in it. Even when a case is in court, only the name of one Deepak Kamani is reported in media. This case represents one of the most challenging issues in the war against corruption in Kenya-the fear to name those involved in corruption.
In April 2015, the Director of Public Prosecution (DPP) Keriako Tobiko asked government to review the security of prosecutors and judicial officers handling high profile and transnational crimes. A few weeks after the DDP’s request, Anti-Corruption Commission chairperson Mumo Matemu said his life was in danger, after a van rammed into his car twice.
In order to continue the fight against corruption under such circumstances, journalists and activists have coined the term “some forces in this country”, a term they use to refer to corrupt individuals, who they can’t name by their real identities. One hidden rule seems to guide efforts against corruption in Kenya. And this is the rule: You can seek them, find them, see them, know them, but you can’t name them.
Making governments more transparent: International experiences
The reason governments were created was to provide public services. In Nordic nations, local governments for example are more established, accountable, efficient, and participatory. They provide some of the services national governments provide in developing countries for instance education. In Japan, local governments operate at village level, where each village determines its own public service priorities and how they should be delivered. Local government is also involved in foreign policy decisions, especially those that directly affect the economy or are essential to the affairs of the local people. This shows not only the stability of government systems, but also the level of competency and accountability at which they deliver services, as well as the trust institutions have earned over time. However, in developing countries, governments don’t always work as they should. Based on various examples from around the world, Pierre Landell-Mills (2013) points out that this has to do with money and politics. Political influence on government systems and operations largely determines whether people will benefit from public services or not. Drawing lessons from Landell-Mills, this article shows how governments from around the world failed to demonstrate transparency and actions taken to address these problems.
Poland: Foreign aid from the EU was about to be embezzled by local public agencies becauseinformation on aid money was not accessible to the public.In response, Polish Green Network undertook the initiative to strengthen the capacity of local civil society organizations to engage in public monitoring and to improve the regulatory framework. As a result, the money was not embezzled.
Philippines: Lack of transparency in the public procurement of drugs led to ‘ghost’ deliveries, incomplete deliveries, overpricing of drugs, poor management of health budgets, and delivery of sub-standard medicines. In response, National Citizen’s Movement for Free Elections (NAMFREL) partnered with the Department of Health to create a procurement monitoring system and codes of conduct.
Romania: A major restructuring in the energy sector was intended to bring together two state-owned companies matching oil, mining and gas sectors. Media was misinformed about the details. Experts however were concerned that this restructuring was going to conceal hidden subsidies estimated at US$ 3billion. Romanian Academic Society a leading think tank studied the restructuring process, developed a comparative framework of best practices, and raised public awareness over the issue.
Mongolia: Due to lack of awareness on corruption, the national anti-corruption program lacked adequate public support. In response, Zorig Foundation worked to transform media into an effective anti-corruption watchdog. In this program, journalists engaged in a competition to investigate, cover and expose corruption in the country. This initiative helped to raise public awareness and mobilize public support in favor of anti-corruption initiatives.
For further readings consult, Pierre Landell-Mills (2013) Citizens against Corruption
Resources on corruption
http://news.yahoo.com/african-president-fights-back-over-corruption-charges-194343039.html
http://www.theguardian.com/world/2015/feb/16/irans-former-vice-president-jailed-for-corruption
Resources: http://www.theguardian.com/books/2009/mar/14/politics
ttps://www.standardmedia.co.ke/mobile/?articleID=2000158974&story_title=eacc-chairperson-mumo-matemu-say
Transparency Thailand Newsletter, January 2015
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 decade. Investigations 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.bbc.com/news/world-europe-30777844
http://www.reuters.com/article/2015/01/20/us-governments-data-transparency-idUSKBN0KT1IS20150120
http://hosted.ap.org/dynamic/stories/A/
http://www.trust.org/item/20141204153933-59mqn/?source=search
http://af.reuters.com/article/topNews/idAFKBN0KO0GW20150115
Police and Corruption
http://uk.reuters.com/article/2015/01/23/uk-rwanda-corruption-idUKKBN0KW0RD20150123
http://www.theguardian.com/world/2014/nov/25/thai-senior-police-officer-corruption-charges
Sports and Corruption
http://www.reuters.com/article/2015/01/27/us-china-sports-corruption-idUSKBN0L007420150127
www.reuters.com/article/2014/11/17/us-china-corruption-idUSKCN0J118Z20141117A
Corporations and Corruption
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