Beating kleptocrats at their own game: Learning how to tackle kleptocracy more effectively Elsa Peraldi June 13, 2019 7 Comments Kleptocracy – a global phenomenon, with local consequences One of the many benefits of globalization is, depending on people’s access to technology, the possibility to connect with everyone everywhere almost instantaneously. However, the logic of instantaneous connectivity has allowed corrupt governing elites to commit and get away with crimes of baffling magnitude. Kleptocracy, a government or state in which those in power loot state resources for private benefit, is a “side effect of globalization.” Despite kleptocracy’s being around for so long, anti-corruption advocates have only begun to scratch the surface in addressing its challenges. Today, there is growing consensus that kleptocracy is rapidly becoming one of democracy’s biggest threats, although the scale and impact of its corrosive effects have yet to be fully assessed. Kleptocrats bypass anti-money laundering regulations in Western democracies and infiltrate the political system through donations, weakening the rule of law and corrupting the basic pillars of democracy from within. In fact, democracies provide a network of services that enable kleptocratic behavior. White collar professionals – lawyers, accountants, bankers, and public relations agents – in Paris, London, and Washington, DC, provide creative mechanisms through which kleptocrats channel their ill-gotten gains by giving donations to universities, for example; get reputation makeovers, including granting prize awards to multilateral organizations or having former democratic leaders lobby on their behalf; and avoid prosecution. Moving beyond the usual approaches – connecting the dots Traditionally, Western policymakers and stakeholders fighting this type of corruption have failed to tackle the “transnational networks and global services that enable kleptocracy,” focusing instead on the countries where the money is stolen and on kleptocrats themselves. For example: Strategic litigation has been used to bring cases in the United States, France, Switzerland, and the United Kingdom against corrupt officials in Equatorial Guinea, Venezuela, Malaysia, Russia, and Kazakhstan, to name a few . However, obtaining convictions can take as long as 10 years, as in the case against Equatorial Guinea’s Vice President Teodoro Nguema Obiang. Once a conviction is obtained, the process of returning the assets might even fall into limbo due to the lack of established regulations and procedures to return stolen assets. Sanction lists in the United States have been created to prevent certain corrupt officials from continuing to operate freely. Unfortunately, the sanctions focus on individuals and do not affect the networks that enable kleptocratic behaviour. Beneficial ownership registers in the United Kingdom have increased transparency to identify the true owners of shell companies. Yet, in the United States, efforts to pass beneficial ownership legislation have been thwarted by the American Bar Association, mostly over concerns around attorney-client privilege and anti-money laundering reporting. As a result, kleptocrats still have easy access to legal vehicles in which they can shelter their ill-gotten gains abroad. (On June 12, 2019, the “House Committee on Financial Services favorably reported H.R. 2513, the Corporate Transparency Act of 2019,” which would “require companies to disclose the identity of their beneficial owners.” While the bill has bipartisan support, it still must clear the full U.S. House of Representatives and Senate, and there is speculation that registers will be kept from the public, undermining transparency and accountability.) Investigative reports have exposed kleptocrats’ networks in some cases, but the threat of libel lawsuits continues to obstruct efforts to investigate. Corporations and individuals, particularly in the United Kingdom, use lawsuits to cripple journalists’ ability to investigate and expose corruption-related crimes. Many governments have leapt on the anti-corruption bandwagon to win global esteem. This includes authoritarian and populist regimes, who often end up misusing anti-corruption rhetoric or processes to reinforce their own kleptocratic behavior while at the same time delegitimizing or getting rid of the opposition. These experiences demonstrate that there is no single, replicable blueprint for solving complex and ever-evolving kleptocracy challenges, particularly when an interconnected transnational web facilitates the mobilization of stolen resources and whitewashing of images. How do we change the field? Those at the forefront of the fight against kleptocracy – in-country activists, journalists, and government officials – are best placed to lead. Local reformers need time and space to figure out not only what works and what does not, but to think through the why and how, and to share their insights with others trying to tackle kleptocracy elsewhere. More local leadership and coordination of transnational efforts can support the design and implementation of effective anti-corruption strategies that address the different enabling elements of kleptocracy. Without this kind of approach, anti-corruption campaigns and efforts to involve citizens may backfire or fail. Activists and government officials who lead anti-corruption efforts are already trying different strategies along these lines, and we as anti-corruption advocates should encourage them to keep trying! We should help local activists enjoy the flexibility to test whether their devised tactics make life harder for those committing crimes and generate impact, regardless of the type of reform they prioritize. And, just as kleptocrats do, activists and governments should be encouraged to leverage the collective strengths and expertise of their allies around the world to learn and adapt together so that they, individually and collectively, can become more effective over time. If governments and civil society activists are to make meaningful progress in the fight against kleptocracy, unpacking and mapping problems, including with respect to their transnational dimensions; understanding whether and how their strategy fits into the overall system of proposed countermeasures; and tracking whether their interventions have the desired effects is crucial. Only by following this sort of problem-driven, learning-centred, and adaptive approach can anti-corruption organizations learn how to more effectively counter the negative effects kleptocracy has in both Western democracies and in the countries where resources are looted. At Global Integrity, we are excited to support both the local leadership and innovation and cross-country learning that can help address kleptocracy. We help our partners systematically experiment and learn to craft ever-more-effective solutions to corruption problems. We know that starting with problems can be more daunting than thinking of the solutions first. That’s why, in conversations with partners in Central Africa over the past year about how we could work together to tackle kleptocracy, we have turned the process upside down and thought about the problems they face first. Only then can we strategize together about what kinds of solutions fit their contexts and how we might make progress toward tackling kleptocracy. We are excited to keep these conversations going over the next few months and learn more about how we can work together to generate evidence and insights that can inform more effective work against kleptocracy around the world. Topics: kleptocracy Elsa Peraldi Manager, Integrity & Anti-corruption 7 comments on “Beating kleptocrats at their own game: Learning how to tackle kleptocracy more effectively” June 13, 2019 at 7:24 pm GuyChristian Agbor says:Wonderful piece Elsa. Reply November 16, 2019 at 5:27 am Son Of the Soil says:Wonderful piece there. Well written and informative. Case study in particular…Zimbabwe. The once beautiful jewel of Africa has now been torn and destroyed by the liberator-turned-oppressive zanupf government. Under robert mugabe, zanupf looted resources and further impoverished Zimbabweans by denying them to enjoy the national cake. The general masses continue to wallow in untold poverty, meanwhile Zanupf fatcats enrich themselves using political and military power. The biggest curse in Zimbabwe is the army. The army continues to deny the people their will. Elections are rigged, stolen and manipulated because of the deep state capture by zanupf. This cannot be allowed to go on. Zimbabwe shall be free and Zanupf will fall! Reply July 30, 2019 at 11:38 am Armando LP says:Have you ever studied about severe kleptocratic regime in Iran? 1. Dictatorship and use of armed militia men for supression have made civil society, activist and journalists at the weakest position. 2. Constititue wrote in order to give the whole authority to the leader who is called representative of God! And chief of judicial system is appointed directy by the leader, Khamenei, hence no independent judiciary does exist. 3. Islamic regime economic system does not follow any known patterns in the worlds; it is a total mess of comibination of islamic, socialist and capitalist laws with the focus on socalism. Their most obvious aporoach is to hold the the most important parts as state-owned and privatisation of other companies is intransparent and given to the rulling class including both poleticians, military forces and their ties. 3. Islamic regime allies, Russia and China help the cleptocrats to be in power. Globalization has the contrary effects on them; Allies and who profit from kleptocrats help them to transfer the money to supoort terror in Syria, Yemen, Iraq and Ifqanistan also for supply of militia equipment for suppresion of Iranian civil society, on the other hand USA make sanctions on their banking system, IRGC terrorists and statesmen to prevent them from adavancing. Conflict of interests makes EU to be in state between eastern allies of the regime and USA. EU has so many profits in trade with Iran also political and econemical stability of the regime im middle east. Furthermore, the left Eropeans in power need a regime like Iran to stand against USA. I apprciate you if let me know your opinioin about Iran as an expert in kleptocracy. Reply Pingback:‘Xenophobia in the system’: university staff launch fightback against hostile environment | Education | The Guardian | + Opinion – Earthpages.org December 6, 2019 at 8:27 pm Open Your Eyes says:Ever wonder how further corrupt it might be with fake patents and assignments and fake Government procurement contracts no one ever traces back up the line ? How much more corrupt could it possibly be ? Are we really industrialized in 1st World Countries or is the technology really no technology at all based on monitoring the pollution ? You might be shocked at what your STEM industries are hiding ! Reply Pingback:An Insight to Putin’s Kleptocratic Russian Regime – RAIA Group July 2, 2020 at 12:03 am Honey_Badger says:Been tracking suspect “friendly” contracts between various branches of gov’t (military industrial complex & stock market related) and fortune 500 corps and in the last 20yrs it seems that some of the most suspect “donations” (could it be – perhaps more likely, sophisticated money laundering) it comes at critical “technical” junctions (when the S&P500 needs a lift or else risks big declines). Could provide several examples if anybody is interested. Rigged economy (to an extent) – meaning they can tank it when desired, yet lift it all the same and of course certain senators, elites & money managers get tipped 1st. Does the SEC have an interest to ask any tough Qs of the suspects… or could they be involved to an extent (by acceptance via passive acquiescence), is the probable conclusion. Likewise the FDA of late in regards to Covid19 related biotechs. 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