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Friday 7 September 2018
Tackling Moneyland
By Oliver Bullough

Oliver Bullough is a journalist and author, whose work has covered how corrupt individuals from overseas use the UK to launder their stolen wealth. His new book “Moneyland: Why Thieves and Crookes Now Rule the World and How to Take it Back”, is available to buy now.
Anger over corruption is driving political change all over the world, more than ever.


In Malaysia, the former prime minister is facing allegations over the 1MDB scandal; in Pakistan, ex-prime minister Nawaz Sharif has been convicted of corruption; South Africa’s former president has been charged over a $2.5 billion arms deal; and, of course, in the United States, political insiders from Donald Trump downwards are facing questions about dirty money.


For activists who’ve been campaigning on this issue for years — and journalists like me – this feel great, like the world is waking up at last. But there is a gap in the debate around corruption, and that is what the word means. What exactly is it that the world is rising up against? If we don’t know what the enemy is, how will we know if we’ve defeated it?


TI has long defined corruption as “the abuse of entrusted power for private gain”, which is a definition that appears to make sense. If you’ve been shaken down by a Russian border guard, a Nigerian policeman, or at an Afghan checkpoint you immediately know that what happened to you was corruption. It is this definition that powers the Corruption Perceptions Index. The CPI’s scores – most recently, New Zealand and Denmark were winners at the clean end; Somalia and South Sudan were the losers at the bottom – reflect accurately a visitor’s chance of being shaken down on a visit to any chosen country.


But if you look at the headline cases of corruption that have driven such anger in recent years, that definition only captures part of the picture. In Ukraine, for example, “abuse of entrusted power” was just the start of the corruption of ex-President Viktor Yanukovich’s regime.


Having abused their power to steal hundreds of millions of dollars, officials in Kiev hid their loot via elaborate networks of shell companies in Britain, Cyprus, the Caribbean and elsewhere, and bank accounts in Latvia, London and Liechtenstein. With the money in the bank accounts, they bought influence in Washington and Westminster; they hired assistants in Vienna and Zurich; their children splashed out on shiny toys in Monaco, Milan and Mikonos.


The precise geographical locations may be different for Malaysian officials, South Africans, or Afghans, but the basic pattern is the same. Money is stolen in one jurisdiction, laundered in a second, then spent in a third. This three-stage pathway – steal, hide, spend — is powered by the anonymity and convenience of offshore finance. And it is all corruption.


What this means Is that the corruption scandals in the headlines go far beyond the idea of “abuse of entrusted power” (that’s just the initial “steal” stage of the pathway) into a host of related offences, all dependent on the original crime like bacteria are dependent on our guts. The second and third stages of the pathway are not just separate from the first one, but actively support it. If you can’t hide your stolen wealth, you can’t get away with stealing so much of it; and if you can’t spend it, you wouldn’t steal it in the first place. Our guts wouldn’t work without bacteria; the bacteria would have nothing to eat, without our guts.


By focussing our attention only on the first stage of the pathway protesters can criticise and even overthrow politicians, but any new post-revolutionary governments will find it very hard to bring the crooks to justice, and to confiscate their ill-gotten fortunes, if they fail to address stages two and three. Modern corruption is by its nature transnational. Dirty money seeks out weaknesses in the globalised financial system; it hides in dark spots; it profits from our willingness to ignore our scruples in return for its spending power. Laws, however, are by their nature national. They have to stop at the borders that money ignores. This mismatch creates a virtual space beyond the reach of the law, where money is free to go where it likes, which I call Moneyland.


Tackling Moneyland is beyond the capabilities of all but the best-resourced and most fearsome investigative agencies. The US Department of Justice’s first case against the ruling family of Equatorial Guinea collapsed. The majority of Ukrainian ex-Premier Pavlo Lazarenko’s assets remain unconfiscated, despite him having been convicted by a US court more than a decade ago, and having committed the crimes in question a decade before that.


This is a problem because, if the current wave of anti-corruption uprisings fails to lead to prison time and asset confiscations for the politicians who abused their powers it will drive distrust for the international architecture that underpins the rules-based order. And a populist backlash would, like all populist backlashes, benefit the cynical and the vicious, and thus help return the corrupt to power.


Everyone – from organisations like TI, to journalists, to politicians, to investigators – needs to take all three stages in the corruption pathway as seriously as they take the first one. The only way we can properly combat corruption is to make sure we properly understood how it works.


If offshore centres stopped helping politicians hide their stolen money, then those politicians would be both easier to prosecute, and discouraged from stealing. If big western cities stopped accepting foreign crooks’ money into their real estate and luxury goods markets, those crooks would no longer want to steal so much money, and that money would be easier to confiscate.


Look at the case of Nawaz Sharif: he’s been convicted of corruption in his home country, thanks to his purchase of four luxury properties in London, having previously gone undetected by obscuring his ownership behind three British Virgin Island companies. The BVI and the UK are as crucial to this crime as Pakistan was, yet where are the prosecutions in these jurisdictions?


If we want to help ensure the anti-corruption uprisings are a success, we need to help them by tackling corruption in its entirety. And that means we in the West, and in Britain most of all, need to face up to our own role in hiding and accepting crooked officials’ stolen wealth.

Transparency International has been fighting corruption around the world for a quarter of a century. As we turn 25 we’re asking what does corruption look like in today’s tumultuous world, and importantly how we can best fight it? For this blog series we’ve canvassed opinion from some of the leading voices in the anti-corruption world and will be sharing those here. Views expressed on this blog do not necessarily reflect those of Transparency International and where possible we encourage robust discussion and debate.


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