Commanders of Corruption

[C]apitalism is not a monolithic form of economic organization but rather that it takes many forms, which differ substantially in terms of their implications for economic growth and elimination of poverty. The implicit assumption underlying the idea of a homogenous capitalism, the notion that all capitalist economies are fundamentally the same, reflects something of the mentality common during the cold war when two superpowers, representing two great ideologies, were struggling for the hearts and minds of peoples of the world. On the one side were countries like the United States, whose economies rested on the foundation of the private ownership of property, and on the other were communist or socialist societies, whose economies essentially did not. This distinction seemed to divide the two economic systems, and not much thought was given to the possibility that there is much more to capitalism. (Baumol et. al. 2007, vii)

Good Capitalism, Bad Capitalism and the Economics of Growth and Prosperity

Fighting corruption is not just good governance. It is self-defense. It is patriotism, and it’s essential to the preservation of our democracy and our future.

—President Joseph R. Biden, Jr., June 3, 2021

Across the world, leaders of authoritarian governments, and their cronies, are robbing their people. These leaders are kleptocrats and they are pocketing staggering sums of cash, which they move through the world’s financial systems into investments in the wealthiest Western nations. These crimes perpetrated by the kleptocrats governing Russia, China, Iran, Egypt, Hungary, Nigeria, and many more nations not only impoverish their own citizens, but all of us. More gallingly, we are assisting them in their greed and their grand corruption. Even more worrying, we are complicit in their quest for ever greater power. (Vogl, Frank; Vogl, Frank. The Enablers (p. 12). Rowman & Littlefield Publishers. Kindle Edition.)

Central to Western complicity with kleptocrats and their associates across the globe are the armies of financial and legal advisors, real estate and luxury yacht brokers, art dealers and auction house managers, diamond and gold traders, auditors, and consulting firms, based in London and in New York and in other important global business centers, who aid and abet the kleptocrats in return for handsome fees—these are the enablers. They are motivated not only by the substantial incomes they obtain but also by the widespread failures of law enforcement across the Western democracies to impose punishments that are sufficient to serve as meaningful disincentives. At the major banks, for example, who have been prosecuted at times for multi-billion-dollar laundering of dirty cash, not a single chairman or chief executive officer has personally faced criminal charges for such activities, while the fines that are agreed to settle legal actions appear, quite simply, to be viewed by bankers as just the costs of doing business. (Vogl, Frank; Vogl, Frank. The Enablers (pp. 12-13). Rowman & Littlefield Publishers. Kindle Edition.)

The short-term maximization of profits is at the core of the corporate cultures at many of the world’s largest banks and multinational corporations. They are giant enterprises and some of these banks have assets under management that dwarf the GDPs of many national economies. The drive for ever bigger and quicker profits, which translate into mounting bonuses for senior executives, push issues of integrity and accountability to the sidelines. Concerns for serving the public interest, which ought to be at the center of the cultures driving vast companies, have increased in recent times as public demands and leading groups of investors have called upon these companies to pay far greater attention to how their business practices impact climate change. Gradually, arguably too slowly, these pressures are generating positive developments. But when it comes to international corruption and the roles that major banks and other giant multinational firms play, then public pressures for reform are few, investor concerns are barely visible, and corporate boards of directors charged with risk management oversight are silent. (Vogl, Frank; Vogl, Frank. The Enablers (pp. 13-14). Rowman & Littlefield Publishers. Kindle Edition.)

Some of the activities of the enablers are illegal. Many of their actions in service to their kleptocrat clients are legal, but they do not serve the public interests of citizens in democratic nations, and indeed well beyond. By supporting the power of the kleptocrats and their associates, the enablers contribute to risks to international security, to Western democracy, and to the stability of the international financial system. The threats are now so formidable that countering the kleptocrats and their money-laundering operations has to become a leading priority for the Biden administration, the US Congress, the British government, the Commission of the twenty-seven-country European Union (EU), and other public authorities, such as those in Canada, Australia, Singapore, and the United Arab Emirates (UAE). These authorities are now doing more to counter illicit finance than ever before, but their combined impact is modest when seen against the full magnitude of international grand corruption and money laundering today. The necessary actions need to embrace fully the roles played by the enablers who reside in our midst, who are subject to our domestic laws and regulations, and whose operations do us so much harm. (Vogl, Frank; Vogl, Frank. The Enablers (p. 14). Rowman & Littlefield Publishers. Kindle Edition.)

Curbing the activities of the enablers will make it far more difficult for kleptocrats and their associates to launder their stolen loot and invest it safely and profitably. It will make it far harder for authoritarian governments to access the global capital markets and secure formidable sums of cash through new bond issues. Diminishing the activities of the enablers for their corrupt clients will make the financing of terrorist organizations more difficult. It will stymie the rising efforts of some regimes, notably Russian and Chinese, to channel funds to foreign governments and organizations in their quests to disrupt democracies and diminish Western geopolitical and commercial influence. (Vogl, Frank; Vogl, Frank. The Enablers (pp. 14-15). Rowman & Littlefield Publishers. Kindle Edition.)

The vested interests are well-entrenched, and securing reforms to counter corrupt practices in finance and commerce more generally will be intensely difficult. The starting point is increasing broad public understanding of the activities of the enablers and why these are so damaging. Too many politicians, journalists, and concerned citizens are poorly informed about how the kleptocrats operate, how the enablers serve their clients, how inadequate are current laws and the application of relevant financial regulations, and just how much cash we are now talking about. (Vogl, Frank; Vogl, Frank. The Enablers (p. 15). Rowman & Littlefield Publishers. Kindle Edition.)

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