Dances with Thieves
If the West is really serious about combating corruption in the rest of the world, it can start by cleaning up its own act.
On one side: Boris Berezovsky, a former Kremlin insider, now an outcast. On the other: Roman Abramovich, currently a Kremlin insider. The former claims the latter cheated him out of more than $5 billion. The latter denies it.
It’s the lawsuit of the decade, and the London newspapers have been reporting it for months with purple prose and excitable headlines. Words like "jet-setting" and "megalomania" get used a lot, and much of the case hinges on verbal deals allegedly struck on large yachts. The Russian word krysha, which literally translates as "roof" but now means something like "protection," comes up frequently too. Abramovich says he hired Berezovsky as his krysha in the 1990s and gave him a French château and jewelry for his girlfriend as part of the deal. Berezovsky says there were no krysha arrangements: Those gifts — which he doesn’t deny — simply represented his share of the profits of Abramovich’s company at the time, then called Sibneft, a corporate entity that extracts oil and sells it to opaque, offshore companies in Panama, Gibraltar, and Cyprus.
The case, which is being argued by Britain’s best (and most expensive) lawyers, poses a lot of questions. How, exactly, did both men acquire the billions of dollars they are now arguing about? What, exactly, have their acquisitions cost Russian taxpayers in lost income, jobs, and national wealth? And why, exactly, are they having this argument in London?
This final question has lately come to interest me a good deal. For the answer is quite simple: These two Russian oligarchs are suing one another in London because they live in London and because at least some of their companies are registered there. Abramovich owns Chelsea, a British soccer team; both men inhabit vast mansions in Belgravia and Sussex; both have children in British schools. And neither the British legal system, nor the British political system, cares remotely about the sources of their extraordinary wealth. If you have money in Britain, nobody asks you where you got it.
This, if you think about it, is very strange. Not long ago, I attended a high-minded and well-intentioned conference, the World Forum on Governance. It was dedicated to the discussion of corruption, sponsored by the Washington-based Brookings Institution, and attended by an impressive array of anti-corruption activists, legislators, and government officials. For two days, we sat in a Prague hotel and earnestly discussed ways in which procurement might be made cleaner, corrupt officials might be held accountable, and lobbying might be made more palatable. A lot of time was also spent expressing concern about places like Russia — as well as Afghanistan, Kazakhstan, China, most of South America, and large parts of Africa — where corruption is endemic.
"We" were mostly "Westerners" — Americans or West Europeans, that is, with a large dose of Eastern Europeans on hand to relay their experiences too. Yet we barely acknowledge the ways in which the Western world and its network of offshore banks and tax shelters are complicit in the corrupt practices of the East and the South. After all, we service oligarchs, tyrants, and dictators with lawyers and financial advisors, as well as art dealers and butlers. We humor their wives; we educate and flatter their children. Until the Libyan revolution, Saif al-Islam al-Qaddafi, with his London School of Economics Ph.D., was a favored playmate of British bankers and European princes. Only after the Tunisian revolution did the French elite distance itself from Tunisian dictator Zine el-Abidine Ben Ali’s entourage, whose members owned properties in Paris, the Alps, and the Côte d’Azur, where they liked to entertain friendly French guests.
After the revolutions, we confiscated their cash. But why did we store it for them in the first place?
Nor is Western complicity limited to behavior at home. Last year, I heard an Afghan woman — Sakeena Yacoobi, head of an educational NGO — shut up a whole room full of people in Davos who were asking about Afghan corruption. She told them to look in the mirror: In her experience, the really big corruption in Afghanistan came from Western contractors and donors who had to spend too much money too fast. They overpaid for staff, housing, and cars; they bought up local bureaucrats and paid off local politicians. Then they complained that Afghanistan was "too corrupt" for development. And they packed up and left.
In one sense, this is an old story. The link between aid and corruption has been exposed many times, most brilliantly in Graham Hancock’s 1989 book, Lords of Poverty, as well as many other works since. The role that Western banks play in hiding Southern money has been exposed more than once as well.
Yet the Western government officials and academics who study the economics and politics of "transition," trying to figure out how to help such countries become richer, more peaceful, more democratic, and more accountable — a process this new website, Democracy Lab, is intended to facilitate — rarely take into account the negative influence exerted by their own compatriots. For four years, the U.S. Agency for International Development paid for a program designed to develop "anti-corruption instruments" in Russia. Its British equivalent, the Department for International Development, maintains an online database that monitors corruption around the world, in Russia among other places. Their efforts might be a lot more successful if they didn’t have to fight against the bad influence of the British bankers who help Russian oligarchs hide their money or the American contractors who have been given too much money to build roads in Afghanistan too fast.
Since 9/11, we have come to understand that kleptocratic foreigners aren’t just somebody else’s problem. Corrupt governments can harbor terrorists; they can buy and sell lethal weapons; they can pour money into criminal enterprises — all of which can eventually become our problem too. Why, then, don’t we talk honestly about how to stop helping them?