Their Corruption, and Ours

December 13, 2020   •   By Erik D’Amato

Kleptopia

Tom Burgis

On Corruption in America

Sarah Chayes

MY FIRST TRIP as an adult to Los Angeles was also the first time I was treated to the junketry often deployed by corporations and governments trying to skew decisions at other institutions in their favor. I don’t remember much about the trip itself — there were free drinks from the moment the towncar collected me at my apartment in Manhattan until my return flight began its descent — but I do recall wondering whether it might have made more sense for my hosts to just slip me an envelope of cash, which is what happened in Nigeria later that year in reverse. I was hit up for cash bribes no fewer than five times.


America has always had a genteel relationship with corruption, including a special gift for devising Talmudic distinctions around legal graft, and other unremarkable bits of everyday life. In the very proper New Jersey commuter town where I live, for example, it is considered normal for parents to slip envelopes of cash to public school teachers and bus aides. But doing the same for the school principal would be thought scandalous.


At the same time, there seems to be a growing agreement with Michael Kinsley’s adage about scandal — it’s what’s legal, not what’s illegal — and thus a tendency to apply the word “corruption” very liberally. Not only do Americans have to grapple now with spectacles like Ivanka Trump’s Chinese licensing deals and Hunter Biden’s Ukrainian board seats, but intense pressure to believe that one matter is a harmless corporate retreat and another matter is brazen payola. Two recent books attempt in different ways to look at this vague stew of corruption.


The new book Kleptopia by investigative reporter Tom Burgis offers an excellent primer on how the sausage of kleptocracy is made in the post-Soviet East and then fattens an insatiable crowd of bankers, lawyers, and other hangers-on in the West. Interweaving several different tales over a dozen years, it homes in on a handful of memorable characters, notably a selfless and doomed British banker-turned-regulator. The digressive approach stretches thin in a few spots (a 180-word riff about a lawyer’s relationship with his Parisian barber) but it helps make the often baffling action real. Kleptopia is a gripping read.


Burgis closes out with a grim warning about how what he lyrically calls the “black aquifer” of dirty money filled by foreign kleptocrats threatens to poison us all. “Globalisation meant that rule by theft and the rule of law were co-existing. It was like China and Hong Kong: one country, two systems, only global. Such tension could not be maintained indefinitely. One system would have to dominate, leaving the other as a façade.”


Yet he makes clear he believes the damage has already been done, calling corruption “the primary mechanism by which power functions” around the world today. He also offers the jarring image of an international kleptocracy composed of “five families”: nationalists; the financial Disneyland that is modern Britain; a mix of spies and crooks (“Sprooks”); resource companies (“Petros”); and the ruthless conglomerate that is the Chinese Communist Party.


For sure, the world’s kleptocrats have had a great run over the past three or so decades, and the black aquifer has been a lifespring to a whole generation of bankers, lawyers, luxury real estate developers, and others in the West. At the same time, Burgis’s fatalism is belied by a global awareness of the problem of kleptopia, and a resolve to deal with it. In fact, times are downright dystopian for some of what you might call the “kleptocrat kids of Instagram.” Teodoro Obiang, son of the current strongman of the African petrostate of Equatorial Guinea, makes a brief appearance in the book due to his purchase of a $30 million mansion in California. But recently Obiang has found himself in trouble in France for embezzlement, while Switzerland seized and auctioned off his collection of exotic cars. Likewise, thanks to the “Luanda Leaks” investigative reporting initiative, Isabel Dos Santos, the daughter of the Marxist-Leninist independence leader of nearby Angola, has gone from Paris Fashion Week princess to international pariah. Meanwhile, Gulnara Karimova, the daughter of the late dictator of Uzbekistan, is now in prison in Tashkent while Switzerland duly repatriates some of the many millions she spirited out of the country. Most spectacularly, in mid-October former French President Nicolas Sarkozy was indicted for allegedly accepting dark money from Libya. One can understand why Burgis would not end on a cheerier note, writing from the city in the West (London) so conspicuously dependent on the ill-gotten gains of the East and the Global South. Still, there has been much progress.


Needless to say, the black aquifer stretches under the Atlantic. And by some measures, America’s taps into it are now the most productive in the world, thanks to the growing ubiquity of anonymous shell companies in the United States. But given America’s vastly larger and more insular economy, corruption in the US is necessarily less about the influence of dark money flowing in from abroad than our own darker side.


On Corruption in America: And What Is at Stake is an ambitious attempt to put American corruption into the context of that of the rest of the world, and of history as a whole. A veteran of various anticorruption campaigns across the Global South, Sarah Chayes is not only an expert on the causes of corruption, but also how it in turn leads to other problems, such as terrorism and environmental crises. In her acknowledgments, Chayes says of her several researchers on the project that she “sold them a bill of goods” by pivoting from a tight focus on contemporary networks to a broader look at the “basic principles” of corruption. And in this she delivers, offering a sweeping history and examination of corruption, from the creation of money to the unchecked avarice of the Gilded Age to the lucre of the black aquifer.


This is at points fascinating and rewarding. But the colorful threads are gathered haphazardly — there are multipage digressions on the history of anarchism and prairie populism — and are quickly balled up by Chayes’s excessively broad notion about what constitutes corruption. This isn’t to dispute Kinsley’s rule of scandals, or the larger notion of legal corruption, including the ongoing trend in American jurisprudence toward an ever-narrower definition of what constitutes official corruption (the judicial redefining of corruption was also a focus of the similarly titled 2014 book Corruption in America: From Benjamin Franklin’s Snuff Box to Citizens United by the law professor and political crusader Zephyr Teachout). But however you define corruption, it can’t just be a synonym for economic and social injustice as a whole, or, as Chayes suggests at points, money itself.


Chayes’s belief that the American system of government and economics is inherently corrupt turns the narrative of a corrupt Post-Soviet East and Global South on its head. It is we who are corrupting them, she seems to conclude, rather than the other way around.


This is not a new idea, and one that clearly has some merit. As Burgis’s account makes clear, the mad rush to clean the bones of the Soviet Empire was not only corrupt to its core, but enabled by the West. Farther to the left, academics like Jason Hickel have made convincing arguments that the widespread adoption of corruption rankings like those of Transparency International should be upended, given the positive scores invariably handed out to countries that are centers of banking secrecy, or dubious tax practices like transfer pricing, which allow multinational corporations to starve developing world governments of the taxes they are legitimately due.


But the image of a fallen, consumerist West corrupting a more communitarian, pastoral South is not very compelling, beyond the awkward issues of orientalism it inevitably raises. The black aquifer empties into places like London, New York, and Amsterdam not because such places are corrupt, or because they offer banking secrecy — Moldova or Myanmar could do that — but because they are places known for respecting the rule of law.


Again, this is not to argue that everything that follows legal niceties by definition isn’t corrupt. I consider it undeniably corrupt that the Trump Organization was able to profit from foreign dignitaries hoping to curry favor with the president, and that my state’s governor is in office solely due to his ability to write an eight-figure check to his campaign account, despite both outrages apparently being perfectly legal. But the two are corrupt in different ways, and their corruption is likewise different from that of my senior US senator, who was “severely admonished” by the Senate Select Committee on Ethics in April 2018 after his indictment on 18 counts of bribery and fraud, and later that year was comfortably reelected to a third term in office.


The defeat of Donald Trump will likely reduce the immediacy and prestige of the corruption beat, and in particular squeeze the market for books about corruption. On the other hand, there are indications that the foreign policy of the incoming Biden administration will center issues like kleptocracy and the “strategic corruption” used by powers like China and Russia to ensnare or co-opt the leaders of other countries. And the grotesque depredations of the Trump years unleashed a new generation of talented and dogged writers on the topic who are unlikely to back off even if the zeitgeist moves on. I especially look forward to the upcoming book by Casey Michel, an indefatigable young American journalist who has virtuatually cornered the international kleptocracy beat on the US end of the black aquifer.


And even if one takes a narrow view of what constitutes corruption, there remains so much to explore, about our own corruption and how it relates to that of the rest of the world. As America moves slowly but inexorably toward a more European-style model of health care, there should be a better understanding that in some European countries your “free” health care often comes at the cost of a envelope of cash passed to your doctor. In fact, in some places it is considered no more corrupt than a gift card for the teacher, or a corporate junket to Los Angeles.


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Erik D’Amato is a New York–based corporate intelligence operative and journalist, and the author of The Little Book of Left-Right Equivalence: 350 Mutual Blind Spots, Dueling Hypocrisies, Double Flip-Flops and Other Uncanny Parallels Between the Two Tribes of Today’s America. He is on Twitter @erikdamato.