8 Ways to Commit Grand Corruption (Part 2)

Large bribes paid to public officials are difficult to track. Hardly ever are the bribes delivered in suitcases of cash  – although that has been known to happen. More often than not, bribes are paid through bank transfers made to “corporate vehicles” – companies, foundations and trusts – that have been set up to conceal illegally acquired wealth. As The Puppet Masters, a recent study by the World Bank, says, there’s a whole industry of  “service providers” – law firms, notaries and secretarial companies – that exists mainly to help clients hide  illegally acquired assets by setting up companies and other structures that obscure their real ownership. Read the rest of this entry »


8 Ways to Commit Grand Corruption (Part 1)

Frederick Chiluba, who was Zambia’s president for most of the 1990s. was convicted of corruption. Investigators seized his wardrobe, which included 100 pairs of handmade shoes. (Photo from Ghanian Chronicle)

Having grown up during the Marcos era, I have a morbid fascination with corruption that takes place on a grand scale. By the time their 20-year reign ended in 1986, Ferdinand Marcos and his glittering wife Imelda had amassed a fortune estimated at $10-$20 billion dollars and stashed in Swiss banks, artwork and real estate, including buildings in Manhattan.

The looting continues. Only now, for example, are we beginning to get an idea of the assets amassed by more recently fallen dictators. Muammar Gaddafi  is said to have $200 billion in bank accounts, real estate and corporate investments worldwide. Hosni Mubarak’s fortune is estimated at $70 billion, including investments in companies and real estate in London, Manhattan and Beverly Hills. Read the rest of this entry »


How to track looted wealth

I am off to the annual conference of the Investigative Reporters and Editors, which will be held in Boston this year. I will be on a panel on international corruption together with Claudia Mendez Arriaza of the Guatemalan newspaper El Periodico and  the New York Times’ David Barstow, who shook Walmart with his blockbuster story on payments totaling $24 million that the company made to Mexican officials.

I will be talking about tracking looted wealth. Here’s a preview of my presentation,  published in The Global Muckraker, a blog put out by the International Consortium of Investigative Journalists:

It’s estimated that every year, over a trillion dollars flow illicitly out of the world’s economies. These are the proceeds of corruption, crime and tax evasion. A lot of that money ends up in bank accounts, companies and various assets overseas. The Global Financial Integrity Task Force says that a good portion of  it – about $2 trillion of the $10 trillion in deposits held by non-residents in offshore centers – has found its way to the United States.

It’s hard to document these illicit financial flows: banking secrecy and the opacity of corporate information in offshore jurisdictions, including the U.S., cover up the money trail. But it’s not impossible. Read the rest of this entry »


How to investigate corruption in the courts 2

Just how prevalent is corruption in the courts? The closest approximation we can get is from a 2007 global survey by Transparency International. It found that 20% of African respondents who had interacted with the judiciary the previous year said they paid a bribe. For Latin America, the figure was 18%, and Asia, 15%.

These are rough estimates, but surveys are a safe and anonymous way to get revealing information about bribery in the judiciary. After all, few people openly admit to bribing judges. (A recent exception was Pakistan’s top real-estate developer, Malik Riaz Hussein. This past week, he provided journalists with evidence that, in order to curry favor with the Supreme Court, he had paid for lavish London vacations taken by the son of Chief Justice Iftikhar Muhammad Chaudhry. Hussein’s admission raised eyebrows in Pakistan: the charges, some journalists say, are part of a plot to discredit the independent-minded chief magistrate.)

Unlike the statements of self-confessed bribers, surveys have been less contentious. In Russia, the independent INDEM Foundation conducts annual surveys of “everyday corruption.” The 2010 survey found that Russians were most likely to pay small bribes to traffic policemen and to facilitate entry in publicly funded kindergartens and colleges. Bribes paid to courthouses were lower down the list, with the average bribe at less than $400. Read the rest of this entry »


How to investigate corruption in the courts 1

Damning photo: Tun Eussof Chin, then chief justice of the Malaysian Supreme Court (second from left), and his wife were photographed vacationing in a New Zealand ski resort with a prominent lawyer who had a case pending in his court. (From Malaysiakini)

This week,  scandals involving high court judges in the Philipppines and Brazil were in the international spotlight. On Tuesday, Renato Corona, the chief justice of the Philippine Supreme Court, was removed from office after having been found guilty by the Senate of failure to disclose millions of dollars in his bank accounts.

On Wednesday, The New York Times reported that high court judges in Brazil were alleged to have taken overseas trips on private planes arranged by opposition senator Demostenes Torres. The senator is said to be a “gopher” for Carlinhos Cachoeira, a powerful businessman and illegal gambling operator who is known as Brazil’s Michael Corleone. Read the rest of this entry »