Highway robbery: Investigating corruption in road projects

Unfinished bridge in Abra province, northern Philippines. Corrupt contractors ran away with the funds for this project. (Photo from the Philippine Center for Investigative Journalism)

The Summer School sponsored by the Balkan Investigative Reporting Network ended yesterday, and as the participants got ready to leave the picturesque mountain town of Mavrovo, Macedonia, talk inevitably turned to the bad state of roads in the Balkans. Most of the journalists were driving back home, taking journeys that will last five to 11 hours on highways that have seen better days.

Many of them traced the sad state of public works in the region to corruption. It’s a lament that’s heard in many other places as well. Yesterday, the ramp of an eight-lane bridge collapsed in Harbin, northern China. Reports say the bridge was just nine months old and was the sixth major bridge to have collapsed in that country in the past year. Citizens have blamed corruption and the frenetic speed of construction for the shoddy infrastructure.

Read the rest of this entry »


Unlocking Swiss secrets

Secrecy is deeply embedded in Swiss political, bureaucratic and business culture. It’s of course not surprising that the world’s banking capital puts a premium on discretion and confidentiality. Switzerland is still a preferred location for companies and rich individuals around the world because it offers tax and other advantages, including political stability and a low level of transparency. Many journalists probing business, corruption, and even organized crime are bound to encounter either a Swiss bank account or a Swiss company in the course of their reporting. And getting information on them is not going to be easy.

But even in Switzerland, the walls of secrecy are slowly being breached. Banking secrecy there is no longer as ironclad as it used to be, after the U.S. began aggressively forcing Swiss banks to open their records as part of an effort to collect taxes from American citizens stashing their wealth overseas. Read the rest of this entry »


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 »


How to hide your wealth 101

There is nothing more damaging for public officials than to have their secret and hard-to-explain assets exposed to the public. You’d think that they would have learned by now. And yet…

In the past weeks, I have been following from afar the travails of Renato Corona, the chief justice of the Philippine Supreme Court. Corona is in the midst of an impeachment trial and was found to have deposited millions of dollars in undisclosed bank accounts. As chief justice he should have known: Bank secrecy is not inviolable. As regulators worldwide crack down on money laundering and compel banks to be more accountable for their depositors, full secrecy is no longer guaranteed.

So here’s some unsolicited advice to those in public office: Be careful where you put your money. Be discreet about acquiring assets. Don’t be sloppy when you hide your wealth. Otherwise you’ll prove true what I’ve suspected all along: only the uninitiated and indiscreet get caught. Read the rest of this entry »


Globalizing stolen assets: greed, fear & a taste for the luxury goods of the West

Harvard professor and China expert Roderick MacFarquhar had an insightful op-ed in today’s New York Times, where he talks about why the Chinese elite are stashing their assets overseas and sending their children abroad for schooling. It’s not pure greed, he says, but fear.

China’s Communist leaders cling to Deng Xiaoping’s belief that their continuance in power will depend on economic progress. But even in China, a mandate based on competence can crumble in hard times. So globalizing one’s assets — transferring money and educating one’s children overseas — makes sense as a hedge against risk. (At least $120 billion has been illegally transferred abroad since the mid-1990s, according to one official estimate.)

Such massive asset transfers are happening not just from China, but other places as well, such as Russia and the resource-rich states of Africa, where the acquisitiveness of political leaders have earned some global notoriety. But is it really just fear that motivates the accumulation and transfer of wealth? Is it also not the sheer enjoyment of what money can buy? Read the rest of this entry »


Putin’s Wealth: No ‘smoking gun’ but some ‘smoking watches’

Certificate showing that the wife of the Russian first deputy prime minister is the sole shareholder of a British Virgin Islands company that made millions from a “loan” it gave to a Russian steel conglomerate.

Last month, The Bureau of Investigative Journalism in London and the Al Jazeera program, People and Power, released the provocatively titled investigation, “Putin: The Richest Man on Earth?”

The report examined Putin’s assets and allegations that he had amassed vast amounts of wealth. The Bureau employed a tried and tested way of uncovering the hidden assets of politicians: its reporters used asset declarations as a starting point and then unearthed proof that other, hidden, and more substantial assets had been acquired through questionable means. This method has been used with some success elsewhere, notably in the Philippines, where journalistic investigation into the assets of the president led to his ouster and by prosecutors in the ongoing trial of the Supreme Court chief justice, who was found to have had millions of dollars in undeclared bank accounts. In Thailand, reporters have used then Prime Minister Thaksin Shinawatra’s asset declarations to show that he had violated divestment laws, an exposé that came close to forcing him out of office in 2001. Up to now, Thaksin is still facing lawsuits alleging he had falsified his asset disclosures. Read the rest of this entry »