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 »

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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 »


On the trail of Bo Xilai 2: Beyond China and Hong Kong

Page from a Hong Kong corporate filing shows that Hitoro Holdings, in which Gu Kailai’s sister is a director, is mostly owned by a British Virgin Islands company called Informatic Resources Limited.

Like many members of the Communist Party elite, recently purged Politburo member Bo Xilai and his family members did business in Hong Kong and the West, making it easier for journalists to find a document trail. Bo’s wife Gu Kailai, a high-powered lawyer, practiced in the U.S. and lived in the U.K. for some time. The couple also sent their son to a posh boarding school in England then on to Oxford and later Harvard, where he is currently in graduate school.

Last November, the son, Bo Guagua, provided Exhibit A for a Wall Street Journal essay on China’s princelings. The article opened with a bright red Ferrari the young Bo was supposedly driving around while in Beijing. As the piece said cheekily, he “was driving a car worth hundreds of thousands of dollars and as red as the Chinese flag, in a country where the average household income last year was about $3,300.”

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Follow the family: On the trail of Bo Xilai 1

Hong Kong-based Next magazine followed the trail of corruption left by the recently disgraced Chinese Communist party official Bo Xilai and his glamorous wife, who has been implicated in the alleged murder of the U.K. businessman Neil Heywood.

No recent political scandal has been more riveting than the one that has been swirling around Bo Xilai, the recently purged Chinese Communist Party official now in the international spotlight.

As most of the media focused on Bo’s precipitous fall from grace and its implications on the Party leadership, a feisty Hong Kong magazine began sniffing the corruption trail. In two weeks of intense reporting, the Hong Kong-based, Chinese-language Next Magazine uncovered previously unknown business dealings by Bo and his glamorous wife.

In subsequent weeks, reporters at the Wall Street Journal, the New York Times and Bloomberg, would be on that trail, too, trolling public records databases around the world to piece together information about the couple, information that in the pre-digital days would have been difficult to find.

This is the new era of investigative reporting. Governments and companies are publishing increasing amounts of information online – yes, even in China. And the ability to find and mine that information is now an essential part of any journalist’s toolkit. Read the rest of this entry »


Follow the houses 2: A DIY Guide

The rock star Sting is among those who bought an apartment on 15 Central Park West, where a Russian billionaire recently purchased an $88-million penthouse.

It’s hard to find assets squirreled away in Swiss banks or buried in an offshore company in the Bahamas. Houses, however, are difficult to hide. As anyone who owns a house knows, a real-estate purchase leaves a trail of public records. That’s why they provide relatively easy pickings for investigative journalists. Reporters may not be able to find evidence of bribery or of other corrupt acts, but with some real-estate sleuthing, it’s possible to trace where the proceeds of crime or corruption went.  Following the houses, therefore, can be as productive as (and sometimes easier than) following the money.

It helps that land records are publicly available in most places – if not online, in public registers accessible to citizens. The New York Times’ recent piece on Russian billionaires gobbling up  $1-billion worth of the fanciest real estate in Manhattan and elsewhere in the United States was made possible in part by the availability of real-estate records stored in online databases throughout the U.S.

In New York, it’s possible to search ACRIS, the city’s online property registry, by party (owner) name or address. Last year, my students were looking into investments made by a shadowy Chinese company in Guinea.

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Follow the money (and the houses)

Demonstrators outside Estrada's 'Boracay' mansion.

I didn’t know much about real estate until 2000 when my colleagues and I  at the Philippine Center for Investigative Journalism were checking out rumors that then President Joseph Estrada —  a former movie actor famous for his boozing and womanizing — was building fabulous houses for a string of mistresses. It turned out that the houses were just the most visible manifestations of the deep-seated corruption that was taking place during Estrada’s reign.

Since then, I’ve become house-conscious and have kept an informal tally of officials around the world whose crimes and misdeameanors have come to light because of their mania for mansions (cars are a close second, especially Ferraris and Bentleys, followed by private jets and yachts). Whether in the United States or Nigeria, South Africa or Bosnia, public officials have a penchant for using the people’s money to acquire real property. It wasn’t just Imelda Marcos who suffered from a publicly-financed edifice complex. (See my photo collection, Mansion Mania, on Pinterest.)

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