Corruption thrives in a globalised world

Has corruption become more common? Or simply easier to expose

Gideon Rachman

Remember the Brics? When the concept was first launched by Goldman Sachs in 2001, it was a handy acronym to describe the world’s most dynamic emerging economies. There were always sceptics who questioned just how much Brazil, Russia, India and China have in common. Those doubts only grew when South Africa joined the club.

But it turns out that the Brics do have something in common after all — corruption. In all five countries, popular rage about graft is at the very heart of politics. And because these countries are increasingly important to the world economy, their corruption problems have global implications.

Both Brazil and South Africa have seen presidents forced out of office by corruption scandals — with Jacob Zuma compelled to resign in South Africa this year, and Dilma Rousseff being impeached in Brazil in 2016. In Russia, the ruling United Russia party is widely known as the “party of crooks and thieves”. The rise to power of Narendra Modi was fuelled by his pledge to crack down on corruption among the elites. The Indian prime minister has since taken the drastic step of abolishing about 80 per cent of the country’s currency, in an effort to squash the black economy. In China, President Xi Jinping’s anti-corruption drive has seen more than 100,000 officials arrested. Meanwhile, Chinese exiles have spread online allegations that corruption extends into President Xi’s inner circle.

High-profile corruption scandals are not confined to the Brics. This month Mariano Rajoy was forced to resign as prime minister of Spain after seven years in office, following a scandal in his political party. And last month Malaysia’s ruling party lost power for the first time since the 1950s — after allegations that the prime minister, Najib Razak, had embezzled vast sums.

Corruption has always existed — and it has never been popular. But the frequency and political impact of corruption scandals seem to be growing all over the world. So has corruption become more common? Or has it simply become easier to expose? The answer seems to be that both things are happening simultaneously.

The globalisation of business and finance opened up opportunities to make corrupt profits in fast-growing emerging economies. Industries that often need official involvement, such as natural resources and infrastructure, are particularly lucrative targets. There are contracts to be awarded and development projects that need official approval. And the money for bribes can always be deposited offshore.

But such malpractice can be exposed. Strong, independent prosecutors and judges such as Brazil’s Sérgio Moro and South Africa’s Thulisile Madonsela have done heroic work in driving forward anti-corruption investigations. Press freedom in Brazil and South Africa has also been critical in keeping up the pressure on corrupt politicians.

Even when the national media are muzzled, the internet provides an alternative medium for airing corruption allegations. The “Panama Papers”, which detailed the offshore financial affairs of many prominent politicians, was the result of an international journalistic project and based on hacked documents.

New forms of international co-operation and transparency have also made would-be crooks more vulnerable to exposure. Changes in the Swiss laws on banking secrecy — made under pressure from the US — were crucial to allowing Brazilian prosecutors to uncover the proceeds of corruption. International investigations by the Swiss and Americans also kept up the pressure on Malaysia’s Mr Razak.

But conquering corruption is not something that can be achieved with a single cathartic effort. Lasting progress requires strong institutions that can survive changes in the political climate; independent courts and prosecutors with training and resources; a press that cannot easily be bought off, jailed or killed; efficient civil servants who cannot be fired at the whim of a corrupt boss. Remove any of those elements and corruption seeps back into the system.

Prosecutors in Brazil are haunted by the example of the “clean hands” investigations in Italy in the early 1990s. These swept away many powerful figures — and were seen as a watershed. But within a few years, Silvio Berlusconi, who epitomised shady business practices, had been elected prime minister.

Searching for examples of lasting cultural change in the battle against corruption, Brazilian prosecutors have lighted upon the example of Hong Kong under British colonial rule and the establishment of an Independent Commission Against Corruption in 1974. Even that achievement may now be in doubt, with growing fears that the independence of Hong Kong’s institutions is being compromised by pressure from mainland China.

The concerns over Hong Kong might give pause to those who interpret the eruption of scandals all over the world as evidence that the global battle against graft is being won. An alternative theory is that the growing economic power of countries such as China, India and Russia may be spreading corrupt practices more widely. The US, EU and UK pride themselves on their sound institutions. But western bankers, lawyers, real estate agents, PR firms (and perhaps even presidents) are often all too willing to share in the proceeds of corruption.

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