Oligarchy

Hello, and welcome to Oligarchy. We are tracking how Covid-19 and the world’s response to it is affecting the super-rich — and what that means for power and politics.

CORRUPTION KILLS

Last week, South African President Cyril Ramaphosa gave an important speech about the national effort to contain Covid-19, which has killed more than 6,000 South Africans. He directly addressed the increasingly loud concerns about the theft of money being spent to fight the disease: through fraud, overpricing of goods, collusion between companies and officials, and the creation of fake charities.

• “More so than at any other time, corruption puts lives at risk,” he said.

His government initially won praise for its response to the outbreak, but the virus has since surged, and allegations of embezzlement from the health budget have become increasingly hard to ignore, with media reports of more than $130 million being stolen. 

• “South Africa is becoming a nation of thieves, with the most unscrupulous enablers in official positions all too ready to feast on the relief meant for the most vulnerable in our society,” said Sandile Zungu, president of the Black Business Council.

Some of the allegations have touched people in Ramaphosa’s inner circle, and cynics suggested the only reason the president was speaking out now was because he desperately needed a loan from the International Monetary Fund to keep his government solvent. The loan was duly approved on Monday, with the usual warnings about “full transparency and accountability.”

The IMF has previously been heavily and rightfully criticized for attaching too stringent conditions to its loans, and has come close to admitting it went too far in imposing neoliberalism on countries. As Naomi Klein wrote in The Shock Doctrine, governments can usually only be forced to do things they don’t want to when faced with a major external shock: a tsunami; a terrorist atrocity; the loss of subsidies. In the cases she highlighted, this was overwhelmingly a bad thing, since it allowed Westerners to impose financial capitalism on countries that were neither ready for it, nor wanted it.

However, if the shock of Covid-19 forces politicians to stop stealing from their people, and start serving them instead, that’s a doctrine I can get behind, because right now the trend is in the opposite direction: in the United States; in many parts of Europe; and everywhere else too. 

Every penny stolen from health budgets by oligarchs is a penny not being spent on helping sick people. A study published almost a decade ago conservatively estimated that 1.6% of all the children that die every year die because of corruption. That’s 160,000 children — enough to fill every seat in the largest football stadium in the United States, with enough left over to fill the Yankee Stadium too. Every year.

So, why has this not been a priority before? There are many different reasons for that, which is itself one of the reasons.

• “This topic has failed to engage most global policymakers, who seem to put it in the “too difficult” tray,” noted an editorial by three influential London-based academics published last year.

If a pandemic doesn’t move it into the “urgent” tray, nothing will. 

• “As Covid-19 infection rates and death rates rise, leading to mass graves, these too will be the images of corruption,” wrote Martin Woods, a compliance analyst, and former police officer, who blew the whistle on Wachovia Bank’s money laundering in Mexico. “We should use these images to train and influence our staff and our customers as to why we seek to stress the importance of due diligence, transparency, and certainty when helping customers to make and receive payments. The corrupt consultants who syphoned funds from health contracts also stole the oxygen from the lungs of people who subsequently died from Covid-19.”

Corruption makes everything worse, which is depressing. But conversely, getting rid of even some corruption would make everything better, which is heartening.

STOP SHOOTING THE MESSENGER

Corrupt officials may consistently fail to tackle allegations of corruption, but they do tend to find time to persecute the people making the allegations. Last week, someone burned down the house of Vitaliy Shabunin, the head of the board of Ukraine’s Anti-Corruption Action Centre (AntAC). He and his children were not at home at the time and, mercifully, the neighbours awakened his parents before the fire got out of control. It was bad, but it could have been a lot worse.

President Volodymyr Zelensky condemned the attack, which was nice of him, although it would have been even nicer if he’d reinstated Shabunin to Ukraine’s anti-corruption council, from which he removed him in June, elevating several controversial officials in his place. It would be great too if he intervened to stop some of the legal cases that have been brought against Shabunin.

This is just the latest attempt to pressure Shabunin into shutting up, although happily none of them have succeeded so far, and Shabunin continues his vital work. 

Full disclosure: I’m a member of AntAC’s supervisory board and know Shabunin well, so I’m not exactly neutral here, but I sincerely hope I’d be appalled by this attack even if I had never met him. If you’d like to know more about him and AntAC’s work, he’s speaking at this online event on August 3.

Depressingly, the authorities in Zimbabwe have the same approach to tackling those that expose the misdeeds of the powerful as their counterparts in Ukraine. Last week, journalist Hopewell Chin’ono was arrested, with officials accusing him of conspiring with external powers to undermine the government’s credibility and legitimacy, which was widely seen as punishment for his work exposing official corruption.

• “Acts of aggression against journalists such as Hopewell who engage in investigative journalism are a clear sign that he is being victimized for exposing corruption in government,” said the Zimbabwe Union of Journalists.

“Zimbabwean authorities must stop misusing the criminal justice system to persecute journalists and activists who are simply exercising their right to freedom of expression and peaceful assembly. The authorities must stop using the police and courts to silence dissent,” said Amnesty International.

THIS WEEK

I’m going to be hosting an online event for the Frontline Club to discuss what corruption looked like in the era of Donald Trump and Covid-19, with three fantastic guests: Sarah Chayes, whose new book, “Everybody Knows,” I mentioned a month ago; Helena Wood, of the British think tank RUSI; and Shabunin’s colleague at AntAC, Daria Kaleniuk. It’s on July 30 at 7p.m. London time; it’s free, so sign up, if you want more oligarch-chat in your life.

WHAT I SHOULD BE READING

I’m uncomfortably aware that the books and articles I read about oligarchs, corruption and kleptocracy are often by people like me: white, middle-aged, Western blokes. So, please send me suggestions for things to read — papers, books (both fiction and non-fiction), articles, theses — things to listen to, and things to watch; the more, the better. I’ll highlight them here, which will hopefully not only educate me, but also improve the diversity of the sources we all rely on for information about the world’s oligarchs.

See you next Wednesday,

Oliver