Corruption: From Abuja to London

If asked to fill in the blank in the phrase “corrupt ____ countries,” many would insert the words “third-world” or “developing.” And that would not be incorrect. As an OECD report on the subject put it, “In most developing countries today, corruption is widespread and part of everyday life…”

But if you think the developing world is morally upright and relatively free of corruption, well, there’s a blank in your thinking that also needs filling in. The anti-corruption summit in London, last week, reflected a changing world-view.

At the summit, British Prime Minister David Cameron told Queen Elizabeth that “leaders of some fantastically corrupt countries” — specifically, Nigeria and Afghanistan — were there. Cameron’s former policy chief, Steve Hilton, who overhead the comment, added that the United Kingdom is “fantastically corrupt, too.”

Cameron himself has suffered from the Panama Papers fallout, after his late father, Ian Cameron, was among the leaked list of clients of a Panamanian offshore services firm. As it turns out, the prime minister recognizes that the problem has to be dealt with closer to home than Abuja or Kabul.

For example, a European Union report two years ago said it found& a “breathtaking” amount of corruption linked to EU funding in member countries.

In the United States, we are no strangers to corruption, either. Banks on Wall Street have paid tens of billions of dollars in fines for insider trading, financial fraud, price rigging and other financial crimes in recent years.

Just this week, the corruption trial of veteran Pennsylvania congressman Chaka Fattah opened, in which he is accused of accepting bribes and misusing campaign funds and federal funding to line the pockets of family and friends.

In the looming general election campaign, charges of corruption are likely to play a significant role. The putative Republican nominee has already made a talking point of his likely Democratic opponent’s record of taking fabulous fees from Wall Street banks — some $1.6 million for eight speeches, according to one source. She, of course, denies that her Wall Street connections have any influence on her financial policies. By the same token, the Republican candidate may not be invulnerable to unpleasant revelations about his business dealings.

The problem is so ubiquitous that until recently, economics researchers could only guess at the figures. Like dark matter, it’s everywhere, but hard to put your finger on. But now, the RAND think tank tells us that “thanks to the ‘explosion’ in measurement approaches,” we have arrived at a ballpark figure: a “conservative” estimate of bribery internationally comes to about $1 trillion dollars. The IMF helpfully translated that a few days ago, saying that it means around 2 percent of global gross domestic product is now paid in bribes annually.

And that’s just bribery; it doesn’t count such common pastimes as embezzlement, tax evasion, conflicts of interest, and so on.

What to do? Is there any way to make people more honest? The answer, it seems, is Yes.

The London summit came up with some ideas, like the Global Forum for Asset Recovery to address the issue of returning stolen assets to countries from which they were taken — often by their own ministers and officials. Cameron also pledged that the British government would require foreign firms that own London property to declare their assets in a public register.

Nor are the developing countries abandoning the threat of cutting off aid when they see most of it going to local politicians. On the eve of the London meeting, IMF Managing Director Christine Lagarde’s recent warning to the Ukraine hung in the air. She said the IMF would halt its $17.5-billion bailout for the Ukraine unless it gets serious about fighting corruption, including new governance reforms.

But it isn’t just a desire for good governance and universal morality that’s driving the Western leaders. Tim Evans, a professor of political economy at London’s Middlesex University, pointed out that fear has a lot to do with it.

“They’re worried at the loss of legitimacy that will come from rich and powerful people being able to evade taxes and get away with it. So, I think there’s huge pressure on elites to be seen to be engaging the subject and to be doing something about it,” Evans said.

“Given some of the things, some of the riots and problems we’ve seen in Europe and in the United States in recent years, the politicians are fearful, and they’re becoming focused on trying to rebuild trust and transparency,” he told the Voice of America.

Corruption has been an inseparable part of government for much of history, and despite efforts to root it out, a certain amount of corruption is likely to continue. But at the very least, the elite countries should own up to the fact that this isn’t a third-world issue, but a common denominator that they all share.