The company that bribed the world
theage.com.au
theage.com.au
One thing I can't help think here is: this is just another uncomfortable truth re: what a truly global economy looks like (frankly, similar the factory jobs leaving the US for cheaper labor countries, etc.). The bottom line is that in many developing countries, bribery is part of the economy, and if western companies want to engage in the economies of those countries, then it's not surprising that they need to participate wholly. Because of western anti-corruption laws, they of course can't engage directly, so these Unaoil folks found a solid business opportunity to exploit.
What sucks of course is that western companies often have funds to overpay vs. the local bribery market, so they end up reducing local economic competition, slowing internal development, flooding incumbents with cash, keep incumbents in power longer than they would be otherwise, and contribute to their illegitimacy.
They still should stop, I guess my point is that corrupt systems (usually) pre-existed western corp. participation. If I'm being optimistic, stories like this hopefully will motivate the US and other western gov. to recognize this reality, and then actually develop and enforce international laws to handle this effectively - though I wouldn't hold my breath =)
(Of course, the involvement of western governments in colonization and in creating this atmosphere is a whole other discussion, which I won't start here..ha)
But with climate change, I find it hard to get upset about any corruption that causes the price of oil to rise. The current situation of rock bottom oil prices encourages more consumption and reduces the incentives to improve energy efficiency. It makes it harder for renewables to compete.
Bring on more corruption. Let oil prices boil over.
it works the other way. There is no environmental controls and proper taxation on corrupted contracts by corrupted governments. So the price of such oil is cheaper. Just think - who would pay a bribe to obtain something for a higher price than it would be without a bribe?
>The current situation of rock bottom oil prices
and the cheapest oil is from ISIS - one of the reasons for current low prices. It is the most corrupt oil - to get into your car as gas it passed through the most corrupt laundering "pipelines" in Turkey and Saudi Arabia and further to Ukraine and Poland...
"On the macro level, corruption distorts market mechanisms, like fair competition...The World Economic Forum estimates that corruption increases the cost of doing business by up to 10% on average. "
As to whether ISIS oil is cheaper, I don't know about that, but if so, perhaps that could be because it was stolen from its rightful owners. I don't think you can use that to draw a conclusion that corruption causes costs to go down.
...
>corruption increases the cost of doing business
these statements make sense and are true only than normal competition is a real alternative. Which it isn't in those corrupted countries.
Without normal competition as a feasible alternative, the things are the other way around. Corruption way of doing things is cheaper, while doing things "by the book" is much more expensive if at all possible (an attempt to do "by the book" is basically denying government people an income they are "entitled to" and they don't take it lightly and would make sure that it is less profitable for you :)
In other words, one of the big points of the piece is that the idea that "these countries are just that way and you have to pay to play" is actually not true across the board, and that in cases where the country wasn't that way, Unaoil and their clients made it that way.
But let's assume American justice system works. But still it seems arbitrary and not clear cut.
If Rolls-Royce is banned from operating in US, does that mean Boeing won't install Rolls-Royce engines on airliners they make for their customers?
Samsung is composed of many subsidiaries that do not look out for each other and it may be that just one or few of the Samsung subsidiaries are involved in bribing. Samsung phone division buys chips from qualcomm instead of Samsung chip division because qualcomm is cheaper (or whatever reason). Will US court ban Samsung from US? Then what happens to the billion dollar chip plant in Austin, Dallas that supplies CPU chips for Apple iDevices?
I don't condone bribing but to me I'm not surprised bribe was needed to get anything done in the nations listed. I'm pretty sure anyone and everyone who has any kind of influence in the said nations require bribe before doing anything. A billion + dollar from US went into Iraq that can't be traced. What's a few hundred thousand or a few million dollars? I highly doubt these companies eagerly bribed people, but they to get anything done in those so called nations, they probably had to bribe.
To get away you probably need a third party plus good lawyers. Which your training was successfully in teaching you that lowly programmers can't afford, so they should not take bribes.
I would assume it to be near untraceable if these third parties used shell companies in various offshore jurisdictions to make these payments. Good luck putting that together again, if you try to get data from an unwilling to cooperate jurisdiction.
It's interesting because I have some exposure to law-firm ethics ( I wrote software for law firms for a while decades ago ) and they're like this. Their admins ( who really run law firms ) are past masters at dealing with it. Since it's lawyers writing that law, we should not be surprised.
You get a (distorted for the purposes of plot-conflict) view of that in "Better Call Saul."
http://www.huffingtonpost.com.au/entry/unaoil-bribery-scanda...
Note that I am equally disgusted at both of these.
By the way, is it illegal if the bribes are called campaign contributions or are sent to places the target wants money to go, like a charity that helps their political ambitions?
It's almost never going to be the case that a lobbyist will convince a politician to support a measure they wouldn't otherwise support. Politicians all have agendas and preconceived notions. The most important thing lobbyists do is help politicians filter through he universe of proposals and convince them that particular ones fit within their preconceived worldview and platform.
I think many people have a hard time even conceiving that politicians could support big companies without getting some sort of kickback or campaign contribution for doing so. But a politician's first, second, and third top priorities are jobs. Big companies control the jobs, and for better or worse what's bad for big companies is often, at least in the short term, bad for jobs.
And besides, if a politician passed a bad law thinking he did a great thing for society because corporate marketing was very convincing, does that make a difference?
As to your last point: what is a "bad law?" Does anybody really have any idea what works and what doesn't? Did the repeal of Glass-Steagall cause the 2008 crash? We really have no idea. Did NAFTA leave consumers better off? Who knows? Do minimum wages increase unemployment? Experts disagree. It's effectively impossible to determine what impact laws really have, especially on the economy. Laws and policies aren't judged as "good" or "bad" except in history books. They're judged based on whether they fit into ideological frameworks and prevailing narratives. And voters are part of that. They want politicians who will vote for laws that fit their preferred narrative.
The advertisement makes you want that car, or at least makes you aware that it exists, which influences your behavior in the future, when you are actually able to buy.
The lobbyist never knows if the investment of time and effort is successful until after the vote is cast, and has no recourse whatsoever if is cast the "wrong" way. The car company can't demand a refund for its advertising if not enough extra people want to buy their cars. Watching the ad does not obligate anyone to buy. Lobbying does not obligate anyone to vote in a particular way.
Of course, as the lobbying game is played in multiple iterations, it is certainly a winning strategy to "stay bought". If a lobbyist invests a lot of effort into getting you to change your mind, they will likely continue to do so if you voluntarily act to make that investment pay off every time. There doesn't need to be a legally recognizable quid pro quo. The implicit deal is that consistent cooperation will be rewarded consistently.
no. and yes.
there are donation limits. So what they do, is to create super-PACs and such. which means, lots of little people and companies donate the maximum to the candidate, but all those people and companies all get their money from the same source. So in practice, a single source is brib---donating way more than allowed by law, but legally.
As such, the lobbying will take a different form for different targets, based on their individual preferences and personalities. For some, lobbying will actually take the form of accosting a senator in the lobby of their office building to discuss a possibly overlooked consequence of a bill up for consideration. For others, it may take the form of anonymously mailing some blackmail photos. For others, it may be cash in an unmarked envelope.
My impression of lobbying is that it involves anything and everything likely to produce the desired result within the allocated budget. Some lobbyists are better positioned to influence specific issues than others. If you are not allowed to lobby by offering a bribe directly to the person who must be swayed, it is always possible to work your way down the chain of social connections to someone or several someones that can be bribed to carry your case to that person on your behalf.
If you can't bribe the senator, hire their spouse to change their mind. If you can't hire the spouse, hire their best friend. If you can't hire the spouse's best friend, hire the extramarital romantic interest. If you can't hire that person, hire a photographer.
As long as getting the attention of a government office holder is worth more than what it costs to obtain, there will be lobbyists available to purchase it wholesale and resell it in manageable parcels.
Many seem to think it's only campaigns you don't agree with that are.
However, in the US and other countries with (relatively) developed election and legislation processes, I think there's some key differences:
Lobbying usually requires a level of policy rationalization (however disingenuous) that bribery does not. Lobbyist can say behind closed doors that they want X for selfish reasons, but in order for it to be politically tenable the legislator usually will require at least some publicly defensible rationalization for the action.
Similarly, lobbying usually involves the legislative process and getting a political actor to make certain political/legislative decisions that would benefit the lobbyist's clients. Bribe's usually involves getting a person in power to make decisions that often don't involve the political process or legislations, like the awarding of a contract by an agency under their control, or withholding an investigation.
Seen this way, lobbying can be and has been characterized as interest groups subsidizing the legislative process by providing competing research and proposals to an understaffed legislature. Whether that's a good or bad of making law is another discussion, but I think it's fair to say that bribery could not be considered that way, and therefore serves no acceptable public purpose other than the enrichment of the briber and bribee.
If you think that this must be adversarial, and that The People must get completely impartial ... justice in dealing with all economic entities, then you must expect to match those entities blow for blow. But there are information and resource asymmetries in play that are profound. This ignores that some people simply view activities differently, which will greatly increase the cost.
Grassroots movements organize all the time using donations from its members which they then use to send a lobbyist (a member of the org or a professional) to Washington, where they can use their personal contacts and influence to get an audience with a legislator to provide them with information. Most lobbying, I would wager, is of that form: a lobbyist simply informs the legislator about the on the ground perspective of a grassroots movement's members, a corporation, or industry group. It only becomes distasteful when a lobbyist has influence over campaign contributions or the ability to provide "perks" like hiring a politician's friends or family.
You can argue that campaign contributions are a form of bribery but there remains the big difference that in well regulated nations, all of the donations have a maximum and are tracked publicly [1][2]. In the US, all campaign spending is released publicly, both by politicians/political NGOs and campaign finance improprieties destroy political careers quite often. In the US, the FEC has the authority to enact civil penalties and the DOJ has the authority to prosecute any politicians caught willfully misusing campaign finance to better themselves. [3]
[1] http://www.fec.gov/finance/disclosure/norindsea.shtml
[2] https://www.opensecrets.org/
[3] http://www.fec.gov/ans/answers_compliance.shtml#penalties
Corporate lobbying is questionable for other reasons, but it's not bribery. It's on elected officials to not let businesses influence them too much, no matter how many lobbyists they hire.
People in the western world usually don't realize just how deep the rabbit holes go everywhere around the world and it's very sad.
I've lived in many countries and I speak 6 languages, including Russian, Spanish and Portuguese, which gives me access to local press in many parts of the world.
From Brazil to Turkey, to former Soviet Union to India to China to Latin America, to Africa and the Middle East - the press is teeming with corruption scandals and political unrest triggered by corruption everywhere.
All this fantastic economic growth that we've experienced in the last 20 years - all those titanic infrastructure projects, olympic stadiums, high speed trains, highways, new factories, gold mines, oil fields.... had the effect of producing a kleptocratic global "elite", which currently sits on piles of offshore bank accounts and "own" the power in most of the world, including military.
The western companies have gained a lot from this status quo, having shown positive growth year after year, much of it from expansion into foreign markets, which made investors and regulators happy, yet all that growth helped feed and grow the corruption monster to an incredible size.
Russia is so corrupt that people have stopped perceiving it as something wrong, rather they internalized it as something unavoidable and "part of the culture" - they've long lost hope of fixing it, given that the political elite owns the legal system, police, armed forces and any dissent or attempt of uncovering the scale of corruption, is quickly eliminated, as was the case of Boris Nemtsov last year.
In Moldova, corrupt politicians allowed a group of criminals to extract $1 billion or 1/8th of the country's GDP into offshore companies and that money was never recovered. It was both sad and comic to see the people on the streets shouting "we want our billion back". Yeah, right.
A former Romanian minister was sentenced to prison in the Microsoft licensing corruption scandal just two days ago. More than $50 million have been paid in bribes in that scandal. Note that we're talking about a small country and just one company.
Kazakstan, Uzbekistan, Belarus, Ukraine, in fact most of the former USSR (except maybe the Baltic states) are corrupt beyond imagination.
People in Brazil are rioting on the streets right now because the current president gave immunity to the former president, accused of huge corruption and money laundering allegations.
Venezuela is currently a failed state mainly because of the corruption on all levels.
Afghanistan, Iraq, Syria are failed states with terminal corruption, which inevitably leads to war.
Africa .. I can just guess.
I don't know many details about Asia, but I wouldn't wonder if the picture is similar as in the rest of the 'developing' world.
Corruption is injust, it leads to cynisism and criminal political interest groups, it strengthens the criminal organizations and people loose hope. Eventually it reaches a boiling point, which results in rioting and war, the radical method of reshuffling the power structure.
Sorry for the long comment, but I feel like this issue is on par with climate change - and actually a cause of the latter, so there, I've said it.
I think you might have the cause/effect backwards. War is by far the mightiest and most profitable expression of corruption (My experience/knowledge is mostly limited to Afghanistan, but I have a feeling it applies equally to the other states as well).
The chaos caused by war also breeds corruption because when you're at war, acquisition, infrastructure, and other support are literally life and death. Since there's very little price elasticity and competition (you're at war so you usually try to buy from the most trusted sources which a huge barrier to entry), suppliers can jack up all the prices and not do the work since oversight in a warzone is much harder.
I do disagree with that. It may be true for somebody living at the US and a few more countries that used to be more honest, but in general, corruption was always about as widespread as it is now.
You are seeing a lot of it recently because it is getting uncovered. It is even hard to find a corruption scandal that is new (but I don't speech as many languages), and has not been going on since forever. And corruption getting uncovered is a good thing - it is how it ends.
But the scale of corruption is greater than ever before possible, as globalization allows moneyed, corrupt, and powerful players to pull up the ladder for entire countries. The Internet and modern transportation means you could move you in a day and your and entire stash in a moment - to whatever end of the earth you choose. It's a big planet. Not so easy for the fleeing nobles of the French Revolution.
And here in the States - and my home state of New York in particular - the line between corruption and expected business is very blurry. For example, lawmakers in Albany are allowed to make money on outside income, but what if that outside income relies on your legislation? Obviously that is corrupt (and has seen two prominent assemblymen convicted of felonies recently), but what if a lawmaker the next office over - a respected geologist - consults for fracking firms looking to drill in NY while working with other senators to get Governor Cuomo's fracking ban overturned? I'm sure many people would say yes, but what if instead that same lawmaker consulted environmental groups (for pay) about the risks and dangers of fracking while staunchly siding with Cuomo's moratorium? Is that also corrupt, even if we like that course of action more than the other?
Unfortunately, the more these things get brought to light, the more people call for transparency, and the powers that be work ever harder to obfuscate their actions. Even Barack Obama is guilty of this: he came into office promising the most transparent administration in US history, and has since set the record for classifications and federal charges under the Espionage Act (of 1917! As in, more than anyone else during the whole Cold War!).
Sorry to end on a bummer. I don't really know how to fix such a system from top to bottom.
I take peace from the fact that, at least until my country gets into Switzerland level of corruption, it's a known fact that there is room to improve.
But if you know of an even better example, great, share it.
Well duh, everyone knows that.
Switzerland is rich because a hell of a lot of people benefit from international corruption.
>But if you know of an even better example, great, share it.
Singapore. And possibly Lichtenstein.
I think rather as long as power over other people. Corruption only exists if some people can decide about other peoples money (resources in general).
you don't have that right.
Current government was the first to allow the federal police to go after corrupt politicians, even the ones in office.
that triggered a chain reaction that scared a lot of people (since you pointed out, almost everyone in government is corrupt to some level). Those more corrupt powers (e.g. the candidate that lost to the current president was a drug trafficker) started a bogus impeachment protest that hardly represent what is on the streets. You have manifestations pro-impeachment with 500 people, and against impeachment with 20,000 people, then the press only report about the pro-impeachment one.
What is more interesting? all that seems to be funded by US money. And remember that former and current presidents where the first to forbid american companies to explore Oil in Brazil. It all comes full circle with the article subject.
> Current government was the first to allow the federal police to go after corrupt politicians, even the ones in office.
Even the dictatorship went after corrupt politicians, look at the story of Moises Lupion.
> the candidate that lost to the current president was a drug trafficker
That is a lie, part of the mudfight propaganda from last election.
> a bogus impeachment protest that hardly represent what is on the streets
The pro-impeachment protests are the biggest in Brazil's history, far greater than the pro-government protests. Check DataFolha numbers, the most respected Brazilian stats agency on these issues.
> all that seems to be funded by US money.
Bullshit.
also not sure what you are comparing from that fellow on your first vague argument. He was a Governor of a lowly state. what's the comparison to president or the dictators?
but well, i think you at least gain some points for not being on the dictatorship-denial group like the other pro-impeachment people...
This seems to be a rather whitewashed view of "our civilization". For instance, I'm sure you've heard of Stanford? Not the university, but the guy who founded it: Leland Stanford. The famous philanthropist with an exceptional business and political background:
http://www.philanthropyroundtable.org/almanac/hall_of_fame/l...
Stanford’s business career rose in tandem with his political career. He participated in the founding of California’s Republican Party and was elected Governor in 1861. That same year, he became one of the four principal investors in the Central Pacific Railroad, which Congress authorized in 1862 to build the eastbound section of the first transcontinental railroad.
In 1885, he was elected to the U.S. Senate. Political maneuvering made Stanford a very rich man. He participated in the worst practices of the Gilded Age: stock watering, kickbacks, rebates, bribes, collusion, monopoly. There is no acquitting Stanford on this front; his participation in such schemes is amply recorded in his letters. One historian of the transcontinental railroads argues that the principals of the era made clear their unsavory activities in correspondence in part “because the dimmer lights among them, such as Leland Stanford, had to have so much explained to them.” Stanford is best remembered today, however, not for corruption but for a tribute to his only child.
Nope. For example the reason Catholic priests cant marry/have children is because the church felt this would stop priest filtering money from the church to their families.
Otherwise a great rant to read. I've very much with you in believing corruption is the cancer of society. And no country will excel while they allow it to to be a significant part of a nations economy.
Check out the unfolding 1MDB scandal in Malaysia.
http://www.latimes.com/world/middleeast/la-fg-cia-pentagon-i...
It's the circle of (a corrupt) life ...
This being said, the combination of an African-style failed state (or outright kleptocracy) and rich natural resources creates a special case of the Resource Curse.
When it comes to a stable legal system and low corruption, Americans were born on third base and think they hit a triple.
Only in unstable states? Has oil money corrupted the United States federal, state, and local governments at all?
> The Unaoil emails don’t show corrupt third-world kleptocracies shaking down helpless Western corporations. They show the opposite: Unaoil, working for Western companies, is seen slowly corrupting foreign officials, starting off with small gifts and shopping sprees and eventually hooking them on major graft.
http://www.huffingtonpost.com.au/entry/unaoil-bribery-scanda...
We're not powerless, but trying to create a Perfect System out of such crooked timber as Man may be utterly futile. To think you can design such a system looks like Hubris to me.
That's probably more Stoic than Cynical.
"They can take my silver or take my lead" said Pablo Escobar ( paraphrased ). It's like that.
Singapore, which pays its bureaucrats multi-million dollar salaries, has one of the least corrupt governments in the world according to Transparency International.
The cynic/economist in me says that this would be a classic case of "waterbed" economics. That is to say, any pressure pushing down in one part of the system results in a subsequent rise somewhere else. If you define corruption as a particular localised phenomenon, then pushing down in one area and measuring that area looks like things have gone down.
But there are many undesirable things in our societies (network effects, self censorship, rich ruling families, artificial barriers and rent seeking,etc). I know I've had many conversations with my wife where I've said "if this happened in any other society/market, we'd call it corruption, but here it's just "the way things are/our governance system".
So to bring it back to Singapore and economic theory, I would posit that the appointment to those highly paid positions would become the point of corruption as the wages/power/connections increase, though we'd probably start to call it something else (having the right connections, belonging to the right families, going to the right schools).
I know, incidentally, very little about Singapore...I'm just making general theoretical predictions here...
https://en.wikipedia.org/wiki/Temasek_Holdings https://en.wikipedia.org/wiki/Ho_Ching
The former Prime Minister (Lee Kuan Yew) was in power for 31 years. His son is in power now. People don't hold on to power for that long by playing fair.
Singapore is also known as the Switzerland of the East, not least for the fact that their banks are among the favourite destinations in the region for the proceeds of corruption.