Klepto Plutocracy

[Alethia Tiell]

Kleptocracyis different from plutocracy (rule by the richest) and oligarchy (rule by a small elite). In a kleptocracy, corrupt politicians enrich themselves secretly outside the rule of law, through kickbacks, bribes, and special favors from lobbyists and corporations, or they simply direct state funds to themselves and their associates. Also, kleptocrats often export much of their profits to foreign nations in anticipation of losing power.[6]

According to the Oxford English Dictionary, the first use in English occurs in the publication Indicator of 1819: "Titular ornaments, common to Spanish kleptocracy."[7][citation needed]

Kleptocracies are generally associated with dictatorships, oligarchies, military juntas, or other forms of autocratic and nepotist governments in which external oversight is impossible or does not exist. They can also be found in liberal democracies with crony capitalism. This lack of oversight can be caused or exacerbated by the ability of the kleptocratic officials to control both the supply of public funds and the means of disbursal for those funds.

Kleptocratic rulers often treat their country's treasury as a source of personal wealth, spending funds on luxury goods and extravagances as they see fit. Many kleptocratic rulers secretly transfer public funds into hidden personal numbered bank accounts in foreign countries to provide for themselves if removed from power.[6][2]

Kleptocracy is most common in developing countries and collapsing nations whose economies are reliant on the trade of natural resources. Developing nations' reliance on export incomes constitute a form of economic rent and are easier to siphon off without causing the income to decrease. This leads to wealth accumulation for the elites and corruption may serve a beneficial purpose by generating more wealth for the state.

In a collapsing nation, reliance on imports from foreign countries becomes likely as the nation's internal resources become exhausted, thereby contractually obligating themselves to trading partners. This leads to kleptocracy as the elites make deals with foreign adversaries to keep the status quo for as long as possible.

To some observers, a thievery society allows the politically connected to redirect wealth to those deemed worthier by state apparatchiks. According to some pundits, one reason governmental bodies subscribe to theft-prone policies is to lay the groundwork for the socialization of labor and property in an effort to permit thievocrats to make the populace "subservient to an institutionalized authority."[8] Newspaper columnist Paul Greenberg, in writing against the idea of the United States sending large amounts of foreign aid to Poland in 1989, argued that Poland was emerging from "40 years of a Communist thievocracy that has obliterated not only economic progress but also the idea of a modern economy."[9]

A specific case of kleptocracy is Raubwirtschaft, German for "plunder economy" or "rapine economy", where the whole economy of the state is based on robbery, looting and plundering the conquered territories. Such states are either in continuous warfare with their neighbours or they simply milk their subjects as long as they have any taxable assets. Arnold Toynbee has claimed the Roman Empire was a Raubwirtschaft.[10]

Kleptocrats abuse the freedoms found in Western countries by transferring funds out of a kleptocracy and into Western jurisdictions for money laundering and asset security. Since 2011, more than $1 trillion has left developing countries annually in illicit financial outflows. A 2016 study found that $12 trillion had been siphoned out of the kleptocracies of Russia, China, and developing economies.[16] Western professional services providers are taken advantage of by kleptocratic Russians and Chinese, exploiting legal and financial loopholes in the West to facilitate transnational money laundering.[17][18] The kleptocratic financial system typically comprises four steps according to one opinion.[19]

In a 2011 forensic study of grand corruption cases, the World Bank found the United States was the leading victim of illegal incorporation of entities involved in money laundering schemes.[25] The Department of Treasury estimates that $300 billion is laundered annually in the United States in violation of US law.[26]

Currently[when?], there are only around 1,200 money laundering convictions per year in the United States and money launderers face a less than five percent chance of conviction.[30] Raymond Baker estimates that law enforcement fails in 99.9% of cases to detect money laundering by kleptocrats and other financial criminals.[31]

Other Western jurisdictions favoured by kleptocrats include South Africa, the United Kingdom, and its dependencies, especially the British Virgin Islands, the Cayman Islands, Guernsey, and Jersey.[32][33] Jurisdictions in the European Union which are particularly favoured by kleptocrats include Cyprus, the Netherlands, and its dependency the Dutch Antilles.[34][35]

Other forms of a thievery society that can induce a "culture of systematic fraud" has been described as "political and corporate kleptomania."[36] In this case the plunder and looting enriches not only high government officials, but a narrow class of plutocrats, who usually represent wealthy individuals and families who have amassed great assets through the usage of political favoritism, special interest legislation, monopolies, special tax breaks, state intervention, subsidies or outright graft. This type of economic system of political spoils is sometimes referred to as crony capitalism.[37][38]

The effects of a kleptocratic regime or government on a nation are typically adverse in regards to the welfare of the state's economy, political affairs, and civil rights. Kleptocratic governance typically ruins prospects of foreign investment and drastically weakens the domestic market and cross-border trade. As kleptocracies often embezzle money from their citizens by misusing funds derived from tax payments, or engage heavily in money laundering schemes, they tend to heavily degrade quality of life for citizens.[39]

In early 2004, the German anti-corruption NGO Transparency International released a list of ten self-enriching leaders in the two decades previous to the report. Transparency International acknowledged that they were "not necessarily the 10 most corrupt leaders" and noting that "very little is known about the amounts actually embezzled".[42]

Former Malaysian Prime Minister Najib Razak had $731 million in his personal bank accounts when his ruling-party alliance Barisan Nasional lost the 14th election to opposition party Pakatan Harapan led by former Prime Minister Mahathir Mohamad, in part because of allegations of participating in the 1MDB scandal.[45][46]

A narcokleptocracy is a society in which criminals involved in the trade of narcotics have undue influence in the governance of a state. For instance, the term was used to describe the regime of Manuel Noriega in Panama in a report prepared by a subcommittee of the United States Senate Committee on Foreign Relations chaired by Massachusetts Senator John Kerry.[49]

One year after the brutal massacre of democracy protesters in Chad, President Mahamat Idriss Dby continues to preside over a deeply authoritarian klepto-state, according to Finance Uncovered. Facilitated by the regime of the son of the former president, Dby and the political elite maintain their power and wealth by exercising tight oversight of the petroleum industry. Finance Uncovered claims the Chadian leadership maintains this dynamic because the French government turns a blind eye toward these actions. Paris continues to prioritize security cooperation with the kleptocratic regime despite the severe human rights abuses and poor economic conditions in the country.

India cannot remain strong, united, democratic, and prosperous unless the enlightened sections of society play an effective role during and between elections. It is tragic that the educated in India kept off the polling booth, unlike in developed countries, whereas the poor here exercised their franchise for whatever reasons. If the young and the educated shed their inertia and take active part in politics, the Indian republic will not merely survive but flourish, Dr. JP said.

Dr. JP said the Indian republic has registered success in resolving conflicting claims over the national language, facilitating caste-based reservations and in preserving secularism. It has matured as a federation of States. All these are remarkable successes in nation-building by any standards.

Dr. JP said that everything in the Indian republic is not hunky-dory. It has failed to ensure that there is no discrimination based on the accident of the birth of a child in a certain caste or religion. It has abysmally failed in ensuring decent education and quality health care, imparting livelihood skills and providing employment opportunities to all. It has failed in transferring power to people at the grassroots level by strengthening the third tier of government and ushering in citizen centered governance. It has spawned a Pluto-kleptocracy as is evident from reports that there are many bureaucrats in Andhra Pradesh each of whom has amassed wealth worth Rs.1000 crore. Money power today is so powerful that it can destabilize or dictate governments.

Dr. JP said these problems are not intractable if the people in power have the will and determination. Comprehensive electoral reforms, strong and effective regulation of political parties and resolute and ruthless action against the corrupt should be institutionalized. Political parties should refrain from exploiting differences based on religion, caste, region and language to serve their vote bank politics. Instead, they should demolish the narrow domestic walls that Rabindranath Tagore talked of.

Dr. Ambedkar incorporated the values of the national movement, which were embedded in the Constitution of India Bill proposed by Annie Besant and Lokmanya Tilak in 1895 and the Nehru Report, drafted by a committee under chairmanship of Motilal Nehru in 1928; into the constitution. Civic rights such as universal suffrage and fundamental rights irrespective of the creed, class, caste and gender were results of advocacy by the leaders of national movement.

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