Kleptocrat

[Lina Drury]

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]

The US anti-kleptocracy initiative, started under President George W. Bush and expanded under President Barack Obama has been a signature effort to stop kleptocrats from fleecing their people. The program prosecutes high-level foreign official corruption and seizes ill-begotten proceeds located in the United States.

U.S. and EU policymakers' views were shaped by wishful thinking rather than being based on hard intelligence. Links between Yanukovych, the Party of Regions and crime have been long known to policymakers as seen in U.S. cables from Kiev available through WikiLeaks.Advertisement

The first stage -- wishful thinking -- dominated 2010, when Yanukovych became president in the last free election Ukraine has held with policymakers either believing he had changed under the influence of U.S. consultants or would be no different to President Leonid Kuchma (1994-2004). Policymakers reserved their criticism arguing Yanukovych needed to be given a chance to prove himself.Advertisement

Wishful thinking papered over democratic regression, the transformation of Parliament into a rubber-stamp institution, corruption of the constitutional court and local election fraud. It also sidestepped the first signs of selective justice against defeated opposition candidate and Prime Minister Yulia Tymoshenko.

The second stage -- thaw -- in 2011 began with Freedom House downgrading Ukraine from "Free" to "Partly Free." Although Ukraine's democracy was being rolled back and opposition leaders persecuted, the European Union continued to negotiate with Ukraine for an Association Agreement and Deep and Comprehensive Free Trade Agreement.

The European Union and United States condemned Tymoshenko's imprisonment in October. The European Union, in what could be only described as a slap on Yanukovych's wrist, postponed the initialing of the AA from December to the following March but continued to hope it would be signed in late 2012.

The third stage -- stagnation -- dominated 2012 with efforts to end selective use of justice. Yanukovych was only invited to one Western country -- Cyprus -- as he became internationally isolated. Additional criminal charges, including murder, were added against Tymoshenko, which didn't prevent the European Union from continuing to negotiate with Ukraine.

Attacks on democratic rights and media freedom continued to escalate and Parliament adopted a highly controversial language law in July 2012 that raised Russian to the same level as Ukrainian.Advertisement

Transparency International reported on rampant growth of corruption and emergence of "The Family," a new clan of presidential loyalists from Yanukovych's home region headed by his eldest son Oleksandr who, although a dentist by profession, entered the list of the Top 50 wealthiest people in Ukraine. In the former U.S.S.R., only four Central Asian countries had worse levels of corruption than Ukraine, TI said, while the Heritage Foundation ranked Ukraine with the least economic freedom in Europe.

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