The Judiciary Is Vital To Secure Democracy

Lecture to International Students at George Mason University

October 25, 2023. Frank Vogl

 Business and Morality

         The Morgan Library & Museum in New York will open an exhibition on November 10 called Medieval Money, Merchants, and Morality.  As the museum notes: Medieval Europe witnessed an economic revolution: trade was conducted on an unprecedented scale, banks were established, and coin production surged. The expanding role of money in daily life sparked ethical and theological debates as individuals reflected on fluctuating markets, disparities in wealth, personal conduct, and morality.

 Indeed, for a short period, the city state of Sienna in Italy was Europe’s leading banking center. The nine eminent councilors of Sienna were concerned about the moral hazards of grand finance and they turned to the artist, Ambrogio Lorenzetti, to commission great murals for the city’s opulent council chamber.  Between February 1338 and May 1339, Lorenzetti painted three adjoining large frescoes titled the The Allegory of Good and Bad Government.  The frescoes remain on show today, although it was not long after their completion that Sienna fell on hard times – first with the Black Death plague of 1348 and soon thereafter with a major financial scandal. Scandals continue to this day.

 All of us, whether we are powerful politicians and judges, or just small business people, or even university professors, have a fundamental choice in life. We can decide to be guided by a crystal clear moral compass and determine our actions on a powerful ethical course. Or, they can pursue a very different approach. A former New York public prosecutor, who won guilty verdicts against Mafia bosses, and wrote a book called the “The Gotti Wars – Taking down America’s most notorious mobster”  - which was published last year – wrote: “Once people decided they weren’t going to obey the law, there were so many ways for them to get rich.”

 That is as true of mafia bosses, as it is of politicians who seek to place themselves above the law and enjoy impunity. Once they have taken control of the courts and the institutions of law enforcement then, too often, together with partners in organized crime, these politicians steal on a grand scale from the public.

Authoritarianism & The Rule of Law

More than one-half of the world’s population today live under dictatorships, or quasi-authoritarian rule. That is approximately four billion people who lack the freedoms that we in the United States so often take for granted. Organized crime and kleptocracy – the grand theft of public funds by politicians and their associates - know no national boundaries in the 21st century.

 As all of you knows and has experienced, publicly unaccountable governments are corrupt governments. We see this absence of public accountability from Central America to Argentina, from the Central African Republic to Russia and to China as well. The famous Chinese artist Ai Weiwei, who published a memoir last year, wrote: “Corruption of the judiciary is the public face of a morally bankrupt body politic, a scar disfiguring the era in which we live.”

 The application of the law against corruption and illicit finance is one of the great challenges today and we in the United States and across Western Europe are falling short.  In my most recent book, THE ENABLERS, I stressed in the sub-title “How the West supports kleptocracy and corruption-endangering our democracy.”  It is wrong to look at the global challenges of corruption and just highlight the crimes across the developing nations – the culpability of the leading democratic nations is profound. Corruption is universal.

 Mark Koplik, partner in the New York law firm of Henderson & Koplik LLC, not knowing that he was being secretly filmed for national television, once stated: “We run the country – we make the laws and when we do so we make them in ways that’s advantageous to the lawyers. We make the laws and some people say we selectively enforce them.”  He quoted what he said was an old adage: “A good lawyer knows the law and a great lawyer knows the judge.”

 We want to think in the United States that our judges are honest and can take immense pressure from those who are dishonest. Right now, we are seeing tough judges refusing to bow to incredible pressure from former President Donald Trump.

 In the United States, we have, overall a respected and honest judiciary – more and more challenged by a corrupt political system. A few years ago the Supreme Court took actions that allow any individual or corporation to spend as much money as it likes in support of the campaign of a political candidate. Staggering amounts of money go into these campaigns today. One of the Supreme Court Justices who opposed the majority decision on campaign finance was Justice Stephen Breyer who warned: “Where enough money calls the tune, the general public will not be heard.”

 An independent judiciary is the single most important safeguard that a democracy has in the confrontation with authoritarianism. You know this. But not enough people in the global media, in international organizations like the United Nations and the Organization of American States, adequately appreciate this basic point.

As Donald Trump slanders judges every day, hits at the FBI, asserts he will get revenge on the judiciary, and declares that if he is elected President in 2024 he will put his own people in the Justice Department – so, in fact, placing himself above the law. This is the talk of a dictator. Perhaps his statements will wake up influential people across the world to be far more alert to efforts by dictators to coopt and to manipulate the judiciary.

Democracies need to have forceful systems in place to counter corruption, which I define as the abuse of public power for personal gain. The United States today does not have such systems in place – our defenses against corruption are far weaker than we would like and we can later discuss how this can have a negative impact on the countries that are so close to the United States, such as those in Central America.

Bribery and the United States

I have mentioned one weakness in suggesting our system of elections is overrun with money – indeed, the 2020 presidential and Congressional election here involved campaign spending of more than $14 billion.  Another weakness takes us back to the U.S. Supreme Court.

In 2014, a jury here in Virginia found both former state governor Robert McDonnell and his wife, Maureen McDonnell, guilty on multiple charges of corruption. They had received gifts from a businessman, including a gold Rolex watch, a Ferrari, $50,000 in financial aid for their beach house and a significant portion of the costs of their daughter’s wedding. They admitted that they had received the gifts for over $175,000. They agreed that their business friend had taken part in parties at the governor’s mansion where he mingled with state officials, enjoyed access to such officials as a result of his friendship to the governor and his wife. They argued that they provided no specific business favors in return for the gifts.

The McDonnell’s appealed the guilty verdict all the way to the Supreme Court where the arguments of the defense lawyers were accepted The U.S. Supreme Court overturned the convictions in a June 2016 ruling. It determined that illegal corruption needed to show that in any transaction there is a specific quid pro quo.

To be clear, a case of criminal corruption can only be brought when a politician takes a direct action that leads to a meaningful financial benefit for an individual or organization that has provided the politician with valuable gifts.   The Court ruled that there has to be a specific benefit and that setting up a meeting, calling another public official, or hosting an event does not, standing alone, qualify as an “official act.” 

So, the standard now is that there has to be a smoking gun that shows that gifts explicitly resulted in a real business gain for the giver. The ruling by the Supreme Court was central to the events in the New Jersey court in 2015 where U.S. Senator Robert Menendez was on trial for alleged corruption. The jury could not come to a verdict, a mistrial was determined, and prosecutors did not call for a new trial because of the Supreme Court’s decision. The Senator was reelected in 2016 to another six-year Senate term. That he did favors for friends who contributed significantly to his campaigns is not in doubt, but the specificity of the benefits granted to the donors did not rise to the full understanding of quid pro quo in the view of some of the members of the jury.

And, right now, the same Senator Menendez of New Jersey faces a whole set of new corruption charges. Before being indicted last month he was Chairman of the US Senate’s Foreign Relations Committee. The FBI found hundreds of thousands of dollars in cash in his home, a pile of gold bars, and a new Mercedes as well – all gifts from friends of his. The allegation is that he obtained the gifts because he provided intelligence and other actions for the government of Egypt, who was secretly represented by these gift-giving friends. He will argue in his defense that while he took the gifts, there was no specific quid pro quo.

It would be tragic if he wins with this defense, but given the views of thew Supreme Court everything is now possible here.

Enforcement

  It is one thing to have good laws, quite another to have good enforcement of these laws.  One of America’s first leading politicians, Alexander Hamilton wrote more than two hundred years ago in his Federalist Papers: good administration is the key to good government.

 Commenting on this in his memoir, the late, brilliant American central banker Paul Volcker wrote in 2021 that what has changed since Hamilton’s days “is the complexity, the rapidly changing technology, the multiplicity of programs, the intensity of political and lobbying pressure.” All these factors have come into play when we examine the enforcement of anti-corruption and anti-money laundering laws and regulations in the United States and, indeed, across Western highly developed democracies.

 The drug cartels may reside in, for example, Latin America, but their clients are in the wealthy countries, and the safe harbors for their profits are also in these countries. Why do I say safe harbors, because only a tiny fraction of all the dirty cash that is laundered by criminal organizations and authoritarian dictators, and their associates around the world, is ever caught by law enforcement.

 There are estimates that more than $2 trillion in illicit finance cross national borders every year. I have argued that probably one-third, more than $600 billion comes into the United States every year – this is by far the largest single capital market in the world, with incredibly sophisticated financial systems, and with armies of very experienced enablers – bankers, lawyers, real estate agents, art dealers, auditors and financial consultants who know how to assist their crooked clients to wash their dirty money.

 Yes, more than 600 billion – roughly equal to the total world sales of Walmart the world’s largest retail company. Very roughly the same amount as the base budget of the U.S. military.

 As we meet here, so Sam Bankman-Fried, the former founder and head of FTX, one of the largest crypto-currency exchanges, is on trial in New York for committing massive fraud. Crypto exchanges claim total identity protection for their clients – what could be better for gangsters and corrupt politicians?  They buy crypto-currency tokens in one part of the world and sell them for US dollars in another part of the world – this is just part of the complexity challenging law enforcement today.

 There are very few laws and regulations in the United States or the United Kingdom or Switzerland that govern the actions of the enablers. Art auction houses are not required to publicly state who buys and sells or undertake due diligence on their customers. When Jho Low was part of a scheme working with Goldman Sachs that stole $4.6 billion from the Government of Malaysia, he bought paintings worth more than $60 million at a prominent New York auction houses, and nobody in Hollywood checked on his as he financed a multi-million dollar movie with Leonardo DiCaprio, called the Wolf of Wall Street, that was all about corruption.

 Many of the magnificent apartments overlooking the ocean in and around Miami are owned by Latin Americans, and many others are owned by Russians and Chinese. Where did they all get their cash for such investments? Are the real estate agents required by the U.S. to do due diligence on their customers? No. Where did they get their cash.

 The scale of the illicit financial inflows to the United States, and the channels by which terrorist organizations secure funds through U.S. institutions at times, makes these issues of great national importance. When you consider this together with a widely held view, and stated by President Biden that the overarching political challenge of our time is the contest between democracy and authoritarianism, then you will not be surprised that Congress has accepted these are matters of national security.

Beneficial Ownership

In late 2021, as part of national defense budget authorization, the Congress passed, and then President Biden signed, the Corruption Transparency Act.  This called upon the U.S. Treasury to develop regulations so that every corporation and trust operating in the U.S. had to disclose to the Treasury its true beneficial ownership. The rules are close now to being finalized.

 From Delaware to Nevada to South Dakota, there are local laws in place that allow people to establish companies without disclosing the identities of the owners. These holding companies and trusts, together with similar ones registered in the Cayman Islands, the British Virgin Islands and many other jurisdictions, are critically important for gangsters seeking to hide their cash.

 However, beneficial ownership laws will only be effective if the government agencies charged with enforcement have the resources necessary to do the job. Providing those resources is fundamentally a political decision. While the UK and the EU are ahead of the US in establishing systems to reveal the beneficial owners behind shell corporations, skepticism may be in order as to whether national authorities will provide sufficient budget funds to make full use – for investigations and prosecutions – of the new information that they can obtain. The funding of the U.S. Treasury’s anti-money laundering operations is less than an annual $200 million – a minimal amount given the scale of the problem.

 The U.S. does more than any other country to try and enforce anti-corruption and anti-money laundering regulations. Effective lobbying by banks and many influential enablers have constantly challenged the justice and financial regulatory authorities.  The far-reaching sanctions that the U.S. and Europeans imposed on Russians after Russia invaded Ukraine in February 2022 have strengthened enforcement overall – but only modestly so. As one Swiss banker recently noted, the tighter regulations in Switzerland have only meant that the dirty money goes to Dubai instead.

Tough regulations are needed to shine a light on all aspects of asset management and asset investments by non-residents. Real estate brokers, bankers, auction house managers and art dealers, jewelers and others should be bound to file reports to authorities on all suspicious transactions and all investments on our shores by non-residents that are above an arbitrary level.

 Enforcement will only be truly effective if the punishments for violations of the law are sufficient to serve as a deterrent. As of now, it has proven to be too complicated for public prosecutors to find sufficient evidence that heads of multilateral companies that paid bribes, or banks that laundered money, knew of such criminal acts and approved them.  While large fines have been imposed on companies, which have had some beneficial effects, there remains the sense that for some enterprises, notably banks, the fines are largely seen as a cost of doing business.

 At the international level, the United Nations, the International Criminal Court, the OECD and other multilateral organizations say all the inspiring things, but they have not demonstrated that there is a powerful legal arm to bring the perpetrators of grand corruption to court and on to prison. Proposals for an International Anti-Corruption Court have been made and received considerable support from prominent legal experts around the world, but there is negligible political support for this proposal.

Seeking Reform

Complacency is the archenemy of efforts to curb corruption, combined with cynicism that suggests that people just don’t believe anything can ever be done about this problem. Professor Robert Klitgaard has noted that prosecuting people who engage in petty corruption will not do much to dent the cynicism, but a more positive impact can be secured by going after the masters of grand corruption – “the big fish.” Professor Klitgaard noted, for example, in an article on Southern Sudan in 2011: “Put the fight against corruption at the center of creating a new government. Create a core of qualified, well-paid government leaders. Demonstrate that impunity is over by frying some big fish.”

 Promoting transparency and accountability in government and fair and honest administration of justice is an enormous challenge that many courageous civil society organizations are shouldering. They take risks of censorship, imprisonment and murder.

 To succeed, Civil society organizations can be greatly helped if there are people in official positions of government who share their concerns and aspirations and are willing to strive to see that government responds positively to public demands for justice.  The good news is that the U.S. AID today is more fully supporting civil society anti-corruption activism across the world than ever before.

 Often, the moment for action by civil society in this context comes when there is a crisis, such as disclosure in the media of a major corruption scandal that hurls a government into disarray; or charges by political opponents to the government of far-reaching abuses of office that start to generate demonstrations and protests.  Sometimes, civil society can seize the moment when people are willing to take to the streets en-masse as they reach that point of utter frustration with the hardships of life, and the sense that a tiny corrupt elite in their nation is accumulating vast spoils at the public’s expense.

 In other words, in considering ways to curb corruption it is important to not only consider legal and political pathways, but to turn as well – especially in developing and emerging market countries – to pragmatic development operations that see citizens engaged in project planning, implementation and monitoring. At the grass roots levels, for example, citizen initiatives can seek to curb corruption in basic delivery of public services and thereby counter illegal activities at the petty corruption level.

 In some countries, and Mexico immediately springs to mind, the risks of being murdered as an activist against corruption, or as an investigative journalist, are very high indeed. More journalists are killed in Mexico every year than in any other country. “The dirty entanglements”[i] described by Professor Louise Shelley highlight multiple cases that demonstrate the scale and near-universality of the threats to order and justice posed by the interlocking relationships between corrupt public officials, criminal and terrorist networks and here the counter-forces of civil society are understandably very weak.

It is absolutely crucial that led by the United States, the Western powers and their aid agencies and their justice departments, recognize the national and international security issues that are at stake.

The facts, as I see them, point in the other direction, despite the good news from US AID.  The complicity of the West is so evident when we see Western governments, and big corporations backed by these governments, showing far more interest in selling arms to authoritarian corrupt regimes, and securing access to natural resources in their countries, than enforcing anti-corruption laws. This encourages dictators everywhere. It is a cause of the instability that we see from West Africa to Central America – regions where so often corruption is the system.

If we value our democracy and our security then our policies and our diplomacy need to be still more tied to our core values. In her memoir, titled “Lessons from the Edge,” Marie Yovanovitch, the brave former U.S. Ambassador to Ukraine, who was forced to resign by President Trump wrote: “In principle, our values and our interests are nowhere more aligned than when it comes to fighting corruption. When leaders view their positions in government as sinecures serving their personal interests rather than those of their constituents, it not only contravenes our values, it also goes against our interests, our long-term interests.”

 The fight against corruption is not an end in itself. It is central to supporting human rights, democracy, and security. It is a war to promote a world where every individual can live in dignity and look forward to freedom and prosperity for their children. This is the fundamental importance of why across the world the gathering momentum of kleptocracy must be reversed. And it is why at the individual level it is vital that we do everything we can, starting with students and young people, to emphasize that a values-driven life is at the core of what we would like to think of as civilization.

[i] Shelly, Louise, “Dirty Entanglements: Corruption, Crime, and Terrorism,” by Louise Shelly (2014 - Cambridge University Press, 2014).

Autocracy - v - Democracy

UAA/DACOR Development Dialogue

Frank Vogl                                                       

Author of The Enablers

Wednesday, April 20, 2022.

Good afternoon. It is a great pleasure to be back here and to engage with you on the issue of anti-corruption. My special thanks to Alex Shakow for inviting me.

In his riveting new memoir, “1000 Years of Joys and Sorrows,” Chinese artist Ai Weiwei writes: “Corruption of the judiciary is the public face of a morally bankrupt body politic, a scar disfiguring the era in which we live.”

I open my new book by quoting President Biden: “Fighting corruption is not just good governance. It is self-defense. It is patriotism, and it is essential for the preservation of our democracy and our future.”

 When I set out to write this book over two years ago in the Trump years, I could not imagine that there would soon be a U.S. President in office who would decry corruption so vigorously and who would host a Summit for Democracy, warning that we are in a bitter fight across the globe between autocracy and democracy.  And I could not imagine that a corrupt, mad Russian leader would unleash a horrendous war, where one of the West’s responses would be to promote many of the anti-corruption policy actions that I advocate forcefully in this book. 

Permit me to briefly highlight some of the key points in my book and then go beyond this volume to consider some rather fundamental issues about the paths ahead that U.S. foreign service officers, and US AID, should pursue in a world where grand corruption has emerged as such a powerful force.

At December’s Summit for Democracy, Maia Sandu, the courageous President of the tiny Eastern European country of Moldova, stressed that her country’s economic challenges have long been exacerbated by public officials and their cronies looting the nation’s banks and shipping the cash into Western financial markets.

President Sandu asserted that if Western democracies want to counter global corruption, then they must accept that: “Corruption has to be combatted from both ends: from the sources where money is stolen and to the destinations where this money is finally invested.”

Grand corruption today is a universal phenomenon.

The vast scale of corruption in Iraq, and the compelling investigations led by Special Inspector General for Iraq Stuart Bowen during the US occupation of that country, which found enormous abuse, should have served as a siren call: security in many parts of the world demands putting in place a justice system that is fair and respected by all citizens, and that is enforced free of political and military interference. In the preface to Bowen’s final report, General David Petraeus and Ambassador Ryan Crocker wrote that the lessons drawn from the Iraq experience “could help improve significantly the US approach to future stabilization and reconstruction operations.”

The lessons were not learned. The same mistakes were made on an even larger scale in Afghanistan. The exhaustive official accounts by the office headed by Special Inspector General John Sopko reveal how so much of the U.S. reconstruction and development aid to that country of over $140 billion was stolen and added to corruption problems.

Bowen and Sopko shown a bright light on abuse, that were too often ignored by our diplomats, aid agencies, the intelligence services, and our military.

I wrote this book as a wake-up call. For far too long Western governments and too many Western businesses have been complacent about global grand corruption.  Our governments have repeatedly placed commercial goals above core values related to corruption and human rights.  

For too long, foreign policy practitioners have seen the effort to develop good relations with foreign governments as a delicate balancing act where they have felt it best to push anti-corruption and human rights in such a delicate diplomatic manner that the impact was largely negligible. Unreliable partners, from Karzai to Mubarak, from Chalabi to Kagame, have known how best to take full advantage of the fact that our public anti-corruption rhetoric has too often been mere bluster.

Kleptocrats and their cronies in Russia, China, Nigeria, and many other nations, steal staggering amounts of money from their citizens. They seek safe and secret homes for their wealth. Western governments have known this for years and sought to do very little about it. Not just abroad, but here on our own shores.

We are talking about upwards of two trillion dollars of dirty cash flowing through the world’s financial system. I estimate that $600 billion is laundered and flows into US investments every year – more than the total annual sales of Walmart, the world’s largest retailer.   

For example, sub-Saharan Africa loses about $90 billion – about 3.7 percent of its gross domestic product (GDP) - annually in illicit financial flows. This is almost double foreign aid inflows.

In my book I provide concrete examples, from the kleptocrat Aliyev family that runs and loots Azerbaijan, that is President Ilham Aliyev and the Vice President, his wife, Mehriban Aliyev,  to Angola’s Isabel dos Santos, daughter of a former President, and once the richest woman in Africa. Kleptocrats need business partners – let us call them oligarchs – to help them keep in power, to pay off supporters, to finance assorted off-the-books schemes, and to increase their personal wealth.

And these oligarchs need enablers — bankers, lawyers, auditors, real estate brokers, art dealers, and financial consultants — on Wall Street, in the City of London, and in other leading international financial centers. Without the enablers the crooks could never launder their dirty loot; they could never invest their cash in safe and secret investments here in the United States and across the largest developed economies.

I provide concrete examples of how some of the biggest banks played major roles as enablers – BNP-Paribas laundering $6 billion for Sudan’s President Omar al-Bashir at the very time he was perpetrating genocide in Darfur, Deutsche Bank laundering billions of dollars of Russian cash. J. P Morgan Chase bribing Chinese officials, by giving jobs to their sons and daughters, to secure government contracts; and, Goldman Sachs bribing Malaysian officials, then floating $6 billion of bonds for the country’s development agency of which around $4.5 billion went missing – into the pockets of some of the bank’s executives and the former President of Malaysia Najib Razak and his friends.

Not a single chairman or top executive of a US bank was prosecuted after the massive sub-prime mortgage frauds, and none has ever been prosecuted for money laundering, tax evasion and other crimes by their institutions. The banks pay fines. They look at these as the costs of doing business in an era when massive bonuses are paid to the leaders of finance, tied to short-term profit maximization.

I provide details of the dirty cash flowing into real estate from Vancouver to Londongrad; of the opacity of the art auction houses; of the ease with which lawyers can establish trusts and companies, from South Dakota and Delaware to the British Virgin Islands, where the beneficial owner’s name need not be documented.

In addition, I discuss klepto-debt – the licit financing of corrupt regimes through the sovereign bond markets. Hundreds of billions of dollars flow licitly to countries that are not creditworthy like Zambia that has defaulted; like Argentina that has defaulted nine times; like Lebanon that is in default today; and like Belarus and Russia and other countries run by kleptocratic dictators.

 The reckless system that I describe in my book must end. We cannot keep on sending money to kleptocracies; opening our markets to oligarch investments; permitting the enablers on Wall Street and beyond to pursue activities that not only run counter to the public interest and endanger our security, but that are illegal.

            We have seen Russian oligarchs finance espionage to undermine our elections in 2016 and 2020 and the German elections last year. We have seen Gazprom bully Ukraine, and many other European countries because of the power of its natural gas resources – Gazprom has raised over $40 billion from Western investors through the markets.

I argue that if we are to eradicate what Ai Weiwei called the “scar disfiguring the era in which we live,” then we must use every device under the law to oppose the kleptocrats and their cronies and their oligarchs. At the same time, we must be determined to use the full force of the law against the enablers. How?

First, the culture in our financial industry of massive profit maximization needs to change – integrity and serving the public interest must be restored. It has taken the Russian aggression in Ukraine to finally make some of the major Western corporations recognize that operating in Russia supports a regime that is determined to destroy Western democracy.

Second, as Alexander Hamilton wrote in the Federalist Papers, “good administration is the key to good government.” We need administrative reforms.

 We need a massive ramp-up of enforcement on both sides of the Atlantic of existing anti-money laundering and anti-corruption laws and regulations; far higher standards of Know-Your-Customer rules for all the enabling institutions so they are truly honest and thorough in doing due diligence on how their rich clients amassed their wealth, and far greater transparency on the beneficial owners of investment assets. I call for explicit actions to make top bankers criminally liable for major corruption-related crimes by their institutions.

Finally, we need political reforms, embracing all those proposals before the Congress on ending revolving doors, tightening lobbying rules and above all, curtailing money in politics. We will never bring the enablers to end their dirty games until we reduce their political influence. The top bankers are deeply connected into the political elite networks of their countries; they hire lobbyists; they finance political campaigns; they do everything they can to maintain a status quo that, in effect, allows them to pursue criminal activities at low risk.

This must change. Because of the Russian invasion of Ukraine, we are seeing a far greater focus by the Administration and Congress on precisely the kinds of measures that I have long advocated.

The big question is whether the anti-corruption zeal will be sustained, or will it decline as the Ukraine news moves off the front pages and as the lobbyists quietly work to undermine reforms?

 USAID and Diplomacy

And now let me turn directly to you and consider how my call for an all-out approach to anti-corruption and anti-money laundering should prompt changes in our diplomacy and aid work. Permit me to start with US AID.  Thanks to Alex Shakow, I learned about the excellent new book by John Norris, “The Enduring Struggle” – the history of US AID. This agency has played an important and vital role in reducing poverty and humanitarian hardship across the world over many decades – its many dedicated professionals have fought the good fight, often without the praise that they so richly deserved.

I am very hopeful that today’s US AID leadership find ways to attain the critical objectives that were highlighted for it at the Summit for Democracy: 1) Support global coalitions of reformers, (2) protect anti-corruption activists and journalists, and (3) strengthen the capacity of our partners to detect, track, and expose dirty money.

Expert Shannon Green, who leads a special Anti-Corruption Task Force, reported to a Congressional committee last week that concrete plans are being rapidly developed in each of these priority areas. They should succeed but let us not underestimate how difficult implementation will be. 

First, they will only be meaningful if sustained long-term: we must finally accept that results in these areas cannot be secured in one or two years and that, irrespective of which president is in the White House, these programs must be continued.

Second, implementing and managing these kinds of programs demand skills that you will not find in the Beltway contracting consulting firms that US AID has used for years. Greater priority must be given to direct partnerships with journalists and civil society organizations in countries, using them to design and manage and implement programs – trusting them and rercognizing their professional skills.

I became involved in anti-corruption, in establishing Transparency International 30 years ago, because of the devastating impact of corruption on poverty in many countries – it is a critically important contributor to the hardships that face the world’s poor every day. I helped to establish the Partnership for Transparency Fund to work directly with CSOs in countries to help them build the skills to monitor public procurement, to press for rule of law improvements, and to help eradicate extortion in basic social services delivery, such as in health and education.

PTF is an all-volunteer group. We have worked on scores of successful projects and seen how the skills of so many CSOs in many countries have grown dramatically. US AID and the World Bank must finally recognize these resources as the leaders in curbing corruption in their countries by providing them with both meaningful financial support and the authority to manage and implement.

If US AID is to be more effective on a sustained basis in countering corruption, then there needs to be fundamental change in the ways in which most of our diplomats work.  For years, US administrations, including the present one, send mixed signals that diminish our credibility when it comes to human rights and anti-corruption.

For example, look at our relations with Egypt, which usually receives around $1.3 billion annually in total aid.  According to the State Department’s new Human Rights Report, on Egypt: “International observers maintained the government detained or imprisoned between 20,000 and 60,000 individuals on politically motivated grounds.” The Committee to Protect Journalists reports that in 2021 Egypt jailed more journalists than every other country except for China and Myanmar. The newest Transparency International Corruption Perceptions Index ranks the country at 117th out of 180 with a score of just 33 out of a clean 100 – just four points cleaner than Russia.

This year the State Department withheld $130 million in aid because of human rights violations – why did we give this ruthless kleptocracy any money at all? Well, we are so concerned about keeping a good relationship with Cairo that having reduced the aid, we also, at the same time, gave the green light to US arms sales to Egypt of $2,5 billion. Our aid cut was pure tokenism lacking force and credibility. Worse, our arms sales send a message to the citizens of Egypt that we support their dictatorial government.

Take another example, that you will find in my book: Azerbaijan. Another ruthless, kleptocratic regime that locks up and murders journalists, controls the media, ships vast sums of dirty cash to the West, and receives US military assistance because of strange claims that it can help us against Iran. Our military aid sends a message to the citizens of Azerbaijan that we support their corrupt government – and that same message of course is registered by the citizens of Armenia who see, and loathe, our embrace of Azerbaijan’s Aliyevs.

Just a few weeks ago on March 15 a coalition of human rights groups[1] wrote to Secretary Blinken and stated in part: “additional U.S. assistance – above and beyond the $164,000,000 that has reportedly already been sent to the armed forces of Azerbaijan – risks materially strengthening Baku’s authoritarian capabilities and emboldening the unelected and unaccountable leaders of this authoritarian single-family regime. Azerbaijan, an oil-rich nation that already spends billions annually on its military, neither needs nor deserves U.S. tax dollars.”

We do this all the time. We send mixed signals. We declare in public rhetoric that we support civil society, but time and time again we fail to provide in-country civil society with the means to really hold their governments to account. We say we support investigative journalism, then we give Egypt and Azerbaijan, for example, aid and weapons. We may enjoy temporary good relations with the leaders of these nations, but we damage the standing of the United States in the eyes of their citizens.

One diplomat who understands this is Marie Yovanovitch, the former U.S. Ambassador to Ukraine, who writes of her more than 30 years as a diplomat in her new memoir, titled “Lessons from the Edge,” -  “In principle, our values and our interests are nowhere more aligned than when it comes to fighting corruption. When leaders view their positions in government as sinecures serving their personal interests rather than those of their constituents, it not only contravenes our values, it also goes against our interests, our long-term interests.”

Ambassador Yovanovitch highlights how she struggled in her different posts to find ways to push anti-corruption while at the same time improving relationships with highly corrupt governments. I think she only really reached the conclusion that I just quoted in her final appointment in Ukraine – and it cost her her job. She was the victim of collusion between a corrupt Ukraine government and a corrupt White House.

All the same she is right. It is fundamentally naïve to believe that the US can secure long-term relationships that diminish security risks without boldly dealing with vast human rights and corruption abuses in many foreign governments.

Increasingly, we have sought to use sanctions to back up our human rights and anti-corruption public rhetoric. The Magnitzky Act, recently extended by Congress and the President, has been a valuable tool for strengthening US sanctions. It is named for a valiant lawyer who sought to speak out against Russia and was murdered by his Russian jailers.

We need to be realistic about sanctions. Those on Russia’s central bank and financial system may prove to be effective if sustained; those on US financial institutions that bar them from involvement in any form with Russian sovereign debt issues are welcome and overdue. Sanctions on individuals, such as the Russian oligarchs are harder to assess, despite the short-term public relations gains when TV cameras film FBI agents boarding oligarch superyachts.

Current sanctions law here and largely in the UK and Europe, allows for the blocking, the freezing of assets – but confiscating the assets in terms of full forfeiture requires that prosecutors prove that the true beneficial owner of an asset is indeed the sanctioned individual and that he and/or the assets in question are connected to a crime, such as laundered cash.

Identifying the assets and proving criminal connections under current laws is difficult. We need better laws to sharpen this weapon against global money laundering and the crooks that pursue it.  The greater our enforcement powers and resources the stronger will be the diplomatic tools that our ambassadors can deploy in their candid conversations in foreign capitals.

Every foreign service and US AID officer needs to take note of Marie Yovanovitch’s warning that our security depends on maximizing our efforts in foreign policy to counter corruption. That means that the delicate balance in diplomacy needs to change. It means that our diplomats place the highest priority in forging relationship in foreign capitals on pushing anti-corruption.

That means that we should no longer shunt aside our values to sell a few more US aircraft and weapons systems, and to boost commercial prospects for US multinational corporations. We must understand that fundamentally corrupt, autocratic regimes are unreliable partners.  The White House response to the Russian invasion of Ukraine is a major step forward in anti-corruption.

We are not winning across the globe in the confrontation between autocracy and democracy. We must redouble our efforts and in so doing, with US leadership we must spare no effort to support those who are on the front lines. People of extraordinary courage across the globe who are speaking truth to power despite enormous risks, from Belarus to China to Myanmar and of course Russia.

Alexei Navalny and Vladimir Kara-Murza are in Russian jails, so too are many other reporters and activists in Russia, in China, Egypt and Turkey. There are bold people forced into exile from Belarus and Azerbaijan and China and other nations who are still striving to promote freedom and democracy in their home nations. There are large numbers of civil society activists harassed by dozens of governments – but all remain committed to the cause of anti-corruption – they must be supported.

Thinking of them, permit me to highlight the final quote in my book by the late civil rights leader, Congressman John Lewis, who stated in his memoir: “I have been rejected, hated, oppressed, beaten, jailed and I have almost died only to live another day. I have witnessed betrayal, corruption, bombing, lunacy, conspiracy and even assassination – and I have still kept marching on.”

Let us march ahead together. Thank you.

[1] https://anca.org/press-release/diverse-coalition-calls-on-biden-to-stop-u-s-military-aid-to-azerbaijan/