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How supermarkets model kleptocracy

Oligarchy is a weekly newsletter tracking how the super rich are changing the world for the rest of us. Also in this edition: Uzbeks ask Britain for oligarchy relief

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Last week, when I wrote about how depressing I found the Pandora’s Papers, I had a whole plan for this week. Yes, opening Pandora’s Box gave the world Trouble and Woe, as the ICIJ put it, but in the Ancient Greek legend, once all the bad things had flown out, there was Hope too, down at the bottom. So, this week’s newsletter was going to be all about hope, and the outpouring of substantive and imaginative policy proposals that would surely come out in the days after the data dump was unveiled. In retrospect, I recognize that this approach was a bit of a hostage to fortune.

Timothy Noah in the New Republic was certainly imaginative with his suggestion that, to solve the problem caused by South Dakotan trusts’ facilitation of secrecy and tax avoidance, we should get rid of South Dakota.

  • “We’ve put up with this moral sewage long enough. Let’s abolish South Dakota by merging it into North Dakota. If Congress has the power under the admissions clause to admit new states, shouldn’t it also have the power to dissolve them? Everybody makes mistakes,” he wrote.

It does seem odd that a state with a population that wouldn’t even put it in the top ten most populous Californian counties should have the same Senate representation as California, but sadly a problem caused by the nexus between venal politicians and greedy citizens isn’t going to be solved by abolishing just one state, no matter how well its voters and their oligarch clients do out of the peculiarities of the U.S. constitution.

I rather like South Dakota, and in an ideal world I wouldn’t have led with Noah’s policy suggestion of scrapping it altogether. It’s just that I didn’t have any choice, since there have been precious few other suggestions about how to solve the problem of kleptocracy and robbery, which is systemic, and best explained, in my opinion, by comparison to a supermarket.

In 2015, two academics at the University of Leicester published an analysis of rates of theft at traditional supermarkets compared to others that had implemented “mobile scanning technologies” – those machines that let you scan your goods yourself as you put them into your trolley. Their conclusion is fascinating: customers stole more than twice as much stuff – “shrinkage” rose by 122 percent, as they put it – when they certified their own purchases, compared to when a cashier did.

So, what has this got to do with oligarchy and money laundering? Our financial system is basically a giant self-check-out supermarket, in which lawyers, accountants and others fill up their trolleys with clients, and we trust them to self-certify that those clients are legit, without employing any security guards to check on whether they actually are. And, as the Pandora Papers make clear, the unsupervised enablers fill their scrutinized trolleys with kleptocrats, tax dodgers, oligarchs and so on, just like shoppers at a supermarket might slip an extra bottle or two of champagne underneath the frozen peas.

Plot twist: if you make it easy for people to get away with crimes, they commit more crime. Sooner or later, you have to start wondering if the reason governments make committing crimes so easy is because they actually want crimes to be committed?

So maybe the reason there haven’t been any imaginative and substantive policy responses to the Pandora Papers is that this is all just breathtakingly obvious – JUST HIRE MORE SECURITY GUARDS, PEOPLE, AND STOP RELYING ON SHOPLIFTERS TO VOLUNTARILY STOP SHOPLIFTING. And I probably should have known that all along. Besides, “hope” may not even be the best translation for what was left in Pandora’s Box, since the Ancient Greek word apparently also means “apprehension” or “fear”, which do seem more appropriate.

CHECK OUT THE CZECHS

A huge yay for voters in the Czech Republic who responded to the Pandora Papers’ revelation that Prime Minister Andrej Babiš had secretly spent $22 million on a French chateau, by voting for the opposition, although it doesn’t look like the situation is going to get much easier as a result.

  • “Like its counterparts in the United States or in France, the new Czech parliament pits two opposing camps against each other. On one side stand the proponents of internationalism and cultural openness, embodied particularly by the Pirates and STAN. On the other is ethno-nationalist exclusion, utilized by Babiš and ANO, and personified by the radical right SPD. Rather than social class, today it is education and the urban-rural divide that determines the side one stands on,” notes Jan Rovny.

It is puzzling how corruption so often gets a pass from politicians that claim to stand up for traditional values, everywhere from Brazil to Britain, via the Philippines and the United States. Equally puzzling is the fact that the politicians who make the biggest thing out of being anti-globalists also tend to be the most enthusiastic exploiters of the global financial system. Hopefully, the Czech election will prove that voters won’t put up with this kind of humbug indefinitely.

TWO CHEERS FOR THE EU

It was good to see members of the European parliament debating the Pandora Papers, and coming out with some pretty spikey criticisms.

  • “MEPs unanimously expressed indignation and disgust at the Pandora Papers revelations and criticized governments’ woefully inadequate response for over a decade,” the press release said.

The European parliament has a good record on oligarchical issues, and has been extremely critical of golden passports, and of the disastrously counterproductive EU tax havens list. Sadly, however, it doesn’t have any actual power to stop any of these things, so it’s difficult to be too enthusiastic about it and I’ll stop being so.

UZBEK PETITION

The final Pandora response I’d like to highlight is this letter written by journalists and activists from Uzbekistan, who are calling on the U.K. government to take action against Mohamed Amersi, the financier and donor to the Conservative Party who structured the deal that ended up enriching Gulnara Karimova.

Amersi denies any wrong-doing and even if he didn’t, expecting Boris Johnson’s government to do the right thing in any direction is touchingly naïve. But then again why shouldn’t we expect Britain to investigate major allegations of wrongdoing involving well-connected and wealthy people, just because it has pretty much never done so in the past?

  • “It is time that the U.K. government sends a clear message to diamond collar intermediaries, such as lawyers, accountants, and consultants”, said Umida Niyazova, director of the Berlin-based Uzbek Forum for Human Rights. “It is entirely unacceptable in this day and age where rigorous due diligence and compliance measures are standard practice, to facilitate and benefit from, wittingly or unwittingly, grand scale corruption that decimates the economic and political fabric of regions like Central Asia.”

Perhaps if we start treating Britain as an exemplary upholder of international norms and standards, it will become one. Let’s face it, nothing else has worked.

SANCTIONS

Regular readers will know that I am ambivalent about the way governments are increasingly relying on sanctions to keep dirty money out of their economies, rather than putting in the hard work of imposing transparency and properly resourcing law enforcement. However, sanctions are better than nothing, and do provide a fixed point from which to influence the world.

If you know of someone who has abused human rights, has assets stashed offshore, and yet who is escaping punishment, then you can now appeal to the British government to impose sanctions on them by filling in a form, created by Redress, a group that seeks justice for victims of torture. Redress has brought evidence to international tribunals and courts on behalf of people from all over the world.

  • “Our approach is strategic, so that as well as representing an individual we target the policy reasons that enabled the torture to take place, by building a campaign that uses advocacy, community engagement, and communications to influence change,” it explains, on its website.

That sounds like a good approach to me. At the risk of repeating myself: perhaps if enough people demand Britain does the right thing, it will actually do it.

YOU COULD MAKE IT UP, IT TURNS OUT

During the interminable lockdown of last winter, I liked to solicit recommendations from friends for films to watch at the weekend. One of the suggestions I enjoyed most was Galaxy Quest, a deeply daft film from 1999 about aliens coming to earth under the mistaken impression that actors in a sub-Star Trek TV show were genuine intergalactic voyagers, and asking them to intervene in a space war. The joke has multiple levels, but basically the film fondly satirizes Trekkies and other science fiction obsessives.

Anyway, in further proof that satire these days functions more as prediction than anything else, Jeff Bezos is actually sending the 90-year-old William “Captain Kirk” Shatner into space, thus spectacularly outdoing Elon Musk, who couldn’t think of anything more interesting than a Douglas Adams slogan when it was his turn to boldly blast a space-related pop cultural reference where no space-related pop cultural reference had gone before.

  • “Jeff Bezos’ concept in doing all this is to build industry, homes, to live in close connection with Earth and function close to Earth and that’s a vision that I think is very practical and worth getting behind,” Shatner told an interviewer so bamboozled by what was happening that she actually addressed him as Captain Kirk. “I want to see what we need to do to save Earth.”

Here’s my suggestion on how to save earth: don’t waste a load of fuel by sending a retired TV star into space in a pointless vanity project. Or a car, for that matter. I am genuinely apprehensive about how Richard Branson is going to respond to this, although he’s presumably already tried to get hold of Mark “Luke Skywalker” Hamill with a view to loading him onto one of his hateful space-planes. I can only hope Hamill is too cool to get involved.

That’s not say of course that the battle between space overlords isn’t real, because it is intense and ongoing. Bezos may be winning the publicity war, but Elon Musk has overtaken him at the top of the wealth table. Excitingly (or depressingly, depending on how you look at it) there are now 10 centi-billionaires.

WHAT I’M READING

I spent about 10 hours driving on Sunday, which was unexpectedly quite fun, thanks to alternating between two audiobooks while I zoomed along the motorways of central and northern England. One was Sapiens by Yuval Noah Harari, which I know I should have read years ago, but had never previously got round to. It is a deeply accessible analysis of why humans are different to animals (I haven’t finished it yet though, and I’ve no idea how we’ll end up, so no spoilers please). The other was Mort by Terry Pratchett, which is a gloriously odd story about Death getting fed up and finding an apprentice to go round with the scythe instead. If I got bored with one, I could switch over to the other, and so the journey merrily passed by.

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Oliver Bullough

Oliver Bullough is an author and journalist from Wales, who specializes in writing about financial crime, often when it has links to the former Soviet Union. His most recent book is Moneyland, why thieves and crooks now rule the world and how to take it back, and he is currently trying to write another one despite lockdown.

@OliverBullough