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Oligarchy—An anti-corruption void from Guatemala to Ukraine to the Philippines; London’s Evian bathwater

Hello, and welcome to Oligarchy. We are tracking how COVID-19 and the world’s response to it is affecting the super-rich — and what that means for power and politics. 

BAD TIMES IN CENTRAL AMERICA…

Anti-corruption activists, when asked to point to a successful campaign against kleptocracy, once invariably singled out Guatemala, and its International Commission Against Impunity (CICIG). 

The U.N.-supported project tried to cut through the corrupt networks that dominated the country, and helped to support the prosecutors and state authorities. It grew out of peace-building efforts at the end of the country’s 36-year civil war, and brought hundreds of cases against officials, businessmen and organized criminals.

Led by international prosecutors, the cases exposed the mechanisms by which corruption impoverished millions of ordinary Guatemalans, and enriched a tiny elite.

The highlight of its work was a probe into corruption in the administration of taxes, which forced the resignation of President Otto Perez Molina in 2015. 

However, his successor, Jimmy Morales, who initially ran on an anti-corruption ticket, started criticizing the commission three years ago when it opened an investigation into him, as well as his brother and his son, for campaign finance violations. 

  • “2015 saw the coming together of many positive elements in the fight against corruption. We had a committed attorney general; (Colombian diplomat) Iván Velásquez led CICIG with all the support it had at the time; the US administration and ambassador at the time. All the forces were aligned but this slowly changed,” Juan Francisco Sandoval, head of the attorney general’s anti-impunity unit, and a rare figure still with the autonomy of the old days, said in an interview.

Last year, CICIG closed its doors for the last time. Once upon a time, the commission was firmly supported in the White House. However, under President Donald Trump — who Morales has lobbied — that support tailed off. Without diplomatic pressure from Washington, CICIG was doomed. What had been an inspiring tale of how public pressure and international assistance combined to help a people overturn kleptocracy, has become a story of how a kleptocratic elite regained control once the attention of the world turned elsewhere.

… AND IN EASTERN EUROPE … 

It is a particularly worrying example for Ukraine, which once was also making strong progress against corruption — with procurement reform, and a new Anti-Corruption Bureau, as well as sackings of high profile officials under pressure from Washington and Brussels — but has begun to slide backwards. Here too, as we know from John Bolton’s explosive memoir, the White House has no interest in helping a people break free of corruption.

With an American president more interested in finding dirt on his rivals than in helping Ukraine, old officials have returned to settle old scores. On June 1, President Volodymyr Zelensky sacked Vitaly Shabunin, one of the leaders of the Anti-Corruption Action Centre (AntAC), Ukraine’s premier anti-graft pressure group, from his anti-corruption council. In his place came the interior minister, the prosecutor general, and his chief of staff — none of whom are known for opposing corruption.

Enjoying Oligarchy? I recommend you also check out the Infodemic, Coda’s bi-weekly newsletter tracking the global spread and impact of COVID-19 disinformation.

… AND IN THE PHILIPPINES. 

Once upon a time, U.S. officials would have been immediate and firm in their demand that  journalists like Maria Ressa and Reynaldo Santos be released, after they were convicted on criminal libel charges in President Rodrigo Duterte’s Philippines earlier this month. Under Trump, however, the State Department waited two days to issue an anodyne expression of concern. 

  • “By passing this extremely harsh sentence at the end of utterly Kafkaesque proceedings, the Philippine justice system has demonstrated a complete lack of independence from the executive,” said Daniel Bastard, the head of Reporters Without Borders’ Asia-Pacific desk. 
  • “It’s a campaign that ought to be strongly opposed by the United States,” wrote The Washington Post editorial board. “Yet, despite the president’s outspoken anti-Americanism, the Trump administration has been largely silent. President Trump evidently admires Mr. Duterte’s strongman instincts.”

Why this matters?

  • Free journalism and activism are two of the few effective tools against embedded corruption. Many foreign reporters and anti-corruption activists have long sheltered under the protective shield offered by the United States. If that shield is removed, kleptocratic governments will feel unrestrained in prosecuting or persecuting reporters or investigators who expose unwelcome facts.
  • The United States has always been the world’s most prestigious democracy. These successive attacks on its institutions embolden autocrats and oligarchs everywhere.

WHAT ARE YOU BATHING IN?

Fun news from a UK court, where Sheikh Khalifa bin Zayed al-Nahyan is claiming that his asset managers stole money from him. Documents presented to the court suggest he had the water tanks at his $75 million house outside London filled up with Evian water, specially shipped in from France. He’s the emir of Abu Dhabi, and hardly ever visited the luxury property, but clearly didn’t want to risk English water getting anywhere near him if he did.

  • Top analysis from Professor Heather Marquette, an expert in corruption at Birmingham University, who tweeted: “I shall not take a number two, unless there’s Evian in my loo.”

SHELL COMPANIES CAN BE USEFUL…

I get news alerts when Russian oligarchs do things, so my inbox went ping with the information that Galina Anisimova, ex-wife of Russian businessman Vasily Anisimov, had sold her Florida property for $12 million. In 2013, she listed her New York mansion for $30 million, making it the most expensive house in Brooklyn at the time. It eventually sold five years later, for a third of that, despite her having expended significant resources in renovation. 

  • “Some of the design influences seem tossed in almost arbitrarily,” noted the magazine American Luxury, in quite a good definition of oligarch chic, “and some are more remarkable than tasteful.”

So who bought the properties? We don’t know, because their owners hid behind shell companies. 

… AND SHELL COMPANIES CAN OVERDO IT  

Take the tale of poor Vitaly Malkin – a former member of Russia’s upper house of parliament – who was ordered to pay almost 1.5 million euros in tax on a luxury chalet in a French ski resort. The tax is designed to penalize people who own property via shell companies, and Malkin tried to get out of it by proving to a court’s satisfaction that he owned the property. Tragically, however, he was unable to do so: his shell company was so good at hiding his ownership, that it even hid it from him.

  • “Even though everyone knows the owner is who he says he is, tax officials consider that proof of ownership isn’t provided under French rules,” said Arnaud Tailfer, a French tax lawyer. “As the shareholding of limited liability companies doesn’t have to be kept up to date in Luxembourg or in places such as Guernsey, it’s exceedingly difficult to prove ownership.”

WHAT I’M READING 

Twitter was convulsed last week by a column in the FT about journalist Shruti Advani’s “luxury lockdown” in London’s posh Kensington region. It was widely felt that she had offended taste and good sense by revealing how her lockdown purchases had been fresh flowers, silk pajamas and private tuition, when ordinary folk have been struggling to make ends meet. I thought it was brilliant, however, if perhaps inadvertently so. The world is full of extravagantly wealthy media personalities claiming to be tribunes of the people, sneering at the “liberal elite” and pretending not to drink French wine, despite living in a style every bit as luxurious as Advani. At least she was honest about it, and honesty is always worth reading.

Thank you for reading! 

Oliver

The story you just read is a small piece of a complex and an ever-changing storyline we are following as part of our coverage. These overarching storylines — whether the disinformation campaigns that are feeding the war on truth or the new technologies strengthening the growing authoritarianism, are the crises that Coda covers relentlessly and with singular focus. We work with dozens of local and international reporters, video journalists, artists and designers to bring you stories you haven’t seen elsewhere, provide you with context missing from the news cycle and illuminate the continuity between the crises we cover. Support Coda now and join the conversation with our team. No amount is too small.

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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.

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