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Kleptopia: How Dirty Money Is Conquering the World

By Tom Burgis

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The United States is a money-laundering mecca. Our legal system, corporate lawyers, bankers, real estate agents, title companies and accountants are eager to turn dirty money into gold. Or yachts. Or sparkling new luxury condos in Manhattan and South Florida. Though the true owners of these clean assets largely hide from view, the fact that America welcomes big dirty money from abroad is no secret. The mystery, however, is why our leaders in Washington have not taken the simple steps to stop this.

In June 2019, the Senate Judiciary Committee held a hearing on “Combating Kleptocracy: Beneficial Ownership, Money Laundering, and Other Reforms.” Sen. Sheldon Whitehouse (D-R.I.) laid out the problem starkly: “America too often enables global corruption” by providing leaders who loot their countries “the shelter of our rule of law for their ill-gotten gains.”

The expert witnesses agreed on the need for a critical legal reform: Congress should pass a law to require that the owners of shell companies, including those created just to make cash purchases, be disclosed. Despite bipartisan support in the House and the Senate for such a bill, it is not moving.

Even if it passed both chambers, it’s unclear whether President Trump would sign it into law. For years, Trump has railed against the Foreign Corrupt Practices Act — the 1977 law that makes it a felony for a U.S. corporation (including its employees) to bribe foreign government officials. Trump told then-Secretary of State Rex Tillerson in the spring of 2017 that he wanted to get rid of the law, Washington Post reporters Philip Rucker and Carol Leonnig disclosed in their book, “A Very Stable Genius.” “It’s just so unfair that American companies aren’t allowed to pay bribes to get business overseas,” the president said, according to the book. “We’re going to change that.” And some have claimed that Trump owes his wealth in part to post-Soviet Eastern European kleptocrats. In the early 2000s, “the influx of Russian money did more than save Trump’s business from ruin — it set the stage for the next phase of his career,” Craig Unger wrote in the New Republic in 2017.

Tom Burgis’s new book, “Kleptopia: How Dirty Money Is Conquering the World,” is a must-read for anyone wanting to better understand what has already happened here in America and what lies ahead if Trump is reelected in November. It provides a magisterial account of the money and violence behind the world’s most powerful dictatorships.

“Kleptopia” is a meticulously reported narrative spanning continents over several decades. In it, Burgis, an investigations correspondent for the Financial Times, places Trump within the context of a widening number of international kleptocrats. While Trump is not mentioned by name until Page 250 of this 339-page story, Burgis paints a portrait of him as a player in that murky world. At first, Trump appears in the book as a nameless “American developer” building a skyscraper in Toronto. Burgis later contends that Trump operates among shadowy figures around the world. “Trump was helping to construct a new global alliance suited to the times. It was an alliance of kleptocrats,” writes Burgis. “Drain the swamp, they cry, as they luxuriate in it. They have taken hold in central Europe, eastern Europe and Russia, with imitators on every continent: Bolsonaro in Brazil, Duterte in the Philippines, Erdogan in Turkey, Netanyahu in Israel, Maduro in Venezuela, Trump in Washington.”

After Trump stumbled in business again and again, Burgis argues that Trump regained and maintained his financial footing at the very same time he was associated with many crime-linked business figures. Some who bought condos from him, for example, were members of the Russian emigre mob, whom Burgis refers to as the “violence-to-finance” figures in Brooklyn’s Brighton Beach — some of whom were allied with Italian American mafia families in the 1980s.

Beyond documenting in great detail corruption across several continents, “Kleptopia” offers a theoretical frame. “Globalization meant that rule by theft and the rule of law were co-existing,” Burgis writes. “Such tension could not be maintained indefinitely. One system would have to dominate, leaving the other as a façade.” This problem did not arise only after the fall of the Soviet Union and Russia’s nominal transformation to a market economy. We have seen this before. Burgis draws on the work of German legal scholar Ernst Fraenkel, who published “The Dual State: A Contribution to the Theory of Dictatorship” in 1941. “Fraenkel found what he believed to be ‘a key to understanding the National Socialist system of rule,” Burgis writes. “It was the ‘concurrent existence of a “normative state” that generally respects its own laws, and a “prerogative state” that violates the very same laws.’

Burgis is a strong storyteller. We can visualize diamonds smuggled in a toothpaste tube for Swiss banking clients. We see a lawyer taking SIM cards with important contacts from her oligarch client and concealing them in a candy wrapper as he fled one snowy night on a private plane from his home country for asylum in London.

The story Burgis tells is at times appalling, yet it is also somewhat hopeful, thanks to Nigel Wilkins, the book’s hero of sorts. The former head of compliance for BSI, a now-defunct Swiss bank, Wilkins turned into a regulator and later a whistleblower. He desperately “wanted the system to kick in, the counter system of institutions and laws, the system that protected the many.” Yet he was fired from his post at Britain’s Financial Conduct Authority in 2014 after “his bosses, the guardians of the City’s probity, had suspended him after he told them he had evidence that suggested a crime might have taken place.”

“Kleptopia” offers us this message: “If there is an antidote to kleptocracy,” Burgis writes, “it is honesty, the sort of indomitable resistance to lies, obfuscation and bulls---.” Yet, he adds, “It is a struggle without end: the struggle for who gets to tell the stories by which we live.”


Afew years ago Francis Fukuyama, a political scientist, described corruption as “the defining issue of the 21st century”. Whereas the 20th century saw ideological battles between democratic, fascist and communist regimes, he argued, the chief divide among today’s governments is whether they primarily serve the interests of their people (as in Denmark or Canada) or of their leaders (as in Zimbabwe or Russia). The worst are “kleptocracies”, states whose very purpose is to enable elites to plunder resources, in which bribes, favours and violence are the methods of rule.

In an era when prime ministers and presidents from Malaysia to Ukraine amass billions in cash, and Western banks that handle the money turn a blind eye to its provenance, Mr Fukuyama’s thesis commands widespread assent. Yet the lineaments of corruption can be hard to define, not least because corrupt people tend to be good at constructing excuses for themselves. After all, isn’t government supposed to encourage commerce? Shouldn’t politicians and businessmen talk? Corruption on a grand scale is fantastically complicated and tough to write about, not least (in Britain especially) because of libel law. Two new books take up the challenge.

“Kleptopia” does the job brilliantly. Tom Burgis of the Financial Times spins his tale of global corruption from the ground up. He begins with a hero straight out of a John le Carré novel. Nigel Wilkins is an ageing, introverted economist with an obstreperous streak. He takes a job as a compliance officer at the London office of bsi, a Swiss bank, just as the global financial crisis strikes. He soon suspects that bsi is laundering money for a long list of the international high and mighty, and surreptitiously copies reams of documents which he tries to bring to the attention of the Financial Services Authority. It ignores him.

Mr Burgis also follows the story of enrc, a metal and minerals outfit that listed in London in 2007. Partly owned by the government of Kazakhstan, the firm was founded by three Central Asians who bought ex-Soviet factories at discount prices, quickly becoming billionaires. The listing brings an injection of cash from Western investors; they also expand into Africa, taking in more money in Zambia and Congo. A parallel storyline concerns Mukhtar Ablyazov, a former Kazakh minister and banking tycoon turned opposition leader. In this telling, after Mr Ablyazov falls out with the regime, he, his family and his staff face lawsuits, surveillance, false arrest and torture. In 2009 he fled from Kazakhstan, where he has been convicted in absentia of murder and accused of fraud and embezzlement, all of which he denies. (He also left Britain after a judge ordered him jailed for concealing assets; he has just been granted political asylum in France.)

“Kleptopia” is wonderfully if grimly entertaining, replete with tales of Zimbabwean thugs, late Soviet gangsters and kgb officers-turned-entrepreneurs, as well as a Romeo-and-Juliet romance between the children of rival oligarchs. Mr Burgis’s depiction of the interlocking worlds of post-Soviet business and politics captures the way corruption binds together economic and political power. He meticulously demonstrates how, once overseas money enters Britain (attracted by the protections of its legal system), the associated power struggles and skulduggery follow.

When Western governments and media try to take on Kazakh wrongdoing, they are misled by what Mr Burgis terms a “presumption of regularity”. European courts treat international arrest warrants from Kazakhstan as if they emanated from a genuine national legal system, rather than the ruling clique. Worst of all, money-hungry Western banks, lawyers, public-relations firms and security consultants exacerbate the sleaze, developing a sort of international kleptocracy-service system. As the web widens, readers unfamiliar with Kazakh or Russian politics will start to come across names they may recognise, such as Felix Sater and Donald Trump.

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