Corruption…??Or, pathological greed?

by rahnuma ahmed

MIND BOGGLING figures. The share market scam, 20,000 crore taka. Destiny’s rip-off, 33,000 crore taka. The Hallmark Group-Sonali Bank’s embezzlement, about 3,600 crore taka. But these are only particular instances of fraud and embezzlement, ones that have featured prominently in public outpourings of anger. Financial corruption is far deeper, more extensive.If the estimates reported in the weekly Holiday be true, 400,000 crore taka has been skimmed off over the last few years from four major public run sectors: banking, telecommunication, energy and education.
Who benefits? Cabinet ministers, their family members, their family businesses (suspicions of a ?cartel?). Ruling party loyalists. Traders. Stock market regulators (officials in the Securities and Exchange Commission, the Investment Corporation of Bangladesh). Military officers. Government high officials (in the civilian bureaucracy, in state-owned banks). Businessmen with close ties to people in power; in the case of the latter, we must bear in mind what Ibrahim Khaled (head, government appointed probe committee on the share market crash), had pointed out ever so perceptively: allegiances, whether to the Awami League or the Bangladesh Nationalist Party, are not hard and fast. ?When it comes to making money, they [businessmen] are above politics.?
Who is deprived? Those members of the public who had bought stock market shares, who had invested in Destiny’s multi-level marketing scheme etc etc. And of course, the public in general, since the costs of corruption — committed by the few — is borne by the overwhelming majority. Costs that are distributed generally — and generously — evidenced in galloping food prices, increased electricity charges (quick rental schemes), various forms of government tariff, the distortion of public spending priorities. The poor, equally citizens, are worst affected, being forced to continue leading lives of economic? impoverishment.
The politics of anti-corruption
The solution to corruption? Neo-liberals insist, more privatisation. Economic analyst and former banker Mamunur Rashid, speaking at a recent roundtable discussion on the economic situation (mess) argued for turning over state-owned banks to the private sector. The Hallmark Group embezzled because of the lack of political accountability. ?The donor community has been trying for long to develop the banking sector, to make it honest, efficient and forward-looking.? Akbar Ali Khan (former bureaucrat, advisor to the caretaker government) thinks similarly, said Dr Salauddin Ahmed, former governor of Bangladesh Bank. Turning everything over to the private sector is a bad idea, he said. It can only increase inequality. Left economist Anu Muhammad asked pointedly, but who will buy these state-owned banks? Obviously not members of the public but people like Tanvir Mahmud (managing director, Hallmark), a swindler. But it is precisely this, ie privatisation, which has occurred over the last three to four decades, which is to blame. It is the the reason for the financial crisis that we are in (Shaptahik, September 27, 2012).
In other words, if one aspires to fix the problem one must know its root causes.
A deeper understanding of corruption is prevented, I think, when a single factor is extracted out of what are complicated local and national histories, is transplanted to another setting and presented before the public in an idealised form. These exercises discourage critical thinking. The writer of an opinion piece for an online newspaper writes, when Bernard Madoff’s Ponzi scheme (the largest financial fraud in US history) was detected, he was immediately arrested, charged and sentenced to 150 years in prison. But since no one was held responsible for the 1996 share market scam in Bangladesh — since impunity prevails –? stock market manipulators are trying to manipulate the market again. The problem is one of weak legal systems vs those with well-developed legal frameworks. ?When laws don?t protect investors? rights, development of financial markets is stunted.? (AFM Mainul Hasan, ?Share scam 1996: justice delayed and denied,? bdnews24, October 24, 2010)
Keener observers would disagree, for, it is too simplistic. While it is true that individual offendors in the US are more likely to get caught, as compared to say, India, while it is true that the FBI and the Department of Justice are generally impartial, in other words, individual corruption is low in the US because the chances of punishment are high, ?a corrupt political-business nexus does exist? (Dr Susmit Kumar).
This difference in kind between third world and industrialised countries becomes more evident as the US presidential elections come closer, driven home by the title of Tom Engelhardt’s piece, Corruption, America-Style.
?In the U.S., corruption is seldom ?corruption.?? Take as an example our president, who has been utterly clear: he will not take money for his electoral campaign from lobbyists.?
Instead, Obama takes money from 15 of his top ?bundlers? (those who gather contributions and present the sum in a bundle to the campaign). They are not registered as federal lobbyists, but if he gets elected, they are likely to get cushy jobs and appointments. As did 200 bundlers after Obama became president in 2008.
The underlying assumption of Ahsan’s piece, and that of many others, is characteristic of 1960s modernisation theory: corruption is symptomatic of the political backwardness of underdeveloped societies, of immature societies who need to be tutored by Northern industrial societies so that they can outgrow their infantile behaviour and learn to live by the adult norms of the modern developed state (Ed Brown, Jonathan Cloke, ?Neoliberal reform, governance and corruption in the South: Assessing the international anti-corruption crusade,? 2004).
In other words, my argument is, if we are serious about dismantling corruption we must stop being euro-centric, we must stop viewing the industrialised nations of Europe and North America as being the ?pinnacle of political development.? We must acknowledge that corruption exists there as well.
But that is not enough, we need to push our thinking further because in today’s global world, interconnections exist between corruption in the North and corruption in the South, between corruption in the public sector and that in the private sector.
This brings me to how the World Bank defines corruption: ?the abuse of public office for private gain.? But first a brief note on the historical context within which the World? Bank developed its current interest in corruption. During the Cold War era, strategic geo-political interests had counted more to major powers, particularly the US; the issue of third world dictators being ethically motivated souls had hardly mattered. Well summed up by US president Franklin Roosevelt who had said of Niracagua’s president Anastasio Somoza (widely known to have appropriated his country’s financial resources): ??he may be a son of a bitch, but he?s our son of a bitch.?? After the Cold War was over, the World Bank, and to a lesser extent IMF, needed to ??prove their usefulness,?? writes Ivan Krastev. Their new strategy included fighting corruption.
It is true that the strategy has led to a massive explosion of international interest and action in corruption:? the founding of Transparency International (TI) by ex-World Bank employees (1993), their annual production of the Corruption Perceptions Index (1995 onwards), the UN Declaration Against Corruption and Bribery in International Commercial Transactions (1996), the OECD’s International Convention on Combating the Bribery of Foreign Public Officials in International Business Transactions (1997), a series of major international conferences including the International Anti Corruption Conferences (IACC), the governmental-level Global Forums, inclusion of anti-corruption agenda in institutional reform programmes of the International Financial Institutions (IFIs), the funding of institutional reforms under Good Governance by individual donor organisations such as USAID, adoption of anti-corruption? initiatives in the South through the adoption of measures like freedom of information legislation, judicial reform, strengthening public institutions which are responsible for financially overseeing the government (ie Anti-Corruption Agency), electoral reform, the involvement of civil society in anti-corruption initiatives etc. etc.
While this is all true, it is also true, write Brown and Cloke, that this growth of interest has emerged from within the mainstream development paradigm which ??unthinkingly accepts the neoliberal mantra of pursuing liberalisation, deregulation and privatisation as goals in their own right, despite mounting evidence of their role in accentuating the opportunities for corruption.??
The emphasis on corruption has additional benefits, it helps provide an explanation for why pro-market economic reforms, pushed in the South by the World Bank and IFIs over the last two decades, have failed to bear the fruit that they were supposed to.
To get back to the World Bank’s definition of corruption, although one must admit that devising a cross-cultural, universal definition is no easy task, it suffers from major problems. Namely, that, corruption is about the ??pursuit of private individual gain?? (here I’d like to add, as is implied in TI’s ethical policy); it largely ignores that individuals may ??use their position to pursue ideological objectives??, but most importantly, it assumes that corruption is ??a phenomenon of the public sector.??
Interpreting corruption in this manner, means that the possibility of market-led economic reforms giving rise to increased private sector corruption is ignored. It means that our attention remains glued to the rent-seeking behaviour of individual public servants. It also means that we seek solutions to corruption through the ??dual processes of economic liberalisation and deregulation.?? As do Mamunur Rashid and Ali Akbar Khan, but there are scores of others.
It also means that the continuing politicisation of bilateral, unilateral and multilateral aid, of using aid as an extension of foreign policy, is largely ignored.
It also means that certain things fall outside the anti-corruption radar, say, the Al-Yamamah arms deal between Britain and Saudi Arabia, which ??has kept BAE afloat for the last twenty years.?? Under the deal, signed in 1988 and renewed in 1993, Saudi Arabia has purchased 72 Tornado planes, 30 Hawk trainer jets, 30 other trainer planes, 48 Tornadoes (totalling ? 40 billion), 72 Eurofighter Typhoons (another ?10 billion). Extensive allegations of corruption led to an investigation by the Serious Fraud Office, but it was forcibly closed down by then prime minister Tony Blair. Pursuing the investigation, said the attorney general, was not ??in the national interest.?? (Guardian, January 16, 2007, August 16, 2012).
When offendors are caught and punished in Western countries, their actions are viewed and propagated as being individual, personal. Not systemic (which is claimed to be the case in Southern countries).
This helps conceal the fact that corruption and near-corruption, argue Brown and Cloke, are in reality ??part of the normal workings of the capitalist system.?? They are not aberrations, not the work of a few ??bad apples?? (as Bush had said of torture and rape by American soldiers at Iraq’s Abu Ghraib prison)
This brings me to the issue of what’s known as ??dirty money.?? It takes several forms: (a) bribery and corruption of public officials (b) criminal (drugs, counterfeit, theft of minerals, terrorism financing, other forms of organized criminal activities etc); and (c) commercial. Only 3% of global dirty money flows, writes Charles Abugre, citing Raymond Baker’s study (Capitalism’s Achilles Hill), can be attributed to bribery and corruption. Criminal activities constitute between 30-35%. The rest, over 60%, are the result of commercial activities, ??largely international/multinational companies using different means to evade and avoid tax by concealing and moving profits abroad, mainly into tax haven, low tax countries and financial secrecy jurisdictions.??
Six British overseas territories, Cayman Islands, Gibraltar, the British Virgin Islands, Bermuda, Montserrat and Turks & Caicos, and a British crown dependency, Jersey, form ??some of the world?s most notorious financial secrecy jurisdictions and tax havens.?? They offer secrecy services, particularly, ??the concealment of the identities of beneficiaries of companies registered there and the actual owners of bank accounts?? (Pambazuka News, July 21, 2011).
Possibly, this is why Brown and Cloke write of ??Shadow Europe.? An underground financial architecture, where money gained illicitly from corruption flows with capital from other sources, both licit and illict, ??surfac[e] to be cleansed in the global bourses, banks, and financial institutions of sunlit, upland ?proper? capitalism.?? Europe, they write, plays ?a global role in facilitating and encouraging various forms of illicit financing and corrupt practices.??
The wealth looted by corrupt politicians and businessmen of third world countries are also deposited in these safe tax havens.
What about the looted, scammed, embezzled money from Bangladesh? What percentage of, if the weekly Holiday report be accurate, of 400,000 crore taka, has been deposited in these safe havens?
Understanding ‘greed’ and the ‘greedy’ — in neo-liberal times
Greed for native English speakers, is visceral. A. F. Robertson, author of Greed: Gut feelings, growth and history (2001) writes, ??it [the word] doesn’t fuss around the head or heart, it jabs just below the navel.??
For native Bengali speakers lobh (greed) is located in the tongue. Greed means gluttony. When a person becomes greedy it is her tongue that extends. A matter of shame, for it hangs out; if not reined in it keeps growing longer and longer, stretching out to devour more food than the belly needs, oblivious of the needs of others. Of those who are hungry, starved.
Greed is also located in the eyes. It is the eyes that covet, once again, what belongs rightfully to others. Thanks to economic liberalisation policies, 16 private TV channels instruct us through commercials (pleasurably, of course) — whether of mobile phones, dried milk powder, shampoo, or whitening creams, or flats built by developers — to covet. To desire. They chip away at our moral scruples, they normalise greed.
While greed is not unique to capitalism, there is something distinctive about money. Being neutral, because of its abstract character, it can become valued for itself; beyond its capacity to provide enjoyment of its benefits (Burkard Sievers).
Money can become accumulated for its own sake, larger than the purpose of life, larger than life itself. When accumulating money becomes an obsession, greed becomes chronic. It creates a dynamic which leaves no space for experiencing either love or guilt.
The latter is well exemplified by Muhith, finance minister, and Moshiur, advisor to the prime minister, who felt no ??sympathy?? for the four shareholders who’d committed? suicide after the stock market crash. Petty greed was punished, while big, chronic, obsessive greed is nurtured by the government.
Salivating tongues of the ??big fish?? hanging out, is an ugly sight. Far divorced from reality, they remain fixed in their pathological state.
Published in New Age, Tuesday, October 2, 2012