These 5 Facts Explain the State of Global Corruption


March 19, 2016

These 5 Facts Explain the State of Global Corruption

by Ian Bremmer @ianbremmer

As Brazil grapples with an earth-shaking corruption scandal, a look at the state of global honesty

Brazil Protests

You can learn a lot about a country’s politics by looking closely at its corruption scandals. Who is investigating whom? What do the investigators really hope to achieve? And what do the investigations tell us about the country’s true balance of power? These five facts offer examples and answers.

1. Brazil

Brazil’s so-called Car Wash corruption scandal, which appears on the verge of bringing down a president, centers on Petrobras, the state-run oil giant. Last March, a top Petrobras official admitted that the company was awarding contracts in exchange for bribes, some of which were diverted to political slush funds. Brazil’s current president, Dilma Rousseff, was energy minister and chairwoman of Petrobras when the alleged kickbacks took place, though she has yet to be directly implicated in any wrongdoing.

But with an approval rating of just 21.8 percent, plenty of Brazilians see her as guilty by association—55.6 percent of Brazilians want to see her impeached. Former President and Rousseff mentor Luiz Inácio Lula da Silva was recently detained for questioning by police. Dozens of politicians are now under investigation, the vast majority of whom belong to Rousseff’s party. This is a country with a long history of official corruption: Four of five living former presidents are currently under investigation for one thing or another.

Tensions boiled over this weekend, and some 3 million Brazilians took to the streets. This type of social unrest would be a worrying sign for the country’s economy, but the Brazilian stock market surged 18 percent on news of Lula’s detention and speculation that Rousseff might finally be impeached—speculation that will grow stronger with the news that Rousseff may have offered Lula a cabinet post to help give him greater immunity from foreign prosecutors. And that’s the main takeaway here: Brazil is a country with a genuinely independent and empowered investigator capable of putting the country’s most powerful under a public microscope. Anti-corruption drives can create political chaos in the short-term, but they can benefit the country in the long-term if sunlight is used properly as a disinfectant.

(Bloomberg, The Guardian, The Economist)

2. Malaysia

Malaysia-What's wrong

That’s not the case with Malaysia. In 2009, Malaysian Prime Minister Najib Razak established a sovereign wealth fund called 1Malaysia Development Berhad (1MDB) to help the country attract foreign investment and boost its economy. Long story short, by 2015, 1MDB owed investors $11 billion. As investigations of the state fund got underway, it was revealed that $681 million dollars had been deposited into Najib’s personal account. The prime minister copped to the money transfer, but claimed it was a “gift” from the Saudi royal family, about $620 million of which he says he has returned. Two weeks ago, the 1MDB investigation uncovered that the total routed into Najib’s personal account was actually about $1 billion.

image10

Malaysia is a de facto one-party country. All of the country’s six post-independence prime ministers have come from the United Malays National Organization (UMNO). That’s why Najib owes his position to his party, not to the Malaysian people—good news for a man currently polling at 23 percent, the lowest ever for a Malaysian head of government. He has spent the last half-decade strengthening his position within UMNO, and the past year since the 1MDB scandal broke purging his party of potential adversaries. This past summer, Najib fired his attorney general, who had been leading the 1MDB investigation. Malaysia exemplifies how corruption drives can fall short in countries with a single political party and weak governing institutions.

(The Wall Street Journal, CNBC (a), CNBC (b), Australian National University)

3. South Africa

Half a world away, South Africa tells much the same story. Like Najib, South African president Jacob Zuma has been dogged by corruption allegations for years. Most recently, Zuma has been accused of improperly using taxpayer money for “security upgrades” to his personal residence. These include construction of an amphitheater, a swimming pool, and a chicken run—because you can never be too careful. As of this writing, a South African court is hearing a case to reinstate 783—the actual number—corruption charges against him, which include pocketing kickbacks associated with arms deals. But like Najib, Zuma’s power comes from effective control of his political party rather than directly from the people—just 36 percent of South Africans approve of Zuma’s job performance in 2016, down from 64 percent in 2011. Don’t expect South Africa’s anti-corruption push to amount to much because this is a country where investigators are empowered to bring damaging allegations to light, but not to enforce their judgments. Zuma will probably survive through the end of his term in 2019.

(The Economist)

4. China

Executed for Corruption
In China, it’s the leader who runs the investigations. President Xi Jinping has presided over a far-reaching anti-corruption campaign, with a particular emphasis on curbing wasteful government spending. Over the last three years, punishments have been handed down to 750,000—also the actual number—party members. Corruption inspection teams have more than doubled their staff in recent years, and have gotten a boost from the Chinese people—since 2013, corruption inspectors have received more than 270,000 tips from the Chinese public. Beijing even launched a WeChat account in January to make reporting graft easier.

 

Of course, the anti-corruption push is politically useful for Xi. Aside from dealing with the country’s real corruption problem, the campaign aims to restore public confidence in the ruling party at a time when the Chinese economy is slowing. It also helps that the anti-graft crackdown ensures that Xi can sideline opponents of his political agenda ahead of next year’s leadership transition in which five of seven members of the Politburo Standing Committee, the pinnacle of the country’s leadership, are scheduled to be replaced.

(The Wall Street Journal (a) , The Wall Street Journal (b), Radio Free Asia)

5. Russia

The Kremlin has Russia’s corruption problem fully under control. At least that’s what the 90 percent of Russians who get their news from state-dominated media have been told. Vladimir Putin currently has an approval rating of 83 percent, so the message seems to be getting through. But non-Kremlin sources tell another story. On a scale of 1 to 7 where 7 is “most corrupt”, Freedom House ranks Russia a 6.75. This is a country where corruption investigations are tools used by one political/business faction to cut into another’s market share. These are not the kinds of investigations that strengthen a country or its economy.

(The Atlantic, The Washington Post, Freedom House)

9 thoughts on “These 5 Facts Explain the State of Global Corruption

  1. I hate to say this but I think Najib and Malaysia will be runaway winners here. Petrobras sounds very much like our minting machine Petronas. But our oil company has only been responsible to Najib and before that Mahathir and there is no doubt that hundreds of billions ringgit are not properly accounted . What the heck nobody really knows what goes in and what goes out. But questions are now being asked only because the ‘milk’ from the cow is doing up. Corruption has been part of the culture since Mahathir took office and his polices including the NEP helped the disease to trickle down right to the policeman on the beat. Corruption has crept into every fabric fof our society and that goes for the private sector as well. Sorry people, but we will remain on the top list of the world for at least a generation. And that is assuming UMNO is removed at the next GE.

  2. Due to the 1PM, Lynas deception (so-called Temporary Operating License), and bauxite mining (so-called mining moratorium until April 15),
    Kuantan (once a BN-Ma Chai Association stronghold) has become
    an Opposition stronghold.

    http://www.malaysiakini.com/news/334379

    He wants to come to Kuantan to get us Kuantan people to
    support him ?? (!!!)

  3. Things began to unravel after we became a corrupt nation. Corruption now threatens our security when our Police Force is known to be in league with gangsters. That is why my good friend Hussain Najadi’s murder mastermind cannot be brought to justice. And Altantuya too died in vain.

    Read Sarah Chayes’ Thieves of State: Why Corruption Threatens Global Security. Sarah made the following observation in this book: “When every government function is up for sale to the highest bidder, violations of international as well as domestic law become the norm”( p. 184). –Din Merican.

  4. Three of the four BRIC countries on the list. May as well include India, I suppose. Hey if we did, we could say, see Malay, Chinese and Indian .

    And now they are trying to create a Housegate for LGE. How come this is not on the list ? MACC apparently is on the job, lads. We will get to the bottom of this. We will know how this country is being destroyed, our institutions compromised, our coffers robed…….by a Chinese guy who bought a house below market value.

    Chaos , pandemonium, dogs and cats living together…..but these allegations against Najib ? Please don’t think of him as a crook.

    For my religiously inclined comrades out there.

    From the Original Man In Black :

    (Last line from this verse always gets me)

    “Well you may throw your rock and hide your hand
    Workin’ in the dark against your fellow man
    But as sure as God made black and white
    What’s down in the dark will be brought to the light”

  5. Good governance is relative. But the more good governance you have you will have more relatives. Third World Leaders must understand this and understand it quickly.

  6. PM Najib says that he had not taken the people’s money. So please take a break and give the country time to investigate and come to a impartial conclusion without any interference from him.

  7. /// Conrad March 19, 2016 at 5:56 pm
    Three of the four BRIC countries on the list. May as well include India, I suppose. Hey if we did, we could say, see Malay, Chinese and Indian. ///

    South Africa has been added to the original BRIC in 2011 to form BRICS. So, yes, five out of five are absolutely corrupt as India clearly qualifies to be in this group. The out-lier is Malaysia which is not emerging economy, but submerging, and whose economy is not even of comparable size to be in BRICS. Yet Malaysia is in this exclusive club of kleptocrats and plutocrats.

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