128 - The Corruption Curse: How Ukraine, Argentina, Malawi, and the U. S. Battle High-level Fraud
and Ramaphosa Redux
Today is International Anti-Corruption Day!
On Wednesday, I credited Ukraine’s successful repulses of Putin’s Russia in part to its anti-corruption initiatives. They contributed measurably, I said, to the willingness of the Ukrainian people to endure air bombardments, frozen pipes, winter’s darkening gloom, and deaths on the battlefield. Battening down the hatches against pervasive corruption has boosted the state’s legitimacy. Improved integrity, plus the perception of such enhanced probity among officialdom and the military, has strengthened Ukraine as it defends itself against immoral and corrupted Russia.
Ukraine is almost Nordic in its unexpected turn toward honest dealings. The peoples of many other countries across the globe are less fortunate, even absent major wars or intrastate conflicts. Indeed, much of the developing world is enmeshed in the kinds of sleaze from which Ukraine is extricating itself.
Peronist Argentina
We can commiserate with Argentines, for example, now that their former president and current vice-president has been sentenced to six years in jail for exchanging contract preferments for cash. She has also been banned holding office. (Americans please note.) As a result, she promised whatever happens to her court appeals to “step out of politics” forever at the end of 2023.
Vice-President and former President Cristina Fernandez de Kirchner (and likely her late husband and presidential predecessor) let a bankrolling friend and co-conspirator win nearly $1 billion worth of the lucrative road-building contracts in Santa Cruz Province. He rewarded the Kirchners, of course.
Three judges declared that they were “certain” that “an extraordinary fraudulent maneuver took place that harmed the pecuniary interests of the national public administration.” They ruled that the harm came from two decades or more of corruption through construction kickbacks in Patagonia and major malfeasance in public office. (The tribunal also convicted the road-builder and provider of kick-backs and three others of corruption, sentencing the first to six years in prison.)
Corruption has long engulfed Argentina and often accompanied authoritarianism and incompetence. In recent times, probably only one president was comparatively clean, but his financial reforms ultimately failed. Today, with raging 86 percent inflation, an inability to pay back massive borrowings to the IMF, the United States, Germany, and Japan, and a floundering economy, all testify to corruption’s power to distort the priorities of what was once the strongest economy in South America. No more, not since corruption helped to strangle economic progress.
Malawi
Malawians would love to have the problems of Argentina. With an annual GDP per capita of $642 compared to Argentina’s $11,000, Malawi is one of the world’s poorest countries, with likely diminishing export and foreign exchange earning now that China is reducing its imports of flue-cured tobacco. Whereas Argentina’s population is stagnant, tiny Malawi’s is tripling between from now (20 million people) to 2080. Argentina’s population is 46 million.
Just like Argentina, Malawi has also suffered from serious bouts of official corruption for decades. A string of greedy presidents have matched Peronist plunder in Argentina. In Malawi, the abuse of public office began in 1964, under American-trained President Kamuzu Banda. He declared himself president-for-life in 1970 and ruled until 1994, having built thirteen palaces and profiting from a raft of money-making businesses. President Bakili Muluzi, Banda’s successor, gained monopoly control of sugar and trucking enterprises, took Taiwanese money meant for the state, and tried and failed to break the constitution so that he could rule indefinitely. Two of his successors, the brothers Bingu wa and Peter Mutharika, siphoned national funds into private accounts in Singapore; when Bingu Mutharika died, Peter hatched a plot to pretend that Bingu was still alive, shipping the dead man as a supposed live one to a hospital in South Africa so that Peter could breach the rules and become his successor. (Peter had previously taught constitutional law at Washington University in St. Louis for thirty-seven years.)
Joyce Banda, who succeeded to high office after the Mutharika caper failed, presided over what became known as Cashgate; an international accounting audit discovered that almost every cabinet minister and senior civil servant was cooking the books and stealing from the state. After her troubled time, Peter Mutharika came to the presidency legitimately, and then rigged a subsequent election by erasing his opponent’s vote totals.
Thanks to a Malawi court ruling and a new contest, the Rev. Lazarus Chakwera, Peter Mutharika’s opponent, was overwhelmingly elected president in 2020. Chakwera, a Pentecostal minister trained in India and the United States, vowed to resuscitate Malawi’s weak economy and eliminate corruption.
Instead, Chakwera’s handpicked vice-president is now accused of accepting a $280,000 bribe from a U. K. businessman with Malawian roots. The businessman was supplying overpriced armaments to Malawi’s security forces. And the woman who heads the national Anti-Corruption Bureau and uncovered the bribery has herself been arrested by prosecutors friendly to the vice-president.
Chakwera seems surprised at his vice president’s thievery even though he earlier sacked a key minister for purloining anti -coronavirus pandemic relief funds. Chakwera and Vice-President Saulos Chilima came to power pledging to end Malawi’s long and vastly damaging history of fraud in high places.
Indeed, like Ukraine before President Volodymyr Zelensky became president, constant corruption had reduced Malawi’s annual GDP per capita by at least 2 percent. There has never been enough money for medicines and good schooling. Poverty is everywhere and constant, and now what is left of the Chakwera administration continues to battle 20 percent per year inflation rates, shortages of foreign currency, fuel and energy scarcities, and massive food insecurity. Malawi feeds itself with water dependent maize and manioc, but rainfall patterns have not been kind, so millions are bound to suffer during the southern African summer that has now begun.
Corruption in high places, with soaring prices for imports (especially fuel), hardly makes life any easier in either Malawi or Argentina, or across the rest of Africa and South America.
Ramaphosa Redux
On December 2, I wrote about South African President Cyril Ramaphosa and the bundles of cash that had been stuffed into a couch on his game farm. Now a wealthy Sudanese business has come forward to acknowledge purchasing $580,000 worth of prize wild buffalo from Ramaphosa’s farm – but not from Ramaphosa – and to paying the resident manager in cash. As a result, it appears that Ramaphosa need not answer charges of corruption or money-laundering. There are other questions remaining how the money was removed by thieves from the couch, and how Ramaphosa’s political enemies discovered the theft and chose to make a vendetta of accusation against South Africa’s president. Many questions still need to be answered but, whatever Ramaphosa was doing or is doing, it hardly resembles Argentinian or Malawian peculation. Nor does it echo the criminalized schemes in which President Jacob Zuma, who preceded Ramaphosa, was engaged, and may still be.
The Enablers Act
In Washington, to curb corruption and money laundering, the bi-partisan Enablers Act is about to be tacked on to other must-pass legislation. The new Act would show that the U. S. was building on the long-existing Foreign Corrupt Practices Act to “require professionals who handle money on behalf of clients - including investment managers and some lawyers - to conduct due diligence on the funds’ origins, as banks are typically required to do.” This legislation would constitute the most ambitious anti-money laundering initiative ever enacted, especially as so many shady transactions pass through New York and other American centers daily. The act would also help to uncover beneficial ownership, thus making illicit maneuvers more transparent. Ukraine believes that the Enablers Act will keep mysterious Russian money out of international trafficking, and supports the Act’s passage.