Flipping the Corruption Myth

The global anti-corruption NGO Transparency International has just come out with this year’s edition of its annual corruption pertceptions index, which is packed with faux surprises, such as the fact that corruption — or at least the perception of corruption — is significantly more rampant in the world’s poorer countries than it is in the world’s most developed countries. Shock, horror!

My country of residence, Spain, is now officially one of Europe’s most corrupt countries, which is hardly debatable given the sheer scale and scope of political corruption that has been unearthed in recent years. Meanwhile, my country-in-law Mexico’s corruption score on a 0-100 scale — 100 being the cleanest — is a confidence-inspiring 35. Anything under 50, says Transparency International, the global anti-corruption NGO, indicates “a serious corruption problem.” 

In other words, Mexico, has a serious corruption problem. But as El Daily Post points out, so does most of the world. Two-thirds of the countries graded by Transparency International (TI) in its 2015 Corruption Perceptions Index released this week came in under 50.

But is this widespread perception — that corruption is the exclusive scourge of the developing world — accurate? According to Dr Jason Hickel of the London School of Economics, writing in a brilliant, ball-busting 2014 article for Al Jazeera, it is not, for a simple reason: it completely ignores the corrupting role of the world’s shadowy financial system, which includes tax havens, paper companies, anonymous accounts, and fake foundations, with the City of London at the very heart of it.

Here’s the first part of the article:

Flipping the Corruption Myth

Transparency International recently published their latest annual Corruption Perceptions Index (CPI), laid out in an eye-catching map of the world with the least corrupt nations coded in happy yellow and the most corrupt nations smeared in stigmatising red. The CPI defines corruption as “the misuse of public power for private benefit”, and draws its data from 12 different institutions including the World Bank, Freedom House, and the World Economic Forum.

When I first saw this map I was struck by the fact that most of the yellow areas happen to be rich Western countries, including the United States and the United Kingdom, whereas red covers almost the entirety of the global South, with countries like South Sudan, Afghanistan, and Somalia daubed especially dark.

This geographical division fits squarely with mainstream views, which see corruption as the scourge of the developing world (cue cliche images of dictators in Africa and bribery in India). But is this storyline accurate?

Many international development organisations hold that persistent poverty in the Global South is caused largely by corruption among local public officials. In 2003 these concerns led to the United Nations Convention against Corruption, which asserts that, while corruption exists in all countries, this “evil phenomenon” is “most destructive” in the global South, where it is a “key element in economic underperformance and a major obstacle to poverty alleviation and development”.

There’s only one problem with this theory: It’s just not true.

Corruption, superpower style

According to the World Bank, corruption in the form of bribery and theft by government officials, the main target of the UN Convention, costs developing countries between $20bn and $40bn each year. That’s a lot of money. But it’s an extremely small proportion – onlyabout 3 percent – of the total illicit flows that leak out of public coffers. On the other hand, multinational companies steal more than $900bn from developing countries each year through tax evasion and other illicit practices.

This enormous outflow of wealth is facilitated by a shadowy financial system that includes tax havens, paper companies, anonymous accounts, and fake foundations, with the City of London at the very heart of it. Over 30 percent of global foreign direct investment is booked through tax havens, which now collectively hide one-sixth of the world’s total private wealth.

This is a massive – indeed, fundamental – cause of poverty in the developing world, yet it does not register in the mainstream definition of corruption, absent from the UN Convention, and rarely, if ever, appears on the agenda of international development organisations.

With the City of London at the centre of the global tax haven web, how does the UK end up with a clean CPI ? [DQ: The UK was actually one of the best perfomers in this year’s index]

The question is all the more baffling given that the City is immune from many of the nation’s democratic laws and free of all parliamentary oversight. As a result of this special status, the City of London has maintained a number of quaint plutocratic traditions. Take its electoral process, for instance: More than 70 percent of the votes cast during council elections are cast not by residents, but by corporations – mostly banks and financial firms. And the bigger the corporation, the more votes they get, with the largest firms getting 79 votes each. This takes US-style corporate personhood to another level.

To be fair, this kind of corruption is not entirely out of place in a country where a feudalistic royal family owns 120,000 hectares of the nation’s land and sucks up around £40m ($65.7m) of public funds each year. Then there’s the parliament, where the House of Lords is filled not by election but by appointment, with 92 seats inherited by aristocratic families, 26 set aside for the leaders of the country’s largest religious sect, and dozens of others divvied up for sale to multi-millionaires.

Corruption in US is only slightly less blatant. Whereas congressional seats are not yet available for outright purchase, the Citizens United vs FEC ruling allows corporations to spend unlimited amounts of money on political campaigns to ensure that their preferred candidates get elected, a practice justified under the Orwellian banner of “free speech”

Continue reading the article

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