Today is part II of my interview with Sarah Chayes, Author, Thieves of State, Why Corruption: Threatens Global Security (www.thievesofstate.com). This week I am particularly excited about my post, as on Tuesday, February 10th, I will have the pleasure to Sarah’s speaking engagment at the Jackson Institute for Global Affairs, Yale University.
For those who might have missed the first part of our Q & A (link here), I will repeat the introductory portion of our interview:
RB: Sarah, for those who are not familiar with your background, let me summarize. An award-winning NPR correspondent, you set aside your journalism career to stay in Afghanistan after covering the fall of the Taliban to “try to make a difference,” as you have put it. Toward the end of a decade on the ground in Kandahar, you were tapped to serve as special advisor to two commanders of the international troops (2009-2010) and then the chairman of the Joint Chiefs of Staff (2010-2011).Now, as Senior Associate in the Democracy and Rule of Law Program at the Carnegie Endowment for International Peace (link), you focus your research on the security implications of severe corruption.
Your Awards include the chairman of the Joint Chiefs of Staff Distinguished Civilian Service medal, Tufts University’s John Mayer Award for global citizenship, the Bulletin of the Atomic Scientists’ inaugural Ruth Adams award for writing in international security, and Oprah Winfrey’s Chutzpah Award.
In Afghanistan, I might add, you worked as an entrepreneur, launching a manufacturing cooperative that produces natural skin-care products for export. (www.arghand.org) That could be the topic for another whole blog: How to Expand Your Business in an Active Theater of War!
So, as the entire focus of my blog is corruption and compliance from the front line, your front-line, let me share, is breathtaking: as a journalist, an entrepreneur trying to run a business in one of the most corrupt environments on earth, and then a high-level government official, seeking to develop strategic anti-corruption policy.. Sarah, that is the front-line of compliance and corruption.
You don’t pull punches, either. You shine a light on realities that many with anticorruption responsibilities would rather not discuss. This is a work that addresses, as you put it, “systemic corruption and all the reasons that can be dreamed up for ignoring it.” Sarah, you don’t pull the curtain back on the front lines of corruption, your book puts an RPG right through it!
In other words, readers, this is the antithesis of the type of abstract, expository text that abounds in the compliance field. This book is down there in the oak-tree-roots of reality. I hope that today’s Q and A will be widely distributed to those at the front-lines of international business, who deal with these issues in their personal and/or business lives.
My struggle here, Sarah, is where to start. If I were leading an overseas sales team I would require each member to read your work and submit an essay entitled “The Consequences and Implications for our Work of Corruption.”
So, lets dig in to part II:
RB: Sarah, lets talk about the “soft state” where the institutions, laws and rules of state are deliberately weak and confusing. In my own career, I have seen procurement personnel who are poorly paid and inadequately trained which all resulted in dynamic where “weaknesses of the state encourage corruption.” What can businesses do to help those countries where those weaknesses exist and where ethical businesses want to create local value and development?
SC: I have to say, I don’t really think this is primarily a capacity issue. Too often Western officials and businesspeople see it that way. I see the low capacity and weakening of norms and their enforcement as deliberate on the part of corrupt elites, to make it easier for them to steal. The “soft state” riff in “Thieves” ends with this sentence: “Perhaps corruption was not the result of Egypt’s soft state, but rather its cause.”
That said, what businesses can do is ally with ethical local businesses, and take a united stand. Refuse together to pay the bribes, and suddenly the local officials will have something to lose. I found that when I refused to pay bribes in Afghanistan, if I was adamant enough, I didn’t have to. The trick is to make sure that local businesses can enjoy the benefit of the international investor’s implied protection. It should be a group action, taken together, with real discussion of potential repercussions and plans for mitigating the risks. Also, identify local officials of integrity, and seek to reinforce and protect them.
Such a collective approach may be hard for many businesspeople to contemplate, used as they are to competition, and trained as they are to shun collective action. But these are unusual environments, which call for the development of unusual practices.
RB: In your book you talk about the international banking systems that serve as a “wholesale clearinghouse to transfer national revenue into the hands of elite networks.” Lately, there has been a great deal of enforcement with respect to banking regulations including circumvention of sanctions, money laundering, and tax avoidance. How is the current attack plan on that front progressing in your perspective? If these kleptocratic networks need to get the money out of the country, how do you feel the banking community and the enforcement agencies are doing in cutting off the blood supply? Or, better said if “a stream is muddied from the source,” and the banks are part of that source, are we disrupting the water supply!
SC: I think some improvements have taken place. But I still see much more eagerness to act when the culprit is a terrorist, a tax evader, or a drug dealer, than when the culprit is a corrupt government official. The sanctions legislation enacted in the midst of the Ukraine crisis included great language. But it seems that a regime already has to be a pariah before anyone considers sanctions against its members. The same crimes committed by a ruler who is not yet an official “bad guy” don’t attract the same penalties. Look at Mubarak before and after the Arab Spring, for example. The one good in rem forfeiture case against stolen Nigerian assets was against money stolen by Abacha! He’s four heads of state back, and dead!! What kind of dissuasive signal does that send?
RB: In your final chapter, “Remedies” — which in my view, is the required reading of the required reading — you speak of corruption as “unnoticed, like some odorless gas, it fuels these threats (to world stability) without attracting much policy attention.” Do you think that is changing?
SC: To some extent, it is. There has been more high-level policy attention to corruption on the national security staff, in Congress, and in the Department of State than I ever saw when I was in government. But we are not there yet. We are still at the level of rhetoric and very broad-brush approaches. I have not seen a design for a concerted campaign aimed at a specific kleptocratic network. And when some colleagues and I began working to get a mandatory course on corruption included in Foreign Service Institute training for incoming diplomats, we got nowhere. Can you imagine? No willingness even to train diplomats in these concepts.
I also don’t see any willingness to devote resources to the systematic gathering and analysis of intelligence on the structure and functioning of kleptocratic networks. It reportedly requires 60 intelligence professionals to guide a single drone in the air. But I don’t think we have 60 intelligence professionals working on analyzing corrupt governments across the whole, sprawling intelligence community.
RB: Re-reading “Remedies,” which I could clearly can make as a stand alone Q and A (if I don’t wear out my welcome with this one), let me focus on two: legal and business tools. With respect to “legal tools,” here is a link to recent article in the Wall Street Journal, Risk and Compliance Journal, on the “FBI To Bulk Up Foreign Bribery Efforts.” As the article states “The agents will focus on both sides of corruption, hunting down executives that pay off foreign officials, while also helping other nations recoup funds stolen by corrupt leaders.” Sarah, if you were sitting with these thirty agents on the Anti-Corruption Squad, twenty of which are new to the Squad, what might you share?
SC: A couple things. Note that the focus is on executives who pay bribes. Well let’s get real here. While the U.S. is prosecuting executives for paying bribes, it is bribing corrupt government officials itself. The U.S. does that quite directly, in the form of CIA cash payments, and it does so in a more camouflaged fashion, by using foreign assistance in a kind of “pay to play” bargain with foreign governments. Military assistance to Egypt in return for the Camp David accords was a perfectly explicit version of this form of bribery, and less explicit versions of it are rife. I realize that defining their mandate is above the pay grade of these FBI officers. Still, I would suggest they work hard to use their investigations of bribe-payers as leverage to develop information on bribe-TAKERS.
Secondly, I would tell them to avoid the temptation to go for the easy cases. I would tell them that the objective of their work is to make a real-world dent in a real phenomenon. So they should do intelligence-driven enforcing. That is, they should think of the kleptocratic system the way they would organized crime, and go at it the way they would go after a mafia organization. First map it. Then look for vulnerabilities. THEN choose their targets (bribe-payers) as a function of their likelihood of providing leverage on these vulnerabilities.
RB: Sarah, thank you again, and I hope we can continue to exchange perspectives.
SC: Thank you, Richard, for the opportunity to answer these thought-provoking questions.