WAKING UP ON THE WRONG SIDE OF THE CORRUPTION INDEX

 

Uncle Volodya says, 

"It is said that power corrupts, 

but actually it's truer that power attracts the corruptible."

The Kremlin Stooge

February 1, 2012

Russia has an acknowledged problem with corruption. The dispute goes back and forth on whether the government is doing anything serious to combat the problem, or simply paying it lip service while remaining relatively unconcerned. But statistics released in June 2011 by Transparency International, and based on its research, are discouraging.

I mean, the conclusion is inescapable – from surveys which examined 23 sectors and institutions, researchers learned:

Some 53.4% of respondents to a national survey believed corruption had increased “a little” or “a lot” in the past 3 years. Only 2.5% of respondents believed corruption had decreased a little or a lot. A whopping 48.1% did not think the government was effective in tackling the corruption problem. Damningly, 92.7% of respondents would like to report corruption, but only 30.1% would know where to report it.

A leaked police investigation report from 2006 suggested there were approximately 1000 corrupt prison officials currently working, while a further 600 were having an “inappropriate relationship” with a prisoner.

An estimated 38, 000 people are involved in organized crime, and a 2006 survey of the construction sector reported that 41% of respondents had been offered a bribe at least once in their career.

Who is running this benighted country? Let its Prime Minister step forward, and bow his head in shame. Step forward, Vladimir Put….no, wait, wait, my mistake. I got my pages mixed up, sorry for any unintended attribution of blame. Just a minute, let me get my notes together….

There, sorry once again for being so disorganized; I can’t think what came over me. Step forward, David Cameron, because those statistics reflect the state of corruption in the United Kingdom.

Shame you have to take the rap for it, considering some of those values were realized before you took office ~ but that’s why you get the big bucks.

Today’s discussion of bribery and corruption was inspired by the smug pontifications of EU-Russia Centre Director Fraser Cameron. It appeared not to be Mr. Cameron’s intention to rip on Russia for corruption ~ no, he wanted to talk about the recent Duma elections, and had no problem passing on the estimate of “some observers” who believed United Russia actually received less than 30% of the vote, although that would imply 20% fraud and international observers suggested nothing like that.

He likewise is comfortable quoting GOLOS and Mikhail Gorbachev, which begs the question why the appointee to the Directorship of the EU-Russia Centre seems not the slightest interested in obtaining any official statements on such an important event from the current Russian government. But he could not resist dragging the old “party of crooks and thieves” chestnut out for a quick airing, which was one time too often for me. So instead of just assuming the western reports of corruption in Russia – portraying a country on the verge of collapse due to its own internal rot – reflect the true state of affairs, let’s take a closer look at the other half of the EU-Russia Centre: the European Union.

So; going back to the United Kingdom for a moment.

Although more than half the country surveyed believed corruption had increased in the past 3 years and nearly the same number believed the government was ineffective in its anti-corruption efforts, and although the UK did fall from 17 to 20 in the CPI between 2009 and 2010, this reflects the fact that the 2009 survey measured 180 countries while the 2010 survey measured only 178, and the UK’s actual score only faded slightly from 7.7 to 7.6.

Well, let’s move on.

The country is reluctant to ratify the United Nations Convention Against Corruption. For those who don’t realize the difference between signing a convention and ratifying it, until you do the latter, you as a nation are not legally bound by it; the country justifies its reluctance with worries that ratification might mean more bribery investigations.

Refusal to ratify the convention ranks the country with peers like Saudi Arabia, Syria and North Korea. Is it Russia? Nope ~ it’s Germany, one of only two countries in the EU that have yet to ratify the anti-corruption convention. It’s not hard to see why, if you look: Siemens, Volkswagen, Daimler/Chrysler. Deutsche Bank. GM/Opel, Linde, Infineon. Scandal, scandal, scandal.

Siemens was just the biggest in the country’s history ~ $2.5 Billion in fines for bribery and falsification of corporate records.

Deutsche Bank was fined $1.32 million by the Financial Services Authority in the UK for “irresponsible lending practices”: issuing home loans exclusively through mortgage brokers to customers with poor credit histories, then soaking them with made-up fees when they fell into arrears.

The FSA reported that this was the first time they’d ever had to fine a company for irresponsible mortgage lending, and that the fine would have been $1.8 million if Deutsche Bank had not cooperated with the FSA.

Gosh; Germany must have gotten hammered on the Corruption Perceptions Index, what? Ummm…not so you’d notice ~ number 14 in 2009, falling a single place to 15 in 2010 when two less countries were rated, and losing a tenth of a point to fade from 8.0 to 7.9.

Transparency International produces its index “based on business people’s perceptions of the problem in different countries”, we are told.

Really?

Business people like Bernd Hafenberg, German economist? I guess not ~ because he commented on the online Frankfurter Allgemeine,

“I consider this to be merely the tip of the iceberg. Based on 45 years’ work experience, Germany is thoroughly corrupt and whoever talks about this is considered a Judas.”

Between 1000 and 2000 corruption cases come before the courts annually, and some experts suggest these might represent a tenth of the actual instances.

All right; one more.

Who does this make you think of:

“The impression is of a clique of powerful men up to no good, linked by a potent mix of money, politics and business, and of an executive branch too close to the justice system”?

How about,

“…her husband went often to Switzerland and returned with suitcases of cash. He travelled there, she said, with Ziad Takieddine, a Franco-Lebanese arms broker, who has also been charged in the Karachi affair“?

The Karachi Affair referred to kickbacks on the sale of submarines to a foreign country, and to a bombing which killed 11 French engineers, said to be in retaliation for unpaid bribes.

How about when the Best Man at your wedding is charged with “complicity in the misuse of public money”?

Did you think of Russia?

Sorry ~ just another day in the rough-and-tumble scrimmage of those close to the French president, Nikolas Sarkozy.

Similarly tawdry allegations ~ by a judge, no less ~ suggest Sarkozy received funds directly from France’s richest woman (L’Oreal heiress Liliane Bettencourt) to be used in his presidential campaign.

Judge Prévost-Desprez further alluded to witness intimidation, and claimed she was removed from the case so as not to damage Sarkozy’s reelection prospects (which I personally ~ without knowing anything about his opposition ~ would rate as between “not a chance” and “never happen”).

Although France is a ratified signatory to the U.N. Convention Against Corruption and the French government claims to be in the forefront of the anti-corruption ambush, a Sofres poll in October 2011 found a full 72% of French citizens believes its politicians are corrupt ~ the highest percentage ever.

What’d that do to France’s position on the CPI? That’s right; nothing. France moved down one position, and its score slipped from 6.9 to 6.8; the de rigueur tenth of a point. Starting to see a pattern?

So, we’ve looked at three prominent EU economies. Of those ~ the UK, Germany and France, 48.1% (UK) and 72% (France) believe their leaders are corrupt, while the other (Germany) has been rocked with corruption scandals that resulted in over $1 Billion in fines.

A recent survey of European companies by London’s Ernst & Young revealed that two-thirds acknowledge bribery and corruption are widespread in their country, nearly 80% have received no training in anti-corruption practices and 77% want regulators to do more to reduce the risk of company fraud, bribery and corruption. Yet each of the three countries profiled here slipped only a tenth of a point on the CPI, which was more than accounted for by the decrease in countries surveyed.

How did Russia do, since I’ve mentioned it so often?

The country that rebounded quicker than most from the global financial crisis, whose currency rose faster in value than any other during the recovery, which paid every penny it owed in loans and built up the third-largest cash reserves on the planet while cutting national poverty in half and steadily increasing the living standard of its citizens….plummeted from 146 to 154 on the CPI.

This, too, apparently represents a difference of only a tenth of a point, from 2.2 to 2.1. In another ironic twist, if you are fond of irony ~Greece admitted to a substantially higher level of cash bribery than Russia.

What has been the western response to Greece’s out-of-control corruption?

They gave Greece a multi-billion dollar bailout. When the chronically-irresponsible country missed its $52 Billion target for funds realized from privatization and reforms by around $48 Billion, and the Swedish finance minister announced the original bailout funds had been “wasted“, the exasperated EU punished the Greeks by….agreeing to take a 60% ~ 70% “haircut” on owed value on Greek bonds and preparing for another bailout.

If this has made you as curious as it has me, you must be wondering now ~ if Transparency International (“fighting corruption worldwide”, ha, ha) formulates its standings based on “business people’s perceptions of the problem in other countries”…..who are the business people they poll in Russia to formulate that nation’s standings?

If Russia is supposedly “as corrupt as the Congo” ~ which it is according to Fraser Cameron ~ who is left in Russia who is trustworthy to report the state of corruption?

I couldn’t say, because I don’t know, but I would guess foreign businessmen.

Foreign businessmen whose yardstick of corruption draws heavily on how they are doing, profit-wise.

Business and political reporting by western-owned or western-leaning newspapers such as The Moscow Times and Novaya Gazeta.

Business reporting in the western press, which is often agenda-driven and tailored to achieve a goal, such as “The Hermitage Effect” as practiced by William Browder.

The alternative is that Transparency International does not actually poll any Russian businesses at all that are Russian-owned.

This should not suggest the corruption problem in Russia is imaginary. Of course it exists ~ it stands to reason it would if corruption is so widespread in Europe as a whole.

The real difference is that reporting on corruption in Russia receives a fierce spotlight that similar or worse problems in other countries do not, and that this distorted perception of corruption in Russia is rigorously applied to its international standings, while corruption levels as established by their own citizens have little part in the standings of other European countries.

Transparency International is a fierce partisan zealot in its reporting of corruption in Russia, and a sleepy blind man in the countries that provide its funding.