06/08/18

The trial of Paul Manafort and the global business of corruption

(Quartz) -- US government prosecutors made global headlines this week with tales of former Trump campaign chair Paul Manafort’s terrible taste. Having raked in millions from a Ukrainian kleptocrat, he magicked that money out of his Cypriot shell companies and into an array of boxy suits, ostrich and “blue lizard” jackets, unfathomably expensive rugs, and luxury houses replete with wisteria-lined pergolas.

His story is not unique, however. Manafort’s trial for bank and tax fraud is a case study in how Western elites help plunder young democracies.

One of Washington’s most skillful political operators, Manafort entered Ukraine to help rebrand the Kremlin-backed politician Viktor Yanukovych. By 2010, Yanukovych was president. During his four years in office, up to $100 billion was stolen stolen from the country—more than its entire 2016 GDP.

Manafort’s share of the spoils was allegedly $60 million.

He would be far from the only Westerner to feed at this trough. Political operators from the Trumpian right to the Bernie Sanders left worked on Yanukovych campaigns. Dig into the world’s most power-hungry kleptocrats, and, as Quartz has found, you’ll almost certainly uncover a cabal of Western PR shills, lawyers, real estate agents, and business intelligence operatives laundering their wealth and reputation.

In the UK, a PR agency run by Margaret Thatcher’s top spin doctor collapsed last year after exploiting racial tensions in South Africa for a set of billionaire brothers deeply entwined in politics. And when Saudi crown prince Mohammed bin Salman arrested the owners of a massive broadcaster last year, global accounting firm PwC reportedly helped him vet the company’s books and British law firm Clifford Chance apparently drew up the paperwork for the Saudi government to buy a controlling stake.

Kleptocracy doesn’t just harm the countries whose coffers are being emptied. When Western experts fill their pockets with money from corrupt leaders abroad, they tend to bring a bit of that corruption back home with them. Autocrats enmesh those around them in a global system of shady transactions and opaque power agreements, leaving their enablers morally and financially compromised. Once those Westerners reach powerful roles at home—like campaign chief for the Republican presidential nominee—that puts the entire democratic system in peril.

Manafort reached the pinnacle of his power desperately in debt, owing $19 million to an oligarch close to the Kremlin. He allegedly tried to patch things up by offering the tycoon inside information on the Trump campaign. He also allegedly promised a government role to a banker in exchange for fraudulent loans, in the kind of patronage system that destroys good governance and opens those in power to blackmail.

Manafort’s lawyers claim he went to Ukraine to build a Western-style democracy. Instead, he appears to have brought post-Soviet values—and a truly oligarchic fashion sense—to the US.