Alexander Lebedev: We must create a global force to fight corruption

It is estimated that half of the world’s GDP is being siphoned off in illicit payments — we have to act

Dirty money: a campaigner at St Paul’s Cathedral in 2011 makes his protest against money-laundering (Picture: Roland Hoskins)

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Alexander Lebedev

1 September 2014

The world today is a more dangerous place than I can ever remember. On every continent, terrorists are committing terrible atrocities. All our attention is concentrated on battling the terrorist, on meting out justice to them. What we do not do is focus on their money.

Not enough is being done to tackle their backers. Now, more than ever, we need to stop this flow of funds, to cut off their financial pipeline, to end this dirty money.

But dirty money is a wider problem than that. Nations have made progress on many subjects of common interest: combating the effects of climate change; trying to alleviate poverty, especially in Africa; cracking down on drugs; the horror of human trafficking and modern-day slavery. We can even talk about cyber-crime and hacking and organised crime, and how we’re jointly fighting them. But where we struggle to make headway is on corruption.

This is bizarre when you consider the scale of the problem and its endemic, all-encompassing nature.

What is corruption? The Oxford English Dictionary defines it as “dishonest or fraudulent conduct by those in power”. And by “those in power” I would include those working for corporations and institutions which, while not directly an arm of government, are part of the ruling elite.

According to campaigners Tax Justice Network, corruption has cost us $30 trillion over the past 15 years — or half the world’s GDP. So, for every dollar of output, 50 cents is being siphoned off in bribes and other illicit payments.

Between 2000 and 2011, just from China $3.97 trillion is thought to have disappeared, much of it the profits of corruption, channelled into secretive offshore financial havens. From Russia the figure is close to $1 trillion. In the EU the total lost is put at $1.2 trillion ($150 billion from Italy alone).

Many of the perpetrators have been able to move abroad and draw on the expertise of what I term the “financial services oligarchy”, of international banks, law firms and accountants, to ensure they can continue to live off the proceeds of their crimes. Sadly London is at the very epicentre of this web.

Much of the illegal profits flow through the City. Around the world, individual nations have launched their own initiatives to tackle corruption. But they ignore the international, cross-border nature of the problem: recovering the stolen assets inevitably involves a degree of cooperation with another jurisdiction.

I’ve come to the conclusion that if countries want to have any real prospect of recovering what has been lost, they must join together to create an international anti-corruption force, along the lines of Interpol, to defeat these financial services oligarchs.

The new agency would have wide powers. It would not, though, be expensive to run — about $70 million a year would be my estimate. Its remit would be to raise awareness of corruption; explain why it matters; and, most importantly, cut across national borders to seize people and assets.

It would have real teeth and at its head I would appoint someone of global credibility and stature. The point would be to tackle corruption and to be seen to be tackling it — in the hope that those planning to deceive their countrymen, to steal valuable funds, would desist.

Without such a global body, it is difficult to see how the battle against corruption can be won. Ranged against national police forces and investigators are hugely sophisticated international professional advisory firms. They’re smart and well versed in assisting those who want to put their wealth beyond the reaches of the authorities.

They’re aided and abetted by offshore tax havens that structure their constitutions to assist those who seek total secrecy and security. This financial services oligarchy can only be broken if governments fight like with like, if they create a joint, well-equipped, expert, sleuthing agency that is not afraid of anybody or aligned to any particular nation. If that seems extreme, then consider how else can corruption be defeated?

Ways have to be found to break open the tax havens and the professional advisory firms that specialise in using them to squirrel away client money.

In theory, lawyers and accountants adhere to strict codes of conduct. But these are repeatedly flouted. Put these alongside underfunded and over-stretched local enforcement agencies and you have a recipe for inaction.

An international anti-corruption body would cut through all that. At present, if someone steals $1 billion and heads for an offshore haven, it is practically impossible to institute legal proceedings against them. As for recovery, that again is even more unlikely and besides, will take many years and incur a fortune in legal costs. The adage, “the more you steal the less chance you run of being caught” has never been more apposite.

We have to punch through this inertia, to take the fight to the criminals and their well-paid, well-connected, silky smooth helpers. When a major corruption scandal erupts there are predictable howls of rage. But ask yourself: how many of the perpetrators are ever caught, how much of the profits ever recovered?

In the past few years we’ve experienced a slew of such cases. As the transfer of money and communication gets quicker and easier, there’s no doubt they’re on the increase. The sums of money involved are also growing commensurately.

We need to put a stop to this trend. Governments around the world are struggling to raise funds.

They can’t keep raising the taxes on their middle- and higher-income brackets. We’ve got to pursue cash where we can, and one such target has to be the proceeds of corruption.

I am proposing a cheap, effective solution to one of the most pressing issues facing the world: we need an international policing body aimed at economic crime.

This is an abridged version of a speech to be delivered tonight by Alexander Lebedev, part owner of the Evening Standard, at the International Symposium on Economic Crime in Cambridge

Alexander Lebedev: We must create a global force to fight corruption

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