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U.S. a Haven for Global Corruption Profits, Panelists Say

Danielle Brian speaking at a panel, Democracy Defenders in Dialogue
Danielle Brian, POGO Executive Director, speaks at a panel, "Democracy Defenders in Dialogue: Sharing Lessons from Investigative Journalism and Anti-Corruption Advocacy Partnerships Around the World," December 14, 2017.

Last fall, the Miami Herald and a freelance journalist who works for Transparency International’s Russian chapter worked together to reveal how a Russian bureaucrat, ostensibly making the equivalent of $75,000 a year, was secretly buying multi-million dollar condos in South Florida. While Transparency International brought the individual’s corruption to the attention of the Russian government, the Miami Herald was able to focus its stories on the systemic problem of corrupt Russians (and others) using American real estate to hide and launder money.

The case is a prime example of how American journalists and advocates can work with their peers overseas to highlight the systemic problems that allow corruption to flourish and to help bring the individuals to justice in their own country. By working together and sharing information with international civil society groups, journalists can significantly amplify the impact of their stories. American regulatory, law enforcement, and intelligence agencies are better at their jobs because they regularly work with other countries. Journalists and advocates should do the same.

Danielle Brian, the Project On Government Oversight’s executive director, participated in a panel discussion in December examining how American journalists and anti-corruption nonprofits can partner with other groups around the world to more effectively address international corruption.

Panelists shared numerous instances when the impact of a story was amplified around the world as a direct result of organizations working together. The competitive media environment in the United States, however, means that such cooperation is rare here despite the potential benefits. With everybody looking to distinguish themselves, journalists are unlikely to share valuable records and risk having someone else publish the story first. International cooperation has also been hampered by technological barriers, although new platforms and tools are making it far easier to manage those partnerships. Despite the barriers, American journalists are beginning to take advantage of opportunities for cooperation.

Panelist Marina Walker Guevara, deputy director of DC-based International Consortium of Investigative Journalists, pointed to the Panama Papers and the more recent Paradise Papers projects to highlight the benefits of cooperation. The projects were based on massive leaks of information from firms that facilitate tax evasion and avoidance by the rich and powerful. The original recipient of the leaks, a German newspaper, decided that the sheer volume of records and the global scope required a global investigation. By partnering with a global consortium of trusted journalists, investigators were able to share access to records and help each other put various pieces of the puzzle together. All of the participating organizations had time to make sense of the records, and they then broke the news on the same day, creating a massive media wave that grabbed the world’s attention. As a result, approximately 80 countries have launched a total of nearly 150 audits, investigations, prosecutions, and arrests. One such investigation in India encompasses over four hundred entities. Iceland’s Prime Minister resigned, Pakistan’s former Prime Minister has been indicted, and the founders of the law firm whose records were leaked have been arrested.

Another organization that was featured on the panel is the Organized Crime and Corruption Reporting Program, led by Drew Sullivan and Paul Radu. Organized crime, they say, can only be defeated by an organized opposition. When that crime crosses national borders, the opposition must do so as well. Their organization is dedicated to conducting cross-border investigations, and they help teach other organizations how to maximize their impact through international reporting.

As international corruption increasingly crosses America’s borders, the oversight community needs to play catch-up.

“While the rest of the world provides the transparency that the U.S. demanded, the U.S. is rapidly becoming the new Switzerland,” the Bloomberg Editorial Board wrote in December. Despite requests from the previous administration, Congressional inaction on the issue has prevented the reporting of information like account balances and the names of beneficial owners—the same information that other countries provide to us. “A Russian billionaire, for example, can put real-estate assets in a U.S. trust and rest assured that neither the U.S. tax authorities nor his home-country government will know anything about it.”

Corporation secrecy laws in Delaware, Nevada, Wyoming, and other states facilitate transnational crime, according to a Transparency International report from January 2016. Complex webs of anonymous shell companies can make law enforcement’s job much more difficult and allow foreign organizations to get away with defrauding Americans and committing crimes. Global Witness, an anti-corruption nonprofit that focuses on how corporate secrecy in developed countries facilitates corruption in developing ones, regularly highlights how criminals make use of anonymous American companies. In one such example, Mexico’s largest drug cartel “used an anonymous Oklahoma company in a scheme to launder millions of dollars of drug money into the United States.” In another, a Russian mobster “allegedly set up a network of anonymous companies stretching from Eastern Pennsylvania to the United Kingdom to cheat the stock market and steal over $150 million from investors.”

The bad news is that too many investigations into international corruption lead to American companies. The good news is that while corruption can transcend borders, the work of watchdogs can too. POGO is looking forward to working more closely with international groups in the months and years to come.

By: Daniel Van Schooten
Investigator, POGO

Daniel Van Schooten Daniel Van Schooten is a Investigator at the Project On Government Oversight.

Topics: Financial Sector

Related Content: Financial Oversight, Extractive Industries Transparency Initiative (EITI)

Authors: Daniel Van Schooten

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