How to mess with an oligarch

Corruption: you hate it, right?

It’s one of the few political problems that unites people across the political spectrum, and across the globe. But how can we actually fight corruption on a meaningful scale?

Whether it’s in Kazakhstan or the United States, a dictator or a stock trader, there’s a common financial thread: secrecy. Paul Massaro, adviser to the bipartisan Helsinki Commission in Congress, told POLITICO’s Global Insider podcast there’s no way to defeat corruption without exposing money flows.

Foreign and domestic crises are linked

“It’s really important that we not lose sight of the fact that our domestic and foreign crises are inextricably linked. It all comes back to the fact that we have these global corrupt networks that traverse multiple countries that are being abused, exploited by dictators, in many cases built by dictators, who are looking to undermine democracy. They require enablers in the west, to help them to do so. And these include lobbyists, lawyers, real estate professionals, accountants, it’s really just so many people.”

“Ten percent of world GDP is held offshore: I want people to understand the massive, massive magnitude of this issue. But it’s not just money: It’s also loss of democracy, it’s abuse of courts, it’s our entire system.”

Corruption is hard to pinpoint, by design

“Americans are extremely upset about corruption, on both sides of the aisle, on all sides of the aisle: the extremes, the middle, everywhere. They intuitively feel that our system is corrupt. Now, it’s hard for them to pinpoint it. And that’s by design, right? I’ve been doing this for almost a decade, and I still can’t explain to you the exact manner of all these anonymous shell companies.”

“The people that end up bearing the brunt of this [corruption] are working Americans and middle-class Americans, just because there’s no ability [at the IRS] to go after the wealthy and the corrupt. You’d see a lot less of that, if you abolished secrecy jurisdictions.”

It’s the secrecy jurisdictions, stupid

“America is one of the biggest secrecy jurisdictions in the world, and so is the U.K. They are not tax havens, they are secrecy jurisdictions. If these two jurisdictions cleaned up their acts, you have knocked out 70 percent of the problem right there: all the top 200 global law firms in the world are Anglo-American, every single one.”

“If you’re only attacking the minimum corporate tax rate, tax havens, you’re missing the forest for the trees. Ireland is perhaps the most important corporate tax haven in the world, but has no role to play almost whatsoever in the secrecy jurisdiction business. You need to be attacking both.”

“If you don’t attack both, what ends up happening is the secrecy jurisdiction is used to obfuscate your ownership of things, move things around, and basically avoid whatever new tax codes come down the line. You can create these chains of anonymous shell companies, hold 10 passports, go through webs of financial capacity to ensure that you can never be held responsible for your crimes, that your taxes can never be tracked down.”

Where Kazakhstan goes, other dictators follow

“Kazakhstan, the Nazarbayev regime, pioneered many of the kleptocratic tactics we see around the world today. The hiring of former Western officials, using Western courts to essentially outsource any need of the rule of law, suing people into oblivion just to run them out of money. Kazakhstan was really one of the early examples of modern dictatorship.

No one has more disdain for their own people than kleptocrats: They don’t even want to live in the countries they run! They want to be in Miami and they want to be on the Riviera, in nice London neighborhoods, and so on and so forth. One would have actually expected the Kazakh people to lose patience much earlier than they did. They didn’t in large part because of the West’s complicity in hiding this money and obfuscating the crimes.”

Sanction the oligarchs

“There’s no country with greater wealth inequality than Russia. There’s only billionaires, and then the average Russian. The idea of having kind of a middle class and upper middle class, it’s gone.”

“The Russians hate corruption as much as anybody. When you look at what threatens Putin most, it is revelations of his corruption, because that attacks the very core of his legitimacy, which is that, ‘You guys need me, you know, I’m the only thing standing between you and the decadent West.’ In fact, all of his cronies live in the West, all of his wealth is in the West.”

“My modest proposal is to sanction all the oligarchs. If you actually force these guys to live in the system they’ve created, they will demand reform.”