Ken Silverstein writes: It is hard to overstate the devastating role that corruption has played in the failure of Iraq and the rise of ISIS. According to a report last March by the Iraqi parliament’s auditing committee, the country’s defense ministry has spent $150 billion on weapons during the past decade — but acquired only $20 billion worth of arms. Much of the equipment it did obtain was useless, 1970s-era matériel from former Soviet bloc states that was invoiced at up to four times its actual value. Late last year, well-placed sources tell me, the Pentagon delivered a shipment of new weapons to the Iraqi government, including .50-caliber sniper rifles, which were supposed to be sent to Sunni fighters in Anbar Province. Instead, corrupt officials in the Iraqi ministries of interior and defense sold the arms to ISIS, which is using them to kill Kurdish peshmerga fighters.
“The Kurds are still using equipment we gave them in 2003,” says a former CIA official who spends a good deal of time in Iraq. “They’re forced to buy ammo and weapons that the U.S. government gives to Baghdad from corrupt Iraqi government officials.”
Weapons aren’t the only target for corruption. When it comes to the vast sums of money that have flowed into Iraq for reconstruction and economic development, officials at every level of government have been more focused on lining their own pockets than rebuilding their ruined country. [Continue reading…]
CNN reports: FBI and Justice Department prosecutors are conducting an investigation into possible US ties to alleged corruption of the former pro-Russian president of Ukraine, including the work of Paul Manafort’s firm, according to multiple US law enforcement officials.
The investigation is broad and is looking into whether US companies and the financial system were used to aid alleged corruption by the party of former president Viktor Yanukovych.
Manafort, who resigned as chairman of Donald Trump’s campaign Friday, has not been the focus of the probe, according to the law enforcement officials. The investigation is ongoing and prosecutors haven’t ruled anything out, the officials said.
The probe is also examining the work of other firms linked to the former Ukrainian government, including that of the Podesta Group, the lobbying and public relations company run by Tony Podesta, brother of Clinton campaign chairman John Podesta. [Continue reading…]
The New York Times reports: On a leafy side street off Independence Square in Kiev is an office used for years by Donald J. Trump’s campaign chairman, Paul Manafort, when he consulted for Ukraine’s ruling political party. His furniture and personal items were still there as recently as May.
And Mr. Manafort’s presence remains elsewhere here in the capital, where government investigators examining secret records have found his name, as well as companies he sought business with, as they try to untangle a corrupt network they say was used to loot Ukrainian assets and influence elections during the administration of Mr. Manafort’s main client, former President Viktor F. Yanukovych.
Handwritten ledgers show $12.7 million in undisclosed cash payments designated for Mr. Manafort from Mr. Yanukovych’s pro-Russian political party from 2007 to 2012, according to Ukraine’s newly formed National Anti-Corruption Bureau. Investigators assert that the disbursements were part of an illegal off-the-books system whose recipients also included election officials.
In addition, criminal prosecutors are investigating a group of offshore shell companies that helped members of Mr. Yanukovych’s inner circle finance their lavish lifestyles, including a palatial presidential residence with a private zoo, golf course and tennis court. Among the hundreds of murky transactions these companies engaged in was an $18 million deal to sell Ukrainian cable television assets to a partnership put together by Mr. Manafort and a Russian oligarch, Oleg Deripaska, a close ally of President Vladimir V. Putin. [Continue reading…]
Adam DuBard writes: If one could find a textbook example of the Washington GOP Establishment, Manafort would certainly fit the bill. In 1976 he was a key delegate manager with Gerald Ford’s campaign, and he also produced the Republican Conventions of 1984 with Reagan and 1996 with Bob Dole. More importantly, he has gained a reputation with his lobbying firms Black, Manafort, Stone, & Kelly and later Davis, Manafort, & Freedman of representing and rehabilitating the image of anyone willing to pay the right amount, no matter how brutal or controversial their past. While he was originally hired for the primary purpose of reining in delegates and assuring their allegiances, he has since ruthlessly risen to the top of Trump’s campaign, a development that should come as no surprise once one becomes familiar with Manafort’s intriguing and controversial past.
After his political education with the campaigns of Ford and Reagan, Manafort jumped into lobbying in 1985 with the first of two lobbying firms with his name on it, Black, Manafort, Stone, & Kelly. The Stone in that name is no other than Roger Stone, the still prominent Republican strategist known for underhanded tactics and longtime friend of Manafort and Trump. Stone would later say of the now defunct firm, “Black, Manafort, Stone, and Kelly, lined up most of the dictators of the world we could find. … Dictators are in the eye of the beholder.” The amount of work Paul Manafort has done on the behalf of international dictators is long and varied, especially for someone who’s, you know, managing the campaign of a candidate for “the leader of the free world.”
In 1985 Manafort’s firm agreed to work for Philippine dictator Ferdinand Marcos to the tune of $1 million in return for shaping up his image in front of the US media and government ahead of the upcoming Philippine election. Marcos ruled as the president of the Philippines for twenty one years and gained a reputation as a brutal and corrupt leader, with martial law being the law of the land from 1972 until 1981. According to Filipino news outlets, Marcos’ reign of martial law would result in 3,257 extra-judicial killings, 35,000 torture victims, and 70,000 incarcerations. In addition to his totalitarian mean streak, Marcos and his wife Imelda made a habit of amassing money in various illegal methods. The Philippine supreme court has estimated that the Marcos family accumulated around $10 billion while in office, despite the fact that his official yearly salary never exceeded $13,500. In the end Marcos proved too corrupt even for President Reagan to support, as he was pressured to step down amid election-fixing allegations just months after hiring Black, Manafort, Stone, and Kelly. [Continue reading…]
As PM orders removal of British-made fake bomb detectors, Iraqis say ‘corruption is the greatest threat we face’
The Guardian reports: For the past nine years, Iraq’s security forces have tried to stop car bombs with a British-made bomb detector wand that was long ago proven to be fake. A day after a car bomb killed at least 149 people in central Baghdad, the country’s prime minister, Haidar al-Abadi, has demanded their withdrawal.
After the single deadliest attack in Iraq this year, Abadi also ordered a renewed corruption investigation into the sale of the devices from 2007-10, which cost Iraq more than £53m and netted the Somerset businessman James McCormick enormous profits, as well as a 10-year jail sentence for fraud.
The cost to the Iraqi public will remain incalculable: the vast majority of the bombs that have killed and maimed at least 4,000 people since 2007 have been driven straight past police or soldiers using the devices at checkpoints.
Their withdrawal follows years of insistence by interior ministry officials, who bought the wands at vastly inflated fees, that they were effective in sensing odours from explosive components.
Near the scene of Sunday’s bomb attack in the suburb of Karrada, which was claimed by Islamic State, Iraqis reacted with derision at the ban, which follows years of complaints from citizens and warnings by both the British government and US military that the wands have no scientific value.
“This should have happened a long time ago,” said Sheikh Qadhim al-Sayyed, standing near the scorched remains of a shopping district in Karrada, just south of the Tigris River. “There isn’t a person in the country who thinks they work. No one here is responsible for what they do. It should be an eye for an eye, a tooth for a tooth. Corruption is the greatest threat we face.” [Continue reading…]
On JANUARY 23, 2010, the New York Times reported: The director of a British company that supplies bomb detectors to Iraq has been arrested on fraud charges, and the export of the devices has been banned, British government officials confirmed Saturday.
Iraqi officials reacted with fury to the news, noting a series of horrific bombings in the past six months despite the widespread use of the bomb detectors at hundreds of checkpoints in the capital.
“This company not only caused grave and massive losses of funds, but it has caused grave and massive losses of the lives of innocent Iraqi civilians, by the hundreds and thousands, from attacks that we thought we were immune to because we have this device,” said Ammar Tuma, a member of the Iraqi Parliament’s Security and Defense Committee.
But the Ministry of the Interior has not withdrawn the device from duty, and police officers continue to use them. [Continue reading…]
— Reza H. Akbari (@rezahakbari) June 21, 2016
Eduardo Salcedo-Albarán and Luis Jorge Garay-Salamanca report: In the early morning hours of Friday, January 8, 2016, Mexican marines closed in on the world’s most wanted man: Joaquín Guzmán Loera, better known as El Chapo, a notorious drug trafficker with a net worth estimated near $1 billion. The climactic shootout in Sinaloa, Mexico, took place after Guzmán made a getaway into the sewer system from a house that the authorities had been watching. He was finally apprehended after he reemerged and stole a car. His capture brought to a close six months of humiliation for the Mexican government, which had struggled to explain how Guzmán could escape from a maximum-security prison by walking into the shower, under full view of a video camera, and slipping away through a tiny hole in the floor that led to a 30-foot-deep, mile-long tunnel that had taken perhaps a year to construct. It was the second time that El Chapo had broken out of prison under the noses of Mexican officials. Mexican officials are currently debating whether to hold Guzmán — really, whether they can hold him or — extradite him to the United States, where he faces indictments in multiple federal courts on drug trafficking and murder charges. His organization, the Sinaloa cartel, has smuggled vast quantities of drugs into the United States through elaborate tunnel systems near the border between the two countries.
In Mexico, the confrontation between cartels such as Sinaloa, Los Zetas, and Caballeros Templarios (Knights Templar) has cost nearly 44,000 lives during the presidency of Enrique Peña Nieto. Human rights organizations counted more than 100,000 deaths during the tenure of Nieto’s predecessor. These and other criminal networks originating in Mexico pay bribes and co-opt police chiefs, mayors, local legislators, and municipal and state police. They infiltrate state institutions, such as courts and attorney offices, especially at the local level, spreading corruption and violence across the country. Though usually defined as “Mexican drug cartels,” they don’t confine their operations to Mexico or their activities to drug trafficking. They extort, kidnap, and murder across Mexico, Guatemala, Honduras, and El Salvador. Los Zetas has perpetrated mass murders in Guatemala, while members of Sinaloa operate in Colombia and Venezuela.
As the United States’ interest in extraditing Guzmán shows, the impact of these activities is often felt beyond Latin America. In 2012, the U.S. Justice Department’s Criminal Division pointed out that at least $881 million in proceeds from drug trafficking, some of which involved Sinaloa in Mexico and the Norte del Valle cartel in Colombia, had been laundered through HSBC Bank USA, without being detected. A U.S. district court requested extradition of former Guatemalan president Alfonso Portillo in 2013, and convicted him in 2014, for laundering millions of dollars through American bank accounts with the help of Jorge Armando Llort, whom he had appointed director of a semi-state-owned bank, Banco de Crédito Hipotecario Nacional. No Guatemalan courts sentenced the bank’s director or the former president.
What few observers realize is that, while El Chapo’s capture made for a dramatic story, the criminal operations of his Sinaloa cartel will proceed almost as if nothing happened. In his notorious Rolling Stone interview with Sean Penn, El Chapo observed: “The day I don’t exist, it’s not going to decrease in any way at all. Drug trafficking does not depend on just one person.”
Sinaloa and other criminal cartels have evolved structures that no longer depend on the direction of single leaders. They have become transnational criminal networks — enormous, decentralized, and difficult to map and control. Their operations, too, have become more varied, not only in their criminal activities but in their infiltration and co-optation of legal entities, including government and law enforcement. Even in some countries with strong rule-of-law traditions, they have overcome judicial systems, reconfigured state institutions, and influenced formal democratic processes. [Continue reading…]
The New York Times reports: Over the years, William R. Ponsoldt had earned tens of millions of dollars building a string of successful companies. He had renovated apartment buildings in the New York City area. Bred Arabian horses. Run a yacht club in the Bahamas, a rock quarry in Michigan, an auto-parts company in Canada, even a multibillion-dollar hedge fund.
Now, as he neared retirement, Mr. Ponsoldt, of Jensen Beach, Fla., had a special request for Mossack Fonseca, a Panama-based law firm well placed in the world of offshore finance: How could he confidentially shift his money into overseas bank accounts and use them to buy real estate and move funds to his children?
“He is the manager of one of the richest hedge funds in the world,” a lawyer at Mossack Fonseca wrote when the firm was introduced to Mr. Ponsoldt in 2004. “Primary objective is to maintain the utmost confidentiality and ideally to open bank accounts without disclosing his name as a private person.”
In summary, the firm explained: “He needs asset protection schemes, which we are trying to sell him.”
Thus began a relationship that would last at least through 2015 as Mossack Fonseca managed eight shell companies and a foundation on the family’s behalf, moving at least $134 million through seven banks in six countries — little of which could be traced directly to Mr. Ponsoldt or his children.
These transactions and others like them for a stable of wealthy clients from the United States are outlined in extraordinary detail in the trove of internal Mossack Fonseca documents known as the Panama Papers. The materials were obtained by the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists, and have now been shared with The New York Times. [Continue reading…]
Luay al-Khatteeb writes: Once again, the subject of illicit financial flows from kleptocratic regimes is in the international spotlight, this time in the form of the “Panama Papers.”
What is surprising is the level of shock at something that should have been obvious. For a long time, many financial institutions turned a blind eye to nefarious PEPs (politically exposed persons) and not just in Switzerland, as we see now with big names such as HSBC, once again deflecting allegations.
The industrialized world can’t afford any more surprises like this, otherwise aid and loans will continue to enter weak states, only to be rapidly snuck out.
Encouragingly, there are signs that governments and regulators are being energized by the Panama Papers. The U.S. Treasury will soon announce a requirement that banks disclose the owners of shell companies, and in the UK regulators set a deadline for banks to disclose details of clients’ relations with Mossack Fonseca, the company at the centre of the current storm.
Iraq, with lamentably high corruption, can be a litmus test for revived effort. Iraq also desperately needs to recover stolen assets, because it is running out of money for both fighting ISIS and rebuilding Iraq, in order to prevent ISIS 2.0.
Luckily, the United States is leading the way with the formation of the Kleptocracy Asset Recovery Initiative (KARI), but far more global coordination is needed. In Iraq, financial assistance should be put into ministries to train people in spotting and preventing corruption.
There are certainly good young people who want change in the Iraqi government, the challenge is creating a culture where they can speak out. That will take a renewed and internationally coordinated capacity building effort. As an example, the Higher Council of Education Development, an Iraqi organization that has sent four thousand students overseas to help ministerial capacity, had a budget of just over $100 million last year. The international community must urgently help Iraq to resource such work, because so far war expenditures dwarf other efforts. [Continue reading…]
Navy chief tells fellow admirals to rethink integrity and behavior in aftermath of string of scandals
The Washington Post reports: the Navy has been dogged by a major corruption scandal involving an Asian defense contractor who has pleaded guilty to bribing Navy officers with cash, sex and luxury goods over a decade.
Three admirals were censured last year for accepting dinners and gifts from the contractor, Leonard Glenn Francis, a Singapore-based businessman widely known in maritime circles as “Fat Leonard.” At least two other admirals in the case remain under criminal investigation by the Justice Department. Four lower-ranking officers have pleaded guilty to corruption charges in federal court and are facing prison time.
While the corruption case has been slowly unfolding for more than two years, the Navy’s senior officer corps has had to endure other embarrassments in recent months.
In December, the Navy reprimanded a two-star admiral for getting drunk and wandering naked around a Florida beachfront hotel while attending a conference with defense contractors. In January, a one-star admiral was reprimanded and relieved of his command after an investigation found that he had spent hours watching pornography on a Navy computer while at sea.
And in March, under pressure from Congress, the Navy reluctantly denied promotion to the admiral in charge of its elite SEAL teams after the Pentagon’s inspector general determined that he had violated the law by retaliating against whistleblowers.
The Navy traditionally has set high standards for its commanding officers and makes a public announcement when they are cashiered for personal or professional lapses in conduct. Those relieved of command, however, are typically officers holding the rank of captain or commander, with admirals rarely getting into trouble. [Continue reading…]
Ivan Krastev writes: Russian elites have the right to be corrupt, but only if they have proved their loyalty. Paradoxically, the West’s sanctions against business figures closest to the Russian president helped whitewash some of the most notoriously corrupt Russian oligarchs and allow Russian propaganda to present them as selfless defenders of the motherland.
Ultimately, the most important reason for Mr. Putin’s reluctance to declare a war on corruption is that any anti-corruption campaign will inspire the public to demand change. It plays not only on the public’s anger, but also on its aspirations. And it is precisely this demand for change that the Kremlin fears most. Unlike in China, leaders in Russia avoid promising that life will be better tomorrow; what they promise is that things will not get worse. And unlike in China, they can afford to do so because the Russian economy is driven not by the entrepreneurial energy of the masses, but by natural resources.
This is why the Russian government is ready to acknowledge corruption’s ubiquity — the slickest propaganda couldn’t convince people otherwise. But the government also advances the idea that corruption is a way of life and is thus a natural phenomenon. In a way, corruption is like vodka: You know it hurts, but Russia is unimaginable without it. [Continue reading…]
The Guardian reports: From about 8.30pm until well after midnight, the dark blue sky above Babaji lit up, as rockets and flares crisscrossed above this cluster of villages close to Helmand’s provincial capital, Lashkar Gah.
At a mud fortress beyond a river bridge painted in the tricolours of the Afghan flag, 24 members of the Afghan border police dug in. They were not supposed to be there.
“We were not trained to fight on the front line,” said Cpt Ghulam Wali Afghan, the commander, when the Guardian visited the post.
As their name suggests, Wali Afghan’s men are meant to protect Afghanistan’s porous border, where smugglers cross with copious drugs, weapons and people.
But seven months ago, the captain and 122 other ABP men were relocated to Babaji, some 300km from the frontier with Pakistan in an effort to bolster the defence against the Taliban, who continue to capture territory the international coalition spent years getting little more than a slippery grip on.
On their first day on the front line, three border police were killed, said Raz Mohammad, a soldier stationed in Babaji. “For two months, we had trouble getting to know the area,” he said.
The police eventually repelled the Taliban assault. But with the calm of the poppy harvest over, and the fighting season just beginning, it is unlikely that the ABP officers will return to the border anytime soon.
With an estimated 25,000 troops officially based in Helmand, the government should have enough muscle to confront the Taliban.
The problem is many of those troops don’t exist.
Across Afghanistan, lists of troops and police officers are filled with fake names, or the names of men killed in the fighting, but not officially declared dead. Captain Wali and his men are in Babaji to fill the void of these “ghost soldiers”.
A recent investigation by Helmand’s provincial council found that approximately 40% of enlisted troops did not exist. The authors of an analysis commissioned by the Afghan government – and obtained by the Guardian – said the share might be even higher. [Continue reading…]
Julian Pecquet writes: The Egyptian government is hindering Washington’s ability to track billions of dollars worth of anti-aircraft missiles and other US weapons, the US government watchdog said in a blistering report just as Congress gets ready to renew the annual $1.3 billion request.
The United States provided $6.5 billion in military assistance to Cairo between 2011 and 2015 with the understanding that it would be closely monitored and it would serve American interests. Instead, the Government Accountability Office (GAO) asserts that the Obama administration has often failed to meet those requirements due to resistance from their Egyptian counterparts, lack of guidance from Washington and insufficient staffing at the US Embassy in Cairo.
The State Department and the Defense Department (DOD) have established programs “to provide reasonable assurance that military equipment transferred or exported to foreign governments is used for its legitimate intended purposes and does not come into the possession of individuals or groups who pose a threat to the United States or its allies,” the GAO said in its May 12 report. “However, gaps in the implementation of these end-use monitoring programs — in part due to limited cooperation from the Egyptian government — hampers DOD’s and State’s ability to provide such assurances.” [Continue reading…]