From Azerbaijan to Russia, how to fight kleptocracy?

Last week marked the anniversary of the arrest of leading Azeri journalist Khadija Ismayil, who is known to international audience with her investigative articles against kleptocracy in the oil rich post-Soviet country.

Azerbaijan, along with its other neighboring countries, has a reputation as an oppressive kleptocracy, in which officials and oligarchs are reportedly bound together to establish a ‘virtual state,’ something that the local authorities often describe as ‘a country with no analogy.’

Experts, journalists like Khadija, argue that the country is in wrong direction, where state budgets are being privatized and cashed by individuals: instead of addressing their countries’ national security interests and other challenges, the authorities would prefer to spend millions of dollars abroad – preferably in the West – just to protect their personal wealth and interest. As a result, the analysts argue, corruption imperils development and stability not only in their countries, but also in international financial markets.

Critics like Ben Judah, a British investigative journalist, believe that the West should also be held accountable for failing to make the world unsafe kleptocracy: Instead of reforming corrupt governments, the western financial system plugged them into the world economy, where they flooded the West itself with stolen money. Yet it’s interesting how the despots from post-Soviet world are able to hold on to their wealth in European cities even after burning so many bridges and making so many enemies.

Judah is currently visiting Washington D.C. to introduce his new documentary called ‘From Russia with Cash,’ an undercover investigation on money laundering. The film will be streamed today in the U.S. capital.

In an interview with TURAN’s Washington correspondent, Judah spoke about kleptocracy concerns in the countries Azerbaijan, Russia and others, and how to fight against the problem in the West.

Q: When talking about oligarchs and despots from oil-rich countries, such as Russia, Azerbaijan, stealing from their own people and popping up in the West with dirty black cash in their hands, the first question that always comes to our minds is how do they even get away with it?

A. In the countries like Russia, Turkey, even Azerbaijan, where the institution of journalism, judiciary, courts, parliament, etc. have, in fact, been destroyed, that means the executive can act in impunity. And when the executive is kleptocratic, it can act in the interest of its unlimited wealth. That’s how it happens. And especially when it comes to an absolute power, the only thing that prevents it from acting in such ways is our democratic and judiciary institutions. But again, when you destroy those institutions it allows the dangers of kleptocracy to flourish.

Q. In Azerbaijan, there are serious reports about how authorities, their families become extremely wealthy after skimming from big contract made in the country. What tactics do the kleptocrats use to steal from their people and how to prevent them from doing so?

A. Let me start by describing how it’s restrained in any western developed country. In Washington, for example, you’ve got all the institutions here - Congress, Supreme Court, states, media, and independent big business, trade unions and they all limit the White House. That said, if a kleptocrat enters the While House – and by the way, it has happened in American history in the 19^th century – and those institutions have been very restrain about what they could do and how much money they could earn.

But in the countries like Russia, Turkey and Azerbaijan, where those institutions don’t exist or are under control of their leaders, you can steal much more.

Q. There are a number of European banks that are reportedly linked to oil-rich governments, which brings me to another question: How do oligarchical power elites skirt the western financial system and shift these massive amounts of money without anyone noticing? Is it just cooperation of shady banks or something systematic maybe assuring about international finance that we don’t know of?

A. Finance itself has become part of the Internet where people can use Facebook, Gmail etc. to hide their profiles. Within the Internet for instance, all you need is to get enough skills and enough money to get the technology access as many websites as the governments don’t want us to access, right? Finance is a bit similar. For average people wondering around their daily lives, when we interact with finance we face with a very tight and regulated legally controlled system. But another interesting type of finance is, what we call, an offshore finance, which is about where you can operate in secrecy and without the constraints of rule of law.

Q. What do nations struggling with kleptocracy need to know about their oligarchs who are engaging in money laundering?

A. What is important for me, first of all, is to get to know the amount of money located in offshore. It’s enormous… There is more money located in Britain’s offshore than it’s equals the total value of British GDP. So just the shocking realization of how much cash is in this parallel dimension of finance -- and it’s not tax, not contributing to the national budgets; it’s just stolen money – the scale of corruption is something that people will start exposing.

Sometimes we think that corruption is like ‘10 dollars here, 20 dollars there,’ but in reality, the amount of money that is being taken from poor countries to rich countries is equal to trillion dollars a year. That is damaging and preventing basic public services from happening, which is leading to the death of some estimated approximately 6 million of people in a year.

Q. Is there any international leverage to use against kleptocrats?

A. Stopping kleptocrats from buying property enormously through offshore channels in, let’s say, London could strike a big blow against these regimes and against corruption.

And I must say that there are active campaigns in Britain to do that. In a long term, the world has to find a kind of new financial system where there is no place for big black cash.

Q. But how? In the U.S., for instance, real estate has been still exempt from reporting suspicious activity and it’s not liable… Are there any other areas that we should focus on while tracking stolen money?

A. Real estates is one of the best areas to focus in terms of politics, because in fact, this process is up in the U.K., in America and other western states. More and more people start understanding that, this sector is one of the attractive areas for kleptocrats to engage with money laundering based on the cash that they steal from their poor people. And the fact that it’s happening means you can raise awareness and show people that reality.

Q. In countries like Azerbaijan, Russia and Turkey, investigative journalists have learned hard way the consequences of tracking kleptocracy; some are even paying in expense of their freedoms… What would you suggest them in their fight, if there were such as chance?

A. Being a British journalist I would never compare myself to the real heroes in Azerbaijan, in Russia who are risking their lives; I’m not comparable to that.

You need to tell western audiences that the banks, their lawyers, the accountants and those real estates men linked to offshore business are really hurting people in Azerbaijan Egypt, Russia, Ukraine, etc.

Q. Do you feel that people in the West are becoming cautious and trying to different business from money laundering?

A. We – journalists are at the beginning of long journey: raising awareness about corruption, and just how involved western finances are to this process. Certainly, there is a lot of knowledge about it. And that’s why I’m happy that I’m invited to Washington today to talk about it at the Hudson institute.

Alakbar Raufoglu

Washington, D.C.