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At Large
Parlor Games
Bribery is getting a lot more sophisticated.
What is the world coming to? The British have discovered that their heralded Metropolitan Police is vulnerable to bribes and that members of the press will go to excess in invading the public’s privacy. Formula One racing is now under intense investigation for allegedly bribing a German bank. Major multinational corporations like IBM have been caught in the vice of the Foreign Corrupt Practices Act. As our good friend Captain Renault said in Casablanca, “I’m shocked, shocked…”
Just to establish some perspective and view this circumstance from a bit of a remove, the fact is that corruption in government, business, sports and virtually all aspects of public life exists, has existed, and will continue to exist on both sides of the pond and all around the world. As far as the UK is concerned, the myth of infallibility of the Metropolitan Police was well exposed during “Operation Countryman” from 1978-1984. This project began with the uncovering of Vice Squad bribe-taking and later identified a working relationship between organized crime and ranking police officers — none of whom were ever prosecuted.
Well, the current fracas centers around journalists from Rupert Murdoch’s London newspaper News of the World and their alleged phone-hacking of significant people. The implication is that these journalists had paid for police assistance. As far as bribery goes, however, this London affair pales in financial comparison with the current scandal of major auto-racing conglomerate Formula One (F-1).
According to prosecutors in Germany, internationally-renowned F-1 president Bernard Ecclestone and his family trust paid off a German banker to the tune of $44 million for undervaluing shares in F-1 sold by his bank to a third-party financial firm. In turn Bernie received $41.4 million in “commission” and the trust was awarded another $25 million. The arithmetic of the deal is in itself startling. No wonder the auditors of the bank involved, Bayerische Landesbank, rushed to the authorities when the odd calculation was finally uncovered. The amazing thing is that it took from January of this year to the last week in July for the prosecutors to turn the arrest of the bank official into a charge against Bernie.
Paying off people, i.e. bribing, in order to gain access and/or advantage appears to be the new accepted way of commercial life. Why? Because society lacks an aggressive and punishing bureaucratic and political ethos that could literally “scare straight” any businessman or official contemplating the short cuts to success.
Many years ago the late president of Ghana, Kwame Nkrumah, had the problem well figured out. Pay-offs for any enterprise in his country — and throughout West Africa — had always existed. It’s called “dash,” both a noun and verb relating to every transaction. So Nkrumah approved and passed down the line what became known in some circles as “Kwame’s Law.”
In the simplest terms this meant that all business deals must have a built-in kickback of 15% to the official sponsoring agency. That government agency then would disburse its “dash” to the other deserving elements down the appropriate line. A certain amount was always set aside for the Trade Union Congress to ensure worker participation. While Nkrumah was in power, and not excessively paranoiac, the system worked amazingly well. At least no one of any great importance complained publicly.
There are, of course, a myriad of devices that are used to bribe and corrupt — from bags full of cash to slush funds passed out to travel agencies to pay for selected officials’ tourist trips. According to the SEC, those are two of the ways IBM “took care of” certain Asian officials. But those are the old-fashioned methods, and these days bribery is serious business. Official records indicate that in 2010 seven of the top firms in the U.S. settled Foreign Corrupt Practices Act infringements for a total of $1.563 billion in fines. One can imagine what their deals were worth.
China for many years has been the site of inventive bribery schemes. One of the new and very imaginative methods is the transfer of valuable art objects to an appropriate official. This worthy gentleman or woman places the objet d’art in a carefully chosen auction house. The item is then purchased by the original donor and the money is paid offshore. Henny Sender, the well-known international financial writer, says this little trick has many mutations — including donations to cooperative charities.
So before any clucking begins over Rupert Murdoch’s predicament, it might be well to look around at the breadth of the world’s political and business communities.
About the Author
George H. Wittman writes a weekly column on international affairs for The American Spectator online. He was the founding chairman of the National Institute for Public Policy.
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daddio| 7.29.11 @ 7:13AM
So because bribery exists and has always existed, we should just accept it? Corruption, especially public corruption, is one of the main reasons we are in the financial mess we are in! Shouldn't we continue to try to root out corruption and expose the shysters?
Rick Z| 7.29.11 @ 8:06AM
Corruption is the primary reason that third world countries cannot advance economically. Africa, Mexico, South America, Caribbean, Asia, Middle East -- all have their wealth sucked out by the elites who control the economy.
rendite| 7.30.11 @ 12:50AM
It is not just the well heeled and elite. Bribery goes on at the middle and lowest of levels. From a traffic ticket to "arranging" sporting events outcomes.
And this is evil.
Every person now has the capability in their hand (yes, in their hand) to help thwart/end this.
What's in your hand? That smart phone. Just video and audio tape. Save what's recorded. And then upload to YouTube.
Just do it.
Pecos Pete| 7.29.11 @ 8:35AM
The USA has the largest system of bribery in the world. It starts with Congress and state legislatures and bleeds down through all of the federal and state agencies.
When you look at the vast sum of money in the USA's tax systems it is inevitable that people will be corrupted.
Pecos Pete| 7.29.11 @ 8:54AM
I forgot to include the people of the USA who are bribed every day with welfare checks and "loopholes" in the tax revenue systems. We are bribed constantly by our elected representatives. There will never be an end to bribery.
rendite| 7.30.11 @ 1:04AM
Correct, Pecos Pete. Corruption and bribery are everywhere in the USA. Small towns, big towns. Little states, bigger states. Doesn't matter. "Corruption carpets the land."
It is odd (uncanny, in fact) when meeting a big honcho of some sort at the county, state, or national level.
It is uncanny how swiftly he or she sizes you up and can determine if you "matter."
You see, one does NOT matter if 1) you have nothing to offer (think bribe, money, influence, perks, equipment) or 2) your position is not one in which you can be bribed (think retiree, leader of a small volunteer organization, young upstart just out of college, etc.)
The corrupt "players" in every hamlet in America can ID the "non players" in a heartbeat.
Sgt Brock e Lee| 7.30.11 @ 3:35AM
Thanks for explaining why I don't matter. And I CAN be bought dammit!
Rick V.| 7.29.11 @ 11:14AM
It's George Bush's fault. And Obama will fix it as soon as he returns from whatever body of water he's walking on.
JimH| 7.29.11 @ 1:22PM
In the words of Captain Renault,'I'm shocked, shocked..'.
Mark30339| 7.29.11 @ 1:28PM
Excellent article. Perhaps one should also mention the pharma industry's agreement to fund media that promoted passage of Obamacare in return for favorable treatment in the new law -- of course, reporting it that way might actually implicate the White House in an illegal bribe.
Is this an effective method for escaping anti-kickback laws, or just business as usual for a corrupt justice department that never finds fault with the Obama Administration or its friends? Remember that AG Holder was instrumental in getting fugitive Marc Rich a pardon on Clinton's last day in office -- this was after Rich's ex-wife gave $400,000 to the Clinton library.
cicero| 7.29.11 @ 3:02PM
The reason that this continues is because none of the participants ever go to jail. The reason none of them go to jail is b ecause most of the recipients of the bribery are the ones charged with enforcing the laws. "I won't send you to jail, so that I won;t go to jail, either." It is only when the recipients lose political favor that there is any retribution. For instance, the City of Detroit was recently afflicted with two mayors of similar quality. From the '70s to the early '90s, Coleman Young was generally recognized as being the largest heroin dealer in the city. He even had police officers escorting the drugs from the airport (DTX) into the city for delivery. He died with relatively large stashes of money deposited safely. The young man who, from the age of 14 years, had been working with the FBI and the Detroit Police Dept to infiltrate one of the major drug gangs (Young's neice was the girlfriend of the gang leader), and who was responsible for breaking the back of the gang (all leaders went to jail with thee exception of Young's niece), and the police escort service was broken up,, was thrown to the wolves. While all of the gang members are already free, and have been free for some time, and all the police who were convicted are out of jail, the young plant was prosecuted and convicted for drug trafficing. The courts would not allow into evidence that he had been working with the authorities.
He has been in jail for 24 years. Ex-governor Granholm, although she ended her tenure releasing rapists, murders, and child molestors on parole to ease prison crowding, refused to consider his request. This despite the fact that everything above was verified in writing by the FBI agent in charge of the district office at the time, the narcotics officer in charge of the case, and statements by prison officials that he had never been involved in any violent behavior before or after his arrest and conviction, or while in prison.
Then we have the case of Kwame Kilpatrick. He thought he was Coleman Young reincarnate. He didn't warrant the same political cover, as the climate of toleration of corrupt black public officials changed. This has to happen more frequently.
As long as we allow our government to skim the huge percentage of wealth from the economy that they do, and pass it out on projects that government has no business indulging in, the problem will persist. One only has to look at Mecare and Medicaide, where one third of all money is disburased fraudulently, or the money squandered in education to want to retch. And that is even before we look at defense.
Ground Control| 7.29.11 @ 3:25PM
Bribery and corruption have existed in government throughout recorded History. The participants are the usual suspects: narcissists and egomaniacs who sell out for public office and popular acclaim, and the greedy who want an advantage. The real problem is the size of government. Small governments that do little have little to offer a briber. It is the level of power that governments exercise that make politicians open to bribery. If we want to see reduced bribery and corruption in Washington, take away their power to screw things up. This is why the Founders wrote the Constitution as it is, to LIMIT the powers of the US Government and thereby limit the corruption therein. Now I'm sure some wag will point out that this only pushes corruption to State and Local governments. True enough. But no State can match the US Government in size and scope and ability to regulate and tax. And local governments can do even less. Devolving power to these levels does not eliminate corruption, but it limits its scope. Plus it is far easier to vote out some small time crook, or even send him to prison, than it is anyone in Washington.
JP| 7.29.11 @ 3:52PM
Hitler used to offer both carrots and sticks. Carrots in the form of contracts, subsidies, and cash. Sticks in the form of arrests, beatings, and concentration camps.
We have gone that far. But, what happened to Microsoft is educational. By the late 1990s, Microsoft was one of the world's premier software firms. Built from the ground up, and without federal subsidies, tax breaks, or contracts, Microsoft had no need of the federal government. Situated thousands of miles from the Beltway, MS didn't even have a K-Street Lobbying firm on retainer.
That all changed when the DOJ (at the behest of jealous competitors) began a series of costly anti-trust suits. MS won some and lost some. But the message was clear; either MS pay up or it would be targeted by any number of federal agencies. Within months, MS hired expensive K-Street firms, PR agencies, and began to kiss the ring of the emporer. That is way things are now done here. No different then Europe.
Lesson is: don't get too big or too rich.
obadiah| 7.30.11 @ 1:51PM
microsoft used monopoly leverage and predatory practices to damage an industry and foist poorly-engineered products on gullible consumers. now is is being superseded by its betters.
bravebear| 7.29.11 @ 4:42PM
Formula One (F-1). Aren't they the 'Dupeks' that gave us Red Light Cameras?
Occam's Tool| 7.29.11 @ 4:52PM
Well, with a Vermin T Maggot, Esq. in the White House (Obama) and a Vermin T Maggot, Esq. who ran against him in the primaries (Edwards) and a Vermin T Maggot, Esq. who's SecState (Clinton) married to a debarred Vermin T Maggot who is an ex-President (Clinton), and with a Vermin T Maggot, Esq. as VEEP (Biden), I wonder why there is corruption in the Executive Branch?
shipley130| 7.29.11 @ 7:35PM
Punish the people that take the bribes, and punish them harshly, not some lame slap on the wrist.
POST American| 7.29.11 @ 11:19PM
-------'90's Show' DIS-traction ALERT!----------
MEANWHILE
NOW declassified State Department MEMO 200
(1975)
Then US Ambassador to RED China, Bush Sr.
to the RED Chinese regime lays out the agenda.
RED China to be made the industrial base of
the world, and top of the New World Order
pyramid. The U.S. to be systematically sold
out and deindustrialized and brought down to
third world 'service' economy status.
ALL this contingent on the already awesomely
genocidal RED Chinese regime implementing
'aggressive EUGENICS' and systematic
extermination of elements of its population.
Just a little '70's Show' you might have missed.
Bernfp| 7.30.11 @ 6:08PM
Remember Hillary's $100,000 profit in cattle futures trading? She's been wading in bull stuff ever since.
POST American| 7.30.11 @ 10:06PM
------------------BOTTOM LINE--------------------
Mafia culture was brought in for celebration
and emulation at precisely the point Nxon
shook hands with MAO ---1972.
Remember? That was the year of 'The Godfather'
---a project massively funded from the book phase.
Of course at that time 'mafia' had been all but
forgotten by media and was in eclipse as a
reality.
The Tavistock programming called for something,
something, to 'bring in' a 'that's the way it is'
TREASON op enviornment and mind set.
One of their greatest demoralization triumphs
of all time.
--------------TAKE HEED
The clock is ticking.
HUAC meets NUREMBERG ---IS COMING.
REALLY
TRULY
UNDENIABLY