Welcome to the second edition of Kleptocracy, Hudson Institute’s new Substack on how corruption is reshaping global politics and security. Scroll down for research and insights from leading experts, as well as links to all the latest news on transnational corruption from around the world.
One thing I wanted to highlight first, though: Today sees the launch of Party Capital, a fascinating new study by Jason Arterburn at C4ADS analyzing 70,000+ corporate and other records in order to identify national security risks arising from US exposure to China’s commercial system. In particular, C4ADS found that:
“Prominent Chinese organized crime figures serve in formal Chinese political institutions and support Chinese foreign policy objectives while simultaneously using their international commercial enterprises for money laundering.”
Despite China’s emergence as a global power, relatively little attention has been devoted to how endemic high-level corruption within the CCP affects governance within the country and its relations with the rest of the world. (Some honorable recent exceptions, if you’re interested in learning more, include Yuen Yuen Ang’s China’s Gilded Age; Jon Hillman’s work on Belt and Road corruption; the New York Times’ exposé on CCP ties to luxury Hong Kong real estate; and The Wire China’s excellent overview of China’s Global Treasure Map).
But overall, Chinese kleptocracy has yet to garner the same level of interest in foreign policy and national security circles as, for example, Russian corruption. That’s a shame, because we know just how much it rattles the CCP when people do start talking about it. Just last week, businessman Desmond Shum received an unsettling telephone call from his wife, whom he had not heard from since she disappeared into detention in 2017. She warned him - almost certainly under some kind of duress - not to publish Red Roulette, a book recounting his apparently extensive experience of “wealth, power, corruption and vengeance in today’s China.” It’s just the latest example of how kleptocratic regimes will stoop to any depths, including threatening their critics’ families, in order to divert attention from their Achilles’ Heel.
Best,
Nate
New from KI
Making a Killing, Ep.21: Germany’s dirty money addiction and Canada’s real estate scandal
On this week’s episode Paul Massaro, Casey Michel and Nate Sibley discuss Germany’s problematic relationship with authoritarian capital, how money laundering gutted Vancouver’s real estate market, Afghanistan missteps, and major new legislation from the US Congress.
America’s money lost the Afghan war | Casey Michel & Paul Massaro, Foreign Policy
“The United States needs to reformulate the kind of “security first” doctrines that have driven so much of its efforts, and failures, in places like Afghanistan and Iraq… Corruption may lead to a tactical success, and abetting or ignoring corrupt networks may appear an easy fix in the moment. But as we’ve seen over and over, it will always blow up in America’s face.”
Insights: Research and commentary from leading experts
America’s financial warriors: How the Treasury Department fights terrorists and rogue regimes | Caitlin Burke, CBN News
"There has been...a continuous thread of consensus on the concept that choking off illicit revenue through these financial measures is the right thing to do, and particularly to do in lieu of having to deploy our armed forces into conflict." - KI’s Marshall Billingslea
Cryptocurrency: rise of decentralised finance sparks ‘dirty money’ fears | Gary Silverman, Financial Times
“Of particular concern is the fate of a key pillar of the anti-money laundering regime — the requirement on financial companies to ‘know your customer’.”
A drop in global money laundering fines: Looking behind the statistics | Nicola Sharp, Lawyer Monthly
“Money laundering penalties imposed on finance companies in the first six months of 2021 were almost half what the figure was for the same period a year earlier.”
China is purging celebrities and tech billionaires. But the problem is bigger than ‘sissy men’ | Alice Su, Los Angeles Times
“‘Common prosperity’ is less a design to reduce inequality than to concentrate political power and ideological control while blaming the rich and famous for the nation’s ills.”
A new book exposes China’s hidden corruption. Xi and his family have a lot to answer for | Aadil Brar, The Print
The world’s most famous private detective makes no apologies: Jules Kroll reflects on his career | Simon Shuster, Time
News: All the latest on transnational corruption
Russian foreign minister has a longtime female companion with over $3 million in unexplained assets | OCCRP
“Svetlana Polyakova is no ordinary bureaucrat… Property records show that she and her family own real estate in Russia and Great Britain worth about 1 billion rubles ($13.6 million).”
Investigative group OCCRP leaves Russia to protect journalists | RFE/RL
US Congress drops Counter-Kleptocracy Act, a massive bipartisan package of anti-corruption and anti-money laundering measures | Helsinki Commission
G7 interior and security ministers issue joint statement against corruption and kleptocracies | UK Home Office
Ex-Glencore trader Anthony Stimler turns on colleagues in Africa bribery case | Bloomberg
China Development Bank vice-president detained in corruption probe | South China Morning Post
German lawmakers to grill finance minister over anti-money laundering probe days before elections | Reuters
Former British Columbia lottery director says he’s a whistleblower on money laundering at casinos | Canadian Press
Venezuela wants to add Alex Saab, jailed food czar, to negotiation table | Bloomberg
Panama unveils extent of official participation in drug trafficking | InSight Crime
Is Dominican Republic making gains in anti-corruption fight? | InSight Crime
‘9/11 millionaires’ and mass corruption: How American money helped break Afghanistan | CNBC
Authoritarian, corrupt, and more of the same. Lebanon has a new government | OpenDemocracy
Ex-Kenya sports minister guilty in Olympic corruption case | Associated Press
Uganda drops money laundering charges against human rights lawyer | Voice of America
“But sometimes these things are brought not to prove them, but because they can be brought. And when they are brought, you find that during that time a lot of things are done, which constitutes the punishment. And that’s why we call it an abuse of process.”