The Geopolitics of Corruption

Risky Business

An activist shows fake banknotes during a demonstration outside the European Commission (EC) headquarters ahead of statements by the EC on the effectiveness of existing measures against tax evasion and money-laundering in light of the recent Panama Paper revelations, in Brussels, Belgium, April 12, 2016. Yves Herman / Reuters

For most of the past four decades, a recurring nightmare has plagued corporate counsels, risk managers, and the CEOs of the world’s largest multinational corporations. Ever since the U.S. Foreign Corrupt Practices Act (FCPA) was enacted in 1977, they’ve believed that somehow, somewhere, in spite of millions spent honing compliance systems and a robust anti-corruption ethos, some failure of process or principle in one of their far-flung global operations would bring the U.S. Justice Department’s criminal division knocking at their door. 

“It was not terribly long ago,” the chief counsel of one of the world’s largest agribusinesses told me recently, “that we looked at corruption as a regulatory risk—something anchored in our desire not to run afoul of the FCPA. It was basically a defensive posture, and we developed processes to manage it.” But the events of the past five years have demanded a more strategic approach, he said. “We look at what’s happening in China and Russia, in Brazil, in Malaysia, and even in our own”—U.S.—“politics, and it’s clear that corruption, or at least a public perception that the fix is in, is eating away at the status quo all over the world.”

He might well have added the Panama Papers, leaked last week from a Panamanian law firm, which document the ties between senior politicians from China, Pakistan, Russia, Syria, the United Kingdom, Ukraine, and others and a network of shell corporations in tax havens around the world. The revelations have already claimed one head of government, Icelandic Prime Minister Sigmundur Gunnlaugsson, who resigned after it was revealed that he and his wife owned an offshore company. That is not illegal in itself, of course—remember 2012 Republican candidate Mitt Romney’s defense of his own Cayman Islands listing. But so sensitive have electorates become to even the appearance of corruption that such revelations are enough to topple governments and end political careers.

People demonstrate against Iceland's Prime Minister Sigmundur Gunnlaugsson in Reykjavik, Iceland on April 4, 2016.
People demonstrate against Iceland's Prime Minister Sigmundur Gunnlaugsson in Reykjavik, Iceland on April 4, 2016. Stigtryggur Johannsson / Reuters

Corruption remains an enormous

Loading, please wait...

Related Articles

This site uses cookies to improve your user experience. Click here to learn more.