Alexander Lebedev and Vladislav Inozemtsev: Western financiers welcomed dirty money but now it must be stopped


Today, the attention of policymakers and analysts around the world is focused on  the crisis in Ukraine. They should not just be trying to predict where it goes from here, but also poring over its causes.

Of course, the Ukrainian people were agitated by the shelving of their “pro-European aspirations” by Viktor Yanukovych’s government. Of course, Vladimir Putin went too far while  annexing Crimea.

But the main source of Ukraine’s problems was rampant corruption and an unprecedented abuse of power by the ruling elite. Bureaucrats illegally pocketed up to $15bn (£8.9bn) in 2013 alone (equivalent to 11 per cent of the country’s GDP). Fleeing the country, Yanukovych and members of his inner circle allegedly transferred abroad – some in bank wires but most of it in cash – about $35bn.

Today, this money, some of which was paid into Russia, is used to fund separatists in Donetsk, Luhansk and Kharkiv. These just happen to be places where the majority of police officers and civil servants “bought” their positions from Yanukovych’s relatives and friends under Ukraine’s former regime, and are not now interested in resisting the pro-Russian militias.

The situation in Ukraine is not unique. In other countries as well, in recent years, corruption and misuse of power by state officials turned from an economic problem to a political challenge. It greatly facilitated the Arab Spring with all the coercion and instability it caused; dirty money is behind terrorist groups such as Boko Haram in Nigeria and the Lord’s Resistance Army in Central Africa. Everywhere in the world, corruption provokes state failures, violence, and civil conflicts – and now, thanks to Ukraine, there’s one in Europe.

Corruption in the “developing” or “peripheral” countries may greatly affect global politics. In addition to its direct influence – through instability, social  unrest and civil wars – it affects  developed countries indirectly by  making them accustomed to their elites’ corrupt behaviour.

About $1 trillion a year flows to the Western banks and financial institutions from the countries identified by the UN as low and medium-developed nations. A large portion of this cash is stolen by public servants and then laundered in the rich countries of the West. The latter want this money: during the 1990s and 2000s, a powerful lobby of financiers, lawyers and politicians was formed with the specific aim of securing it.

Inevitably, this dirty cash will provoke the growth of corrupt practices in the West. So, bribery and fraud exist on two fronts: in the developing and developed nations. Therefore we are convinced that the West should launch the fight against corruption worldwide as soon as possible.

This fight must attract the attention of the most respected global visionaries, such as Al Gore, Bill Gates or Bono. To fight poverty and malaria in Africa may be humane, but, unfortunately, it’s a very particular cause. Corruption now kills more people worldwide, and results in more harm, than Aids.

The battle should begin with seemingly small but sensitive measures. For example, to start arresting and putting before the courts those fraudsters who were engaged in embezzlement of public funds, even if the authorities of their home countries have left them alone.

In Russia, little progress has been made in investigating a former Federation Council member, Sergei Pugachev, who left his Mezhprombank bank loaded with $2.5bn in unpaid debts. The authorities of the countries where he now hides his holdings should be allowed to pursue him, even without a warrant from Moscow.

Another step would be to require every lawyer in the EU and US to make public a list of companies and individuals whose interests they have been representing for the past 10 years. This will help to uncover those organised communities of lawyers who service fraudsters and highlight potential conflicts of interest that often complicate litigations.

In addition, a special international Anti-Corruption Fund should be set up for exposing corruption, finding assets resulting from corrupt transactions and either returning them to the governments that have signed relevant agreements with it, or managing them until the government signs such an agreement.

The long-term goal should be the creation of a universal system for combating corruption – like the one created to confront apartheid in South Africa 40 years ago.

Options may be many, but one point is clear: corruption today is actively  spreading from the peripheral countries to the developed ones, and infecting sometimes solid and transparent institutions. It’s vital we consider how to prevent this becoming an epidemic. As the story of fighting Aids shows, even if a powerful vaccine can’t be found quickly, there is always effective contraception.

This is what the West urgently needs now: a way of localising corrupt practices in the peripheral countries; to prevent corrupt officials from infiltrating the rich countries; and to dismantle the emerging international corrupted community. Otherwise corruption has a real chance of turning into a truly global practice.

Alexander Lebedev is the publisher of ‘Novaya Gazeta’ in Moscow and ‘The Independent’ in London; Vladislav Inozemtsev is a director of the Centre for Post-Industrial Studies in Moscow and a visiting fellow at the Centre for Strategic & International Studies  in Washington

Start your day with The Independent, sign up for daily news emails
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm today
File: James Woods attends the 52nd New York Film Festival at Walter Reade Theater on September 27, 2014
peopleActor was tweeting in wake of NYPD police shooting
Martin Skrtel heads in the dramatic equaliser
SPORTLiverpool vs Arsenal match report: Bandaged Martin Skrtel heads home in the 97th-minute
Billie Whitelaw was best known for her close collaboration with playwright Samuel Beckett, here performing in a Beckett Trilogy at The Riverside Studios, Hammersmith
people'Omen' star was best known for stage work with Samuel Beckett
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'