Hundreds of concerned citizens submitted nominations and thousands voted for the 15 symbolic cases of Grand Corruption. We were deeply inspired by the commitment and the courage of people like you. We remain convinced that together, we can work to end Grand Corruption and its devastating effects.
Because so many cases received a large number of votes, Transparency International decided to pursue nine of the symbolic cases of grand corruption. These were: Zine Al-Abidine Ben Ali, Felix Bautista, US State of Delaware, FIFA, the Akhmad Kadyrov Foundation of Chechnya, Lebanon’s Political System, Ricardo Martinelli and Cronies, Petrobras and Viktor Yanukovych. (See below for more detail on each case)
The nine cases were chosen based on popular voting by the public and also because of their widespread impact on human rights, and on the need to highlight the less visible side of grand corruption, such as laws allowing anonymous companies and those who facilitate corrupt deals.
At first glance, there’s nothing too
remarkable about Delaware – a small, seemingly sleepy state on America’s
north-eastern coast. If people have heard of it at all, it’s probably in
relation to being the home of chemical company DuPont or US Vice-president
But mention the second smallest US state to corruption fighters, and they’ll tell you of a very different Delaware1: a place where extreme corporate secrecy enables corrupt people, shady companies, drug traffickers, embezzlers and fraudsters to cover their tracks when shifting dirty money from one place to another. It’s a haven for transnational crime.
Low taxes, the state’s business-friendly
laws and a sophisticated court system for hearing business disputes draw
thousands of brand-name corporations to Delaware. In fact, nearly 65 per
cent of Fortune 500 companies are incorporated there, making it the state
with more corporations registered within its borders than people. In many
cases, firms flock there for legitimate business reasons – but not everyone
is squeaky clean.
Delaware is also home to thousands of anonymous shell companies thanks to its strict corporate secrecy rules.
Got dark secrets to hide when setting up a business there? No problem! No data is collected on beneficial owners, and company formation agents based in the state can act as nominee directors. It’s a cinch for a criminal to set up a shell corporation to launder illicit money, and gain access to the US banking system.
With the backing of an American corporate address to clean up their image, dodgy firms – including those run by Russian arms dealers and Serbian smugglers – can conduct their dirty tricks in peace.
Delaware has taken a small step to lift the veil of secrecy, but advocacy groups say it’s mere window dressing. In 2014, Delaware enacted legislation requiring some minimal disclosure of corporate ownership – but not to the public. Heather Lowe, legal counsel for Global Financial Integrity, said the measure does not “even approach the issue of anonymous Delaware corporations.’’2
But Delaware is not alone in the US. Nevada and Wyoming have similarly lax corporate registration laws and have attracted large numbers of shell companies, along with the registration fees that they add to state coffers. But Delaware is the leader.3
By hiding behind the cloak of an anonymous company, corrupt people are free to prey on ordinary citizens without attracting attention from authorities. According to Global Witness, lawyers used secret companies from Delaware and Nevada to con elderly people into investing their life savings in worthless enterprises, while a congressman used anonymous companies from Delaware and Louisiana to pocket almost half a million dollars in bribes.
Global Witness describes secret companies as“getaway cars for criminals and the corrupt across the globe”, but the United States, where you need to give more personal information to get a library card than set up a company, is certainly the weakest link.
1. New York Times, “How Delaware Thrives as a Corporate Tax Haven”
2. International Consortium of Investigative Journalists, “Lobby groups ‘see right through’ US state’s financial transparency attempt”
3. Delaware corporate law, “Facts and Myths”
Money laundering, abuse of power,
prevarication and illicit enrichment amounting to millions of dollars:
Senator Felix Bautista of the Dominican Republic has been accused of them
all1. He is well-connected politically2. Efforts to
prosecute him have come to naught so far3.
It all began in the 1990s in his pre-senator days when he was appointed to various government positions related to public works, ultimately rising to become Head of the Office of Supervision Engineers of Public Works a decade later – a position he held until 2010.
When prosecutors compared what he
reported in his asset declarations and what landed up in his bank accounts
during this time, it became clear that Bautista was amassing wealth that far
outweighed his modest salary of US$ 1,245.20 per month received as a public
According to a well-documented investigation carried out by the country’s Public Prosecutor’s Office and referred to the Supreme Court in October 20145, Bautista established a network of more than 35 companies that were all ultimately controlled by him. He, with the support of close associates, used these companies to gain access to public contracts awarded by the public works office he headed at the time6.
In one instance, Bautista awarded a series of public works projects worth more than US$130 million7 to a foreign company8, but some of the funds and the responsibility for delivering some of the work initially contracted were allegedly transferred to a company that has been connected to Bautista9.
Bautista allegedly moved his money through bank accounts in Dominican Republic and abroad, and acquired interests in more than 150 local properties – including luxury apartments, villas and asphalt plants10 – as well as a private jet and several radio stations11.
The Public Prosecutor’s case made use of extensive evidence, including Bautista and his close associates’ bank statements and tax declarations, information from company and property registries, registration details of airplanes and radio licenses, as well as testimonials and other documents12.
The case against him seemed unassailable13, yet in March 2015, it was dismissed due to a lack of sufficient evidence14 by a Supreme Court judge who is a member of the same political party of which Bautista is a high ranking official. This was contested by broad sections of society and led to thousands of people taking to the streets in protest15.
Although the Public Prosecutor’s Office sought an appeal, in October 2015 the Supreme Court upheld its decision that Bautista would not have to face criminal charges, so the Senator remains a free man16.
Bautista has faced similar allegations in the past. In 2012, he was accused of bribing Haitian President Michel Martelly to secure contracts17 and is currently being investigated in Peru for possible illegal campaign contributions to ex-Peruvian president Alejandro Toledo18.
According to a 2014 World Bank report chronic poverty in Dominican Republic is rife and almost one-third of the population remains poor despite having the skills and assets to generate higher income. If Bautista had been diverting public funds into his own pockets as so many have alleged, this can only have served to intensify this cycle of poverty.
Photo: Prensa809/ CC BY-SA 3.0 Cropped and desaturated from original
In his five years as president of Panama
from 2009 to 2014, Ricardo Martinelli and his inner circle allegedly
diverted millions of dollars in public funds into their own
There are now more than 200 investigations2 ongoing into allegedly corrupt deals that took place during his tenure, with Martinelli himself at the centre of a probe by the Panamanian Supreme Court. He faces allegations3 ranging from insider trading4, bribery5, misappropriation of public funds, abuse of power, and illegal wiretapping6.
Among other schemes, Martinelli and his
cronies are accused of manipulating the allocation of resources to Panama’s
largest social welfare scheme, the National Aid Programme, through rigged
tenders and use of shell companies7.
According to a summary of available audit reports, more than US$100 million in public funds could have been lost due to corruption8. This money was allegedly used to buy up luxury mansions and yachts9.
This country is perceived as among the most unequal in the world10, where more than 26% of the population lived on less than US$4 per day in 201211. If this alleged indiscriminate looting occurred on such a wide scale, it would have denied hundreds of thousands of children and disadvantaged adults of their right to basic services12.
Ongoing investigations in Italy have also implicated Martinelli in a corruption scandal involving a military contractor13 there from whom the former Panamanian president and other public officials allegedly received more than US$20 million in bribes to secure a US$250 million contract14.
Despite the raft of potentially damning allegations, Martinelli has so far avoided a trial in Panama and is reportedly in hiding15, possibly in a luxury residence in Miami16, and makes extensive use of Twitter17 to respond to accusations.
Several former cabinet ministers and public officials are also under investigation for involvement in corruption schemes during Martinelli’s term, with some currently responding to accusations from prison18.
As a member of the Central American Parliament (PARLACEN)19 and president of the political party Cambio Democratico20, Martinelli also enjoys legal privileges21 and immunities that could delay further investigation and eventual prosecution, which could only be possible if he returns to Panama – the country does not allow prosecution in absentia.
A court hearing in the illegal wiretapping case is scheduled for December 201522 but it is uncertain whether Martinelli will actually appear before the Court23. Witnesses have reported receiving calls from people close to Martinelli that make them fear for their safety and physical integrity24.
There are also concerns regarding the judiciary’s independence in Panama. The judiciary has been consistently found to be prone to corruption and inefficient25. The Global Competitiveness Report 2013-201426 states that the independence of Panama’s judiciary is among the weakest in Latin America.
Photo: Congreso de la República del Perú/CC-BY-2.0/ Desaturated from original
Crony networks, money laundering and
bribery: FIFA is accused of all this, across five continents. The ongoing
investigations suggest that, for years, top officials in the organisation
have been siphoning off millions of dollars to enrich themselves at the
expense of players and fans because they thought they could get away with
Not so anymore.
FIFA’s golden reign of world football
started to unravel at dawn on 27 May 2015 when Swiss police raided a luxury
Zurich hotel, arresting several FIFA top executives. On 25 September, the
president of the organisation Sepp Blatter became part of another criminal
investigation mounted by the Swiss.
The arrests in May followed major FBI inquiry into allegations of ‘rampant, systemic and deep-rooted corruption’ at football’s world governing body.
The FBI’s indictment now extends to many more officials and executives, and several of Blatter’s close colleagues have already been arrested and extradited to the US to face charges. US prosecutors predict further arrests .
A four-year World Cup period generates revenue exceeding US$5 billion, but where does all this money go?
Because FIFA is exempt from the kind of legal oversight, disclosure and compliance rules that would be standard for businesses of this size, there is little transparency in how these funds are used. And it’s FIFA’s poorest members – dependent on these profits for development – who are hit hardest by this.
The scandal has shown that football’s world governing body and its executive committee have no accountability to anyone.
A separate investigation by the Swiss government into money-laundering involving FIFA’s awarding of the 2018 and 2022 World Cups bids to Russia and Qatar respectively is also underway, and is reported to involve as many as 81 cases.
FIFA’s objectives are to improve the game “in the light of its unifying, educational, cultural and humanitarian values” and “to promote integrity.” In this, it is failing the millions of players and billions of fans worldwide. And when FIFA money meant for development appears to be “hijacked” at the top to run “a World Cup of fraud” , it’s those at the grassroots level who suffer most.
If football is for everyone, FIFA must be too.
Photo: Agência Brasil (edited)
Ramzan Kadyrov was just 30 years old in
2007 when he became president of Russia's Northern Caucasus Republic of
Chechnya. A former armed rebel leader turned Kremlin loyalist, Kadyrov has
over the years become one of Moscow's most trusted regional leaders and
With complete immunity, Kadyrov now runs a state within the state where, according to human rights researcher Tanya Lokshina, "no laws exist except his own orders2". To assert his unchallenged authority3 he has been relying on brutal force (with the help of security forces estimated to be 80,000-strong that report directly to him rather than to Moscow), intimidation (reportedly involved in torture4) and a wealth of questionable origin.
Kadyrov, who officially declares an
annual income of about US$75,0005, has built himself a
palace6 (registered under his mother's name)7 with a
private zoo8 in his home village of Tsentoroi and purchased a
stable of race horses9 worth nearly US$2.2 million. International
celebrities such as boxing champion Mike Tyson and football star Diego
Maradona are claimed to have been invited to Grozny to
entertain10 him. A recent investigative report claims that
Maradona in 2011 was paid US$1 million to play a local soccer team captained
by Kadyrov, while Tyson was paid twice that sum to spar with the Chechen
leader in 2005. These exorbitant fees were paid through the Akhmad Kadyrov
Foundation (AKF)11, according to a documentary film by
OpenRussia, an internet-based movement advocating for democracy in
Named after Kadyrov's late father, the AKF was set up in 2004 to develop post-war Chechnya. Although the AKF has indeed added to Chechnya’s infrastructure, it’s also reported to be one of Kadyrov's main source of personal enrichment, which he uses at his own discretion, for example to buy a new player for Chechnya's soccer team12.
The AKF’s millions flow through an intricate network13 of businesses linked to Kadyrov's relatives and associates, including a food processing company, Chechnya's licensed alcohol dealer, construction companies, car dealers and an airline14.
Ever since Kadyrov became president of the Russian republic of Chechnya in 2007, the AKF has been keeping its actual sources of much of its funding secret. Detailed reports on the work of the fund can only be found on a personal website of Kadyrov but only cover the period from 2004 to 200715. Federal legislation on non-commercial entities says that such information should be made public through the Russian Justice Ministry's database. The ministry has stated that the AKF is exempt, but this conclusion has been questioned.
Nearly all Chechen residents – the majority of whom live below the poverty line16 – are reportedly expected to contribute between 10 and 30 per cent of their salary to the AKF. Business people17 are expected to donate up to 50 per cent of their profits. These contributions alone are estimated at between 45 and 60 US$million a month18.
While Chechen officials deny these allegations as lies, Moscow continues to turn a blind eye19 on the situation. Neither the Accounting Chamber nor the Federal Tax Service has ever audited the AKF or indicated their willingness to do so. They seem content with Kadyrov's boasting that, besides federal subsidies, the huge sums of money generated by his impoverished country "come from Allah20".
Photo: Russian Government/ CC BY 3.0/ Desaturated from original
Lebanon suffers from systemic corruption
that permeates state institutions and public services, often extending to
the private sector as well1.
According to Transparency International’s 2014 Corruption Perceptions Index, Lebanon ranked 136 out of 175 countries. Based on how corrupt the country’s public sector is perceived to be, a position of 1 is very clean and 175 highly corrupt.
At the root of this is said to be the
Lebanese confessional political system of power-sharing agreements between
the elite representing different communities, in effect since independence
in 1943. These individuals distribute wealth and services through
clientelist networks that bind citizens to the ruling elite2.
Such informal networks have hindered the development of regulatory state institutions to challenge rampant corruption3 and contributed to shrinking space for civil society.
Among Lebanese, it is said to be common knowledge that all major public sector offices suffer from chronic corruption that has led to the Lebanese state losing vast amounts of money annually. These include the tax-free Beirut port4, airport5, traffic law enforcement6, telecommunications7 and public sector employment8.
The four councils and funds (majalis and sanadeeq in Arabic) under the Lebanese prime minister's office and also distributed along confessional lines, are widely viewed to be the epitome of patronage.
It’s widely believed that investors routinely pay bribes to win government contracts, which are often awarded to companies close to powerful politicians.
A 2001 UN-commissioned corruption assessment report on Lebanon found that only 2.4 per cent of the US$6 billion worth of projects contracted by government were formally awarded by the Administration of Tenders9. The rest went to the company willing to pay the highest bribe to the minister in charge. It’s not surprising that the report found that over 43 per cent of companies in Lebanon "always or very frequently" pay bribes.
The garbage crisis in Lebanon is the perfect example of how cosy relationships contribute to service delivery failure10 and its devastating effect on citizens.
For over 14 years, the private company, Sukleen, collected and disposed the garbage of Beirut and Mount Lebanon in numerous locations, most recently in al-Na’ameh south of Beirut, the site of the country’s largest landfill.
This year residents were finally able to get the landfill shut down, but authorities failed to find an alternative site. The crisis literally spilled out onto the streets11, making the air toxic, causing respiratory diseases and stoking fears of a cholera outbreak.
The Sukleen company is run by a Lebanese businessman known to be close to the former Lebanese Prime Minister Rafiq Hariri and has enjoyed monopoly over Beirut’s and Mount Lebanon’s waste management and street cleaning12.
As a result of this crisis, the "You Stink" popular movement began in August 2015 and set off a chain of protests demanding accountability for the rot at the heart of the crisis. It’s named after both the mounting piles of trash and its causes.
Photo: Flickr/Kevin Costain/CC BY 2.0 Cropped and desaturated from original.
Brazil's state-controlled1 oil giant Petrobras is at the centre of the country's largest ever corruption scandal. Involving bribery, kickbacks and money laundering reportedly worth over US$2 billion2, the revelations have shaken Brazil's political leadership and plunged the country into a major political crisis.
More than 50 sitting politicians and 18
companies3 linked to the scandal face investigations, including
Brazilian construction companies4 that allegedly paid bribes to
secure Petrobras business, some of them also known for exporting corrupt
practices to other countries. As of September this year, 50 individuals had
been convicted for corruption, money laundering or related crimes in
relation to Operation Car Wash5 - a wider investigation into
allegedly corrupt contracting practices in Brazil.
UK engineering group Rolls-Royce is also being investigated over allegations that it paid Petrobras executives bribes in exchange for contracts6.
Executives from over 20 other engineering firms are thought7 to have inflated the value of service contracts to Petrobras, channelling funds into the accounts of Petrobras executives8 and those of political parties, including the ruling Worker's Party and the Brazilian Democratic Movement Party, the powerful centrist party which has anchored the governing coalition9.
Earlier this year Brazilian prosecutors filed lawsuits10 against some of these firms, seeking over US$1 billion in damages for bribery, contract-fixing and political kickbacks.
The former treasurer of Brazil's governing Workers party João Vaccari has been sentenced to 15 years in prison for his role in the scandal11, while Petrobras's former head of corporate services Renato Duque received a 20-year sentence for corruption12.
Prosecutors have accused13 the speaker of Brazil's lower house of Congress Eduardo Cunha with corruption and money laundering, while former Brazil president Fernando Collor de Mello, who was impeached in 1992 but is now a senator, has also been accused of corruption for his alleged involvement14.
The scandal is taking its toll on the country's job market and tens of thousands of jobs have already been shed15 - most of them low-skilled ones. It's believed that more losses will follow16 as the economy contracts and Petrobras's profits shrink.
People are furious at the political elite and big business for allowing such a culture of corruption to grow. Over a million people17 have taken to the streets to protest this. What the public needs now is accountability and assurance that all those responsible for this massive scandal are brought to justice for any crimes committed.
Consider this for extravagance: relatives of former Tunisian leader Zine al-Abidine Ben Ali are reported to have kept a pet tiger fed on four chickens a day in their seaside compound.
Ben Ali, who was ousted in 2011, his
family and others in his inner circle defrauded the state of between an
estimated US$1 billion to U$2.6 billion over a seven-year period, according
a World Bank research report of 2015.
Controlling an estimated one-fifth of all Tunisian business profits, Ben Ali’s clan is reported to have acquired approximately US$13 billion1 in assets while in power, money that could have gone towards improving life for Tunisian people.
Investigators have identified reported assets held by Ben Ali’s network, including a US$1 million yacht seized in Italy2; a Falcon jet in Switzerland; properties in Paris, the Alps and Côte d’Azur3; and a US$2.5 million mansion4 in Montreal.
Despite denying that he had overseas assets5, funds linked to Ben Ali were frozen in Canada, the EU, UK and Switzerland. The Swiss authorities are working to return US$40 million to Tunisia stashed there during the Ben Ali era.
But Ben Ali’s monumental corruption, like the Arab Spring, could slip into “old history”.
The Tunisian government recently proposed an amnesty from prosecution for the thousands of corrupt businesspeople and top government officials who helped Ben Ali in his tenure.
If passed, the Economic Reconciliation Law6 would require the corrupt to return the money they stole to the Tunisian economy in exchange for having all charges against them dropped. In addition, they would be granted immunity from being prosecuted further. No questions asked. No need to reveal the truth about Ben Ali or others in testimony. No further public debate. No justice.
Photo: Flickr/thierry ehrmann
At one stage earning as little as US$700
a month1, Ukraine’s Viktor Yanukovych seemingly knew how to get
A golf course, private zoo and full-size Spanish galleon replica were just some of the attractions at Mezhyhirya, the former president’s estate.
Following Yanukovych’s ouster in
February 2014, after civil unrest sparked deadly conflict claiming close to
80 lives2, visitors have flocked to see the multimillion-dollar
estate3 and its US$100,000 light fixtures4, US$2
million decorative woodwork5 and spa replete with salt
grotto6. Meanwhile, Ukrainians’ per capita GDP was less than
US$4,000 in 2013.
Yanukovych first rented the then-government owned 137-hectare estate when he became prime minister in 2002. After the 2004 Orange Revolution, Yanukovych lost his job and Mezhyhirya, but he returned to his post and the estate a year later. He left his position as prime minister in 2007, but he continued to live there and the estate was privatised7 in this period through a series of transactions involving companies apparently controlled by close associates8.
According to Yanukovych’s 2005 income declaration, he earned less than U$700 per month9. As Prime Minister in 2006, he was said to have earned around US$5,000 per month – still not enough to live like he did.
How did Yanukovych’s civil servant salary buy him all this? How did Mezhyhirya end up in private hands?
The answer points to front companies10 which allegedly enabled Yanukovych and his inner circle to divert untold millions in state assets.
For starters, a Donetsk trading company acquired Mezhyhirya without a competitive bidding process11, and subsequently went bankrupt. Tantalit12, a Ukrainian real estate and construction firm, then acquired it.
Although the exact corporate relationship remains murky, Tantalit is apparently controlled by an Austrian firm13 whose accounts indicate it is owned by a British company14, according to the Ukrainian activist organization Open Democracy15. Tantalit was registered under Serhiy Kluyev16, an MP currently under investigation who fled the country after Parliament lifted his immunity17. The European Union imposed an entry ban and asset freeze on Kluyev and other Yanukovych cronies in March 2014 and extended the ban on Kluyev until March 201618.
Mezhuhirya had just one major contractor, AVK, whose ownership was disguised by proxy19. AVK spent20, including on items unrelated to Mezhyhirya, such as US$5 million for “media monitoring”, US$25 million for reports on the housing market, and millions for “services according to contracts”. It also received millions as “infusions from investors”. AVK received payments from Tantalit and other companies controlled by Yanukovych’s “Family”, including Ukrbusinessbank21 reportedly controlled by Yanukovych’s son22.
Mezhyhirya not only symbolises Yanukovych’s excesses, but also his clumsy attempt to cover them up23. Yanukovych fled Ukraine in early 2014, but not before he and his henchmen dumped thousands of documents24 recording real estate transactions, millions in payments that have been questioned25 into the estate’s pond. Journalists26 worked to save and post these, which suggest that Mezhyhirya was just the beginning of the story27 as other real estate holdings came to light. Yanukovych has been living a lavish lifestyle in Russia28 without consequences since February 2014.
Photo: Flickr/Israel Ministry of Foreign Affairs/ Moshe Milner GPO Cropped and desaturated from original
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