Battling Corruption in Ukraine—and the U.S.

By just about all accounts other than his own, Vladimir Putin expected a quick and easy victory in Ukraine. His frequent command shakeups—at least eight generals have been removed so far—suggest an inability to grasp the basic morale and discipline problems of his army, or, for that matter, the weaknesses of its hardware. Russia’s missiles, helicopters, and tanks, like its soldiers, have malfunctioned more often than anyone, including Putin, seems to have expected. Among all of the Russian President’s misjudgments, though, bribery may have been the weapon that he overestimated the most. Payoffs to Ukrainian sailors and naval officers had reportedly worked wonders in 2014, enabling Russia to capture most of Ukraine’s Black Sea fleet without a fight. (Extrapolating from that achievement, Putin reportedly allocated more than a billion dollars to a team of agents provocateurs who, eight years later, were supposed to engineer a coup d’état and install a friendly regime in Kyiv.) But, this time around, when Russian operatives came calling with cash to dispense, key Ukrainian officials either refused it or took the money without betraying their country.

That, at any rate, is how the Biden Administration tells the tale in a corruption-fighting handbook—with the no-nonsense title Dekleptification Guide—issued for the benefit of foreign-aid workers and their overseas partners. Between invasions, Ukrainians had taken a long, appalled look at the estate of their ousted pro-Russia leader, Viktor Yanukovych, with its golf course, bowling alley, vintage-car collection, ostrich farm, and ornate toilet hardware. They had pressured their new leaders into adopting a set of impressive-looking reforms. Then, finding those leaders untrustworthy, Ukrainians had sent them packing, voting to hand the Presidency and control of their parliament to a party of political neophytes running on a one-promise platform: we will bring honest rule.

They have a ways to go, as several recent war-profiteering scandals (and resignations of public officials) attest. Nevertheless, the Dekleptification Guide rates Ukraine as a success story, praising its efforts to reform the police, prosecutors, and courts; to develop a “business culture committed to market competition under the rule of law”; and, most notably, to “radically” expand “the degree to which the government collects, and opens to the public, an expansive array of electronic data sources about who owns what in the country and how state resources are spent.” Ukraine’s strong military performance “would not be possible without eight years of hard-fought work building the institutions of dekleptification,” the guide concludes. Russia, by contrast, is judged to have paid a high price for its “rampant corruption.” As a case in point, Lasha Tchantouridzé, a professor of international affairs at Norwich University, in Vermont, cites the large number of Russian personnel carriers, self-propelled guns, trucks, and support vehicles that got stuck in the springtime Ukrainian mud last year. Many of them appear to have been equipped with “cheap Chinese-manufactured tires,” instead of the prescribed Michelin’s, Tchantouridzé writes, adding that the cost difference “most likely ended up in the pockets of the tire contractors and defense officials who approved the deal.” Even some of the money allocated for bribing Ukrainian military and civilian leaders seems to have been skimmed by Russian operatives, according to Tchantouridzé.

The Dekleptification Guide was put out by the United States Agency for International Development, primarily as a playbook for would-be reformers around the world, but also as a statement of this country’s commitment to the cause. America, it proclaims, will no longer be an apologist for crooks and dictators. “We’re going all in on dekleptification,” Samantha Power, the agency’s administrator, said on the day she announced the guide’s creation, last spring. It’s a tough-talking document. Most cleanup campaigns “fizzle out” within a couple of years, the authors warn. To beat the odds, would-be reformers need to be ready for “historic windows of opportunity,” when “aggrieved masses pour into the streets or to the ballot boxes.” For corruption fighters who unexpectedly find themselves in a position to shape policy, the Dekleptication Guide offers a set of practical recommendations, drawing on the record of measures taken, at various recent times, in Ukraine, Sierra Leone, Romania, Moldova, Malaysia, Georgia, South Africa, and the Dominican Republic, among other countries. With its heavy emphasis on financial disclosure, though, the guide has highlighted an area of policy where the United States itself falls conspicuously short.

Transparency International, a Berlin-based watchdog organization, issues an annual ranking of the world’s nations, by “perceived levels of public sector corruption.” The 2022 list, released at the end of January, had the U.S. in twenty-fourth place; we moved up three spots from 2021, past the United Arab Emirates, Bhutan, and Taiwan, but continued to lag behind New Zealand, Germany, Australia, Canada, Estonia, the United Kingdom, and France. The judges (panels of “businesspeople and country experts”) do not have to explain themselves; but one big way in which the U.S. might have earned their distrust is by deciding, in the name of free speech (as understood by the Supreme Court in the Citizens United case), to allow our elections to be flooded with corporate money, and then, in the name of privacy, to let the sources of that money, if they so choose, be untraceable.

These policies help account for the oligarchic fusion of economic and political power enjoyed by the giants of our fossil-fuel, pharmaceutical, and meatpacking industries, among others. The same mentality allows the sharp operators of American real-estate and financial firms to profit from the crimes of oligarchs around the world. The United States has made itself a prime nesting place for their loot by letting them purchase assets through anonymous shell companies and trusts nominally based in states (Nevada, Wyoming, South Dakota, and others) with incorporation rules as free-wheeling as those of the Cayman Islands. “In the popular imagination, the money laundering capitals of the world are small countries with histories of loose and secretive financial laws,” Treasury Secretary Janet Yellen said at a U.S.-hosted “Summit for Democracy,” in December, 2021. “But there’s a good argument that, right now, the best place to hide and launder ill-gotten gains is actually the United States.”

The Panama Papers—a trove of more than eleven million documents leaked, in 2016, from the files of a now defunct Panamanian law firm—brought the shell-company issue into focus, leading to the enactment, in January, 2021, of the Corporate Transparency Act. That law requires companies with money-laundering potential to disclose the identities of their “beneficial owners.” But the title of the legislation promises more than the details deliver: access to the information is limited to law-enforcement bodies and, under some conditions, federal agencies and banks. By contrast, the transparency initiatives cited approvingly in the Dekleptification Guide provide for “public access.” In practice, that feature has proved to be crucial. Non-government actors—investigative reporters, bloggers, citizen activists—have had a large hand in virtually every major revelation involving the yachts, jets, mansions, condos, and other Western holdings of the world’s kleptocrats. Tracking the global flow of crooked money is too big a project for the officially constituted authorities to handle, even when they are fully committed to the job. “It takes a network to fight a network,” the guide observes, using a phrase that has become something of a mantra in the anticorruption world.

Congress had a chance last year to do something about our domestic dark-money problem. The DISCLOSE Act would have required super PACs and other bundling entities to reveal their major donors. But, while the bill had the near-unanimous support of Democrats, Republicans were just as united in opposition, and it died in the Senate for lack of the sixty votes required to overcome a filibuster. The same general fate befell a proposal, known as the ENABLERS Act (another acronym, like DISCLOSE, not worth parsing), calling on investment advisers, lawyers, real-estate agents, and other financial middlemen to flag any suspicious transactions.

With the House of Representatives in Republican hands, the window of opportunity for transparency legislation has closed for now. But the Biden Administration has the leverage to realize some of the benefits of both defeated proposals. Anti-corruption groups have urged the Administration to make federal contractors report their political spending; that would be a big move, since more than half of this country’s largest corporations do business with the government. And the Treasury Department has the authority—under an old statute, the Bank Secrecy Act, as recently amended by the Anti-Money-Laundering Act—to require investment-fund managers and advisers, real-estate agents, art dealers, and sellers of boats and aircraft to do some basic vetting of their customers, which would scuttle at least a few deals. When and if the government takes these steps, the United States will be entitled to say that it has begun to heed its own good advice. Barely begun. 

Battling Corruption in Ukraine—and the U.S.
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