Kleptocracy Watch | January 12, 2018

The week’s leading news and features on globalized corruption and the threat to democracy…

  1. Global Magnitsky Act: 52 individuals and entities were sanctioned in the first tranche of designations – but the real story is the extraordinary Executive Order that Trump signed to do it, writes Rob Bershinski. (Just Security)
  2. Beyond tweets: If President Trump really wants to help Iranian protestors,writes Hudson Institute’s Ken Weinstein, he should “immediately declassify information about the financial holdings of those affiliated with the Iranian government.” (LA Times)
  3. The origins of modern kleptocracy: Oliver Bullough chronicles “what happened when a modern financial system, driven by innovative communications technology, was unleashed on countries without developed legal systems or robust institutions.” (Power 3.0)
  4. Laundering cash, white-washing reputations:“Kleptocrats do not just transform their polities in order to systematically control economic activity and plunder natural-resource wealth; they also cultivate extensive networks of transnational actors and institutions to assist in camouflaging their financial flows and polishing their reputations,” write Alex Cooley, John Heathershaw, and JC Sharman. (Project Muse)
  5. Coreligionists in kleptocracy: In Russia, China, and other kleptocracies, “Even the most patient citizen must realize now why his lot never improves. Under current leadership, 100% of everything is gobbled up in the corrupt power rivalries and overseas adventures of the leadership class,” writes Holman Jenkins. (WSJ)
  6. U.S. weapons compete with Chinese cash in Ukraine: “Ukraine’s future is no longer—if it ever was—a binary struggle between a pro-Western and a pro-Russian future,” writes Nolan Peterson. (Daily Signal)
  7. Mnuchin warns against Bitcoin becoming “next Swiss bank account”: The U.S. Treasury secretary says he’ll work with the G20 to ensure “bad people cannot use these currencies to do bad things.” (Bloomberg)
MIDDLE EASTFinding the way forward on Iran: “The kleptotheocracy is uniquely vulnerable to charges of hypocrisy,” writes Bret Stephens. (NYT)

What Saudi Arabia can learn from South Korea: Riyadh has its work cut out after “what looks increasingly more like a shakedown than a legally-grounded pursuit of justice,” writes Jamal Khashoggi. (WaPo)


UK government criticized over suspected Kremlin assassination: Dr. Matthew Puncher was found with stab wounds after his research contributing to the Litvinenko inquiry – now Lord Rooker says the government failed to protect him. (BuzzFeed)

Russian cryptocurrency plans: The Kremlin can’t count on a “crypto-ruble” to help it dodge U.S. sanctions, writes Fatema Merchant. Russian officials are exempt from declaring cryptocurrency gains, said the department of labor. (Lexology, Cointelegraph)


Chinese buyers eye Cambodia property: “Cambodia is primarily a cash economy, with the United States dollar accounting for the vast majority of money in circulation, which creates opportunities for money laundering,” writes Chris Horton. (NYT)


Bank Secrecy Act: The U.S. financial sector is hopeful of major reforms to the anti-money laundering regime, writes Ian McKendry. For background, read Money Laundering for 21st Century Authoritarianism by Ben Judah and Belinda Li. (American Banker, KI/Hudson)

One-fifth of all Trump properties sold to anonymous firms: Since 1980, 1,300 condominiums were sold to shell companies in all-cash, no-mortgage deals. (BuzzFeed)

From a Kazakh mine to Trump SoHo: “This story… carves a path from near Kazakhstan’s northern border with Russia to the offshore financial centers of the Caribbean, to London and all the way to Trump property in Midtown Manhattan,” writes Marc Champion. (Bloomberg)

Manafort sued by Deripaska: The oligarch’s company alleges that it was fleeced out of $18.9 million by the disgraced campaign strategist. (NPR)

Facebook selectively adhering to U.S. sanctions: Ramzan Kadyrov has been banned from the social media platform – but dozens of other sanctioned individuals haven’t. (Quartz)


Russian elite flocks to buy Malta passports:Wealthy Russians appear to be using the investor scheme to sidestep sanctions, safeguard assets, and secure an escape route from Putin’s regime – they comprised 40 percent of successful applicants in 2015. (EUObserver)

MEPs urge removal of Malta politicians linked to corruption cases: Their report, issued amid multiple high-level graft scandals, follows a two-day fact-finding mission to the island. (Times of Malta)

McMafia: When it comes to confronting real globalized corruption in the UK, “honest people are ducking the fight,” writes Libby Purves. (Times)

Ex-PM of Ukraine in questionable media deal:Using a New York-based company, Arseniy Yatsenyuk sold his share in Espresso TV to an oligarch after just six months – for a 1,000 percent profit. (KyivPost)

New vs. old Ukraine: European leaders must prevent Poroshenko’s administration from “transforming new Ukraine into a mirror image of the old Ukraine,”writes Gustav Gressel. (ECFR)

Poroshenko targets anti-graft campaigners: “Reforms have stalled or gone into reverse as Ukraine’s oligarchs fight back hard,” write Oleksandra Ustinova and Brian Dooley. (Newsweek)

Three Ukrainian oligarchs illicitly traded $1.5 billion: The assets were suspected of being proceeds of crime linked to the Yanukovych regime and were frozen by a Ukrainian court. They made extensive use of Scottish anonymous companies to do it. (Al Jazeera, Herald Scotland)

Scottish Limited Partnerships: 78 Montgomery Street, a respectable address in Edinburgh, is actually “one of Europe’s great money-laundering hubs, a centre of elaborate multi-billion-dollar schemes to clean some of the continent’s dirtiest money,” writes David Leask. (Herald Scotland)