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Patronage profit Dave Cotterill examines the common roots of the international and A will win the help of a serior oficial below S A RULE of thumb five per cent of $200,000 'top rank. The same percentage of $2m and you are dealing with a permanent secretary. At enter the minister, while a cut of $200m $20m justifies the serious attention of the head of state"
This is the report of Transparency International, recently set up by businessmen to highlight global corruption, particularly in the economically underdeveloped and semi-developed world. In a 50-page analysis they spell out the realities of the capitalist may be taught that private flourishes on the basis of savings, hard work and observing laws, but we are also bought up on the myth of Santa Claus. If you really want to get ahead in business then Transparency' Interreveals how to oil the system. Top of national the kick-back system are aircraft, ships, military supplies and telecommunications.
Corruption scandals are now a worldwide phenomenon revealing the truly hypocritical nature of the 'free market'. 'Democracy' is a commodity like any other, bought and exchanged to the highest bidder.
Whilst our leaders law preach and order, morality and the virtues of the market, they are busy gorging themselves on the proceeds of the public purse. Economic crisis and rising trend of corruption scandals.
MR PEMBERTON IS CITY SCANDA ONLY AT BCCI MELI REMO ont/ Corruption • 9
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social and class tensions have combined to tear away the mask, exposing the real nature of society. Dragged into the mud are the leaders of workers' organisation who were drawn into the system, corrupted - and now unceremoniously spat out.
In Italy • the apex of capitalist corruption the 'end justified the means'. Keeping the Italian Communist Party PCI) out of power justified corruption. murder and terrorism. This goes without a comment in the press, though imagine the frenzy if this had been a left-wing regime. But no, this is a Christian Democracy, backed by the morality of the Catholic church sanctioning these methods.
Throughout Europe little Italys' are springing up. Hardly a week goes by without some new scandal surfacing. But it is clear many of these revelations are being manipulated to attack the workers' movement. Champagne socialists in Spain and France have carried out pro-capitalist policies, undermined their electoral support, and left themselves open to attack. In Germany the Social Democratic Party (SPD) is in opposition, but the press have highlighted corruption in the run up to the election.
Currently 20 parliamentary inquiries are being conducted into political scandals. Bjorn Engholm, SPD leader, was forced to resign over one such scandal. Growing disillusionment is reflected in opinion polls, with 39% saying they will not vote.
The problem for the German ruling class is, as Italy shows, once the carpet is rolled back all the dirt is revealed, thus sucking into the scandals the conservative parties, big business and establishment figures.
Capitalism by its very
a system xploitatio domination
and oppression.
APITALISM BY ITS very nature is a system Cof ruthless exploitation, domination and op-
pression. It thrives on the principle of 'dogeat-dog. In its early development it flourished through what Marxists term 'primitive accumulation. This represented the extreme exploitation of the working class to extract maximum profits, combined with looting, piracy and sacking of colonies. By such methods vast fortunes poured in to lay the foundations for industrial capitalism.
Industry and working class power forced relatively 'civilised' norms of behaviour and laws on the bosses in the so-called democracies. From a purely commercial viewpoint the capitalist class were happy to have a codified system of law and order which regulated trade, business and above all
10 • Corruption
protected property.
Nevertheless, even in normal periods of upward economic development there always exists a shadowy world where competitors are driven out of business by bribing officials, fixing prices and industrial espionage. Alternatively, businesses resort to shoddy work, defective materials, cutting corners or speeding-up work.
Despite talk of observing the law, businesses everyday resort to tax evasion, not paying national insurance contributions, and cutting back on safety. According to the Encyclopedia Britannica, fraud and embezzlement is ten times the cost of theft, burglary and robbery, whilst corporate crime is three times the cost of organised crime. Little of this features on the front pages of tabloid papers.
Even within the confines of a 'normal' capitalist system, the lure of super-profits is always strong enough to break the law. After all, it is only a natural extension of the basic theme of the system: 'get rich quick. As Karl Marx pointed out a "profit rate of 10% will ensure its (capitals) employment anywhere, 20% will produce eagerness, 50% positive audacity, 100% will make it ready to trample on all human laws, 300% there is not a crime at which it will scruple nor a risk it will not run" • (Capital, Vol One, p712).
This explains why intertwined with the legal businesses are also drugs, arms trading and smuggling. Originally developing in an illegal 'underworld', the Mafia and other crime syndicates long ago infiltrated respectable business organisations and the institutions of the state.
Roberto Calvi - known as God's banker and prominent in the 1980g Italian scandals - was the opposing twin of this process. A prominent, respectable figure in the state institutions, he ended up as a pawn in the 'silent government'. Calvi was linked with the P2 masonic lodge, which in turn was linked with the Italian and American secret services. One of his main activities through his bank was to set up ghost companies in Latin and Central America to finance right-wing groups.
With the collapse of Stalinism, the threat of a communist takeover in Italy has gone - and with it the strategy to boost all parties to keep the PCI out of office. Patronage, kickbacks and votes kept an alliance of Christian Democrats, the Catholic church and Mafia together. At the best of times capitalist democracy is limited, due to the control of the press and media, but the recent scandals show how money can buy the state machine. In Naples two-thirds of the city's income was from graft and public spending. Because the bosses' parties wanted to guarantee social peace, the illicit economy was ignored. Now Naples is bankrupt and the national state is not far behind.
All layers of society have been drawn into the corroding web of corruption - only the new Com munist Refoundation party (RC) and the Northern League have not been involved. As a consequence all parties have undermined their electoral base
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Former Italian Socialist Party leader, Craxi.
- in the case of the Socialist Party it is likely to be fatal. The party is now bankrupt, 44 out of 140 MPs are currently under investigation. Only the RC and the regional parties are seen to be clean. For a period they will gain electoral support, especially with candidates who are prosecuting attorneys and state investigators.
The lure of super-profits is
super-profits strong enough
break the la
always strong enough to
Italy's corruption scandals will not just remain at the level of politicians. The top names of big business have admitted systematic corruption, and the investigation of Andreotti is likely to reveal the links between top politicians and organised crime. Only the Catholic church stands relatively unscathed, though the 'Calvi affair showed clearly the links between the church and corrupt financial affairs.
Commentators have likened the event to a velvet revolution' and a 'melt-down of the old regime' But the bosses' representatives are now trying to gain time by dragging out electoral reform and hoping to de-criminalise the crimes committed.
S now and not in the 1980s at the time of
O WHY DID the corruption scandal arise
the Calvi affair? The answer lies with Italy's deepening economic and state-deficit crisis, together with the Mafia's strategy in Sicily of taking on the state apparatus - instead of working to corrupt it. Corruption has cost Italy an estimated $20bn over the last decade. Business is now opposed to paying bribes in a poor economic climate - the captains of industry want to cut their overheads.
Economic crisis meant complete reform was needed. Altogether 130,000 jobs fed off the political kickback system. Privatisation of the state industries, seen as the solution to the budget deficits, hits directly
at patronage. Having
cut back on state bor-
rowing and state in-
dustry the government
finds itself in direct
conflict with those
who fed off the old
regime. Events have
had a momentum of
their own. No one
probably intended to
go this far - but the
wool has unwound it-
self. As The Finan-
cial Times put it,
"Corruption in Italy
has gone beyond the
bounds of decency",
(27 February, 1993) or in other words we can tolerate corruption but not if it undermines business.
Big business, now on the stand, is trying to turn the accusation of corruption around, whining that they were corrupted by the politicians. Only by paying bribes, they plead, could they do business. Olivetti admitted that in 1987 they did 2.1bn lira of work, whilst after paying bribes this rose to 204bn lira. In other words they paid a company protection tax - and as the profits rolled in said nothing. For over a year the owners of Fiat would not admit to paying bribes; whilst Beneditti from Olivetti did admit to paying bribes, his plea of being corrupted wears thin when you consider he is currently appealing against a sentence of six years on charges of fraudulent bankruptcy.
TALYS CORRUPTION SCANDALS are linked
to the country's historical development, but many
features are common to other advanced capitalist countries. Flowing from these scandals have come revelations of Belgian Socialist Party leaders participating in kickbacks from defense deals.
EC fraud has also come to light. In the tobacco industry officials sold tobacco to cartels and resold to the ex-USSR and developing countries. Over $1bn was given to Italian and Greek farmers to export phantom tobacco.
Springing up daily in Russia and Eastern Europe are criminal gangs involved in arms, drugs and prostitution. Mushrooming are share schemes that rip-off small investors, with foreign bank accounts that transfer billions to offshore companies in Cyprus, where ex-Communist bureaucrats turn up with $3m in suitcases. In two years $17bn of illegal transactions has out of Russia whilst $8bn in aid has gone in.
Throughout the so-called Third World shortages inevitably lead to black markets, smuggling, corruption in foreign exchange deals and export licences. Corruption in the ex-colonial and developing countries is considered a necessary lubricant to the system. Straight forward exploitation of the working class and peasantry is supplemented by
Corruption • 11
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Protests over nepotism in Japan.
top politicians and industrialists using the state institutions as their own personal banks. Up until the 1980s corruption and fraud was largely concealed in the advanced countries. Since the big bang in financial services and the explosion in credit there has been a parallel development of corruption. World recession has now punctured the credit bubble, and revealed a veritable flood of scandals: insider trading, pension fund fraud, bank fraud and collapses, savings and loan collapse - where investigators discovered criminal misconduct in 40% of thrifts seized - misappropriation of parliamentary funds, in short, a billion dollar burglary of the public purse.
Eddie Murphy's film Distinguished Gentlemen perfectly sums up a practice of the American age.
Eddie Murphy's film Distinguished Gentlemen American are perfectly sums up a practice of the American age which could be transplanted almost anywhere on the planet. Murphy plays a con-man who takes the name of a dead senator and is elected. His sole purpose is to gain access to the Congress gravy train - a legal and less dangerous way of acquiring a fortune - only to find out that he 12 • Corruption is a novice.
Reacting to this graft and corruption, millions in America have either turned away from voting or voted for the 'outsider Ross Perot, expressing their disillusionment with traditional parties and politicians. A similar process is identifiable throughout Europe with 25% of the electorate voting for fringe parties.
stage in the In Japan a new corruption cycle has been reached.
Events are moving quickly. Construction companies have now admitted that a proportion of their contracts were donated to the Liberal Democratic Party (LDP). Leading LDP politicians have been found with gold bars in their offices. Print companies have admitted rigging bids. An unbroken line exists between the LDP, rightwing organisations and the Yakuza (organised crime).
Everyone knows that this kind of corruption is the real norm in the capitalist system. When the managing director of Fiat gave "outline the general evidence he said he would system of corruption". (My emphasis - DC). Fiat's involvement in corruption lead to its shares climbing! So much for the morality of law and illegally creamed money is order. In the EC, hardly ever recovered. One official is quoted as saying "internal investigations never result in a public scandal - (people) are given a bit of money and asked to leave. We don't want any scandal" Do an armed robbery and you get 20 years in goal. Rob billions from a state institution and the old boy network makes sure you get - a pension! Britain is not immune to all of this - in spite of Norman Tebbit's remarks that we should stay out of European Monetary Union to 'avoid the contagion of corruption'. Thatcher's legacy has been mega-fraud, little known prior to the 1980s. Privatisation sold off the family silver with shareholders making obscene profits at the expense of the tax payer. Our national health service has turned into an El Dorado for business consultants, administrators and computer contractors. Greed has taken over from need.
Business scandals now abound: Guinness, Blue Arrow, Polly Peck. Serious fraud in 1991 amounted to £2bn. Pension fund rip-offs perfected by Maxwell are now copied by the government - which looks greedily towards the miners and railway workers' funds to meet their debts. BCCI can collapse with billions in debts and no-one bats an eye. Yet inevitably in Britain, as in other countries, when the final house of cards comes tumbling down, then the thieves will fall out with one anothe
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