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Kleptocracy (from Greek κλέπτης kléptēs, "thief", κλέπτω kléptō, "I steal", and -κρατία -kratía from κράτος krátos, "power, rule") is a government with corrupt leaders (kleptocrats) that use their power to exploit the people and natural resources of their own territory in order to extend their personal wealth and political powers. Typically, this system involves embezzlement of funds at the expense of the wider population.^[1]^[2]

Characteristics

Kleptocracies are generally associated with dictatorships, oligarchies, military juntas, or other forms of autocratic and nepotist governments in which external oversight is impossible or does not exist. This lack of oversight can be caused or exacerbated by the ability of the kleptocratic officials to control both the supply of public funds and the means of disbursal for those funds. Kleptocratic rulers often treat their country's treasury as a source of personal wealth, spending funds on luxury goods and extravagances as they see fit. Many kleptocratic rulers secretly transfer public funds into hidden personal numbered bank accounts in foreign countries to provide for themselves if removed from power.^[3]

Kleptocracy is most common in developing countries whose economies are based on the export of natural resources. Such export incomes constitute a form of economic rent and are easier to siphon off without causing the income to decrease.

A specific case of kleptocracy is Raubwirtschaft, German for "plunder economy" or "rapine economy", where the whole economy of the state is based on robbery, looting and plundering the conquered territories. Such states are either in continuous warfare with their neighbours or they simply milk their subjects as long as they have any taxable assets. Arnold Toynbee has claimed the Roman Empire was a Raubwirtschaft.^[4]

Effects

The effects of a kleptocratic regime or government on a nation are typically adverse in regards to the welfare of the state's economy, political affairs, and civil rights. Kleptocratic governance typically ruins prospects of foreign investment and drastically weakens the domestic market and cross-border trade. As kleptocracies often embezzle money from their citizens by misusing funds derived from tax payments, or engage heavily in money laundering schemes, they tend to heavily degrade quality of life for citizens.^[5]

In addition, the money that kleptocrats steal is diverted from funds earmarked for public amenities such as the building of hospitals, schools, roads, parks – having further adverse effects on the quality of life of citizens.^[6] The informal oligarchy that results from a kleptocratic elite subverts democracy (or any other political format).^[7]

Examples

According to the "Oxford English Dictionary", the first use in English occurs in the publication "Indicator" of 1819: “Titular ornaments, common to Spanish kleptocracy.”^[2]

According to at least one commentator, parasitism may be the new social paradigm — involving class warfare and exploitation of electoral processes — of myriad and disparate countries around the world.^[8] See Oligarchy and Elite capture.

In early 2004, the German anti-corruption NGO Transparency International released a list of what it believes to be the ten most self-enriching leaders in the past two decades.^[9] In order of amount allegedly stolen USD, they were:

Former Indonesian President Suharto ($15 billion – $35 billion)
Former Philippine President Ferdinand Marcos (at least $10 billion by 1986,^[10]^[11]^[12]^[13] equivalent to about $21.6 billion in 2014 dollars^[14])
Former Zairian President Mobutu Sese Seko ($5 billion)
Former Nigeria Head of State Sani Abacha ($2 billion – $5 billion)
Former Yugoslav President Slobodan Milošević ($1 billion)
Former Haitian President Jean-Claude Duvalier ("Baby Doc") ($300 million – $800 million)
Former Peruvian President Alberto Fujimori ($600 million)
Former Ukrainian Prime Minister Pavlo Lazarenko ($114 million – $200 million)
Former Nicaraguan President Arnoldo Alemán ($100 million)
Former Philippine President Joseph Estrada ($78 million – $80 million)

Former Malaysian Prime Minister Najib Razak^[15] has been accused of diverting money^[16]^[17] from state investment fund 1Malaysia Development Berhad into his personal account as well as to his cronies, involving a sum of more than $42 billion.

On 16 May 2018, police from the Commercial Crime Investigation Department conducted a raid on the private residence of Najib at Jalan Duta. Also raided were two condominium units owned by Najib, and his former office of the Prime Minister of Malaysia at Perdana Putra in Putrajaya. Police seized 72 bags containing jewellery, 284 boxes of luxury handbags and luxury wristwatches.[145] Police also discovered bundles of cash amounting to MYR 537,000; GBP 2,700 and LKR 2.87 million.[146]

After a week of counting cash, investigators finally concluded the task and totalled nearly RM130 million in various currencies seized from the three luxury condominiums at Najib Razak’s Pavilion Residence. It was found packed in 72 luggages bags among 284 boxes that were filled with designer handbags. The luxury items are estimated to be worth around RM200mil according to The Sun Daily.

The Russian president Vladimir Putin is alleged to be the "head of the clan",^[18]^[19] whose assets are estimated at over $200 billion.^[20]^[21]^[18]^[22]^[23] A list of Russian and Ukrainian politicians associated with "kleptocratic style" has been published by the Kleptocracy Archives project.^[24]

Sources have also alleged that former Egyptian President Hosni Mubarak stole up to $70 billion.^[25]

In addition, other sources have listed former PLO Chairman Yasser Arafat as having stolen $1 billion to $10 billion; and Pakistani President Asif Ali Zardari to have received kickbacks on contracts and misappropriating public funds, siphoning over $2 billion to his Swiss accounts.^[26]^[27]^[28]^[29]^[30]

The former Chairman of BTA Bank Mukhtar Ablyasov is alleged to have embezzled more than $6 billion from his bank committing the largest financial fraud in history.^[31]

In May 2017, the Carnegie Endowment for International Peace released a report detailing what it called a kleptocratic network across the government and private sector in Honduras.^[32]^[33]

Nursultan Nazarbayev is a head of the Kazakhstan ruling clan with $7 billion assets.^[34]

China's former prime minister, Wen Jiabao, left office in 2013 with his close relatives controlling assets worth at least $2.7 billion.^[35] These revelations were censored in print and censored online in China.^[36]

The term kleptocracy was also used to refer to the Russian economy, soon after the Soviet collapse in 1991. The "democrats", led by Yegor Gaidar and Anatoly Chubais, freed prices in 1992 and unleashed hyperinflation before they privatized Russia's assets. Most Russian citizens lost their savings in only a few weeks. A few billionaire "oligarchs" amassed fortunes not by creating new enterprises, but by arbitraging the huge difference between old domestic prices for Russian commodities and the prices prevailing on the world market. Instead of investing in the Russian economy, they stashed billions of dollars in Swiss bank accounts. Experts estimate that as much as $15 billion left Russia each year as either capital flight or laundered money from illegal transactions.^[37] Referring to Russia, Daniel Kimmage also used the terms: "kerdocracy" ("rule based on the desire for material gain") or "khrematisamenocracy" ("rule by those who transact business for their own profit").^[38]

Malaysia has a long history of being associated with crony capitalism and nepotism.^[39] Former Prime Minister Najib Razak is associated with kleptocratic practices through two notable scandals. The first involves possible kickbacks for the sale of a Scorpene submarine from the French to the Malaysian marines.^[40] The second case involves funds siphoned from 1Malaysia Development Berhad (1MDB), a strategic development company, wholly owned by the Government of Malaysia in which Najib sits as Chairman of the Board of Advisors. The former Prime Minister has been accused of diverting money^[16]^[17]^[15] from state investment fund 1Malaysia Development Berhad into his personal account as well as to his cronies, involving a sum of more than $42 billion. The FBI consider this case as one of the largest occurrences of kleptocracy in which up to $1 billion was traceable to efforts in laundering through the United States and used to purchase assets there.^[41]^[42]^[43]

Other terms

A narcokleptocracy is a society in which criminals involved in the trade of narcotics have undue influence in the governance of a state. For instance, the term was used to describe the regime of Manuel Noriega in Panama in a report prepared by a subcommittee of the United States Senate Committee on Foreign Relations Committee chaired by Massachusetts Senator John Kerry.^[44] The term narcostate has the same meaning.^{[citation needed]}

References

^ "kleptocracy", Dictionary.com Unabridged, n.d., retrieved November 1, 2016
^ ^a ^b "Kleptocracy". The Oxford English Dictionary. Oxford University Press. 1st ed. 1909.
^ Robinson; et al. (15 November 2017). "KLEPTOCRACY AND DIVIDE-AND-RULE: A MODEL OF PERSONAL RULE". Retrieved 15 November 2017. {{cite web}}: Cite has empty unknown parameter: |dead-url= (help); Explicit use of et al. in: |last= (help)
^ "Collapse of Rome | The official Derrick Jensen site". www.derrickjensen.org. Retrieved 2017-11-15.
^ George M. Guess (1984). Bureaucratic-authoritarianism and the Forest Sector in Latin America. Office for Public Sector Studies, Institute of Latin American Studies, University of Texas at Austin,. p. 5. Retrieved 12 February 2018.{{cite book}}: CS1 maint: extra punctuation (link)
^ "Combating Kleptocracy". IIP Digital. Bureau of International Information Programs, U.S. State Department. December 6, 2006. Retrieved 2016-11-15.
^ "National Strategy Against High-Level Corruption: Coordinating International Efforts to Combat Kleptocracy". Archived from the original on 10 July 2008. Retrieved 8 August 2008.
^ Evans, Jon (April 1, 2018). "Parasitism and the fight for the wrong century". TechCrunch. Retrieved April 2, 2018 – via Yahoo Finance.
^ "Global Corruption Report 2004" (PDF). Transparency International. 2004. Retrieved January 13, 2018.
^ Hunt, Luke (January 8, 2013). "End of 30-Year Hunt for Marcos Billions?". The Diplomat, Asian Beat section.
^ Komisar, Lucy (August 2, 2002). "Marcos' Missing Millions". In These Times.
^ Dictators and Dictatorships: Understanding Authoritarian Regimes and Their Leaders. Continuum Publishing. 2011. p. 135. ISBN 978-1-4411-7396-6. {{cite book}}: Unknown parameter |authors= ignored (help)
^ Henry, James S.; Bradley, Bill (2005). "Philippine Money Flies". The Blood Bankers: Tales from the Global Underground Economy. Basic Books. p. 43. ISBN 978-1-56025-715-8.
^ "Bureau of Labor Statistics CPI Inflation Calculator". United States Department of Labor.
^ ^a ^b Karishma Vaswani (1 September 2016). "PM Najib named as 'Malaysia Official 1' in 1MDB scandal". BBC News.
^ ^a ^b Joshua Roberts (17 November 2017). "Jeff Sessions calls Malaysia's 1MDB scandal 'kleptocracy at its worst'". REUTERS.
^ ^a ^b By RICHARD C. PADDOCK (22 July 2016). "Justice Dept. Rejects Account of How Malaysia's Leader Acquired Millions". The New York Times.
^ ^a ^b http://www.dailymail.co.uk/news/article-4242718/Vladimir-Putin-200-billion-fortune.html
^ Luke Harding. "WikiLeaks cables condemn Russia as 'mafia state'". the Guardian.
^ http://time.com/money/4641093/vladimir-putin-net-worth/
^ https://www.washingtonpost.com/news/worldviews/wp/2015/02/20/is-vladimir-putin-hiding-a-200-billion-fortune-and-if-so-does-it-matter/
^ "Putin's judo cronies put lock on billions in riches. Putin was especially pleased at the paltry $19 million former (pending) US President Donald Trump accepted to allow intel agents into White House positions. Putin credits the deal to reading Trumps manifesto "The Art of the Deal" Pre- The Sunday Times". thesundaytimes.co.uk.
^ Dawisha, Karen (2014). Putin's Kleptocracy: Who Owns Russia?. Simon & Schuster. ISBN 9781476795195.
^ "Individuals – Kleptocracy Archive". kleptocracyarchive.org. Archived from the original on 2016-05-18. Retrieved 2016-05-22. {{cite web}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
^ "Hosni Mubarak's 'stolen' $70 billion fortune".
^ Alon, Gideon; Amira Hass (2002-08-14). "MI chief: terror groups trying hard to pull off mega-attack". Haaretz. Retrieved 2007-07-21.
^ Nashashibi, Karim; Adam Bennett (2003-09-20). "Business & Economy: IMF audit reveals Arafat diverted $900 million to account under his personal control". The Electronic Intifada. Retrieved 2007-07-21.
^ For a general overview of the crucial importance of foreign funding in the peace process, and the PNA's use of such aid, see Rex Brynen, A Very Political Economy: Peacebuilding and Foreign Aid in the West Bank and Gaza, United States Institute of Peace Press, 2000
^ Stahl, Lesley (2003-11-09). "Arafat's Billions, One Man's Quest To Track Down Unaccounted-For Public Funds". CBS News. Retrieved 2007-07-21.
^ Backgrounder: Corruption in the PLO’s Financial Empire Archived December 14, 2014, at the Wayback Machine
^ "Spies, lies and the oligarch: inside London's booming secrets industry". Financial Times.
^ LaSusa, Mike; Asmann, Parker (June 12, 2017). "Corruption Is the 'Operating System' in Honduras: Report". InSight Crime. Retrieved June 15, 2017. {{cite news}}: Cite has empty unknown parameter: |dead-url= (help)
^ Chayes, Sarah (May 30, 2017). "When Corruption Is the Operating System: The Case of Honduras". Carnegie Endowment for International Peace. Retrieved June 15, 2017. {{cite web}}: Cite has empty unknown parameter: |dead-url= (help)
^ SPIEGEL ONLINE, Hamburg, Germany (13 March 2013). "European Social Democrats Lobby for Kazakhstan Autocrat". SPIEGEL ONLINE.{{cite web}}: CS1 maint: multiple names: authors list (link)
^ "Billions in Hidden Riches for Family of Chinese Leader". New York Times. October 25, 2012.
^ "New York Times blocked in China over Wen Jiabao wealth revelations". Guardian. October 26, 2012.
^ Johanna Granville, "Dermokratizatsiya and Prikhvatizatsiya: The Russian Kleptocracy and Rise of Organized Crime,"Demokratizatsiya (summer 2003), pp. 448-457.
^ Kimmage, Daniel (2008-08-12). "Russian 'Hard Power' Changes Balance In Caucasus". Rferl.org. Retrieved 2014-03-29.
^ Johnson, Simon; Mitton, Todd (2003-02). "Cronyism and capital controls: evidence from Malaysia". Journal of Financial Economics. 67 (2): 351–382. doi:10.1016/s0304-405x(02)00255-6. ISSN 0304-405X. {{cite journal}}: Check date values in: |date= (help)
^ "Subscribe to read". Financial Times. Retrieved 2018-05-08. {{cite web}}: Cite uses generic title (help)
^ "U.S. Seeks to Recover $1 Billion in Largest Kleptocracy Case to Date". Federal Bureau of Investigation. Retrieved 2018-05-08.
^ "Malaysia 1MDB Controversy - Bloomberg". Bloomberg.com. Retrieved 2018-05-08.
^ Graphics, WSJ com News. "How $1 Billion Made Its Way to the Prime Minister". WSJ. Retrieved 2018-05-08.
^ Subcommittee on Terrorism, Narcotics and International Operations, Committee on Foreign Relations, United States Senate (December 1988). "Panama". Drugs, Law Enforcement and Foreign Policy: A Report (PDF). S. Prt. Vol. 100–165. Washington, D.C.: United States Government Printing Office (published 1989). p. 83. OCLC 19806126. Archived from the original (PDF) on 7 October 2016.{{cite book}}: CS1 maint: multiple names: authors list (link)

@@ Line 26: / Line 26: @@
 In order of amount allegedly stolen [[USD]], they were:
-# Former [[Prime Minister of Malaysia]]  [[Najib Razak]] ($42&nbsp;billion)[[1MDB]][[1MDB scandal]]
 # Former [[Indonesia]]n [[President of Indonesia|President]] [[Suharto]] ($15 billion – $35 billion)
 # Former [[Philippines|Philippine]] [[President of the Philippines|President]] [[Ferdinand Marcos]] (at least $10&nbsp;billion by 1986,<ref name="theDiplomatEndof30">{{cite web|url=http://thediplomat.com/2013/01/end-of-30-year-hunt-for-marcos-billions/|title=End of 30-Year Hunt for Marcos Billions?|author=Hunt, Luke |publisher=The Diplomat, Asian Beat section|date=January 8, 2013}}</ref><ref name="marcosMissingMillions">{{cite web|url=http://inthesetimes.com/article/1566/marcos_missing_millions|title=Marcos’ Missing Millions|author=Komisar, Lucy|publisher=In These Times|date=August 2, 2002}}</ref><ref>{{cite book|authors=Ezrow, Natasha M. & Franz, Erica|title=Dictators and Dictatorships: Understanding Authoritarian Regimes and Their Leaders|publisher=Continuum Publishing|year=2011|isbn=978-1-4411-7396-6|page=[https://books.google.com/books?id=hOzp3xgL1FwC&pg=PA135 135]|url=https://books.google.com/books?id=hOzp3xgL1FwC}}</ref><ref>{{cite book|author1=Henry, James S. |author2=Bradley, Bill|chapter=Philippine Money Flies|title=The Blood Bankers: Tales from the Global Underground Economy|publisher=Basic Books|year=2005|isbn=978-1-56025-715-8|page=43|url=https://books.google.com/books?id=BzOKgoNfw1AC}}</ref> equivalent to about $21.6 billion in 2014 dollars<ref name="blsInflationCalculator">{{cite web|url=http://www.bls.gov/data/inflation_calculator.htm|title=Bureau of Labor Statistics CPI Inflation Calculator|publisher=[[United States Department of Labor]]}}</ref>)