The term "state capture" was first used by the World Bank, around the year 2000, to describe the situation in certain central Asian countries making the transition from Soviet communism. Specifically, it was applied to situations where small corrupt groups used their influence over government officials to appropriate government decision-making in order to strengthen their own economic positions; these groups' members would later become known as oligarchs.
Defining state capture
The classical definition of state capture refers to the way formal procedures (such as laws and social norms) and government bureaucracy are manipulated by private individuals and firms so as to influence state policies and laws in their favor. State capture seeks to influence the formation of laws, in order to protect and promote influential private interests. In this way it differs from most other forms of corruption which instead seek selective enforcement of already existing laws.
State capture may not be illegal, depending on determination by the captured state itself, and might be attempted through private lobbying and influence. The influence may be through a range of state institutions, including the legislature, executive, ministries and the judiciary, or through a corrupt electoral process. It is similar to regulatory capture but differs in the scale and variety of influenced areas and, unlike regulatory capture, the private influence is never overt. The private influences cannot be discovered by lawful processes, since the legislative process, judiciary, electoral process, and/or executive powers have been subverted.
A distinguishing factor from corruption is that, while in cases of corruption the outcome (of policy or regulatory decision) is not certain, in cases of state capture the outcome is known and is highly likely to be beneficial to the captors of the state.
Further, in cases of corruption (even rampant) there is plurality and competition of corruptors to influence the outcome of the policy or distribution of resources. However, in state capture, decision-makers are usually more in a position of agents to the principals, i.e., the captors, who function either in monopolistic or oligopolistic (non-competitive) fashion.
Examples by country
Protests in Bulgaria in 2013–14 against the Oresharski cabinet were prompted by allegations that it came to power due to the actions of an oligarchic structure (formerly allied to Boyko Borisov) which used underhand maneuvers to discredit the GERB party.
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The state capture of Hungary began after 2010 when the former main opposition party, Fidesz–KDNP, won the requisite two-thirds of the vote in the parliamentary election. This made manipulation of the constitutional law and the Constitutional Court possible. Parliamentary election laws were later changed to benefit the new governmental party. Step by step, the different institutional applications, competitions, and tenders have been won almost exclusively by organizations and individuals loyal to the government. The winners have frequently been relatives of the governmental staff or otherwise connected with them. The management of different institutions has been filled with persons loyal to the government. Independent applicants have been rejected without explanation or by formal causes. The incomes of the government-independent media evaporated and their fortunes fell.
The grants and advertising expenditures of the state-owned and government-loyal companies have been directed to the purpose of the widely accessible propagandistic state media and to the government-loyal press. The majority of the Hungarian population can only access government-influenced radio stations. Only a single government-independent television channel has been tolerated as a source of unfiltered news. The propaganda applies classical Machiavellian cunning, regularly using war terms and touts two ostensible public enemies: "migrants" and "George Soros". Altogether, these proceedings provided additional two-thirds victories for the governmental party in 2014 and 2018, and more unrestricted possibilities for the administration.[clarification needed]
Latin American countries
- Mcebisi Jonas, former Deputy Finance Minister; explaining the process of state capture.
In 2016 there were allegations of an overly close and potentially corrupt relationship between the wealthy Gupta family and the South African president Jacob Zuma, his family and leading members of the African National Congress (ANC). South African Opposition parties have made claims of "State Capture" following allegations that the Guptas, said to be close to President Jacob Zuma, his family and other ANC leaders, had insinuated themselves into a position where they could offer Cabinet positions and influence the running of government. These allegations were made in light of revelations by former ANC MP Vytjie Mentor and Deputy Finance Minister Mcebisi Jonas that they had been offered Cabinet positions by the Guptas at the family's home in Saxonwold, Johannesburg.
Mentor claimed that in 2010 the Guptas had offered her the position of Minister of Public Enterprises, provided that she arranged for South African Airways to drop their India route, allowing a Gupta linked company (Jet Airways) to take on the route. She said she declined the offer, which occurred at the Guptas' Saxonwold residence, while President Zuma was in another room. This came a few days before a cabinet reshuffle in which minister Barbara Hogan (then Minister of Public Enterprises) was dismissed by Zuma. The Gupta family agreed that the meeting took place and agreed offering Vytijie a ministerial position. President Zuma claimed that he had no recollection of Vytjie Mentor.
Deputy Finance Minister Mcebisi Jonas said he had been offered a ministerial position by the Guptas shortly before the dismissal of Finance Minister Nhlanhla Nene in December 2015, but had rejected the offer as "it makes a mockery of our hard-earned democracy‚ the trust of our people and no one apart from the President of the Republic appoints ministers". The Gupta family denied offering Jonas the job of Finance Minister. In 2016, Paul O'Sullivan's 'Forensics for Justice' published a report, which alleged that South Africa's criminal justice system had been 'captured' by the underworld.
Following a formal complaint submitted in March 2016 by a catholic priest, Father Stanslaus Muyebe, the Guptas' alleged "state capture" was investigated by Public Protector Thuli Madonsela. President Zuma and Minister Des van Rooyen applied for a court order to prevent the publication of the report on 14 October 2016, Madonsela's last day in office. Van Rooyen's application was dismissed, and the President withdrew his application, leading to the release of the report on 2 November 2016. On 25 November 2016, Zuma announced that the Presidency would be reviewing the contents of the state capture report. He said it "was done in a funny way" with "no fairness at all," and argued he was not given enough time to respond to the public protector.
Zuma and Van Rooyen denied any wrongdoing whilst the Guptas disputed evidence in the report and also denied being involved in corrupt activities. In an exclusive interview with ANN7 (belonging to the Gupta Family), South African President Jacob Zuma said 'State Capture' was a fancy word used by media houses for propaganda proliferation. He said that a real state capture would include seizure of the three arms of the constitution - Legislative, Executive and Judiciary - which has never been the case in South Africa.
The report recommended establishment of a judicial commission of inquiry into the issues identified, including a full probe of Zuma's dealings with the Guptas, with findings to be published within 180 days. In May 2017, Jacob Zuma denied the allegation of blocking an attempt to set up a commission of inquiry to probe state capture. The report led to the establishment of the Zondo Commission of Inquiry in 2018, set up to investigate allegations of state capture in South Africa.
On 11 September 2017 the former Finance Minister, Pravin Gordhan, estimated the cost of state capture at 250 billion Rand, in a presentation at the University of Cape Town Graduate School of Business. The South African news publication The Daily Maverick estimated that state capture cost the country roughly R1.5 trillion (roughly US$100 billion) in the four years preceding 2019. South African Reserve Bank economist, David Fowkes, stated that the negative impact of state capture on the country's economy was worse than expected, stating that it likely reduced GDP growth by an estimated 4% a year.
Donald Trump and his administration have faced allegations of attempting state capture and colluding with foreign powers (see Links between Trump associates and Russian officials) to increase the political and financial gain of individuals in the administration.
Donald Trump has differed from historic presidential precedent by not placing his assets into a blind trust, thus resulting in a conflict of private and public interests. Individuals linked to the Trump administration have used these links for monetary gain.
Appointed officials, such as Attorney General William Barr, have used and as of 2019 are continuing to use their powers to divert attempts at oversight and instead are investigating other branches of government that are not under the complete control of the Trump administration, such as the Special Counsel investigation (2017–2019) or the Federal Reserve Bank.
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- Barr picks U.S. attorney to review origins of Mueller investigation