Bloomberg sends Anders Melin to downtown Sioux Falls to look into South Dakota’s facilitation of global corruption. Melin gets the usual a-few-bad-apples downplaying of the negative effects of our on-shore offshoring from state Task Force Trust law prof Tom Simmons:
“If you’re in the service industry, there are bad people that occasionally sneak through the cracks,” he says as chatter and Beatles tunes fill the room. “If you look at 12 million documents,” — the size of the Pandora Papers leak — “and you find half a dozen people that have, that’s not a bad error rate. But we want zero, of course.”
The Washington Post, which took part in the Pandora Papers investigation, identified nearly 30 U.S.-based trusts with assets tied to people or companies that have been accused of fraud, bribery or human rights abuses [Anders Melin, “The World’s Rich and Powerful Are Stashing $500 Billion in This Tax Haven,” Bloomberg Wealth, 2021.10.14].
Sigh. The problem is not just a half dozen or two and a half dozen bad actors. It’s the fact that our deliberately blinkered view of our role in secret global finance leads us to shoot our own ideals and interests in the foot.
Consider that a lot of the shady money documented by the Pandora Papers investigation is the wealth Putin’s crony oligarchs have raided from their country. The kingpins of the Russian regime use global trusts and shell companies to shield their wealth not only from power swings in Mother Russia but from the Western powers who might try to hold them accountable:
So if you’re an oligarch and you’re tight with Putin and you can do whatever you want, what happens when you’re no longer tight with Putin? What happens when Putin is no longer in power? So perhaps one of the reasons that Russian oligarchs move so much money into these offshore systems is to protect it, is to put it in a safe place where they and they alone can get to it, and the state can’t try to get it back. And it doesn’t – they’re protected no matter what happens politically in Russia. And, you know, there’s a couple of other reasons, too. And Russian business leaders will sometimes even talk about this. I mean – that the interest in moving money into safer jurisdictions, moving money into places offshore, whether it’s the British Virgin Islands or in Singapore, so that it’s not only out of Russia but perhaps even beyond the reach of Western financial institutions because if you’re a Russian oligarch, one of the other risks of doing business is that you might be sanctioned because of your close ties with the Russian president [Greg Miller, Washington Post reporter, interviewed by Terry Gross, “The ‘Pandora Papers’ Expose the Secret Financial Dealings of the Global Elite,” NPR: Fresh Air, 2021.10.14].
When we help the oligarchs hide their wealth, we as a state and a nation are complicit in the piracy and thuggery of a Russian regime that we never would have tolerated when that regime was a bunch of Godless Commies instead of silk-suited crony-capitalists who look a lot like the nicest folks working on Phillips Avenue. Former Estonian president Toomas Hendrik explains how we in the West have slid from the moral clarity we used to exercise in defending dissidents from Russian authoritarians:
Back in those days, we in the West at least had the moral clarity to stand up to the thugs, and to raise these issues with our governments, in our parliaments, in all possible international forums.
Paradoxically, it helped that our foes were ideologically anti-capitalist. Commissars and Politburo members could hardly buy villas on the Riviera, ski chateaus in St. Moritz, Switzerland, or apartments in a skyscraper owned by a U.S. president. They did not dock their 470-foot yachts in Saint-Tropez, France, or Piraeus, Greece. On our side, taking money from totalitarians counted as bribery or as espionage — bringing severe criminal penalties and social disgrace.
Today, the liberal democratic West has abandoned that one-time clarity. We have become partners in crime, colluding with the enemies of liberty, of our Enlightenment heritage of rule of law and human rights. We are the unindicted co-conspirators of our own demise and the destruction of Russia, collapsing under the weight of its corruption and thievery.
So it is not enough to celebrate the heroism of Navalny and his immense contributions to exposing the miasma of corruption in Russia. That serves only to give us a smug and utterly false sense of moral superiority. To truly honor Navalny, we instead must confront the stench of our own liberal democratic West.
That stench swirls from our own corrupt politicians and political parties, from our naive and greedy governments, and even the most prestigious, centuries-old universities. It swirls from businesses who prize profit over justice, truth and freedom. It swirls from bankers, lawyers and accountants who launder money and reputations. The revelations of the Pandora Papers, like the other tales of financial skulduggery that have come before, once again demonstrate that we ourselves are systematically complicit in the thievery and corruption that plague so many societies.
It is this corruption, our corruption, that aids, abets and sustains, indeed nourishes the murderous looting of the Kremlin’s boyars and their minions, as well as other odious regimes around the globe [Toomas Hendrik, “Why the West Has Itself to Blame for Russian Corruption,” Washington Post, 2021.10.11].
Professor Simmons and the lawyers and clerks on Phillips Avenue aren’t attacking and poisoning Alexei Navalny. But they are making excuses for, participating in, and creating in South Dakota one of the greatest bastions of financial secrecy that Russia’s autocrats happily exploit to preserve the wealth and power they use to oppress dissidents, journalists, and other defenders of democracy.
It’s not just a few bad actors. South Dakota, all of us, are bad actors for allowing this oppressive system to flourish in our state.