Double standards for Ukraine on Grand Scale Corruption. Ask why.
The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has proposed designating a leading Latvian bank, ABLV Bank, as a primary money laundering concern because of alleged connections with North Korea and with criminals in Russia and other countries.
FinCEN said, “ABLV’s management permits the bank and its employees to orchestrate money laundering schemes; solicits high-risk shell company activity that enables the bank and its customers to launder funds; maintains inadequate controls over high-risk shell company accounts; and seeks to obstruct enforcement of Latvian anti-money laundering and combating the financing of terrorism (AML/CFT) rules in order to protect these business practices.”
Related to this gross corruption scandal, Latvia’s anti-corruption agency has detained Ilmars Rimsevics, Governor of Latvia’s central bank, and member of the European Central Bank’s rate-setting committee. (The ECB is the central bank for the euro and administers monetary policy of the eurozone.)
Allegations of rampant corruption (which includes money laundering for North Korea and Russian mafia) in EU member state Latvia involving a member of the country’s central bank and of the European Central Bank’s governing council. Latvia – a country held up as an example of how Ukraine should reform itself.
Now tell me how Ukraine is uniquely corrupt…
If the response is, “but wrong doers are criminally charged elsewhere”, consider that British multinational bank HSBC was NOT criminally charged when accused of assisting organizations linked to Al Qaeda and Hezbollah. The reason? Because it would have “destabilized the entire banking system”. The US Department of Justice explained criminal charges where not pursued because “HSBC would almost certainly have lost its banking licence in the US, the future of the institution would have been under threat, and the entire banking system would have been destabilized.”
And HSBC has continued to pursue many wrong doing, evading justice in virtue of its size, and the power it yields as a result. Paying fines hasn’t had a deterrent effect for an obvious reason – it’s an anticipated and accounted for cost of doing dirty business, built into the decisions making process to participate in criminal acts.
This is not about excusing corruption in Ukraine. It is not to say that we should not aim to reduce corrupt practices there – or anywhere else. I share these instances of grand-scale corruption involving western democratic states and organizations in them for perspective.
If a Ukrainian bank were involved in illegal activities like those HSBC is regularly accused of (and for which is pays billions in fines, often to prevent criminal charges), Ukraine observers and many of Ukraine’s reformers would lose their minds, and point to it as evidence of Ukraine’s uniquely & irredeemably corrupt nature. Same acts elsewhere? Different story.
The grand scale corruption occurring in and within western democratic states – some of which is legalized and built right into the political structures – is treated differently. It is less of a sin for British banks to launder dirty Russian money and assist tax evasion, it seems. Seems the same is true of Latvia.
In fact, we should consider Martin Kenney’s argument that places like the British Virgin Islands is no longer the ‘Wild West’ of the 1980s. “If I was a criminal or hell-bent on committing tax evasion, then I would no longer pick the #BVI for these purposes.” He pointed out that there is no such thing as “secrecy” in the context of BVI offshore structures. There is confidentiality, but no secrecy.
But there is secrecy in the United States.
There is *genuine secrecy* in Delaware, Nevada et al., where the identities of beneficial owners are unknown. This is built right into the legal system. By contrast, “irredeemably and uniquely corrupt” Ukraine has no such structures legalizing corruption so blatantly. On the contrary, Ukraine has a registry of beneficial owners of all companies.
But Ukraine is treated differently. Ask why.
Ask why corruption on a massive scale outside of Ukraine is treated as a lesser sin than corruption (sometimes even less odious) in Ukraine. Why are these crimes not an indicator that western states are “failing”, but such a sign post for Ukraine? Why the double standard?
We cannot say it is because these crimes meet justice and wrong doing remedied. We cannot say because they are punished such that there is a deterrent effect. We cannot say that it is because ordinary people do not bear the financial costs of these crimes (where do you think HSBC gets the money to pay billions of dollars in fines for the same crimes it commits over and over and over again). So why? What drives this undeserved differentiation?
Ukraine observers should be asking themselves why they participate in playing the immoral and unethical game of double standards. Ask themselves whose interests they really serve. And we should ask the same.
Helping Ukraine reduce corruption and become a more vibrant democracy is a laudable and important goal. But we should be clear eyed about the realities of the world, and what can reasonably be expected to be achieved in Ukraine considering global standards.