Finally, global kleptocracy has become the main topic. The first big breakthrough was the publication of the Panama Papers in 2016. The current revelations of the Pandora Papers show how little has been done to stop such widespread corruption...
UC Berkeley professor Gabriel Zuckman has estimated the world's offshore wealth at one-tenth of all global financial wealth. And the United States of America is the largest offshore haven in the world with millions of anonymous companies. The most important question: what is the best way to write about kleptocracy in order to make it understandable, so that it can be effectively dealt with?
In his excellent book, American Kleptocracy, investigative journalist Casey Michel provides a compelling answer. Michel's genius lies in his storytelling, which weaves together the development of US financial secrets and countermeasures with the actions of the world's two great kleptocrats in the United States.
Michel's two villains are Teodoro "Theodorin" Nguema Obiang Mangue, son of a dictator and usurper of oil-rich Equatorial Guinea, and Igor Kolomoisky, a corrupt Ukrainian oligarch. In easy-to-read chapters, Michelle describes how they made their money and laundered it in the United States. The contrast between them is indicative. Theodorin can be called a rich and cruel country bumpkin, and Kolomoisky, perhaps, is too smart. He should be offended by being paired with Theodorin, but they illustrate alternative money laundering strategies in the US.
Theodorin presents a crude approach based on the principle of "everything goes as usual". Michel unfolds the story to reveal the major flaws in American money laundering controls. The author starts with the most basic example. "From 1995 to 2003, $ 700 million went through Riggs Bank for the Obiang regime," Michel writes. New money laundering controls introduced by the 2001 Patriot Act forced the Allbritton family to sell Riggs Bank.
Theodorin, who seems more stubborn than smart, did not give up. After being exposed on the East Coast, he traveled to the West Coast of the United States. There, he found lawyers, anonymous companies, real estate and the sale of Michael Jackson memorabilia, which were not subject to any money laundering control. Theodorin continued to spend conspicuously, like a real kleptocrat - on real estate, luxury cars, planes, yachts and parties.
The sophisticated Ukrainian oligarch Kolomoisky is an interesting contrast to Theodorin. Everyone knows that foreign kleptocrats are buying real estate in New York, Miami and California, and Kolomoisky went to the depressed Cleveland, Ohio. But he did it through an American companion, who seemed to be a savior angel, although he was not. Through another American partner, Kolomoisky bought half of the American ferroalloy industry in the depressed Midwest through a cloud of anonymous offshore companies, a dozen of which were established in Delaware.
Most of his money came from deposits in Ukraine's largest bank, PrivatBank, which was co-owned by Kolomoisky. When the Ukrainian government nationalized it in December 2016 due to clear fraud, it was revealed that its owners had withdrawn $ 5.5 billion from it, most of which was transferred to the United States through anonymous companies in Delaware. Michel notes that Kolomoisky was the main sponsor of the current President of Ukraine Volodymyr Zelensky, which may be the reason that the Ukrainian government has not yet opened a criminal case against Kolomoisky.
Talking about how Teodorin and Kolomoisky laundered their money in the United States, Michel also talks about how money laundering developed in the United States and the means of protection against it. Delaware wanted to capitalize on starting companies, and it made itmself attractive by offering secrecy to 1.5 million companies. Other states - Wyoming, Nevada and South Dakota - followed suit, offering additional and alternative services. The problem is that US federal powers are so limited that the federal government is unable to maintain basic transparency.
After all, Kolomoisky remains a major force in Ukrainian politics, and Teodorin's father remains the dictator of Equatorial Guinea. Each of them lost several tens of millions of dollars as a result of the confiscation of American civilian property, but what is it for such billionaires? Both of them live freely in extraordinary wealth, even if they are now hesitant to come to the United States. It is clear that the United States is likely to remain a major hub for anonymous companies, money laundering, and kleptocracy for a long time to come.