Oliver Bullough is the author of Moneyland: Why Thieves And Crooks Now Rule The World And How To Take It Back, an urgent, searing account of corruption in the world's financial systems.

In This Week in Moneyland, Oliver will update us weekly on the extraordinary sories of financial corruption currently in the news in the run up to publication of Moneyland on 6th September.

Follow Oliver on Twitter @oliverbullough.


 

Manafort goes shopping in Moneyland 

Manafort ostrich



One of the perks of running a country is that, if you control the justice system, you can steal as much as you like and get away with it. Occasionally, however, a crooked official slips up and a case does come to court.

Among the most notable of these have been those of Pavlo Lazarenko (ex-prime minister of Ukraine, jailed in California in 2006 after a remarkable series of misjudgements), Teodoro Obiang (vice-president of Equatorial Guinea and so flamboyantly crass in spending his people’s money that he lost cases in both Paris and Washington) and Frederick Chiluba (the diminutive ex-president of Zambia, who lost a case in London). To these we can now add Paul Manafort.

Vulgar things

It may seem odd to add the Beltway lobbyist to this list of heads of state or government. After all, he didn’t actually run Ukraine; he just tidied up the image of the man that did, while indulging in a little biznes on the side. However, Manafort’s trial has revealed a number of remarkable similarities between his behaviour and those of his higher ranking predecessors. They all used similar offshore structures to hide their money, and they all spent remarkable quantities of money on astonishingly vulgar things.

Chiluba was the poor relation of this gang, but still found time to amass a collection of 349 shirts, 206 suits, and 72 pairs of custom-made shoes, adorned with his initials in brass and fitted with two-inch heels to add a little bit of stature to his five feet of height. The London judge said the ex-president owed his country more than $50 million, having spent some $500,000 in just one Swiss clothing store.

Transparency International listed Lazarenko on its Top Ten of all-time corrupt officials; among his baubles, was a hilltop mansion in Marin County, California, which was once home to Eddie Murphy. Obiang meanwhile spent like someone anticipating the apocalypse. Among his treasures was a world class collection of Michael Jackson memorabilia, including the jewelled glove from the ‘Bad’ video, a Gulfstream jet, a Maserati ($137,000), a Ferrari ($332,000), another Ferrari ($280,000), a Lamborghini ($288,000), another Lamborghini ($330,000), and whatever he bought with a cheque that he made out to cash for $3.3 million.

A $15,000 ostrich jacket

Manafort shared similar tastes, though he failed to become quite as rich as the Equatoguinean princeling. His $15,000 ostrich jacket, as shown off by the prosecutors in his ongoing trial in Washington DC, has become famous. But he also spent $18,000 on a python-skin coat, $934,350 on antique rugs, $112,825 on audio and video equipment, $1.5 million on a condo in New York, and another $1.9 million on a house in Virginia. (His clients liked to claim kinship with the “left behind”, but he – like them – preferred to be physically located among the despised “liberal elite”.)

Of course, the vast majority of people who commit the kind of crimes Manafort and the others have been accused of never face criminal proceedings, but the few cases that have taken place give us an insight into their remarkable appetite for luxury goods. So much money is being stolen – more than a trillion dollars a year, according to Global Financial Integrity – that it is distorting the market in all sorts of unexpected ways.

In 2015, the accountancy firm Deloitte published a study of Swiss watches headlined Uncertain Times, which described how leading manufacturers of exclusive timepieces were gloomy about the future. The reason for the misery came not from a recession, or from any problem with the products, but rather from the fact that the government in China was cracking down on corruption, which was harming sales of the kind of lavish gifts that crooked officials had previously accepted. “81 percent of watch executives indicated that demand in China has fallen over the past 12 months due to anti-corruption legislation,” the report stated.

Consequences of Moneyland's emergence

A serious Chinese anti-corruption campaign began in 2012, with tens of thousands of people indicted, including members of previously untouchable classes – leading figures in the military, central government and provincial administrations. Officials stopped flaunting their wealth almost instantly, with dramatic consequences for the kind of businesses that had specialised in supplying them. France’s Bordeaux region had increased exports of wine to China fiftyfold in just seven years Suddenly, Chinese officials were no longer quite so willing to publicly imbibe bottles of Château Lafite, and the region’s exports dropped by a quarter in two years. The same thing happened to Scotch whisky. By the end of 2016, sales to the Chinese market were down by almost 50 per cent.

There is no equivalent association for Swiss manufacturers of bespoke monogrammed shoes with Cuban heels, but I imagine Chiluba’s downfall is likely to have had an equally devastating effect on them. Similarly, the case against Manafort – whether he’s found guilty or not – will almost certainly have hurt the bottom line of the manufacturers of jackets made from the skin of exotic animals.

These curious economic tremors are just some of the strange consequences of Moneyland’s emergence as home to the world’s unaccountable wealth. As more and more of the world’s wealth becomes concentrated in the hands of fewer and few people, the tremors will become stronger. One day, if we don’t do something to rein in their reckless accumulation, when a Moneylander sneezes, it won’t just be tailors that catch cold, it’ll be all of us.

 

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