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Populism’s Corrupt Core

Corruption is both a cause and an effect of today's populist surge around the world. From Hungary to Turkey to the United States, autocrats have won power by tapping into anger over violations of the public trust, only to feather their nests once in office.

NEW YORK – Populist electoral victories around the world in recent years have led many to conclude that liberal democracy is under assault. But the arrest this week of Malaysia’s former prime minister on corruption charges is one of several signs suggesting that widespread predictions of the global demise of liberal democracy are premature.

The implication of the doom-and-gloom view is that liberal democracy’s defenders cannot reclaim the moral high ground until they have reexamined their own political and economic assumptions. Yet it is a mistake to think that the rise of autocrats is all about ideology, or that it represents a widespread rejection of democracy, liberalism, or human and civil rights. Today’s elected demagogues are motivated not so much by principle as by power and greed – they are in it for themselves, their families, and their cronies. Restoring balance to our off-kilter world requires that we expose the rank corruption at the heart of the new illiberalism.

In Hungary, Prime Minister Viktor Orbán’s friends and family members have grown rich on government loans and public contracts. In Orbán’s hometown of Felcsút, one crony has overseen the construction of a soccer stadium that seats 4,000 people, even though the total population of the town is just 1,600. Whereas “corruption before 2010 was rather a dysfunction of the system,” notes the watchdog group Transparency International, “Today, it’s a part of the system.”

In Turkey in 2014, people close to President Recep Tayyip Erdoğan, including several senior members of his ruling Justice and Development Party (AKP), were implicated in a money-laundering scheme that purportedly sought to bypass US-led sanctions on Iran. The scandal led to the resignation of four cabinet ministers, and to the release of audio recordings in which Erdoğan allegedly can be heard telling his son to dispose of millions of dollars of ill-gotten funds. But Erdoğan dismissed the allegations as a set-up, and Turkish prosecutors eventually quashed the case.

In Malaysia, former Prime Minister Najib Razak and his associates now stand accused of pillaging more than $4.5 billion from 1MDB, a government investment fund. According to the US Department of Justice, the pilfered money was used to purchase high-end real estate in Manhattan, mansions in Los Angeles, paintings by Monet and Van Gogh, a corporate jet, a yacht, and other luxury goods.

And in the United States, of course, questions continue to swirl around the private interests of President Donald Trump and his family, and how they may bear on his behavior in office.

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The irony is that anger over corruption played a critical role in fueling the current wave of populist autocrats. So, to defend liberal democracy, we must reclaim the anti-corruption mantle. By redistributing stolen assets from political and corporate thieves and their legal and financial enablers, anti-corruption campaigns do not just hold the powerful to account. They can also address inequality – and thus the widespread frustration that populists have exploited.

But fighting corruption also means shining a spotlight on – and prosecuting – those who threaten, kill, or otherwise thwart journalists working to expose abuses of power. Freedom of expression and other fundamental rights are not elitist luxuries, as authoritarians claim. They are indispensable for safeguarding free societies.

Moreover, a concerted campaign against corruption could serve as a unifying force in countries with deep political divisions. While a majoritarian government can ride roughshod over the interests of minorities, corrupt regimes steal from everyone. That is why corruption has provoked mass protests from Bucharest to Brasilia over the past year.

To be sure, those in power can turn anti-corruption campaigns into a political tool. In China, President Xi Jinping has made deft use of anti-corruption purges to eliminate political adversaries and secure near-absolute power. But this is all the more reason for proponents of liberal democracy to redouble their own efforts to combat violations of the public trust.

Fortunately, those efforts already have a strong track record. In the US, four decades of increasingly robust prosecutions under the Foreign Corrupt Practices Act have punished misconduct around the world and recovered billions of dollars in stolen assets. And despite Trump’s own long-standing criticisms of the FCPA, he has yet to blunt its enforcement activities (though that may yet happen).

Likewise, in France, prosecutors recently charged a former president and a leading business tycoon with large-scale corruption in Africa. In the United Kingdom, the government has just adopted rules requiring that all British overseas territories – notorious havens for dark money – publicly list the real owners of registered companies by the end of 2020. And in Spain, the long-ruling Partido Popular recently lost a no-confidence vote following a criminal investigation of financial malfeasance that sent its treasurer to prison.

But despite these signs of progress, more action is needed. Anti-corruption enforcement remains uneven across different jurisdictions. To address transnational financial transactions, we must build stronger international networks of prosecutors and investigators.

At the same time, more governments should follow the UK’s example, by ending the practice of “beneficial ownership” by secret third parties. Owners of some of the most expensive apartments in New York City have gone to great effort – much of it legal – to keep their identities hidden, by registering through trusts, limited liability companies, or other entities.

More broadly, public and private donors should bolster their support for civil-society organizations and independent media. These institutions can track and expose corruption, explain how it implicates powerful political figures, and push state actors to sanction those responsible.

Reining in corruption will not be easy, given that many economies are dependent on investment flows linked to criminal activity. But the consequences of doing nothing are clear. Corruption is a primary driver of populism and the retreat from liberal values. So the next time someone asks you what happened to liberal democracy, tell them to follow the money.

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