Tackling demand-side bribery, as the proposed Foreign Extortion Prevention Act aims to do, is complex. On the supply side, we know in most cases why business people pay bribes. In the words of the FCPA, it’s to obtain or retain business or secure an improper advantage. But why do officials demand bribes?
Some need the money to survive. Bureaucrats in Africa or South Asia may not earn enough from their government salaries to buy firewood, or food or medicine for their families. Underpaid government clerks are on the receiving end of most facilitation payments.
At the next level are officials who want to buy things they can’t quite afford. A new car, maybe, or a bigger house in a better neighborhood, or a prestige school for their kids. Some extra cash from a few bribes can help bridge the gap.
Mahmoud Thiam was probably in that category. He was a successful banker in New York, first with Merrill Lynch and then UBS. At the mid point in his career he went back to Guinea in West Africa where he was from, to serve as the minister of mining for a few years.
While in office he took $8.5 million in bribes from Chinese companies. He returned to New York and bought a house in Dutchess County, one of America’s richest zip codes, and paid his kids’ tuition at a private school in Manhattan.
The DOJ charged Thiam with money laundering. He was convicted at trial and sentenced in 2017 to seven years in federal prison.
Another level up are people with bigger ambitions, much bigger. They’re kleptocrats posing as respectable billionaires.
Gulnara Karimova comes to mind. Her father was president of Uzbekistan. She took bribes from mobile phone operators on an epic scale. The money, more than $1 billion, financed her various global careers as a fashion designer, pop singer, catwalk model, art collector, diplomat, socialite, and so on.
Her father finally put her under house arrest in 2014. He died in 2016 but her house arrest continues.
Another example is Alejandro Andrade, Venezuela’s national treasurer from 2007 to early 2011. While in office he took more than $1 billion in bribes from a Venezuelan media tycoon.
Andrade used the money to buy an equestrian ranch in Wellington, Florida, part of Palm Beach County. He imported show horses from Europe, bought private jets, yachts, more homes, high-end watches, a fleet of luxury and performance cars, and a fashion line, the DOJ said.
Andrade pleaded guilty to a money laundering conspiracy and was sentenced in 2018 to ten years in prison.
In a very different category are officials who hate the institutions or people they work for. They take bribes from contractors on the “other side” as a way to betray and undermine their government employers.
Were some of the two dozen U.S. Navy officers charged in the Fat Leonard bribes-for-secrets scandal in this category? Did they hate the Navy or their bosses and set out to betray them? Maybe.
Finally, some corrupt officials are true team players. They do their part, even when it means collecting the bribes and passing them along to their bosses and co-workers.
That happened in Indonesia under Suharto. In one case from the early 1980s, Achmad Thahir, a $9,000-a-year manager at Pertamina, the state energy company, died suddenly, leaving $35 million in a personal account at Sumitomo Bank in Singapore.
Pertamina sued to recover the money. Thahir’s widow claimed the money should come to her. It was bribe money, yes, but collected openly, she said, and Pertamina officials had “endorsed” the bribes.
“Corrupt money [at Pertamina] is normally divided up and down the hierarchical ladder in classical feudal fashion, according to her case,” the New York Times reported.
The Singapore court rejected the widow’s claims and gave the money back to Pertamina.
None of the various motivations excuse the demand side of bribery. But since the Foreign Extortion Prevention Act is on the table, it’s a good time to consider exactly who the law is targeting, what drove them to demand bribes, and what defenses they might raise.
Richard L. Cassin, pictured above, is editor at large of the FCPA Blog.