This financier was popularly known as the worst man in the world

Twenty-five years ago, when Transparency International was founded, corruption was seen as the necessary price of doing business and something so deeply ingrained that exposing and fighting it was regarded as futile and even harmful.

We live in a different world now: citizens, media and politicians across all regions actively condemn abuses of power. Such attitude change is partly due to exposure to past scandals and their consequences.

We compiled a list of some of the biggest corruption scandals over the last 25 years that inspired widespread public condemnation, toppled governments and sent people to prison.* These scandals involve politicians across political parties and from the highest reaches of government, staggering amounts of bribes and money laundering of epic proportions.

In the wake of many of these scandals, many governments and international bodies committed to or implemented anti-corruption reforms, counted and, in some cases, recovered losses.

While much progress has been made to improve accountability, raise awareness about how corruption happens and change norms and perceptions, we still have a long way to go to learn from these scandals and fight corruption effectively.

1. Siemens: corruption made in Germany
2. Draining Nigeria of its assets
3. Fujimori’s Peru: death squads, embezzlement and good public relations
4. Kadyrov’s Chechnya: bikers, boxers, bribes
5. Shutting down competition in Tunisia
6. Ukraine’s missing millions
7. Ricardo Martinelli’s spy-game in Panama
8. The 1MDB fund: from Malaysia to Hollywood
9. The Russian Laundromat (with a little help from Moldova)
10. Spain’s largest corruption scandal: Gürtel
11. Venezuela’s currencies of corruption
12. The Panama Papers
13. Maldives: a paradise lost
14. Teodorín Obiang’s #LuxuryLiving in Equatorial Guinea
15. How the Gupta family captured South Africa through bribery
16. Lebanon’s garbage: the stench of corruption
17. FIFA’s football parallel universe
18. Myanmar’s dirty jade business
19. Fighting impunity in Guatemala
20. Turkey’s “gas for gold” scheme
21. The Azerbaijani Laundromat
22. Paradise Papers: where the rich & powerful hide their money
23. Operation Lava Jato: clean cars, dirty money
24. The Troika Laundromat
25. Andrej Babiš’s conflict of interest in Czechia

*Listed in no particular order.

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Did you know that certain bribes paid abroad were technically tax deductible for German companies until 1999? They could simply categorise them as “useful expenditures”, as long as those expenses were not incurred in Germany and there were no foreign state officials involved.In 2006, however, it became clear that Siemens, one of Germany’s biggest companies, was taking corporate bribery to a whole new level. For over a decade, it paid bribes to government officials and civil servants around the world, amounting to approximately US$1.4 billion. While corrupt decision makers profited, citizens in the affected countries paid the costs of overpriced necessities such as roads and power plants.

The company’s transactions eventually caught the interest of authorities in several countries, including the US and Germany, which launched investigations and ultimately secured a historic sanction of US$1.6 billion. Read more…

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Sani Abacha was a Nigerian army officer and dictator who served as the president of Nigeria from 1993 until his death in 1998. His five-year rule was shrouded in corruption allegations, though the extent and severity of that corruption was highlighted only after his death when it emerged that he took between US$3 and $5 billion of public money.In 2014, the US Justice Department revealed that it froze more than US$458 million in illicit funds that Abacha and his conspirators hid around the world. For years, Nigeria has been fighting to recover the stolen money, but companies linked to the Abacha family have gone to court to prevent repatriation.

Encouragingly, the secretive British tax haven of Jersey recently announced it was putting US$268 million, which had been stashed in a Deutsche Bank account, into an asset recovery fund that will eventually return the cash to Nigeria. Read more…

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How does a former president get approval from two-thirds of his citizens while standing trial for human rights violations? Peru’s Alberto Fujimori partly managed this by using over 75 per cent of the National Intelligence Service’s unsupervised budget to bribe politicians, judges and the media.

Fujimori presented a clean image to the public during his presidency while he used death squads to kill guerrillas and allegedly embezzled US$600 million in public funds. After fleeing to Japan in 2000, he became the first elected head of state to be extradited to his home country, tried and convicted for human rights abuses.

With a sentence of more than 30 years in prison, Fujimori joins a long line of former Peruvian presidents who have been investigated or jailed for corruption. Read more…

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Imagine having to pay a bribe to keep your job. Chechens have to do exactly that, every month. In Chechnya, everyone earning a wage pays an unofficial tax to an opaque fund controlled by the head of the republic, Ramzan Kadyrov.

While the fund helped build homes and mosques and provided international aid to Somalia, it also allegedly paid for Kadyrov’s lavish 35th birthday party and the celebrities that attended it, a US$2 million boxing session with Mike Tyson and 16 motorbikes that Kadyrov very publicly gifted to a nationalist biker gang.

Some Chechens lose half their income to this fund, which collects US$648 to 864 million a year, roughly the equivalent of two thirds of Chechnya’s budget. Kadyrov is also said to help himself to that national budget whilst committing human rights abuses that have led to sanctions from US authorities. Read more…

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There are no Big Macs in Tunisia. That’s because the McDonald’s franchise was awarded to a business that didn’t have connections to the ruling family and the government stopped the fast food chain from entering the country.

From 1987 to 2011, President Ben Ali created laws that meant companies needed permission to invest and trade in certain sectors. This allowed him to shut competition out whilst letting 220 family businesses monopolise numerous industries, including telecommunications, transport and real estate. In 2010, these businesses produced 3 per cent of Tunisia’s economic output, but took 21 per cent of the private sector profits. Unsurprisingly, the Ben Ali family amassed US$13 billion.

Tunisians paid a heavy price for this and missed out on employment opportunities, while new entrepreneurs and unconnected investors continued to fail.

Ben Ali fled the country in 2011 and his assets were auctioned off, but few restrictive laws have been repealed, and questionably-connected firms with privileged access continue to reinforce and profit from inequality. Read more…

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A golf course, ostrich farm, private zoo and full-size Spanish galleon replica were just some of the attractions at Mezhyhirya, the multimillion dollar 137-hectare estate of Ukraine’s former President Viktor Yanukovych.

Yanukovych and his family fled to Russia in February 2014 after civil unrest sparked deadly conflict claiming over 100 lives, including by sniper bullets. Three years after these tragic events, a Ukrainian court found Yanukovych guilty of high treason and sentenced him to 13 years in prison in absentia.

As he fled, Yanukovych left behind documents that showed how he financed a life of luxury at the expense of his citizens. Using nominees as frontmen in a complex web of shell companies from Vienna to London to Lichtenstein, Yanukovych allegedly concealed his involvement while syphoning off Ukrainian public funds for personal benefit.

In February, Swedish public broadcaster SVT reported that Yanukovych’s shell company with a Swedish bank account received a US$3.7 million bribe in 2011 and executed two transactions with a total worth of US$18 million in 2007 and 2014.

Former President Viktor Yanukovych and his associates allegedly made US$40 billion in state assets disappear. So far, the Ukrainian government has recovered just US$1.5 billion. Read more…

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Violation of privacy laws, embezzlement, abuse of authority and illicit association – former Panamanian President Ricardo Martinelli was facing a variety of charges in his home country, after the United States extradited him in 2018.While in office from 2009 to 2014, Martinelli allegedly rigged tenders for public contracts, including those for meals and school bags, under Panama’s largest social welfare scheme. Most notably, he is accused of having used public funds to monitor the phone calls of more than 150 people, including politicians and journalists.

A Panamanian court recently cleared him of all charges, after disallowing the evidence presented by prosecutors on a technicality. The court decision shows the extent of the judicial crisis the country is facing and raises serious concerns about judicial independence. The victims and the prosecution have stated their intention to appeal the verdict. Read more…

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Authorities estimate that more than US$4 billion was embezzled in what is one of the world’s biggest corruption schemes, 1MDB.

In 2009, the government of Malaysia set up a development fund, 1Malaysia Development Berhad (1MDB). Chaired by the former prime minister, Najib Razak, the fund was originally meant to boost the country’s economy through strategic investments. But instead, it seems to have boosted the bank accounts of a few individuals, including the former prime minister himself, a fugitive financier and a US rapper. Through a network of shell companies and layers of transactions, billions of dollars of development money was allegedly spent on luxury real estate in New York, paintings and gifts for celebrities, among other things.

More than US$700 million may also be held in Razak’s private account, despite his claims that the money was a “donation” from a Saudi prince. Razak is currently facing charges for misappropriation of public funds. Read more…

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According to a recent study, more than one-fifth of Russia’s population lives in poverty, while 36 per cent are at risk of poverty. The Russian Laundromat, a massive money laundering scheme that siphoned off somewhere between US$20-80 billion in fraudulent funds away from public services and the citizens who need them most, could be one of the reasons why.

To move the money out of Russia, UK-registered shell companies issued fictitious loans to each other and Russian companies, fronted by Moldovan citizens, guaranteed them. Once the debtors failed to “pay back” these loans, corrupt Moldovan judges fined Russian companies and ordered them to transfer funds to accounts in a Moldovan bank. From there on, the money flowed into Latvia and other EU banks where it was ultimately cleaned.

Formal investigations are currently underway in several countries and the banks involved – Moldindconbank, Danske Bank, Deutsche Bank and HSBC – are in hot water for failing to comply with anti-money laundering rules. Read more…

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Over the last 10 years, the Gürtel case has grown into to the biggest corruption scandal in Spain’s democratic history, reaching all the way up to the president’s office. At the centre, the complex scheme funnelled illicit donations and bribes to the then-ruling party in exchange for rigged government contracts.

If the name Gürtel doesn’t sound very Spanish to you, that’s no coincidence: it’s the German translation of the surname of the businessman at the heart of the scandal, Francisco Correa, meaning “belt” in English.

Correa eventually received a 51-year jail sentence, while a close ally and former treasurer of former president Mariano Rajoy was fined nearly US$50 million.

The scheme was discovered thanks to the help of Ana Garrido Ramos, a whistleblower who was also a key witness in this case, contributing to the collapse of the Rajoy government in June 2018. Read more…

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Less than 20 years ago, Venezuela was South America’s richest country. Today, it’s facing one of its worst political and humanitarian crises – and corruption has a key role in it.The plundering of the state-owned oil company, PDVSA, is exemplary of the widespread corruption at the highest levels of government. Once the basis of Venezuela’s wealth, the country’s vast oil reserves ultimately filled the pockets of a small group of individuals.With help from European and US banks, a group of Venezuelan ex-officials allegedly siphoned off US$1.2 billion from PDVSA to the US, exploiting the country’s complicated currency exchange system that only allows certain people and companies to exchange currencies at the official, hugely inflated rate.

Officials bought Venezuelans Bolivars on the black market, at an exchange rate of ca. 1:100 (in 2014). That means they could have bought 100 million Bolivar for $1 million. They then exchanged this money back at the official rate of 1:10, meaning they would get back $10 million – a tenfold increase. Two people involved in the scandal pleaded guilty last year, and investigators are currently looking into more details of the money laundering scheme. Read more…

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Following a huge leak from the Panamanian law firm, Mossack Fonseca, the Panama Papers exposed the darkest secrets of the financial secrecy industry. The Panama Papers showed that Mossack Fonseca created 214,000 shell companies for individuals who wanted to keep their identities hidden. Behind the shell companies hid at least 140 politicians and public officials, including 12 government leaders and 33 individuals or companies who were blacklisted or on sanction lists by the United States government for offences like trafficking and terrorism.

Since the scandal erupted, several heads of government have resigned or faced prosecution, at least 82 countries launched formal investigations and Mossack Fonseca closed. As a result of the Panama Papers, several countries committed to ending financial secrecy, with at least 16 countries or international bodies achieving at least one substantial reform and approximately 23 countries recovering at least US$1.2 billion in taxes. Read more…

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In the Maldives, tourism is the largest contributor to the economy – it’s where the money is. So it should come as no surprise that the country’s biggest corruption scandal is also linked to tourism. In 2016, Al Jazeera revealed that approximately US$1.5 billion was laundered through fake tourism investments in a scheme of astounding simplicity.

The money was allegedly transported to the Maldives in cash, approved by the financial authority and transferred to private companies, where it appeared as clean profits from tourism investments.

That’s not the only case of dodgy tourism deals in the Maldives. Another scandal that came to light in 2018 saw more than 50 islands and submerged coral lagoons leased out to tourism developers in no-bid deals. At least US$79 million from the lease fees was embezzled into private bank accounts and used to bribe politicians. The scandal implicated local businessmen and international tourism operators as well as former president Abdulla Yameen, who allegedly received US$1 million in funds. Read more…

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Teodorín Obiang’s Instagram account celebrates #LuxuryLiving, showing off his mansions, million dollars’ worth of Michael Jackson memorabilia and supercars. However, Obiang funds this lifestyle by embezzling funds from Equatorial Guinea where he serves as vice president to his own father.

This oil-rich country has the highest per capita income in Africa, but about three-quarters of its population lives in poverty. Since 1979, the ruling Obiang family, along with their cronies, have stolen billions of dollars from the people.

As the most conspicuous and international spender in this kleptocracy, justice caught up with Teodorín Obiang several times. In 2014, the US Department of Justice prosecuted him for money laundering and seized US$30 million worth of assets. In 2017, French authorities found him guilty of embezzlement and confiscated his assets worth US$35 million, while Switzerland seized 24 of his supercars. This is some progress, but still a drop in the ocean compared to the flood of ill-gotten money that has flowed out of the country. Read more…

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In what’s been described as a “modern coup”, the Gupta family took control of South Africa. Through allegedly bribing politicians, giving lucrative jobs to President Zuma’s children and other ways of buying influence, Ajay, Atul, and Rajesh Gupta captured the state.

The Gupta family took as much as US$7 billion in government funds, including a US$4.4 billion supply contract with South Africa’s rail and port company. The Guptas also hired and fired government ministers, while the president fired tax officials and intelligence chiefs to protect them from investigation.

In 2016, when a deputy minister went public about the US$45 million that the Gupta family offered him to fire treasury officials, the Guptas fled the country. President Zuma has since lost government office and faces corruption and money laundering charges. His successor, President Ramaphosa, vowed to clean up the country, however, many officials from the previous administration remain in power. In the meantime, South Africa’s economy struggles and the country continues to face high levels of inequality. Read more…

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Sometimes dirty money can lead to filthy cities. Since 2015, Lebanon has had a garbage crisis that’s seen streets and beaches covered in rubbish bags, extreme stench and water contamination. This threat to public health came about when Beirut and Mount Lebanon’s main waste disposal company, Sukleen, stopped collecting garbage.

The company – which had a monopoly since the 1990s – was forced to close an overflowing landfill which was used for 12 years longer than scheduled. Lacking the infrastructure to dispose of the garbage elsewhere, the company let the rubbish bags pile up.

How did a single company monopolise a key public service? It had strong connections with two of Lebanon’s prime ministers. Lebanon also has a culture of patronage, where government contracts are often won through political connections and bribes.

The scandal provoked a popular movement called “You Stink”, which called for the government to clean up its streets and its corruption problems. Read more…

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The indictments on 27 May 2015 of nine current and former Fédération Internationale de Football Association (FIFA) officials on charges of racketeering and money-laundering changed the sporting landscape overnight. Suddenly a system of “rampant, systemic and deep-rooted corruption” was brought starkly into global focus.The surprising re-election of FIFA president, Sepp Blatter, who presided over a culture of impunity, exposed just how much football exists in a parallel universe without accountability. It is easy to understand why public trust in FIFA fell to an all-time low.

In 2017, Transparency International and Forza Football, a football fan opinion platform with more than 3 million subscribers, completed a survey of 25,000 fans from over 50 countries to find out what they thought. At the time, 53 per cent of fans had no confidence in FIFA and only a quarter of fans globally thought that newly reelected president, Gianni Infantino, restored trust in FIFA. Read more…

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Myanmar is a tragic example of how rich natural resources are often exploited by the corrupt while causing social and environmental disasters that affect ordinary people.In 2015, a report revealed that corrupt military officials, drug lords and their cronies, had been illegally exploiting jade mines in northern Myanmar and smuggling the stones to China.In total, more than US $31 billion in jade stones were extracted in 2014 alone – the equivalent of half of Myanmar’s GDP that same year. Yet, the majority of people living in the mining regions and working in the mines did not see any of this money and as much as US$6.2 billion was lost in taxes.

At the same time, areas rich in jade have been shaken by armed conflicts, while aggressive exploitation has led to environmental damages and mining accidents that have cost hundreds of lives. Despite efforts of the Myanmar governments to reign in the illicit jade business, mining still poses a serious risk to the environment and the people living in the region. Read more…

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Approximately 90 per cent of crimes in Guatemala go unpunished, so taking action against impunity should be a priority. At least that’s what the International Commission against Impunity in Guatemala (CICIG), backed by the UN, has been doing successfully for the past 12 years.In 2015, thanks to the efforts of the CICIG, the former president of Guatemala was forced to resign because of a corruption investigation that ultimately led to his conviction. Since then, the commission has been investigating dozens of high-level corruption cases and enjoys strong popular support.

But when the CICIG started investigating current president Jimmy Morales and his family in 2017, Morales unilaterally revoked the agreement with the UN which underpins the ability of the CICIG to operate in the country. Over the past years, the president has been leading a fight against anti-corruption efforts in Guatemala, ignoring rulings of the Guatemalan Constitutional Court. Read more…

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In a real-life version of House of Cards, Turkey found itself embroiled in a massive corruption scandal in 2013. Turkish police officers raided several homes, including two belonging to the families of the ruling Turkish elite. During the investigation, police confiscated some US$17.5 million in cash, money allegedly used for bribery.At the heart of the scandal was an alleged “gas for gold” scheme with Iran, involving businessman Reza Zarrab. Zarrab was reportedly involved in a money laundering scheme as part of a strategy to take advantage of a loophole in US-led sanctions on Iran. All 52 people detained were connected with the ruling Justice and Development Party (AKP).

President Erdoğan remains defiant about the scandal, dismissing or reassigning thousands of police officers and hundreds of judges and prosecutors, including those leading the investigation, and passed a law increasing government control of the judiciary. Read more…

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Some governments make genuine efforts to improve their human rights records and strengthen democracy. Others may try to clean up their reputation by bribing foreign politicians.

Azerbaijani leaders allegedly bribed the Parliamentary Assembly of the Council of Europe (PACE) delegates to talk up Azerbaijan’s human rights record and water down critical election monitoring reports. The US$3 billion slush fund used four British shell companies with accounts in Denmark’s biggest bank to pay bribes, launder money and buy luxury goods.

While real accountability is yet to come for the culprits that undermined Europe’s core human rights organisation, there have been some consequences. An independent PACE investigation found several delegates engaged in corrupt and unethical behavior, resulting in sanctions for these individuals. Transparency International Germany also recently filed a criminal complaint against German MPs who allegedly took bribes. Danske Bank is under investigation for this and other money laundering scandals, and was forced to shut its branch that handled the dirty money. Read more…

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Countries lose around US$500 billion per year in corporate tax and further billions from individuals. That’s enough to pay for the UN’s aid budget twenty times over and bring many nations out of poverty.

In 2017, a major investigation exposed a vast, secret parallel financial universe based on a huge leak of documents from the Bermuda-based elite legal firm, Appleby. Dubbed the Paradise Papers, the investigation shed light on the widespread use of secretive tax havens by 120 politicians, royals, oligarchs and fraudsters.

The Paradise Papers shows how corporations use these havens to reduce their taxes drastically, and in some cases, commit crimes. For example, offshore secrecy put the commodities giant, Glencore, in a position to bribe the former president of the Democratic Republic of Congo, Joseph Kabila, while it negotiated for mining licenses.

The leak helped expose this and other criminal investigations, accelerated EU action against tax havens and inspired citizens around the world to demand an end to the paradise havens that make life difficult for ordinary citizens. Read more…

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What began in 2014 as the Lava Jato investigation, or “Operation Car Wash”, involving a network of more than 20 corporations – including Brazilian oil and construction giants, Petrobras and Odebrecht – has since grown into one of the biggest corruption scandals in history.

This case has it all: dirty money, foreign bribery, illicit financing of political parties, criminal networks, fraudulent business executives, crooked politicians and a system of corruption embedded so deeply within Brazilian politics and business that exposing one piece started a chain reaction.

Involving nearly US$1 billion in bribes and more than US$6.5 billion in fines, it’s difficult to find a region of the world unaffected by Lava Jato’s reach. The case extends across at least 12 countries in Latin America and Africa, more than 150 politicians and business people convicted in its wake, including one president, and indirectly, two successors. And the allegations keep coming. Read more…

This financier was popularly known as the worst man in the world

Image: Unsplash, Tom Grimbert (@tomgrimbert)

Half of Russia’s wealth is allegedly stashed in offshore tax havens. Leaked data from Troika Dialog – once Russia’s largest private investment bank – shows that the bank created at least 75 shell companies in tax havens around the world. When opening accounts in European banks – such as now-defunct Ukio bankas in Lithuania, Raiffeisen in Austria and Commerzbank in Germany – the real owners hid behind the paperwork of unwitting Armenian seasonal workers.

These companies channelled at least US$26 billion between 2006 and 2013. Some of this money flowed out of the Troika Laundromat and into the global financial system as clean cash. As a result, Russian oligarchs and politicians secretly acquired shares in state-owned companies, bought real estate both in Russia and abroad, purchased luxury yachts and hired music superstars for private parties. Read more…

This financier was popularly known as the worst man in the world

In early June 2019, almost thirty years after peaceful protests led to the fall of communism in former Czechoslovakia, people in Prague, Czechia, took to the streets again. This time, they were calling on Prime Minister Andrej Babiš to resign.

The protests gathered momentum after the European Commission (EC) confirmed that Babiš had significant conflicts of interest regarding his private businesses. The EC was following a complaint from our national chapter in Czechia, which revealed that one of the Prime Minister’s many companies, Agrofert, had received more than US$19 million in EU agricultural subsidies.

In 2017, Babiš put the company into two trusts, but remained the ultimate beneficiary of these funds, hiding behind an additional layer of secrecy. In Czechia, “beneficial owners” like Babiš are not publicly known, but in neighbouring Slovakia, owners must disclose who they really are when bidding on public contracts.

Thanks to Slovakian law and some good detective work from TI Czech Republic, the EU recently ruled that Agrofert must repay the money it took from taxpayers over the past two years. Read more…