Capitalism Breeds Corruption – Worldwide


corruptionQuite often, elites in advanced capitalist countries and International Financial Institutions such as IMF & World Bank present corruption as a problem of the Global South. Nigeria in particular has been characterised as an exceedingly corrupt country. The statement a few months back by David Cameron that Nigeria is “fantastically corrupt” underscores this line of thinking. Many Nigerians equally subscribe to the idea that “all Nigerians are corrupt”. But this thinking -which plays into the hands of the bosses- misses out two very important points. Firstly, corruption in Nigeria which leads to the diversion of monies that could be used to better the lot of millions of poor working class people is perpetuated and can only be perpetuated by the rich elite who wield economic and political power which they use for appropriating these monies.

Secondly and very importantly, corruption is an inherent element of capitalism. The bosses EVERYWHERE are corrupt to the bone marrow – it is not just in Nigeria, Africa, or the Global South. The Panama Papers, released in April of this year, indicate the extent of corruption across the world.  They show the internal workings of the Panamanian law firm, Mossack Fonseca.  This firm helped 50 of the richest people in the world to hide their wealth and so, for example, avoid taxation. And they are only the fourth largest such firm in the world.

The Panama Papers provided possible links to 60 heads of states or governments.  These included almost every ruling dynasty in the middle east, those close to the presidents of China and Russia, but also the Prime Ministers of Britain and Iceland.

David Cameron, the former British Prime Minister, received money from his father’s trust fund which had been managed by Mossack Fonseca. This came after the expenses scandal of members of parliament, banks fixing exchange rates and many tax havens remaining British colonies.

The Prime Minister of Iceland (seen as one of the least corrupt countries in the world), Sigmundur David Gunnlaugsson, was forced to resign after mass protests.  The government had previously come unstuck as the privatised banks lent money to boost their own share prices.  The Minister of Finance and another minister also appeared in the Panama Papers.

All the major banks in Germany used the services of the law firm.  Commerzbank helped its customers to avoid paying taxes in this way, despite having previously received €18billion in government support.

Mossack Fonseca also had links with the Syrian dictator, Assad, Gaddafi and Mugabe.  In total, businesses in 52 of Africa’s 54 countries were clients of the law firm. African governments loose twice as much from tax evasion as they receive from international donors.  A similar amount is also lost through capital flight which is also facilitated by law firms like Mossack Fonseca.

Major global companies such as Apple, Facebook, Amazon, eBay and Google have used schemes similar to the ones used by Mossack Fonseca to reduce the tax they have to pay.  This is despite the huge reduction in rates of corporation tax over recent decades.  Competitive pressure and inequality encourage this behaviour, globalisation and the Internet make it possible.

Last year six global banks paid more than $5.6bn to settle allegations that they rigged foreign exchange markets.

Secret companies and tax havens mean that the global rich can avoid paying taxes.  Similar scams can also hide their wealth from irate partners or relatives. Such schemes are also used to hide away wealth gained from corruption, drugs, prostitution and other crimes.  They also allow multinational firms to pay massive bribes.

The world of football is badly infected by corruption.  Television screening rights were sold off cheaply and re-sold at a vast profit. Governments pay huge bribes to gain the right to hold the World Cup and similar events.  FIFA President, Sepp Blatter, and UEFA President, Michel Platini, were banned for eight years from all football-related activities last year.  Many other officials are also being investigated.

Schemes similar to the ones unearthed by the Panama Papers are used by ‘terrorists’ and other criminals, but almost no action has been taken against Mossack Fonseca.  The firm still operates and still claims on its website that “For 40 years Mossack Fonseca has operated beyond reproach in our home country and other jurisdictions where we have operations.”  This is despite the fact that the source of the leaks has pledged to assist with prosecutions if they are given suitable protection.

 In contrast, an IT worker was arrested in June in Switzerland accused of leaking information from the local office of Mossack Fonseca.

 The Panama Papers demonstrate that the global corrupt elite regularly break the law and evade their responsibilities – if they think they can get away with it.  In that sense, the rich elite of Nigeria are no different.  They also steal and use shell companies and tax havens to hide their loot.

Corruption and inequality is a global problem.  It will continue to exist as long as we fail to take effective action.

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