ADMINISTRATOR POWER: Good afternoon, everyone. It’s a great privilege to be among you, I’m a great admirer of the work that so many of you are doing.
And thank you, Rueben, thanks for welcoming me and for organizing this forum. I had the great pleasure of joining Rueben for a discussion last year at the U.N General Assembly on the frontiers of anti-corruption and that has really informed my thinking and that of USAID as an institution as we think about the adjustments that we need to make.
Today, as you all know, corruption is no longer just about individual autocrats pilfering their nation’s wealth to live large – it is about their building out an entire system of governance – aided by facilitators beyond their borders.
It’s about taking advantage of an opaque global financial system to pillage on a grand, international scale with the help of a new industry of these shadowy facilitators.
And it’s about using corruption to influence the politics – and the policies – of other countries and to reshape global norms and influence multilateral institutions in a manner that is seen to be serving their interests.
Today, I’m going to do two things. I will discuss the ways that the United States is radically adapting our approach to tackle the corruption of today and tomorrow – corruption that is systemic in nature, facilitated by shadowy external forces, and instrumentalized transnationally by autocrats to secure those political and policy aims. I will also discuss the efforts that all of us, in this fight – governments, civil society, the private sector, and everyone watching online today – should embrace to defeat it.
It turns out that one of the most vivid, ghastly totems of modern corruption is a 350-acre estate that sits just fifteen miles outside Kyiv. By now, many of you are familiar with this estate – it is sort of the stuff of legend in such circles as these.
The opulent grounds on this estate feature a private golf course, impeccably manicured gardens, and even a small zoo with peacocks and giraffes. At its center sits a large mansion. Its garage features dozens of rare cars. Its sinks are gold-plated. And its chandeliers, which are also gold, cost $41 million.
This complex, known as Mezhyhirya, was home to Viktor Yanukovych for 12 years when he was Ukraine’s Prime Minister and President. While in office, his lavish lifestyle was no secret to the public. Ukrainians watched him take his private helicopter to work, and reporters had an open competition to unearth details of the opulence inside this home.
But, what were more inconspicuous were the billions of dollars he stole and hid around the world. It is estimated that while in office, Yanukovych and his cronies extracted as much as $37 billion worth of Ukraine’s wealth, leading a system of oligarchs who leached off the state, while much of the loot was hidden away in Russia and in Western countries.
This was money meant for roads and bridges, for medicines at public clinics, for paying teachers. Indeed – instead, I should say – it was used to pay the vet bills for exotic fish.
And Yanukovych was able to traffic in this corruption only because powers outside of Ukraine helped make him President. With $10 billion in loans from bankers close to Vladimir Putin, Russian oligarchs funded Yanukovych’s 2010 election bid. In return, Yanukovych oriented Ukraine away from the West, signing a lucrative gas deal with Russia, and even accepting an economic bailout from Moscow, instead of the European Union. Many Ukrainians saw this as a blatant betrayal of the country’s interests in favor of Russia’s interests, and ultimately of course it sparked the Revolution of Dignity.
Yanukovych’s story illustrates the features of modern corruption. The corruption all of you are doing so much to try to combat.
Yanukovych didn’t simply try to enrich himself. He used his position to create a system of entrenched corruption in key industries like energy and real estate, capturing the levers of state power for political control – a system known well as kleptocracy.
Rather than being constrained by how many assets he could buy up with stolen money in his own country, he invested his wealth abroad with the help of facilitators. In fact, in recent years, an entire sinister industry of these middle men has arisen, standing ready to move illicit funds through a complicated network of shell companies, laundering the money to hide billions in the hope that law enforcement and activists or journalists can’t find it. Yanukovych and his circle used offshore companies prolifically, with one of his cronies setting up 26 shell corporations in the British Virgin Islands in 2012 alone.
And of course, Yanukovych’s corruption was never about Ukraine alone – it was about Russia. Putin is threatened by democratic advances – especially in his neighborhood. He feels stronger when democracies grow weaker, when they become more polarized or when oppression becomes more common. The more leverage Putin has over the leaders of countries at the UN, the more he can use that leverage to swing votes and to silence criticism of Moscow’s aggression. The weaker the rule of law and the more centralized power is in developing countries – especially resource-rich countries – the easier it is for the Kremlin to cook up a deal to plunder natural resources.
When Russia funds pro-Kremlin media outlets, and issues loans to sympathetic political parties like the National Rally – formally known as the National Front – in France, Moscow benefits. It is no coincidence that the National Rally recognized Putin’s illegal annexation of Crimea. The People’s Republic of China is well versed in using corruption to further its interests abroad, especially in extractive industries and infrastructure. Using their Belt and Road Initiative, China often exerts its power by offering corrupt favors in exchange for preferential investments and control.
In Malaysia, for instance, after former Prime Minister Razak was caught red-handed funneling state money into his personal bank account, he struck a deal with Beijing. The PRC would attempt to influence investigators to drop their probes – even offering to spy on reporters who helped leak the scandal – in exchange for stakes in massive rail and pipeline infrastructure projects in Malaysia as a part of the Belt and Road.
Systemization, facilitation, instrumentalization of corruption to obtain political benefit abroad – these are the qualities, the faces of modern corruption.
And the impact this hyperpower corruption is having on international development is staggering.
The UN estimates that corruption costs the developing world $1.26 trillion each year, which is a staggering nine times the amount of all the official development assistance provided each year – nine times that amount. In global health alone, Transparency International estimates that number is $500 billion, the pandemic, of course, only fueling that number’s rise, both in the West and elsewhere.
And women and marginalized groups – including the LGBTQI community – often bear the brunt of corruption.
To respond, the United States has raced to alter our approach, to meet the modern conditions of corruption – the modern qualities and faces of corruption. The Biden-Harris Administration, as I know you heard, became the first in history to identify corruption as a core national security interest. At USAID, as many of you know, one of my first steps as Administrator was to stand up an Anti-Corruption Task Force – led by Shannon Green – not just to lead our current efforts but in truth, to transform our thinking.
And today, this very day, I’m excited to launch USAID’s first-ever Anti-Corruption Policy(link is external). This new policy is going to guide our revamped approach, emphasizing that corruption is not just something that happens within a country, but it is something exacerbated by global trends and perpetuated by global networks that include criminal syndicates and trafficking rings. It orients our focus upstream toward the most damaging kinds of corruption – when corrupt officials use their political power to steal their nation’s wealth. It also compels us to try to address corruption across every sector in which we work, and attack it from every angle.
At the core of this new approach – to be specific – is our flagship Transforming the Fight Against Corruption Initiative, which refocuses our efforts to address corruption that occurs at the highest levels of government, spills across borders, and is the very foundation of kleptocracy. This initiative is designed to block corrupt actors from siphoning off their nation’s wealth and help shield our partner countries from corrupt internal and foreign influence.
It has three components. First, we want to reduce opportunities for corruption in the first place – both domestic and transnational. Second, where corruption does occur, we want to raise its cost to deter it – including by funding global networks of investigative journalists and activists who can help expose complex, multi-country schemes. And third, we want to incentivize good behavior and integrity, so that upstanding public servants are rewarded, and private sector leaders are making decisions that improve anti-corruption efforts rather than exacerbating them.
Let’s start with reducing opportunities for corruption. We know that the most effective period that countries have to pass meaningful anti-corruption reform is within the immediate narrow window following a democratic breakthrough – within the first 18-to-24 months of a major political transition. To help local champions take advantage of these novel opportunities we have launched a new Anti-Corruption Response Fund. Already, we have put it to good use. When President Abinader of the Dominican Republic came to power pledging to fight corruption, we were able to support his Administration as they pursued ethics reforms for public officials as well as really important procurement reform.
We’ve also introduced a new Global Accountability Program, which is aimed at strengthening government systems in our partner countries so that they have greater capacity to detect and root out corruption – coming from within their own borders and again to stress, also from without. In Moldova, for example and you’ll hear soon from the great President Sandu, USAID worked with the Central Electoral Commission and political parties to encourage greater transparency in financial disclosures so that external actors who are looking to manipulate and exert influence over Moldovan politicians, cannot hide their contributions.
And perhaps most relevant to preventing corruption is getting ahead of what might become its biggest source in the future: the global green mineral supply chain. As countries mobilize to rapidly transition to clean power, the demand for the minerals needed to power solar panels, wind turbines, and more efficient batteries is skyrocketing. But many of these resources come from countries where corruption is rampant. Instead of these resources enriching citizens, which is so long overdue, they have the potential to become the latest resource curse.
Just weeks ago, following COP 27, we issued the Green Minerals Challenge(link is external), calling for solutions to help us detect and prevent corruption in this emerging supply chain. We will grant up to ten winning submissions up to $400,000 each, and offer them targeted support to help turn their ideas into reality. We’re still accepting submissions for this challenge until January 9th, and to apply, anyone can go to challenge.gov.
To raise the cost of corruption, we are doubling down on efforts to support investigative journalists with the resources they need.
In Europe, we helped support the Suisse Secret project which reviewed complicated records from one of the largest-ever Swiss bank leaks. That investigation revealed a number of corrupt actors across Eastern Europe, including a Serbian drug lord with political ties, the sons of an Azerbaijani strongman, and Venezuelan businessmen who looted the country’s oil wealth even as the country descended further into humanitarian crisis.
In Latin America, we helped create secure platforms so investigative journalists across the region can collaborate on cross-border investigations – we need so much more of this. As a result of this connectivity, journalists have produced hundreds of investigative pieces on environmental degradation, corruption, and money laundering – uncovering over $280 million in mismanaged public funding.
But, as we adapt our tactics to expose modern-day corruption, so too have oligarchs and autocrats shifted their tactics to discredit and silence their critics, including many in this room. They are combining old tricks like paying off dissenters and jailing critics with newer tactics like running smear campaigns against activists or digitally surveilling opposition leaders, and even peaceful protestors online.
In particular, journalists today say that the biggest hurdle to their work is actually not the death threats that they receive or the intimidation – which of course can be devastating – but the lawsuits brought against them by corrupt actors, which can cost millions, which the corrupt actors can afford, and it can put these incredibly important outlets out of business.
For instance, a small investigative journalism organization based in Serbia that we at USAID support called KRIK, is currently dealing with eleven lawsuits costing $1 million – that is more than three times their annual budget.
This same pattern is happening all around the globe.
So, we, at USAID, have designed a new insurance fund called Reporters Shield that investigative journalists and civic actors around the world can use to defend themselves against expensive bogus lawsuits. Journalists can begin enrolling for coverage next spring, and will begin receiving services in the summer.
Reporters Shield is launching thanks to the partnership with the Organized Crime and Corruption Reporting Project and the Cyrus R. Vance Center for International Justice, but we are still searching for partners, to provide both funding and technical expertise. So here, I call upon all those who care about media freedom to join us in providing support.
Finally, we’re incentivizing the kind of honest behavior – in the public and private sectors – that can serve as an alternative to corruption.
After Vice President Harris issued a call to action for international and local companies to increase investments in Northern Central America, more than 40 companies and organizations stepped forward to commit more than $3.2 billion to expand economic opportunity. Just as important though, the companies making these new investments are being vetted for high standards of transparency, human rights and labor rights. Endemic corruption has hindered – is hindering – economic development in Northern Central America, and in many places in that region, it is getting worse. The private sector must be part of the solution.
In Zimbabwe and Liberia, we support a creative program that, rather than seeking to name and shame corrupt actors, practices with which we are familiar and believe in, this program “names and fames” honest actors. Integrity Icon recognizes and profiles bureaucrats who are defying the odds to serve the public interest, detailing their stories on TV and radio. Each episode helps dispel the myth that corruption in government is inevitable, and celebrates those devoted to true public service.
Each plank of our new strategy – reducing corruption, raising its costs, and incentivizing good behavior – is key. But no matter our strategy, we have to wrestle with the tensions that come with providing life-saving services in highly corrupt environments.
In every setting in which we work, USAID takes exhaustive steps to prevent fraud, waste, and abuse. And often what that means in situations where corruption is rampant, is that we avoid working with governments and local NGOs that we fear to be corrupt, circumventing them to deliver assistance.
For instance, in Sudan, after the military takeover last year, we conducted an in-depth analysis to better understand who was controlling key industries. Such analyses leave us better positioned to channel aid through partners who are playing a constructive role.
But avoiding this corruption, rather than working to address it, is untenable, and it breeds dependence. Because what that means in practice is often creating – what we all know too well, which is – parallel systems of delivering aid, in perpetuity, never allowing for the type of local ownership of humanitarian and development work that is most sustainable.
In settings where lives literally hang in the balance, we must not only track how much food we deliver or how many shots we get in arms, but also work to make the procurement, logistics, and personnel systems of the local government – including those we are not using – more accountable and effective.
We can scale up the kind of analyses done in Sudan, so we have a better sense of our options for local vendors and can avoid indirectly feeding corrupt networks – the trucking company we employ may be clean, but if it’s owned by the President’s nephew, we’ve got a little more digging to do.
Grappling with corruption, even in these life-and-death humanitarian emergency circumstances, is something we need to do openly, we need to honestly discuss with our local partners, and with other donors and lending institutions – very much looking forward to hearing from David Malpass imminently here today. If we hope for this to be an impactful effort, it has got to be collective.
And the same is true when it comes to tackling the modern face of corruption. Corrupt actors thrive when we stick to our siloes instead of building bridges – across sectors, across geographies, across stakeholders.
Citizens everywhere – from Iraq to Armenia and even Russia and China – have protested in recent years against the actions of autocrats and oligarchs. People have turned out in record numbers to elect candidates running on anti-corruption platforms – candidates like President Abinader, President Hichilema in Zambia, and of course President Sandu.
These windows of opportunity open suddenly, but they are fleeting.
Ukraine faced a similar window of opportunity in the wake of the Revolution of Dignity. And here, I will close. Ukraine threw off the yoke of corruption and rejected autocrats who were luxuriating in the privacy of their estates, while the basic needs of Ukrainians were not being met.
And in the years since, they have ushered in a wave of institutional innovation and reform. With America’s support, they have established specialized anti-corruption institutions that have turbocharged the way Ukraine prevents and investigates corruption. These institutions are young, they have a long way to go – Ukrainian civil society, activists and officials, I think would be the first to admit – but they have helped foster greater confidence from businesses to invest, they’ve fostered better public services for citizens, and generally, public trust in government has improved. All moves, we know, that infuriated Vladimir Putin and indeed, helped motivate him to launch this war as he realized with this rule of law being strengthened that his grip on this neighboring country was slipping. He specifically cited Ukraine’s anti-corruption bodies in his television address justifying the invasion of Ukraine.
Ukraine’s fight today is, of course, against an invading army, but their insistence on strengthening their institutions and batting down corruption has helped fuel their remarkable defense of democracy – especially at the grassroot level
In that post-revolution period, after the Maidan, Ukraine made one other decision to fight corruption. After Yanukovych fled, the question of what to do with the Mezhyhirya estate arose. Should it be shuttered; should its assets be sold off? Remember those sinks and those chandeliers? Should it be reclaimed, restored as a government building belonging to the public? No, Ukrainians decided. It should become a museum of corruption – a stark reminder of how much Ukrainians would lose if kleptocrats and corrupt actors were ever allowed to seize power again.
Thank you so much.