How the kleptocrats and oligarchs hunt civil society groups to the ends of the Earth
It's a great time to be an oligarch! If you have accumulated a great fortune and wish to put whatever great crime lies behind it behind you, there is an army of fixers, lickspittles, thugs, reputation-launderers, procurers, henchmen, and other enablers who have turnkey solutions for laundering your reputation and keeping the unwashed from building a guillotine outside the gates of your compound.
The field of International Relations has studied the enemies of the Klept in detail: the Transnational Activist Network is a well-documented phenomenon. But far more poorly understood is the Transnational Uncivil Society Network, who will polish any turd of sufficient wealth to a high, professional gloss.
These TUSNs are the subject of a new, timely scholarly paper by Alexander Cooley, John Heathershaw and Ricard Soares de Oliveira: "Transnational Uncivil Society Networks: kleptocracy’s global fightback against liberal activism," published in last month's European Journal of International Relations:
The authors document how a collection of institutions – some coercive, others organized around good works – allow kleptocrats to take power, keep power, and use power. This includes "wealth managers, company providers, accounting firms, and international bankers" who create the complex financial structures that obscure the klept's wealth. It also includes "second citizenship managers and lawyers" that facilitate the klept's transnational nature, both to provide access to un-looted, prosperous places to visit, and boltholes to escape to in the face of coup or reform. It includes the real-estate brokers and other asset facilitators, who turn whole precincts of the world's greatest cities into empty safe-deposit boxes in the sky, while ensuring that footlose criminal elites always have a penthouse to perch in when they take a break from the desiccated husks they've drained dry back home.
Of course, it also includes the PR managers and philanthropic ventures that allow the klept to launder their reputation, to make themselves synonymous with good deeds rather than mass murder. Think here of how the Sacklers used charity to turn their family name into a synonym for culture and fine art, rather than death by opioid overdose:
Beyond providing comfort to "Politically Exposed Persons" and "High Net-Worth Individuals," TUSNs are concerned with neutralizing TANs. Activists in these transnational networks play an inside-outside game: in-country activists will recruit peers abroad to bring attention to the crimes of their local kleptocrats. These overseas partners target the klept in the places they go to play and spend, spoiling their fun – and if they succeed in getting corrupt leaders censured abroad, then in-country activists can leverage that bad press to fight the klept at home.
To fight this "Boomerang Effect," TUSNs seek to burnish corrupt officials' reputations abroad, getting their names on humanitarian prizes, beloved sports teams, cultural institutions and great universities. They seek to capture international governance institutions that might wrong-foot kleptocrats, co-opting them to enable and even celebrate looters.
When it comes to elite philanthropy, TUSNs are necessarily selective. Kleptocrats' foundations don't fund anti-kleptocratic groups – they stick to "education, public health, the environment and the arts." These domains steer clear of human rights questions that might implicate their benefactors. Russian oligarchs love children's charities and disability rights – provided they don't target the Russian state.
If charitable giving is reputation laundering's carrot, then "reputation management" is the laundry's stick. Think of organized copyfraudsters who clone websites that have criticized their clients, then backdate the articles, then accuse the originals of infringing copyright in order to get them de-listed from Google or taken offline altogether:
Reputation managers also spend a lot of time in court. In the UK – the world's leader in libel tourism, thanks to a legal system designed to let posh monsters sue muckraking journalists into silence – Russian oligarchs have perfected the art of forcing their critics to shut up and go away:
Indeed, London is a one-stop shop for the global klept, a place were forelock-tugging Renfields will buy you a Mayfair mansion under cover of a numbered company, sue your critics into silence, funnel your money into an anonymous Channel Islands account:
https://pluralistic.net/2022/01/07/the-klept/#pep
They'll sell you whole galleriesworth of "fine art" that you can have relocated to a climate-controlled container in a Swiss or Irish freeport:
But don't let Brexit stop you from shopping for bargains on the continent. The Golden Passports of the EU – available in a variety of flavors, from Maltese to Cypriot to Portuguese – offer the discerning failson access to the luxury good shops and fleshpots of 27 advanced economies, making it a favorite of the Khmer Riche – the junior klept of Cambodia's ruling faction:
But golden passports are for amateurs. Skilled klepts travel on diplomatic passports, which offer the twin benefits of free movement and consequence-free criminality, thanks to diplomatic immunity. The former Kazakh dictator's son-in-law enjoyed a freewheeling diplomatic life in Vienna; one daughters of the dictator of Tajikistan had a jolly time as an envoy to DC; another, to London (where else?).
All this globetrotting serves a second purpose: when rival elites seize power back home and force the old guard into exile, those ex-monsters can show up in the lands they called their second homes and apply for asylum. It turns out that even bomb-the-boats UK will welcome any asylum seeker who enters via the private jet terminal at City Airport (to be fair, these "refugees" have extensive properties in Zone 1 and country places in the Home Counties, so they won't need housing).
This stuff works. After Kazakh state goons murdered at least 14 protesters at a Zhanaozen oil facility in 2011, human rights groups around the world took up the cause. But they were effectively neutralized by TUSNs, with former UK PM Tony Blair writing on behalf of the Kazakh government to the EU condemning any kind of international investigation into the mass killings (add "former Prime Ministers" to the list of commodities for sale in the UK to sufficiently well-resourced murderer).
The authors close their paper with two case-studies. The first is of the daughters of Uzbek dictator Islam Karimov, Gulnara and Lola. And President Karimov was indeed a dictator: he trapped his population within his borders, forced them to use unconvertible scrip in place of money, and ordered the murder of hundreds of peaceful protesters, plunging the country into international isolation.
But while Uzbeks were sealed within their borders, Gulnara Karimov became an international player, running a complex network of businesses that mixed the products of the nation's oilfields with her family's fortune. She solicited – and received – bribes from Teliasonera, MTS and Vimpelcom, who were all vying for the contract to provide service in Uzbekistan. All told, she extracted more than $1b in bribes, laundering them through Latvia, Hong Kong and New York. She acquired real-estate in France and Switzerland, and her spree continued until her father collaborated with Uzbek security to seize her assets and place her under house-arrest.
Lola Karimova-Tillyaeva was Gulnara's estranged younger sister. She and her husband Timur Tillyaev ran the Dubai-based SecureTrade, which did extensive business with "opaque Scottish Limited Partnerships," laundering more than $127m in a single year to offshore accounts in the UAE and Switzerland. They acquired many luxe assets – a jet, a Californian villa, and an LA perfumier.
Lola styled herself as the face of the Karimovas abroad, a "philanthropist and cultural ambassador." She was a UNESCO ambassador and commissioned works of monumental art – and also sued the shit out of news outlets that reported factual matters about her family repressive activity at home. She organized AIDS charities in the name of Uzbekistan – even as her father was imprisoning a writer for publishing a book explaining how to have safer sex.
The second case-study is on Isabel dos Santos, "Africa's richest woman," daughter of Angolan dictator Jose Eduardo dos Santos. Isabel's vast fortune stemmed from her personal capture of vast swathes of the third-largest economy in Africa: "telecommunications, banking, diamonds, real estate and cement, among many others." Isabel enjoyed seemingly limitless access to state credit and co-investment, and was given first crack at newly deregulated industries. Foreign firms that invested in Angola were required to "partner" with Isabel's businesses.
Isabel claimed to be a "self-made woman" – a claim credulously parroted by the western press, including the FT. She used her homegrown fortune to become a major player abroad, especially in Portugal, where she was represented by the leading Portuguese law-firm PLMJ. Her enablers are who's who of corruption-loving lickspittles: McKinsey, Ernst and Young, Boston Consulting Group, and the Spanish BigLaw firm Uri Menendez.
Isabel cultivated a public facade of philanthropic giving and public spirited activism, serving as head of the Angolan Red Cross. She attended Davos and spoke at the LSE (she was also invited to Oxford, but her invitation was subsequently rescinded). On social media, she dismissed critics of her wealth and corruption as "colonialists," decrying their "racism" and "prejudice."
Isabel dos Santos's corrupt sources of wealth were finally, irrefutably exposed through the Luanda Leaks, in which the International Consortium of Investigative Journalists mapped the network of "top banks, management consultants and legal firms that were central to dos Santos’s operations."
Both case studies shed light on the network of brilliant, driven enablers and procurers without whom the world's greatest monsters would falter. It's a rare window on a secretive world, one that is poorly understood even by its inhabitants. As Michael Mechanic wrote in Jackpot, his 2021 book on vast, intergenerational fortunes, the winners of the lucky orifice lottery often lack any real understanding of how The Money is structured, grown and protected:
This point was reiterated by Abigail Disney, in a brave piece on what it's like to grow up subject to the oversight of these millionaires who babysit the children of billionaires:
This is an important contribution to the literature. We naturally focus on the ultrawealthy individuals whose reputations and fortunes are the subject of so much attention, but without the TUSNs, they would be largely helpless.
Going to Burning Man? Catch me on Tuesday at 2:40pm on the Center Camp Stage for a talk about enshittification and how to reverse it; on Wednesday at noon, I'm hosting Dr Patrick Ball at Liminal Labs (6:15/F) for a talk on using statistics to prove high-level culpability in the recruitment of child soldiers.
On September 6 at 7pm, I'll be hosting Naomi Klein at the LA Public Library for the launch of Doppelganger.
On September 12 at 7pm, I'll be at Toronto's Another Story Bookshop with my new book The Internet Con: How to Seize the Means of Computation.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Mock prescriptions for OxyContin, made out by a “Robert Sackler, MD,” floated down from the galleries, as the crowd below chanted, “Oxy money is in the halls! Throw them out if you have the balls!”
The Sacklers woulda gotten away with it if it wasn't for those darned meddling feds
The saga of the Sacklers, a multigenerational billionaire crime family of mass-murdering dope-peddlers, is an enraging parable about how the wealthy, the courts, and sadistic high-powered lawyers collude to destroy the lives of millions, profit handsomely, and evade justice.
But there's an unexpected twist to this tale. After the Sacklers procured a sham bankruptcy that denied their victims the right to sue while leaving their fortune largely intact, the Supreme Court – yes, this Supreme Court – saw through the scam and froze the process, pending a full hearing:
The Sacklers basically invented modern, legal dope peddling. Arthur Sackler, the family's original crime-boss, revived the practice of direct-to-consumer drug marketing, dormant since the death of the medicine show, to peddle Valium. An aggressive and shrewd lobbyist, Arthur built the family fortune and, more importantly, its connections:
A generation later, the family's business company created Oxycontin, and procured misleading and false research about the drug's safety kickstarting the opioid epidemic, whose American body-count is closing in on a million dead. Armed with inflated claims about opioid safety, the Sacklers' pharma reps bribed, cajoled and tricked doctors into writing millions of prescriptions for oxy.
This scam had a natural best-before date. As ODs flooded America's ERs and bodies piled up in America's morgues, it became increasingly clear that something was rotten. The Sacklers pursued a multipronged campaign to keep the truth from coming to light, and to keep the billions flowing.
On the one hand, they hired McKinsey to find novel ways to encourage doctors to keep writing prescriptions and to convince pharmacists to turn a blind eye to abuse. McKinsey had all kinds of great ideas here, including paying pharma distributors cash bonuses for every overdose death in their territory:
When the issue of these deaths came up in public, the Sacklers blamed "criminal addicts" for their own misery, stigmatizing both people who desperately needed pain relief and the people who'd been deliberately hooked on the Sacklers' products. The legacy of this smear campaign is still with us, both in the contempt for people struggling with addiction and in the cruel barriers placed between people in unbearable agony and medical relief.
But mostly, the Sacklers kept their names out of it. They laundered their reputations by donating a homeopathic fraction of their vast drug fortune to art galleries and museums in a bid to make their names synonymous with good deeds.
The Sacklers didn't invent this trick. Think of the way that history's great monsters – Carnegie, Mellon, Rockefeller, Ford – are remembered today for the foundations and charities that bear their names, not for the untold misery they inflicted on their workers, their crimes against their customers, and the corruption of governments.
But the Sacklers made those Gilded Age barons seem like amateurs. They invented a modern elite philanthropy playbook that Anand Giridharadas documents in his must-read Winners Take All, about the charity-industrial complex that washes away an ocean of blood with a trickle of money:
As part of this PR exercise, the individual Sacklers kept their names and images out of the public eye. For years, there were virtually no news-service photos of individual Sacklers. When journalists dared to criticize the family, they used vicious attack-lawyers to intimidate them into retractions and silence (I was threatened by the Sacklers' lawyers).
They also worked their media mogul pals, like Mike Bloomberg, who added their names to the "Friends of Mike" list that Bloomberg reporters were required to consult before writing negative coverage:
But Stein's Law says that "anything that can't go on forever will eventually stop." As lawsuits mounted, the Sacklers found themselves increasingly synonymous with death, not charitable works. But like any canny criminal, the Sacklers had a getaway plan.
First, they extracted vast sums from Purdue and shifted it into offshore financial secrecy havens:
Even as this money was disappearing into legal black holes, the Sacklers demanded – and received – extraordinary protection from the courts, who aggressively sealed testimony and materials presented through discovery:
When this gambit finally failed, the Sacklers insisted that were down to their last $4 billion, and, with trillions in claims pending against them, they declared bankruptcy.
When a normal person declares bankruptcy, they are required to divest themselves of nearly everything of value they possess, and then still find themselves hounded by cruel arm-breakers who deluge them with threatening calls and letters:
But for the richest people in America, bankruptcy is merely a way to cleanse one's balance sheet of liabilities for any atrocity you may have committed on the way, without giving up your fortune.
The Sacklers are a case-study in how a corrupt bankruptcy can be conducted.
Purdue Pharma presents a maddening case-study in the corrupt benefits of bankruptcy. When it was announced in March, many were outraged to learn that the Sacklers were going to walk away with billions, while their victims got stiffed.
First, they converted their victims' right to compensation into "property" that the Sacklers themselves owned. This transferred jurisdiction over these claims from the regular court system to the bankruptcy court. A bankruptcy judge – not a jury – would decide how much each of these claims was worth, and then what how much of that worth these victims (now recast as creditors) would be entitled to through the bankruptcy.
Thus tens of thousands of claims were nonconsensually settled without a trial, by an administrative judge with no criminal jurisdiction, not a federal judge who'd undergone Senate confirmation:
These "coercive restructuring techniques" are not available to everyday people who are drowning in student debt or credit-card bills – these are the exclusive purview of the wealthiest Americans, who enjoy a completely different bankruptcy system that is rigged in their favor.
Three judges – David Jones and Marvin Isgur of Houston and Bob Drain of New York – hear 96% of the country's large corporate bankruptcies:
These judges are unbelievably horny for corporations, embracing a legal theory "that casts the invention of the limited liability corporation alongside that of the steam engine as a paradigmatic development in the pursuit of prosperity":
Now there are more than three bankruptcy judges in America, so how do the nation's biggest companies get their cases heard by these three enthusiastic Renfields for corporate vampirism?
They cheat.
For example: when GM was facing bankruptcy, it argued that it was a New York company on the basis that it owned a single Chevy dealership in Harlem, and got in front of Judge Drain.
The Sacklers were – characteristically – even more brazen. They really wanted to get their case in front of Judge Drain, the nation's most enthusiastic supporter of "third party releases," through which bankrupt billionaires can wipe the slate clean, securing dismissals of all claims by the people they wronged.
Drain is also uniquely hostile to independent examiners, "an independent third-party appointed by the court to investigate 'fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity…by current or former management of the debtor."
If you're the Sacklers, hoping to keep two thirds of your billions and extinguish all claims by your victims, there is no better helpmeet than Judge Robert Drain of the Southern District of New York.
So, 192 days before filing for bankruptcy, the Sacklers opened an office in White Plains, New York (a company may claim jurisdiction in a specific court once they've operated a business there for 180 days).
Then they filed a bankruptcy in which they altered the metadata on their casefile, inserting the code for a Westchester county hearing into the machine-readable, human-invisible parts of the documents they uploaded to the federal Case Management/Electronic Case Files (CM/ECF) system (they also captioned the case with "RDD, for "Robert D Drain").
They chose their judge, and the judge obliged. UCLA Law's Lynn LoPucki is one of the leading scholars of these bankruptcy "megacases," and has written extensively on why these three judges are so deferential to corporate criminals seeking to flense themselves of culpability. She sees judges like Drain motivated by "personal aggrandizement and celebrity and ability to indirectly channel to the local bankruptcy bar. The judge is the star and the ringmaster of a megacase – very appealing to certain personalities."
Thus, these judges are "willing and eager to cater to debtors to attract business…[an] assurance to debtors that…these judges will not transfer out cases with improper venue or rule against the debtor…"
This kind of judge-shopping goes beyond the Sacklers; the cases that Drain and co preside over make a mockery of the idea of America as a land of equal justice. "Prepack" and "drive-through" bankruptcies are reliable get-out-of-jail-free cards for capitalism's worst monsters: private equity firms.
Whether PE murdered your grandmother by buying her care-home and putting each worker in charge of 30 seniors:
30% of America's bankruptcies are private equity companies using the bankruptcy system to wipe away claims for their misdeeds, while keeping a fortune, thanks to the shield of limited liability.
Take Millennium Health, JamesS lattery's fake drug-testing company, which promised to help nursing homes figure out whether seniors were abusing (or selling) their meds by testing their piss for angel dust and other drugs. Slattery defrauded Medicare and Medicaid for millions, borrowed $1.8 billion (Slattery got $1.3 billion of that). He eventually walked away from this fraud after paying a mere $256m to settle all claims, and kept a fortune in assets, including the 40 vintage planes his private company ("Pissed Away LLC" – I am not making this up) owned:
For the wealthy, bankruptcy is the sport of kings, a way to skip out on consequences. For the poor, bankruptcy is an anchor – or a noose. This is by design: judges who preside over elite bankruptcies speak of their protagonists as heroic "risk takers" and tiptoe around any consequences, lest these titans be chained to a mortal's fate, costing us all the benefits of their entrepreneurial genius.
PE companies helped the Sacklers design their own bankruptcy strategy, and it was a standout, even by the standards of Bob Drain and his kangaroo bankruptcy court. But now, the Supreme Court has pumped the brakes on the whole enterprise.
The judges ruled that the exceptions the Sacklers took advantage of were intended for bankrupts in "financial distress" – not billionaires with vast fortunes hidden overseas. In so doing, the court threatens all manner of corrupt arrangements, from "the Boy Scouts, wildfires and allegations of sexual abuse in the church diocese — where third parties get a benefit from a bankruptcy they themselves aren’t going through.”
The case was brought by the DoJ's US Trustee Program, which lost in the Second Circuit when it tried to halt the Purdue bankruptcy and argued that the Sacklers themselves had to declare bankruptcy to discharge the claims against them.
Now the Supremes have hit pause on the bankruptcy the Second Circuit approved, and will hear the case themselves. It's only one step on a long road, but it's an unprecedented one. Some of the country's filthiest fortunes are riding on the outcome.
Going to Defcon this weekend? I’m giving a keynote, “An Audacious Plan to Halt the Internet’s Enshittification and Throw it Into Reverse,” tomorrow (Aug 12) at 12:30pm, followed by a book signing at the No Starch Press booth at 2:30pm!
https://info.defcon.org/event/?id=50826
I’m kickstarting the audiobook for “The Internet Con: How To Seize the Means of Computation,” a Big Tech disassembly manual to disenshittify the web and bring back the old, good internet. It’s a DRM-free book, which means Audible won’t carry it, so this crowdfunder is essential. Back now to get the audio, Verso hardcover and ebook:
http://seizethemeansofcomputation.org
If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
