Australia’s coming kleptocracy

By December 29, 2017Australian Politics, Society

The word kleptocracy comes from the Greek klepto (I steal) and kratos (power) and refers to a government with corrupt leaders (kleptocrats) that use their power to exploit the people and natural resources of their own nation in order to extend their personal wealth and political power. Typically, but not always, this system involves embezzlement of funds at the expense of the national population1.

While there are numerous examples from all around the world in the past, kleptocracies are generally associated with dictatorships or other forms of government in which the rule of law is shaky at best or in which external oversight is nearly nonexistent. This lack of oversight allows the kleptocrats to control both the supply of public funds and its disbursement. Kleptocrats often look upon the nation’s treasury as in part, a source of personal wealth1. As a consequence, their wealth increases dramatically, while that of the general populace increases minimally or decreases. Given that kleptocrats are often removed from office against their will, they often transfer their wealth into hidden personal bank accounts in foreign countries, to provide for themselves if given the boot either by the next kleptocrat, their military or their populace.

Ever since its independence in 1991, Ukraine has been prey to deeply entrenched corruption. It was initially viewed favourably economically; however, the nation experienced a deeper slowdown than some of the other former Soviet Republics. During this recession, it lost 60% of its Gross Domestic Product (GDP) and suffered five-digit inflation. In 2004, the pro-Russian Viktor Yanukovych, then Prime Minister, was declared winner of the presidential elections, which had been largely rigged, as the country’s Supreme Court later ruled. The results caused a public outcry and the peaceful Orange Revolution led to his ouster. However, after some machinations from Russia, Yanukovych was elected president again in 2010. He was eventually removed by the Members of Parliament in early 20142. In the four years that he was in power, almost $US40 billion was estimated to have been stolen from the state. This massive corruption funnelled wealth primarily to Yanukovych, his family and a small circle of businessmen associated with Yanukovych. At independence, Ukraine’s GDP was about 67% of Poland’s, in 2016, after the depredations of Yanukovych, it is less than 25%. While this is staggering, a simple statistic such as that does not portray the damage done to Ukraine3. It has doomed its younger generation to poor health care, poor education, poor social services and poor infrastructure for decades.

Vladimir Putin runs a kleptocracy that nationalises risk and privatises the reward. This is perhaps best exemplified by the Sochi Winter Olympics. They cost about $US50 billion to host, and most of the contracts for construction etc. were awarded without any bid process to Putin’s close circle of oligarchs. Billions were made by them, some of which went to Putin. Another example is the Bank Rossiya, a private bank set up by Putin’s circle. Much state financing is funnelled through it, despite it being a private bank. Putin and his cronies then cream off any profits made4. Putin is reputedly the wealthiest man on the planet and is suspected to be worth about $US200 billion.

Closer to Australia, but as bad in the kleptocracy stakes, was Suharto’s Indonesia. Up until 1998, Suharto had been President of Indonesia for 30 years. Transparency International, the anti-corruption watchdog, estimated that Suharto and his family had stolen nearly #US35 billion, nearly 4% of the nation’s GDP. The Suharto’s innovation was to create a family monopoly that preserved competition. Three or four large international companies would fight tooth and nail for a huge contract. Each company would be mandated to employ a local partner company, which was at least part owned by one of the Suharto children. The family never lost. The secret of the Suharto kleptocracy, was that it was organised such that the country was fiscally disciplined, had impressive population control, had fairly healthy economic growth, and relatively successful poverty reduction strategies5.

While the countries listed above are what one could argue are or were, at best, corrupted democracies, the methods used in what we think are real democracies are almost as corrupt as in the Ukraine, Indonesia or Russia. It’s just that the circle of oligarchs is a much wider and more diffuse, and the arrangement is not a formal one, but operates at an informal level. As a consequence, the corruption is less obvious. The methods used in Australia do not involve families raking off huge profits because of monopolies, simple theft, kickbacks or bribes. However, they do involve variants of the more sophisticated methods employed by Putin, and they have a similar result in that the risk is nationalised and the profit privatised. The method used here is privatisation. Government entities are sold by a government at a price which is deemed reasonable by the government. The government entity is bought by a corporation and the government contracts it to do the job the government entity used to do, for which the government pays. In turn, the corporation makes donations to the Liberal or National parties’ election campaigns.

In Australia, the government doesn’t control the media like it does in Russia, they effectively form ‘alliances’ with media organisations. The most egregious case of this is with the Murdoch organisation, News Limited. Murdoch, a Trump supporter, is also a supporter of the Coalition government. Not only have the government promised such corporations like Murdoch’s, tax cuts (they pay little tax now), but they gave the Murdoch organisation a $30 million gift, behind which there was no documentation6. In addition, the Labor government of Rudd started building the National Broadband Network (NBN) in which fibre to the premises (FTTP) was the mode of delivery. While initially it was mooted as a public-private partnership to which the Commonwealth would kick in $4.7 billion, two years later it was a $43 billion government-owned business. The Coalition said they would make it cheaper by delivering fibre to the node (FTTN), with the rest of the way to the premises over the old copper cables7. Strangely, this was also the position preferred by News Limited. News Limited did not want the NBN, especially where it would include FTTP. The reason they did not want it was because it would provide direct competition to Foxtel subscription television from online streaming services such as Netflix8.

Another arrow in the government’s quiver in the plan to subdue the media was in the appointment of the former Murdoch employee, Michelle Guthrie as ABC managing director. She has already reduced current affairs at the ABC9, and seems to have facilitated the shift by the ABC to being more sympathetic toward the government, even to the extent of employing the silly right wing commentator Tom Switzer, who is so far out of his depth as to be comical10,11,12. It is possible that the ABC is being prepared for privatisation, as this is Institute of Public Affairs (IPA) policy, which has provided many Liberal members of parliament. The IPA is a right-wing lobbying organisation which masquerades as a think tank. The only thinking it does is what its donors tell it to think. It denies climate change and argued against plain packaging for cigarettes. There has also been a shift to a position more sympathetic to the government from the middle of the road Fairfax media company. It has employed a James Chessell as their new national political editor, and he was previously a staffer for the disastrous former Coalition Treasurer Joe Hockey and was a former ‘ruperter’ at Murdoch’s far right Herald-Sun13.

Opposing Putin is a dangerous game, as numerous oligarchs, journalists, agents, singers and politicians have found as they have been imprisoned, murdered, or have had to escape the country14,15,16,17. In Australia, what the government is trying to do is to silence critics, not by imprisoning them (yet), but making it illegal for charities who receive any funding from overseas, to comment on political topics. This may well lead to people being imprisoned or fined if they do so comment. Apart from charities, the government’s major target is GetUp, an independent community organisation which encourages political participation to build a progressive Australia, with its main themes being social justice, economic fairness and environmental sustainability18. The conservatives were able to tolerate it until the 2016 federal election, when it proved to be extraordinarily effective in helping to get some of the nastiest right wingers from the Liberal Party ousted from parliament19. Ever since then, the government has been trying to limit its effectiveness. The government initially seemed to believe the right-wing propaganda that it received significant funding from overseas. This turned out to be garbage, as many knew, with GetUp only receiving 0.5% of its funding from overseas20, significantly less than the Liberal party itself. The government is now trying to get GetUp listed as an associated entity of the Labor Party or the Greens, or anybody, so it can attempt to constrain it.

This is all part of the slow process of corrupting our democracy so that conservatives can at least attempt to ensure their continued occupation of the government benches, with limited risk that the people could actually vote them out. This desire is being made more desperate by their realisation that their economic paradigm of trickle-down economics is finished, having only led to increased disparity between rich and poor21. The conservative project is also in danger of fragmenting despite the moderates currently being in the thrall of the far right religious nutters22. However, those religious nutters are also science deniers and deny the reality of climate change, and the reality of that is becoming more obvious by the day. The nutters are also social conservatives, and have lost their first battle over same-sex marriage23, and their second battle, in Victoria, with the passing of the voluntary assisted dying legislation24. These are just the first battles which will be lost by the religious nutters against the 21st century. If the conservatives lose government, it is likely that the Liberal Party will tear itself apart, with the religious nutters joining others of their ilk in Cory Bernardi’s Australian Conservatives or forming their own party of god.

The conservatives have even started to break electoral laws by laundering illegal donations through the various branches of the Liberal Party25, with donations being accepted from corporations both local and international, and from wealthy individuals26. Anybody who thinks that these corporations and individuals are doing it out of the kindness of their heart is delusional. Anyone who thinks they want nothing in return for that donation is also delusional. The failed ‘awarding’ of a $40,000 ‘prize’ to Barnaby Joyce by Gina Rinehart26, is just the tip of the iceberg of corruption. The arrogance of Rinehart and Joyce, in apparently initially assuming that this ‘gift’ would not be seen as a bribe, is astounding. It makes you wonder how much of this happens on the quiet.

These depredations are why the Liberal and National parties do not want a federal anti-corruption organisation, at least until they can find out some way to control it, as the NSW government did, by underfunding it. This was seemingly as payback for Operation Spicer, an investigation into Liberal Party fundraising rorts at the 2011 election, which forced the party to repay hundreds of thousands of dollars in illegal donations. This budget cut was despite the government posting a 2016-2017 budget surplus of $5.7 billion; this forced ICAC to cut one of four investigations and to cut six full time staff27. So, the people being investigated were able to damage the organisation which investigated them. That simply invites corruption.

The Dastyari beatup, regarding foreign donations, was simply a desperate effort by the Coalition to make some headway before the Bennelong by-election28. They were aided and abetted by most of the corporate media, who largely neglected to mention that the money that Dastyari received, paled into insignificance compared to the money the Liberal Party gets from foreign donors. Indeed, the Liberal Party received large donations from the same Chinese billionaire who gave money to Dastyari. However, when corporate media want their tax cuts from the government, they will not let facts stand in their way.

This increasing trend towards corruption by the federal government is perhaps most clearly demonstrated by the decline in the rankings of Transparency International’s Corruption Perception Index. In 2012, Australia was ranked 7th on the list of the ‘cleanest’ nations, in 2016, it had fallen to 13th, the most precipitous drop among any of the countries ranked in the top 14 in 201629. We are rapidly becoming more corrupt and unsurprisingly, it has happened under the Federal Coalition Government.




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