World and the potential effects of corruption in the u. S. Hosted by the Carnegie Endowment for international peace, its 90 minutes. Good afternoon. My name is armando trool, the npr station in washington and the toprated npr station in the country. I would like to we come you to what is sure to be a very interesting and exciting conversation about corruption in Central America, the United States and elsewhere. I will be moderating this conversation and you will have the opportunity to ask questions once the panelists are finished. First, sarah chase, senior fellow here at the Carnegie Endowment for international peace. She is the author of this report when corruption is an operating system and shes using honduras as the case study. To add perspective to this conversation, zephyr is a law professor at the university will school of law. Shes thea author of corruption in america and also an attorney on the emoluments lawsuit filed by donald trump. So corruption as an operating system. What does that mean . Yeah. What am i talking about . Exactly. Would you mind yeah. So we have a picture, but fundamentally what im talking about here is not corruption as some nasty practices that some members of government indulge in in some countries, a lot of government officials might indulge in this, but you know, the way we normally think about it is sort of like i dont know, like a disease, right . That creeps in and infects the tissues of a government. What ive been seeing and honduras turns out to be a really clear example of it is a network, right . And a network that crosses boundaries that we think of as separating different sectors of activity like the private and Public Sector. Here we are, concerns. We like to find which one works for your health and let alone, the criminal sector. As we all know, Central America, unfortunately is famous for criminal activity, but what becomes clear when you look carefully is that youve got a network that is made up of people at the top of the Public Sector, the private sector and the criminal sector and often they overlap or share competences or they have a cutout like a representative that theyll, you know, one brother will be in the Public Sector and the other brother will be running a drug cartel so you span these different sectors and thats what this picture is supposed to, at least, you know, evoke in peoples mind, and i do want to just say well, ill say that later, but david, if you wouldnt mind just giving me the next one . This infographic does try to break it down for you. So the Public Sector members of the work have a responsibility and that is to distort state agencies or institutions, function of government, if you will, to serve the purposes of the network as opposed to serving their stated purpose which is the public good. Exactly. The public good. Im not going to go through them all, but what this infographic does is pick them apart a little bit, but there are a couple of obvious examples that ive seen in a number of other countries and one of them is the Justice Sector because theres a bargain that holds these networks together and its that money flows upward in the network and impunity flows downward. Theres the deal. You get, for the part of the take youre kicking upward, you are guaranteed protection from legal repercussions, and that can take a lot of forms in Different Countries. In honduras its particularly, greejous. You had a midnight firing of four of the five justices of the Supreme Court and this happened a number of years ago, but it can be the actual judges. It can be by capturing public prosecution. In some countries, i havent seen it in honduras, but in some countries where its difficult to actually capture the Justice Sector the network figures out how to work around it. So in egypt, for example, where judges did retain quite a bit of independence, president sisi has been working very hard on expanding the jurisdiction of the military courts so that more and more cases can bypass the relatively independent civil system and be funneled through the much more controllable system. It then, the next thing, just look at the next one and the colors on this infographic are blue for government and green for private sector because thats money, right . At least to us and red for criminal sector because the bad guys, except theyre all bad guys. Anyway, so we looked at the private sector and sometimes this can look like the entire system and you can say who is corrupt . Everyones corrupt, but it makes some sense to try to drill down and look at what are the specific Revenue Streams that are being captured by the network. So some of it back to the Public Sector is private procurement. That is one way, in honduras in particular, infrastructure. Big Infrastructure Projects like road building, ports and things like that. So youll see, you know, construction companies, but the Banking Sector is a classic. In this case, it turns out that the network and networkaffiliated families control about half of the financial sector. Energy is a classic and in honduras its interesting because its not a country that has an extractive industry, right . There isnt oil or gas and its got a mining industry, but no oil or gas. So quite interestingly, its been Energy Generation and Electricity Generation including renewables. That was a big surprise. The Solar Energy Sector has been captured by this network and theyre getting sweetheart rates, very high rates. Palm oil also for biodiesel. A couple others, interesting ones and nonprofit organizations and its one to keep ones eye on because one of the important Revenue Streams, of course, is International Development financing and so if you can situate yourself to capture that flow, its a pretty significant one. And then there is the criminal sector, and i dont think i need to belabor that in the case of honduras and we have case in new york, the son of the former president , is that who it is . I did want to ask you a question. Im not trying to deflect. No, of course. What makes it an operating system as opposed to a whole bunch of crooked people. Thats a great question and partly its you look at the personal relationships so in this case a piece of the private sector element is somewhat selfcontained and culturally uniform to some extent. Its a lot of people that are descendants of immigrants from the middle east and they tend to live together, intermarry, go to School Together and exchange positions on each others boards of directors and that selfcontainness is breaking apart a little bit in were now in the fourth generation and its the exchange of personnel and the clear, whats the word you look at the people who are making decisions and you will see the same names popping up in the Decision Making processes and Decision Making bodies and they exchange the personnel. So you will have this private sector group im talking about. They will have top officials selected at different stages. In the criminal sector, also, you can see. You almost have to do a social networking, and i would have loved to have done enough on the personal linkages which would really be the Network Diagram and thats an important avenue for further research on this top sniek whats the overriding goal in this system . Making money for network revenues. We can get into a conversation of whether its money or power and does money got you power or does power get you money . In this case internationally i think money is the objective and power is more the means to that end than it has been in other times and places in human history, and the reason i say that in the honduran case is the money people are bossing around the political people and the criminals who have access to money and obviously, armed force, are often bossing around the political people, too. You mean theres no idea logical motive. Its really thats increasingly my view and thats a whole conversation we can also have about how money is displacing other, you, like, measures of social value in the period we live in today around world. That money is the exclusive way that we measure our social standing and therefore Competition Among elites is over money, not over and therefore kind of how you make the money doesnt matter as much. So criminal sector is pretty obvious. Its largely the narcotics industry and then just one last two last points id love to make. All right. Go ahead. One is networks are more resilient than individuals, and i think this is true of honduras, but not just of honduras. Youve seen next door in guatemala where some of the individuals committing some of these practices have been removed from office and prosecuted, but thats not enough to really uproot a network like this, and we all need to think about that as we think of how we enter act with this everseases in those trying to effect other policy in countries and also as we think about repercussions here at home. These networks are like a fishing net, right . You can cut one knot out of the fishing net and that does not destroy the whole net so thats pretty significant and therefore, we really have to think about and this was important in honduras was the positive organizations and the people fighting against this, we found were quite networked and we can talk about that further, but they are quite networked and theyre quite holistic in their objectives. Theyre not singleissue organizations because they understand wow, this thing has infected a lot of our public space and we need to, and the effects are in multiple, different domains. So i think its a good time to open it up for questions, right . Well, you know first of all, both sarah and zephyr have agreed to allow me to call them by their first names and now by calling them zephyr and sarah im not disrespecting them in any way. I just want to make that clear. Sarah youve been listening patiently, what do you make of this . I want to the put it in different frameworks and one is the framework of the last 30 years of the Global Anticorruption fight and anticorruption has drifted to the top of the global agenda and we put lots of money and resources into anticorruption so it really matters what we mean when we say corruption, and a few things that happened in that area and one is its been fairly technocratic and theres been a hunch for bockes to catch the corrupt actors or particular strategies that might work. If you think about corruption as this sort of sideline problem, infection on another otherwise healthy body politic then that kind of approach makes sense. Its like we have this discreet problem in one area and we can fight it by a few laws here and a few more prosecutions here. What sarah is suggesting that we should think about corruption in a fundamentally different way and not by looking at number of violations of bank secrecy laws. Numbers of prosecutions on particular kind of bribery statute, but rather when those in power use that power to private ends as opposed to public ends and that changes the way we look at things and i what kind of behaviors are happening and its corrupt and if theyre not. We start by asking are those using public power by selfish ends or not. Then you look at power. One of the important things sarah does in this report is not say we look first at elected officials because to assume that those elected officials are those in power. We start with the assumption that those who get elected and depending on what kind of government system are the source and the issue. Instead you look at who actually controls things and who actually controls things matters. What shes doing then is harkening back to a more a rift olthsian way. As you may recall or may not, its okay if you dont. Aristotle had a sixtier system of government. There were three ideal forms and three corrupted forms. The ideal forms were the monarch, the aristocracy and the democracy although at the time the democracy had a bad name and the quality and the corrupted forms were the tyrant, the oligarchy and, again, he would call it the democracy. Mob rule. Yeah. So whats the difference between these two, the corrupted and uncorrupted forms. Its not the number of people governing. Its tilly who they serve, the difference between the tyrant and the monarch is the monarch is publicly interested and the tyrant is out for his own ends and so what shes describing in the aristotlian sense is the rule of the few, the oligarchic rule, and this may sound like a, you know, everybody understands aristotle, but this is not the way we operate internationally now. We tend to operate by looking at particular crimes and trying to stop those particular crimes. I would also say this has real resonance for our Current Situation in the United States, and we can talk later about the Trump Administration which is a unique in its assault on the rule of law and unique in its disregard for any norms or laws around corruption, but set aside donald trump. Prior to prior to this recent presidency, we have a growing split between elites and the rest of the country especially you d. C. Elites, but a split between what we think of as corrupt and not corrupt and theres an incredible capacity of political elites to understand and rationalize behavior as not corrupt because its not illegal. Whereas, if you talk to most people in most places in the country they look at the way we fund campaigns is profoundly corrupt. Not just the way business is done, but actually leading to those in power serving private ends instead of public ends. I would like to jump in on that and ask sarah, because one of her points that zephyr was making is how you can get to what you call a cleptogracy. Whatdemocracy, a somewhat honest system becomes through legally enacted means. What have you seen that looks like that . If you could talk about some other things, enablers, how all of those people are working to make this operating system reach the max my zation of money. I am going to stray from hon do yo honduras is one of the things they typically use to keep the population down is legalism. A u. S. Example that had my jaw on the ground was the 80 Supreme Court ruling last july that threw out the corruption conviction of governor mcdonald of virginia. I could even have swallowed if it had gone that way on a split ruling. It was the 80 part of it that preelly bl really blew me away. The fact that nobody thought to write a concurring opinion saying golly, given the way the law is written, we had to vote this way and a couple of buts about what the implications are. Let me spell out why that conviction was thrown out. It was thrown out not because there was no clear quid pro quo. There was one. It was the definition of what an official act is. He set up meteings for his business benefactor. He had set up meetings even in the governors mansion. He had certainly used public instruments, like his telephone and things like that. An official act was being defined evermore narrowly that essentially, to the point for something to be considered corrupt in this country, you almost need to sign a contract. At least in virginia. No. Is was the Supreme Court of the United States. Wasnt the ruling based on the virginia law and what the virginia law . This was u. S. Law. We have a Supreme Court who has narrowed the definition of corruption in two distinct areas, the laws that are prophylactic laws, making it less likely, Like Campaign law. What she means by prophylactic, the upstream laws, the laws upstream of an act actually being committed would prevent the series of events that would make corruption likely. What the court says is we dont need these laws, because we have bribery laws to deal with the real prob elems elsehow. In the bribery cases, they are also narrowing the definition as in the mcdonald case making it harder to bring cases. You have this vice in, and the only thing that is left, basically, it is for really criminals. Armando is in office. Please dont use me. We are going to sign a contract. Im going to give you 5,000 and you have to vote the following three ways and lets sign the contract. I think that relates honestly to an elite and cultural approach that the Supreme Court sees people like governor mcdonald as part of a community they recognize and understand. Is it a sense of entitlement . It relates to the incredible class split we have. Mark twain, who you can go to for almost anything, writes about this in his novel the guilded age. The two different languages of corruption where elites start to say, this isnt really corrupt. This is just way we do things. Everybody else says, if it walks like a duck, talks like a duck, it is a duck. In honduras, it is quite clear the league the zation process. To look at the congress building. This thing is clearly devalued. The building is not a dignified building. I almost included a picture of the chamber. It is an issue of the body and the institution. It has been systematically undermined, meaning physically the space. When i wanted to meet with members of conference, they didnt have an office. There are two Conference Rooms in the building of the congress. They had to camp out in the building, in the room, to prevent anyone else from taking our space. Some people might say thats a good thing, actually. I mean, just in terms of how you can conduct your business. So, okay, but then what we were able to do was catalog a series of laws that all cut the same way essentially legalizing in zephyrs kind of terms, legalizing practices that obviously violate any normal persons conception of corruption. For example, they create something called the qualianza, the council for Public Private partnerships. It serves to move public money off budget for private Public Partnerships where the money is held in a trust by a bank. And it is, therefore, not subject to the public procurement law. So, again, it is a way of essentially disabling governments ability to perform its function in the Public Interest. Secrecy laws that have increased the ability to hide all of these types of practices. It is under the cover of National Security. All the proceedings with the Supreme Court are covered by a classification system that you would normally assume to be controlled by the military. You also have had the creation of a National Security council that confuses a lot of what would you normally think of as separation of power. You have got the Justice Sector. You have the president of the Supreme Court, the attorney general and the army interior ministry, the president , on a National Security council. Then you have special units of the Police Reporting directly to that Security Council rather than up through normal channels. So those are some of the types of things. Along with the bending, the capture of the Justice Sector, the legislative sector, you have the hollowing out of other government institutions. I mentioned congress has both of those. The environment ministry. There isnt a ministry here but it is remarkable to see how environmental oversight has been gutted. Does that look familiar or sound familiar, sarah . Absolutely. I want to be very clear. It is always important to be context specific. We miss a lot if we start making easy comparisons. As an americanist, there are some things that are very haunting in what sarah is saying about law and about hollowing out. Not the same. There is an echo. In the United States, we have the growing privatization of law. This is largely done through arbitration agreements that people must enter into in order to have an Employment Relationship with big companies. Then those arbitration agreements, you dont have all the protections that you have in a court. The judge is not a judge who is either, depending on your state, appointed or elected through your public way. The rules of appeal are different. It has been a bit of a revolution. A move from the Public Private courts that you agree to. You are contracted to. When you see this mass shift to private courts from public courts, we ought to be very concerned. It is very different. It is nonetheless, a takeover of an essential feature of a selfgoverning, Democratic Society to have privatized court systems. I was fascinated reading her report about the role that Public Private relationships play in this corruption. In our country, we have, you might have heard about, company that is offer, for free, technology to police departments. You get free body cams and in exchange, those Companies Get a foothold in the data and the business stream. Then, you have an incentive to maximize certain kind of development. You also have that in our Public Schools with Companies Like google providing Free Technology to the schools. In exchange, you have a deepen tanglement with the company that has a core and has to have as mate ter a matter of law and ethics, a profit maximizing mode. There has sort of been a rash and a move towards that in the last few decades. It is something we should all be wary of as a potential source of the corruption of our overall society. Where i think honduras is different or almost an exaggeration of this is we still think about maximizing the selfinterest in the u. S. Business context is shareholder value. It is still not there is a notion that the business has to perform some function that causes people to buy its products or use its software or whatever it is. It is offering something that the market requires. Whe whereas, what you see, again, there is some blurry places like fritos. A lot of process food in the United States is not actually food one could argue. It doesnt serve a Public Interest. There is the sort of White Elephant syndrome thats important to understand. That is you create an infrastructure, a big building, a big Infrastructure Development that isnt actually meant to function. Hospitals that get built or arent properly equipped to populations because their actual function is to serve as a passthrough for public funding going into private pockets. Thats the way. For example, the solar energy in honduras, it is terrific. I think i would prefer a green to an oildrenched. You have solar Electricity Generation where the contract with the state is 20 to 30 years long and a price is locked in at the beginning of that contract and that price is 10 above market value. Plus, what is it, david . A 3 cent per kilowatt hour bonus. You are talking about locking in an inflated price. The cost of solar energy is going down by 10 a year. That is no longer shareholder value as we can understand it. Thats called looting. In this case, it is looting the customers because it is going to be paid in rates. It is also looting the state. There is this great corruption joke. You might have heard it. You hang out in a lot of corruption circles. One new cleptocrat is visiting his cousin in another country. He sees this incredible mansion. The cleptocrat shows him around, great pool, great view. He said, how did you do this . How did you make this . The old guy points out window and says, see that bridge, 30 . So then ten years later, the old guy is visiting his country. He cannot believe the castle. He has three pools, an incredible layout. He says, i know i taught you but how did you do that . The young cleptocrat points out the window and he says, you see that bridge. The old guy goes, no. There are different stages. Let me just add another element of this, which is sometimes private businesses can actually serve as White Elephants in a way. So, for example, kabul bank in afghanistan was floating on u. S. Funding, the u. S. Payment of salaries to the Afghan National army. The thing was a ponzi scheme, completely insol vevent. What kept it aflow was the cash flow. In honduras, the biggest bank bought out citigroups Central American holdings. I could understand why citi would want to get out of Central America, given what kind of money is sloshing around there and given kind of the ratcheting up of banking compliance thats been happening. If i were city, i would probably derift in that particular way. Did anybody look at what money they used to buy the map. I had a conversation with someone from a Development Bank who said essentially the entire Banking Sector in hon cure ras looks like kabul bank. Or looks like the Banking Sector in afghanistan. Kabul bank was a ponzi scheme. The only one that is were solvent were the ones running opie y opiate money, drug money. The assessment is thats kind of what the Banking Sector looks like in honduras. It is so systemic. It is kind of too big to fail. This guy is doing Economic Analysis for a big International Development bank. I asked him, how are you factoring in the dirty money . How are you dealing in your Economic Forecast and all this kind of thing . His answer was, im not. You cant measure it. You cant measure the dirty stuff. You dont know how much is sloshing around. Im like, oh, what meaning then does your analysis have . It is not an analysis of the economy as it exists . If the general understanding is that every single Honduran Bank functions this way, as a White Elephant, they are providing services and providing Banking Services to people . Their bottom line is completely detached from the services that they are providing. That helps explain some of the reluctance we all have, not just in figuring out how to deal with a system like this but even acknowledging that a system is like this. Then, it is like the whole country is too big to fail. If we start pulling one of these strings, we are going to pull the whole country down. Let me ask you about that. One of the other groups, you talk ben ablers, external organization that enable some corruption to continue. In the case of honduras, you have been talking about the drug money and all the cartels that are using honduras as a shipment point. There is also a lot of money destined to go to Central America from the United States to fight these cartels and violence. You seem to look at this as another revenue stream that this operating system wants to capture. How do you see that . Specially in a country like honduras where hundreds of millions of dollars has some meaning. Coming at this out of deep experience in afghanistan, and i know a lot of community here is very concerned about military assistance to honduras. When i look at the numbers, im like, hah, thats kind of a drop in the bucket of stuff that i have seen. In this context, it has a very Significant Impact and it is both the military assistance and, of course, sufficientcivil assistance. There is a moral or psychological impact it has. I love the way you frame that question. It raises one of the i want to say there is kind of a political tradeoff thats often applied to these types of situations where it is one of the things that these Network Elites often use to distract from what they are doing. They will say, but, if not for me, the security situation. They always often use the security situation as a counter balance. The heads of these networks will often pose as the people who can help you handle or get to grips with the security situation, be it drugs or insurgent violence. Or undocumented immigration . Exactly. I feel that president hernandez has situated himself very effectively. He has done it on the one hand by, indeed, cracking down on some of the Drug Trafficking and everyone that we talked to did say, you know what, there has been some progress on the drug traffic front and the drug violence front. I could experience it in place that is we visited where locals were saying, two years ago, we couldnt have driven down this street. Two years ago how much of that is what you have seen in other countries where the cartels themselves understand we are about making money. Lets not kill ourselves. Let make money. Lets keep a lower profile and lets maybe throw a couple of sacrificial lambs to the corruption people and the cops that we can really continue with the business . It is a great question. I have to confess, i wasnt looking at that specifically so i cant make an argument how much the cartels were policing. I think hernandez was policing to throw a bone to uncle sam and get himself in good light with the u. S. Government saying, see, i am helping you with your issue. We tend to be a little bit single issue and we get focused on one thing. In the case of honduras, it tend to be two things. It is the migrant flow and drugs. We found a massive increase in incarceration, dramatic. We didnt find it. It is other peoples statistics. A lot of localized reports, people in neighborhoods saying they would see sweeps in the night. So thats one thing that i think is really important. One aspect of your question that i think is really important to think about. Very often, in my view, it is this and in my experience, it is this type of kleptocratic networking of the public space, the political economy, if you will, that drives people toward violent reactions. Be that insurgency in a place like afghanistan or isis or be it Gang Violence. People start setting up their almost own social structures in counter distinction to the governing system. They will lash out in extreme ways. That can be violent and revolution and voting in bizarre ways. Yet, these people, meaning the kind of kleptocratic Network Types are really good at persuading outsiders that they are the champion their practices are fueling and driving. In some of those countries, the people that own the security, the private Security Companies are themselves members of congress and part of this. Bingo. So they are making money off of the security situation. Thats a great point. One they always advice an instrument of force. So it will be a particular Battalion Battalion in the army or a particular unit in the police. There is a lot of that in honduras where hernandez is creating special units that report directly to him but they look to have informal instruments of force, those can be the gangs. You start seeing gangses that supposedly this government is fighting against. They are also instrumentalizing as a plausibly deniable instrument of force. Internet trolls we can think of as that. I am not the short answer kind after gal. I dont remember the question. The question is enablers from outside. I really think it does. Thats the other part of the question that is really important to think about. I think too often, im going to move away from military assistance into Development Assistance when. You look at any corruption. Are there any usaid people . Anyone who has ever work for u. S. Aid . One. They often get offloaded on to the shoulders of u. S. Aid. They have to develop some anticorruption programming and internally Development Agencies when they think about corruption, they tend to think about corruption within their programming. Is any of our money getting stolen by somebody . We found the issue to be much more along armandos question. Streams are being captured by the network. We looked in particular at Development Financing and Development Banks like the ifc, the International Finance corporation or fmo is another important one in honduras. Its the dutch Development Bank. I decided to pick on finland. Poor finland. I love the place. I really love finland. I think it is a wonderful country that has its head screwed on straight. They do have a Development Bank. It was fascinating to look. It is called finfun. It was one of the incompetent ve investors in a famous tragic project, a dam over which he was assassinated. The finish government puts money into finfund, which is a bank. It wants return on its investment but wants the investment to go into Development Objectives. I found that finfund will put money directly into projects or sometimes finfund or usaid will put money into a fund at every layer in this process, the Development Objectives are more at attenuate tiff. The oversight is weaker. What we found was, when i would say what reporting requirements do have . They would say, we get a report every six months. I would say, do you ever check the veracity . Do you check the report against the situations on the ground . I hear a laugh up here. I was really stunned at the degree to which the presumption was people were doing good, where as at the end the official turned to me and said, quite passionately, i just want these people to have power. My grandmother didnt have electricity. The biggest event in her life was getting electricity. I think he really felt strongly about that. What he didnt go down and look at was, is this lec trisity reaching the people or is this actually for export, which turns out to be the case. The presumption that the other thing that was really interesting was that finfund felt attacked by this Civil Society organization that were protesting. When i asked, is there anything you would do differently. A woman, a Tremendous Community leader, a breathtaking organizer. I kind of feel like she was honduras nelson mandela. When i went there and understood the kind of action she had had and the type of impact she had had way outside of her own ethnic group or whatever it was. When i asked would you do anything differently, they saw her organization as an enemy and they said, yes. We now know it is not enough to have a good project. You need to understand the context in which it is being developed. I go, yea. Until i hear the next sentence, you have to know, is there some ngo out there that has a lot of International Support thats going to blow the thing up in your face. I was like, how did finfund, get into a position where the very people they claim they are out there trying to support, which is local villagers, who want electricity, they just dont want lec tristy this way . How did that organization become the enemy rather than the type of community you are trying to support. You havent said anything. This is fascinating. Corruption isnt this side thing. It is deeply intertwined with selfgovernment and freedom itself. So when you look at the sort of founding of our own country, at the constitutional convention, they talked about corruption more than they talked about anything else, not because they saw it. They talked about corruption more than they talked about violence, internal insurgency, those problematic people in massachusetts. More than warfare, they saw the fundamental task of freedom from an inevitable pressure whether you are in a monarchy, it is the reverse of the arc of justice toward history. It is sort of the arc of government bends towards taking and it isnt a secondlevel task but a firstlevel task. So questions of government, who decides, who makes decisions about whether it is solar projects, cant be separated from questions of corruption. You have to engage in all of them together. We were just talking about time. House keeping. He wants to turn to to you guys. Im like, let me just have one more word here. What zephyr just said connects to Something Else i heard from villagers in honduras. They said, you know, we have started to understand that this Political Party thing, this democratic contest between Political Parties is really just designed to split us up amongst ourselves. If i were to translate what they said to me into my vocabulary, they are seeing the Political Party contest as really a contest among or between rival strands of an imperfectly integrated cleptocrati cnet work. The network in honduras is not a Single Network the way it is in azur bijon. There are rival strand that manifest themselves in the Political Party system. I would like to do the u. S. Parallel and say, i think thats a lot of the malaise we have here and why 50 of the electorate doesnt vote. It is quite interesting we are all focused on polarization and Political Party polarization. I think we are very polarized on kind of social and cultural issues. But as zephyr suggested in the beginning, at the top of our party system, there are much more consonants than members or supporters of either of the Political Parties would like to admit. In terms of these types of political economy issues. There is much more similarity at the top of the democratic and republican parties. That is not really expressed in the polarization, identity polarization at the bottom. To some extent, the identity polarization becomes a distraction preventing the people from holding those guys at the top who are kind of colluding, holding them accountable and responsible. I can say that this affects how people work. In the last six years, seven years, since Citizens United. Things were bad before that. Since Citizens United in contested congressional races. I was in a contested congressional race last year. I lost in the Hudson Valley in new york. The majority of money spent in those races is not from either Political Party but in outside so superpacs. It is still reported on by journalists, because there is sort of a potential alignment with the republican side, that this is a republican superpac or a democratic superpac but what that means is that the main contest is happening not with the candidates and not with parties and not with the partys ideologies but with wealthy, extremely wealthy donors on each side. Im talking about 400,000, 500,000 donations. Thats just in the seven years since Citizens United. I think people are not stupid and they feel that. They feel that contests are con fes tests between elites which lead to a lot of things. It leads to disaffection. I think it is part of the story. The true tragedy of the trump election is that trump is probably the most corrupt president that we have had. I use that term not in a legal is stick sense but in a sense of being willing to use the office for making money for himself and for his family, for his clan. I do think that many people voted for him because they were so frustrated with what they saw as a corrupt system. They just wanted something to change. I spoke to a trump voter the day after who said i just wanted to put a stick in the stream because something needed to change. The wrecking ball. The tragedy is that people voted in part. A lot of other things going on. But, in part, as an anticorruption moment. People are feeling like they want fundamental change. Both for our country and not just in terms of the aid that we may or may not provide but in terms of the modeling that we provide. I think that really matters. We have spent 30 years after the wall came down trying to tell toefsh get everybody to get on with this democracy program. We have a special responsibility to make sure we clean our own house, deal with our own structural problems of corruption that are not just wound up in the illegality that we see with the Trump Administration but structural problems about how we fund campaigns and how we privatetize and allow for accessive Corporate Power if we want to continue this. Because we do believe that people are smart. We are going to let you show how smart you are but asking questions. We have facilitator was a microphone. Please raise your hand and try to keep your questions brief and because it is the Carnegie Endowment for international peace, try to keep your questions peaceful. All right. We have a question here in front. Would you not agree that the founders of the country, our country, devised a process of governance that recommended a separation between the policy and the elite. Did they make a mistake . Could i ask you if you are affiliated with someone, if you wouldnt mind just lets us know. Ed burger, a physician that directed a program in russia in the health field for 17 years. Thank you for your question. Let me see if i understand the question. Are you suggesting that there was a mistake in not having a direct democracy as opposed to a Representative Democracy . Parts of the Electoral College is an example. There are others. By the writings of the Founding Fathers. So i by no means think that the Founding Fathers were perfect. There were some obvious errors. Im a Langston Hughes patriot. Let it be the dream it used to be. America was never america to me. Recognize the incredible wisdom in our past and also that there are flaws. I would say that the spirit, the anticorruption spirit is one of the ones that we should continue. So when designing the congress and the senate, one of the reasons they had a separate senate and congress, was to contain different corrupting impulses that we have, the corrupting impulses of the elite and what they saw as the more unruly democracy. Hamilton argued for an executive on anticorruption grounds saying the executive is the least luckily to try to use his position of power, because he will so identify with the country that he wont steal from it. To which mason and others replied, look at the time that charles took money from the king of france and was sort of bribed in various ways. We need the emmolumentes clause. It was initially seen as too difficult given the shape of the roads to corrupt every different electorates if we had all the votes on a same day in a structured way. Ible in the importan i believe in the importance of amending and moving forward. This kind of attention, the size of the veto, not just who are we going to prosecute. Thats how modern anticorruption people think. Who are we going to prosecute . We think of the structural job is reducing the temptation to selfdeal. Next question. Well take one from this side, please. And then the next question will be the person in the back. My question is, i was wondering if the pentagon could play a role in reducing corruption in a country like pakistan, because pakistan being a security state. These pakistani genders, by billions of dollars, they make millions of dollars in kick backs. This is the reason they influence honest position. Do you think they can use their influence to have an honest person . I am not going to get into internal pakistani politics, obviously. The issue of how military assistance can play a role in this type of a situation is an important one. I have a fair amount of experience with it in afghanistan, not pakistan. What i have found is that the u. S. Military in general is quite reluctant to engage in this territory at all. At a very senior level, when i was involved, Senior Officers got it and they did understand that the integrity of government was critical to them succeed in in their own mission. I know a number of Senior Officers that really waded in to the importance of anticorruption as part of the policy toward whatever country it might be. In this particular case, it was afghanistan. It could be pakistan or honduras. On a lower level, the mill fare military is extremely reluctant to have this enter into or officers that i have known and also the palmill department and the u. S. Department of state is reluctant to see this as part of its job. Essentially, they see their job as were there to train people how to shoot. I think thats a mistake. I think that the integrity of armed forces is absolutely critical to these issues everywhere. The u. S. Role in training, mentoring, and equipping militaries in honduras, pakistan, a variety of other places is a really excellent environment in which to drive home some of these lessons. For example, i have talked to people that know something about south korea, which i dont. They say that the gradual emergence of south korea and now is not a great time to be saying that given whats been happening in south korea recently. South korea used to be extremely corrupt and emerged out of it and a number of people said that was partly because of the example that was set by u. S. Force when is they were there. Sarah, let me ask you this. What is the role of u. S. Military aid in pacifying generals and that network being able to keep the generals at bay by using u. S. Money to say, look, we are getting you your piece of the pie, behave . I think thats a great point. Its often used as a bargaining chip. It is pretty maziamazing the un states prosecutes business officials, the foreign corruption practices act, while the United States sometimes seems to bribe foreign officials. We have had some admirals just recently. Indeed. Question in the back. Raise your hand, please. Well take two questions in the back. That gentlemen and the gentlemen behind him. There is one all the way in the very back. Rick masic. I am with a Global Anticorruption blog. My question is, we spent an hour hearing about how terrible the situation is in honduras. Could we spend a couple minutes on what you think might be done and in your comment, could you sort of talk to this Oas Commission recently established . Yep. So im 100 with zephyr on im not in favor of tools and sort of tool kits. Thats part of why i am kind of promoting it doesnt have to be this diagram. To understand how to address a country, you need to know something specific about how its networks are structured. I do think there are about 60 countries in the world or maybe more that you can roughly describe in the way that i describe honduras. You do need to know specifics about how it is set up. There is a Real Networks are incredibly resilient. You cant just hope to knock off a couple of individuals. So i would like to talk about two elements. One is the one that you mentioned, masi, a kind of version 201 of the commission that has now brought down and prosecuted several top members of the guatemalan government next door. When there were broad anticorruption protest s in guatemala, we want a sesig, an internationally supported commission with invest igative and prosecutorial mandate. It is an extremely powerful tool. You can bet that the honduran government once they saw what was happening next door, said huhuh. It lacks the prosecutorial mandate that sesig has but it does have an expanded mandate to address some of the institutional structural setups that allow this system to perpetuate itself. Thats a real potential up side of moxy. They are looking at Campaign Financing laws and they are looking at plea bargaining laws. And some of the really important legal frameworks that allow this system to perpetuate itself. There is going to be a very dramatic pushback and already has been. I havent followed all of the details of it. Thats something very worth following. For example, in the honduran congress, there is a front in support of moxcy. It is a nonpartisan front. There are efforts to disable that front that are underway at the moment precisely because of the danger it poses to the structural framework that allows all of this to go forward. Thats one thing z. If moxy doesnt have any teeth, isnt it just a distraction. The one that really has teeth is the cci. If you cant do whats done in guatemala, essentially, it is just a shell game. Im not sure thats the case. Whats done in guatemala, individuals were prosecuted. For the moment, the network survives. The network can survive the removal of individual nodes in it. Sesig does not have the mandate to address the framework, the structural network that is allow it to prosper. I think frankly they are out on it. Lets watch and see how it evolves and see whether it can grow some teeth. There are some pretty dedicated people there who are not going to allow themselves to be steam rolled . Or kind of a window dressing. None of the people involved in that institution or most of them are not they are pretty ferocious people. Is moxcy able to convert its institutional mandate into something . I want to talk about Something Else in terms of a positive, which is the organizations that are fighting back, the grassroots movements that are often described as environmental movements or indigenous rights activists or land activists. They are often in the description of them broken up into these little categories and finfund treated these organizations as the enemy rather than seeing that these organizations have a bead on this system in a very sophisticated way. They are trying to network themselves. For example, one of the milpau, which is in the constellation, wonderful people in lapaz department. The head of it or the coordinator of it was on his way to colombia where he was about to meet a whole bunch of representatives from other indigenous movements across the region to discuss the problem of monsanto, which is trying to patent seeds. They are like, we invented potatoes. You are not going to tell us that you guys can patent. Central america, thats where they come from. They are working really hard to revive indigenous varieties of plants. They would say, this leaf is a fertilizer and the bark of the sim tree same tree is an insecticide. They are completely reeducating themselves on those type of lure that is part of their struggle. Finfund was saying, copen, this other larger group, they have a, quote, other agenda. It is not just about the dam. What finfund didnt understand is that copen knows that the dam is part of this structured and networked system. Therefore, they have to address it in a structured, network way. Those organizations are doing this as a tremendous personal risk to the activists and their families. They get murdered. They get murdered. And disappear. This is not a joke. Thats right. I want to say even though i am not an expert in the area. There have been successful anticorruption efforts over time. It is not sort of a single direction. It almost always involves an incredible amount of Civic Engagement in this country. We were in bad shape in 1899. It took us several decades but a lot of different efforts and my hesitancy about using tool kit modeling, i just think if you think of a background image of a car that works and a car that doesnt work, then you have a tool kit to fix the car that doesnt work to make it a car that works. Then, it will continue working. What we need to understand is that we can learn from different circumstances and different experiments. That learning never stops. There us no sort of steady state utopian stable, noncorrupting world. It is just new methods will come around in which corruption can be in different ways. Monsanto example is important because i believe that one of the greatest global corruption threats comes from modern multinationals who engage in Different Countries in different ways. Again, have a mandate to maximize profit and we dont accuse them of that. Thats in the law. They are publicly traded. That actually leads to figuring out how to not just not get caught like uber might but actually how to take over the structures of law. Thom Thomas Jefferson was very worried about the corruption. He saw them as becoming many private governments that were essentially corrupt. Not that they are outside governments but that they govern themselves. They govern behavior. One strategy that i would think about in many countries in the world is thinking about antimonopoly as a potential strategy to take on concentration of power. That concentration of power enables the networks to extract a value in society. Thats very interesting. If you read any futureists, some of them go as far as writing that in the longrun, there will no longer be governments. There will be corporations and they will act as governments. If you read anybody, even Science Fiction writers, that is one stream of their writing, the down fall of governments and the rise of these governs. Adam khan, google but im not representing them here today. I would highly recommend everyone buy a copy of dark money. It paints an amazing picture of the corrupt influence of money and corporations and how elections are bought. Coming back to that idea of the concentration of power, gerrymandering, superpacs, what do you see as the future . Are we going to be stuck with s Citizens United which is euphemistically named . Why dont we talk about the power of superpacs and how we are in the situation because of Citizens United . Great question. Citizens united is not about to be overturned, which means that we, in the United States, it can be overturned but it is not about to until the next few years given the state of the Supreme Court. It is important to be realistic of that. More is required of us. If you think of this as kind of a battlefield, we just lost a lot. The last seven years have transformed politics. I talked to you about my race. Superpacs played checkers in the first year. They are playing chess now. They are about to play go. They are deeply involved in data. Superpacs are increasingly doing the canvassing that parties used to do. It is a very quick takeover. I believe, and sorry to say this to you, adam, that one of the things we have to do is take on say, okay, we have changed the way that campaigns are funded. Moved to a publicly financed system in the United States and model that for other systems. In new york city, it has transformed new york city politics, led to a lot more competitive races, fewer incumbents, being able to sit pretty. We also need to bring about antimonopoly laws. I would say that google and facebook have enormous political power. I felt that political power in my own race, not only as filters for news and information but also in terms of the deep political connection to the Political Parties. We talk about law and nonenforcement. Google was deeply embedded in the Obama Administration and many people look at that as a reason why the Obama Administration did not take on the wage fixing scandal in Silicon Valley where the big five agreed not to hire and coach each others workers or something that looks on its face illegal. We have to look not just in the Impolite Company but the Polite Company for where there is concentration of power. Questions up front, please. Lady . Wilma sherka with the oacd. I have a question for each of you. I am glad you talked a little bit more about your view of the tool box. I think tool boxes or in the tool box with perfection work or can work in terms of trying to deal with this issue over the longterm. My question is, the situation with one of you mentioned something about electricity. Instead of going to the people, it ends up being ripped off through the elite. My concern, i think a concern is more when the people get just enough, on the electricity but theres still a ripoff. So i guess my question is which goes back i think to a question that might have been raised earlier is what do you see as the Enforcement Mechanisms . What do you see in the toolbox that potentially needs to be wrim proved or can work and im putting aside our own issues here in this moment with this particular government, so thats one for you. Were almost out of time so were only going to give you one question. Thats right. Your answers will answer if they can. The second thing i turn to go ahead. Because zefr is going to walk out the door at 5 30. Ill get there. For you my question is the following, you made i think a very interesting point about too big to fail, that this can relate to a country. I think one of the prime exam e examples and were now with our third president who is being looked at and perhaps and my question to you is there are how do you move from being the poster child for the good stuff, for showing that the government is strong to the possibility that it can basically be undermined totally and basically have a loss of faith in government and in governance and no government that can operate . Thank you. Briefly, i think in this country we need ive said this before change the way we fund elections. Actually enforcing antitrust laws which we havent since 1981 but then also introducing new antitrust laws to deal with the new monopolyists that are taking over and corrupting a lot of our government, and then subparts of that in this country are these questions about the incentives and culture in our prosecutial offices about why doj and ftc have been inactive in the antitrust, why other agencies have been inactive in taking on big banks, that i think theres actually different ways that we can structure prosecutal offices in as much as a prosecution is one part of what we should be doing and the last thing, which is not a law is cultural. Is actually expecting and insisting as a cultural matter, not as a law matter with revolving doors, as a cultural matter that people serve in the public good and not in their private interests, not merely when they are Holding Office but after they have held office. I used to play a game and ill turn it over called what would oleg do . In Different Countries he would corrupt everybody differently, some countries he would bribe and some countries he would just get a no big contract. In the United States he hired bob dole as a lobbyist so that shows us where our weaknesses are is the different strategies used in Different Countries. We have a real weakness in the accusation between superpacs and our own cultural acceptance there of. Id like to add to that regulations. I hate to say it and it is true that, you know, if youre a Small Business or a small bank, theres a lot of box checking paper work that strangles you but whats interesting is people working on behalf of some very large, very selfinterested private interest are using the tra vails of the little guys as a pretext to dismantle regulations on them that really are in the Public Interest and so i recommend to everybody the book, the best way to rob a bank is to own one. Its about the savings and loan crisis and it is fascinating about the role of effective regulators, the best way to rob a bank is to own one. On my question, i would say that the stories youre referring to reinforce the importance of what shes been talking about, the word about laws that help prevent corruption upstream of its taking place and similarly looking at this internationally, once you get to the point where it takes a year of public demonstrations to get a government to even think about something, youre going to be in a mess, in a catastrophic failure but its going to happen. So for example, mubaric looked great in 2005, right . Mubaric looked like hes stable and delivering on the camp david accords just like we want and hes a strong man and stability and if hes a little corrupt, his son is a little corrupt around the edges, thats okay we can live for that in return for the ability for the stability but youre going to get some kind of a stemmic failure in that case. Unfortunately what happened in the case of egypt is one branch of the network took back over. So now weve got sisi whose the same thing, in fact, and worse and were saying wow, isnt this great, weve got stability, weve got this strongman government in egypt. Its not going to last. Theres going to be systematic failure. Too big to fail actually fails. It does fail in the end as it did in 2008 in the Banking Sector. The real question is how do you then put in place a framework that will avoid getting Systematic Risk again and we havent gotten there yet in the u. S. Banking sector and we havent gotten there yet in corruption in Foreign Countries let alone our own country. Im afraid thats going to be it for the questions, but i would like to give both zeffer and sarah an opportunity for closing remarks. Its been a wide ranging discussion all over the map literal little and many levels from sophistication from Different Countries, Different Levels of corrupt activities, but all of them in many ways showing that if you can fix something in a country where the level of corruption is here, it doesnt mean youre out of the woods because when you get to be a first world countries there are going to be corruption issues there as well. Very briefly. Three things. One is that decentral wriezed private power is actually essential to protecting against corruption. The second and i sound a little old fashion but maybe thats my job is that we have to engage in questions of virtue and morality. And not merely see this as a tech know crattic matter and the third you should definitely read sarahs fantastic report. And i would like to emphasize a point that is that we didnt touch on and that is insufficiently let me touch on two points that we didnt touch on. One is i was hearing you were covering this, the kids coming across the border and theyre still coming across the border and what i heard mostly was they were subject to Gang Violence and gang extortion and i think thats probably what you found, thats what they talked about. But it took me about two days on the ground to realize that the police were outsourcing their extortion to gangs. So i dont want to be the guy with the hammer and everythings a nail but believe me you scratch the surface of just about any problem and youre going to find corruption underneath it. So be aware so this whole system was very instrumental in moving those kids on to those perilous roads that they took. And just to add, each one of those children represents thousands of dollars to the Smuggling Network that brings them here so when you multiply 150, 200,000 children and family units that have come to this country over the last few years and you multiply that by 4 or 5,000 that is perhaps not paid out at the beginning but it being paid out now by those families there is a huge flow of money because of the smuggling thats happening in Central America. And just to reinforce what ar mon dough suggested before the very government that were relying on to stop these migration flows so this is true of corruption in general. When you say, lets not worry about lets back burner the corruption issue because we really care about this concern, more often than not its corruption itself thats driving this concern over here so its actually counter productive in the long term to back burner corruption in order to focus on this and the second point i want to make is that insufficiently developed in this report and i really want to turn to it much more in future work, these networks although its important to look at the country distinctions, the networks themselves are not isolated within their countries. These are transinternational networks and were all used to transinternational organized crimes and multinational corporations, it stands to reason that if the networks are integrated in these ways the clepto crattic networks are transinternational and we ought to be taking a good look at that as we examine our Current Situation in the United States. We have a tend densy to look for specific laws that may be violated, if you look at the pattern of the business and other interactions by key members of this administration overseas, it almost starts to look like an Airline Route map where youve got nodes in Different Countries but the lines are going like this and i think were looking at washington becoming or having become a node in a web of transnational clepto mattic. Thank you for this very, very interesting discussion. Thank you for joining us on cspan2. Good night