Kleptocracy and foreign corruption manifesting in illicit financial flows
Abstract
Purpose
The purpose of this paper is to identify the place of kleptocracy and foreign corruption within the broader framework of financial crime. This facilitates understanding the importance of kleptocracy and foreign corruption as social problems. Two other aims are to better understand the most problematic components of a kleptocratic network and the most effective combatants of that network. A subsequent goal is to offer solutions from a broad range of interventions, including policy, technology, education, research and collaborative efforts.
Design/methodology/approach
Theoretical economic concepts are used to analyze the importance of kleptocracy and foreign corruption. A small in-depth survey of 15 experts is conducted to identify the most problematic components of kleptocratic networks and the most effective combatants of those networks. The proposed solutions are based on a combination of argumentation, econometric developments, application of trends in related fields and material from in-depth surveys.
Findings
This paper identifies kleptocracy and foreign corruption as one of the most, if not the most, devastating financial crime according to its impact on the total marginal utility of wealth. Experts identify foreign kleptocrats or corrupt foreign government officials as the most problematic entities in kleptocratic networks and the most effective combatant is identified as the US Department of Justice. By adding up fines and asset forfeiture related to corruption, penalties are found to be a small fraction of the problem in terms of monetary magnitude.
Research limitations/implications
The paper does not attempt to make causal claims because of the nature of the paper’s purpose and methodology.
Practical implications
The paper offers suggestions and methods for academic researchers who may wish to pursue a research agenda that is empirical and forensic with the aim of combatting kleptocracy and foreign corruption. The paper describes how information on kleptocracy and foreign corruption can be implemented into business and economics curriculum.
Social implications
Kleptocracy and foreign corruption are important problems, and creative solutions are desperately needed.
Originality/value
The paper shows how understanding and combatting kleptocracy and foreign corruption can be considered an interdisciplinary activity, touching on fields including technology, economics, business, ethics, education, law, policy, statistics and research methods.
Keywords
Acknowledgements
The author is grateful to the following interview participants for the invaluable information they provided for this paper: Raymond Baker, Global Financial Integrity; Sarah Chayes, Carnegie Endowment for International Peace; Clark Gascoigne, FACT Coalition; Alex Habershon, World Bank; Michael Hershman, The Fairfax Group; Trevor McFadden, Baker McKenzie; Diana Schemo, 100 Reporters; Nicholas Shaxson, author and investigative journalist, John Torres, Guidepost Solutions; Marina Walker, International Consortium of Investigative Journalists; and five other individuals who are unnamed at their request.
Disclaimer: Views and opinions expressed by individuals mentioned in this paper may not represent the organizations with which they are affiliated.
Citation
Moorman, T.C. (2018), "Kleptocracy and foreign corruption manifesting in illicit financial flows", Journal of Financial Crime, Vol. 25 No. 3, pp. 681-701. https://doi.org/10.1108/JFC-02-2017-0008
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited