 I'm Charles Davidson, the co-chair with Raymond Baker of this event, and I could step up on the stage, but we have a relatively small room here. This was put together by Raymond, myself, Jack Blum, and Tom Cardamone, and this has been delayed because of COVID. This event could have happened earlier, but it didn't. Here we are, welcome everybody. We're going to start with a short video by Senator Whitehouse, who couldn't be here. There's some retreat. We would have had Senator Cardin, too. This wasn't happening, so we're getting a lot of support. It would appear for these ideas from the Hill. So I may have forgotten one or two things, but we're going to roll right now with Senator Whitehouse. Hello, everyone. I'm Senator Whitehouse, and it is great to be here, at least electronically, with all of you today. First, I want to congratulate Raymond Baker on the release of your book, Invisible Trillions. You shine much-needed light on how the hidden wealth of kleptocrats, criminals, and the ultra-rich is stored in rule of law jurisdictions. You've done great work parsing the economic, political, and social dangers of such secrecy. I'd also like to thank Charles Davidson, Jack Bloom, Tom Cardamone, and Global Financial Integrity for partnering with Raymond to launch the D.C. Forum. Right now, America is engaged in a clash of civilizations. It's a growing clash between rule of law and democracy on one side versus kleptocracy and criminality on the other. In this clash, we allow our adversaries to exploit our own laws and financial system, and we allow our institutions and professions to aid and abet them. Wrongdoers can hide their loot and hide their identities behind rule of law, while they're out there degrading rule of law elsewhere. We must prevent foreign adversaries from hiding their loot within America's borders. And around the world, we need to tighten up laws that allow host nations to prop up kleptocratic regimes like Vladimir Putin's. I am with you in this fight, banging steadily away. My asset seizure for Ukraine Reconstruction Act, co-led by Senators Graham Blumenthal and Bennett, was included in the FY23 omnibus. That amendment allows the United States to send proceeds from the sale of assets forfeited from people sanctioned for Russia's invasion of Ukraine, to foreign assistance to the people of Ukraine. This past is an omnibus amendment on the floor of the Senate by voice vote on a completely bipartisan basis. We will work with European allies to adopt similar legislation to help their justice ministries move quickly against ill-gotten assets and plug sanctions loopholes. Our legislation can help serve as a model. The Treasury Department recently issued a new rule based on my earlier bipartisan legislation requiring reporting of the true beneficial owner behind shell companies. Starting next year, when that rule goes into effect, law enforcement will have a new window into the webs of shell companies that facilitate corruption and hide the bad guy's loot. Treasury is also working on an important proposal to shine much-needed light on the $60 trillion U.S. real estate market, and we are urging them on funding. Last May, I secured $67 million for the Department of Justice's new kleptocapture task force and $22 million for FinCEN in the second Ukraine supplemental package. They now have added resources to meet these new challenges on top of a baseline increase Senator Grassley and I led to boost FinCEN's annual budget by $29 million. Relatedly, Congress provided the IRS new funding to crack down on offshore tax cheats and large multinational corporations that play the line between legal avoidance and tax evasion. While we are making progress, there is much more work to be done. Here are my priorities. First, my Enablers Act, introduced with Senator Wicker, which would strengthen federal due diligence and transparency requirements so that American professionals, such as investment advisors, attorneys and accountants, cannot secretly hide illicit money or facilitate financial crimes. We already require this level of diligence in other industries, like banking, so this measure would help level an existing playing field. We must work with nations across the globe to stamp out global tax avoidance and evasion and fulfill the promise of the Foreign Account Tax Compliance Act to help partner nations combat tax haven abuse aided by the U.S. financial system. Tax cheating is at the heart of the global dark economy. We must also honor the historic Global Minimum Tax Agreement negotiated by Secretary Yellen. My No Tax Breaks for Outsourcing Act would bring us into compliance and it would end the incentive for multinational corporations to hide money and tax havens and ship jobs overseas. Last month, I met with President Zelensky in Ukraine. The people of Ukraine have endured so much in Putin's brutal invasion and they stand as brave reminders of the importance of victory in the clash of civilizations we face with international corruption and kleptocracy. So thank you for your partnership in this fight and keep up this important work. Senator Whitehouse and thank you all for coming and joining us today. We've been looking forward to this gathering and I hope that it will be an impetus to address the kinds of issues that we're talking about. Let me begin by being quite clear what drives me. When I graduated from Harvard Business School in 1960, I had no idea, not in the furthest reaches of my imagination, that capitalism might someday undermine democracy. The preceding 15 years, at least in the United States, had been perhaps the highest level of responsible capitalism ever achieved. Veterans retrained, investment soared, relations between labor and management were generally good. Banks and corporations promoted balanced growth and consumption rose. Every indication was that these favorable trends would continue. But then something happened. Over the last half-century something utterly fundamental has happened in the democratic capitalist system. The original pillars of democracy have not fundamentally changed since their formulation in the late 1700s. Popular vote, rule of law, representative legislatures, protection to minority rights still guide our democratic aspirations. However, the original pillars of capitalism are now radically altered. These pillars, also developed in the late 1700s, were originally formulated around making profits, spreading wealth, and generating public goods. But in recent decades, capitalism has taken on the ulterior motive of masking income, disguising income in the trillions of dollars annually, and wealth in the tens of trillions of dollars cumulatively. Secrecy has become as important as profitability, generating, moving, and sheltering money in ways that are beyond the oversight of the organs of democracy. That is beyond the oversight of regulators and legislators is a recent phenomenon in capitalist operations. In pursuit of this new motivation within capitalism, we have created a financial secrecy system that now facilitates perhaps half of global economic operations. What are the components of this system? There are several. First of all, tax havens and secrecy jurisdictions. These are places where lawyers and bankers and accountants can handle your affairs without identifying you. No one outside this circle can see what is going on. Second component is disguised corporations. In these, no record is kept of who owns these shell companies. And they are in the tens of millions around the world. More of them having been created in the United States than in any other country. A third component is anonymous trust accounts. These let you conduct business without anyone knowing with whom they are doing business. A fourth component is fake foundations. You can donate money to your charitable foundation. You can designate yourself as the beneficiary of the charity of your foundation. And you can avoid paying taxes and avoid accountability every step of the way. A fifth component is a broad range of money laundering techniques as John Kassar has written about for years that handle particular types of financial transactions. Sitting in the middle of this financial secrecy system is the practice of falsified trade. This is trade conducted where invoice prices and real values differ. I have never known a multinational, multi-billion dollar, multi-product corporation that did not use falsified trade in some part of its business around the world. And finally, as part of this system, governments intentionally leave holes in their laws to enable money to move through this financial secrecy system and into our economies. The United States of America is the biggest user of the financial secrecy system. And the best data that we have indicates that more money, more dirty money flowing around the world ends up finally in our economy as compared to any other. Now, many people think in the richer countries that we are the innocent victims of the terrible practices of these kleptocrats and drug dealers and human traffickers and counterfeiters and money launders and terrorist financiers. That is not correct. Every single element of the modern financial secrecy system has been created by us in the richer Western countries. Not a single element of this system was thought up by the people that we like to blame. The reality of this system and its operations means that we face extreme difficulty fighting kleptocracy and crime and corruption and terrorism and more. The reality is that this system and the harms it causes is not something that has been done to us, it is something that has been done by us. We, bluntly speaking, we cannot succeed in the fight against these ills while we at the same time move and shelter the money generated by the bad guys. Even with all these ills, the greatest impact of the financial secrecy system is on inequality, on economic inequality. Without question, this is a huge problem in the 21st century going forward. When I got my MBA in 1960, the ratio of executive pay to workers' wages was 20 to 1. Today, this ratio is more than 350 to 1. Today, we live in a world where the richest 1% have wealth accumulation equal to the remaining 99%. Much of this soaring inequality, not all of it, but much of it, is enabled by the financial secrecy system. This system is designed to help rich make, move and shelter their money through mechanisms that are just simply not available to or visible to the middle class and the poor. Let's take that 20 to 1 ratio that existed in 1960. Had that ratio been maintained through to today, the middle class in America would be better off by 50 trillion dollars. That's trillion with a T. Research shows that tens of millions of Americans believe that they will not be as well off as their parents, not able to enjoy the standard of living up to the level of their parents. This is disheartening for tens of millions of Americans and people in other countries as well. In other words, the angst that exists in the middle class in America and elsewhere has factual roots, has realities that contribute in a major way to political discontent, which brings me to the central point of the D.C. forum. That's D for democracy and C for capitalism. Democratic capitalism is at risk. Severe imbalance now characterizes the way that democracy and capitalism are functioning. For decades, even centuries, we've taken it more or less for granted that these two pillars should generally work in support of each other. These two systems should be working in sync to spread liberty and prosperity. Democracy is expected to offer equal political rights to its citizens. Capitalism is expected to offer fair economic opportunities to its participants. Instead, these two guiding tenets are becoming decoupled, no longer operating in sync. The capitalist side of the equation is running out of control, eroding the social contract, empowering kleptocracy, facilitating crime, fostering corruption, evading obligations, and maximizing income and wealth inequalities. And in these realities, thus jeopardizing democracy. The onus for these outcomes needs to be placed on underperforming capitalism rather than upon a collection of other societal problems. Rebalancing capitalism and democracy is one of the most difficult challenges ahead. As currently practiced, our two systems are not working well together and will not get us satisfactorily through the 21st century. The DC Forum seeks to drive an understanding of this risk into the political consciousness, into the Overton window, if you will. Many of us in this room have been fighting particular aspects of these problems for years. Many of us here and many of us in other organizations. And many of us feel that we are not making the progress that is needed, not getting the traction that is appropriate to the issue. The DC Forum seeks to elevate our particularistic approaches, our particular concerns to a higher level, to an understanding that instead of dealing with a collection of individual problems, we're dealing with a systemic issue, an issue that literally cuts to the heart of the democratic capitalist system. The rationale for the DC Forum draws upon the experience of trying to get the climate change issue into the global consciousness. Scientists and scholars knew in the 1970s and 80s and 90s that global warming was a reality, but they were not successful in getting it into people's thinking. It took Al Gore, with his presentations and films and speeches, to focus repeated attention on these issues. And he, with the support of others, succeeded. Climate change is now widely accepted as a looming threat to prosperity and even peace. We hope that the DC Forum can contribute in a similar way to securing into people's consciousness and understanding that our cherished democratic capitalist system is at risk. Let me again be clear in closing. I believe that democratic capitalism is the best invention within political economy that we have yet devised. But I believe that it is being damaged, terribly damaged, if not destroyed, by ill motivations and ill dealings in one of its components, capitalism, far more so than within its companion component, democracy. Change must come if the hinge of political economy is to pivot toward strengthening both equality and justice. We're dealing with a systemic threat to the continuation of our system. I hope that you will join us in the DC Forum, join us in this key issue, in this very key opportunity to bring about change. Thank you. My name is Jared Ryle, and I'm the director of the International Consortium of Investigative Journalists. Over the past 10 years, we've done some of the biggest journalism collaborations in history, the Panama Papers, the Paradise Papers, and the Pandora Papers. And these projects are really aimed at bringing out a secrecy in the offshore world because we think that the issue of secrecy is one of the biggest issues that the world is facing today. Raymond Baker, of course, has been a pioneer in this work before we even started doing it for many years, and he was one of the first people that I went to when I started investigating this. I'm a real supporter of Raymond's new book, Invisible Trillions. It does go to the heart of one of the biggest issues here, which is that this is attacking democracy, and I think democracy is under threat because of it. I'm also a big supporter of this conference. I'm sorry I can't be there in person, but I hope it goes well. Good morning, everyone. Great to see you all. Welcome to the folks watching at home. I'm going to start my presentation off with a very brief quiz, and if you listened intently to Raymond's remarks, you'll probably get the answer without too much difficulty. And that is, what is the common denominator of corrupt government officials, tax evaders, and transnational criminal organizations? Well, they all wander their money the same exact way. They all use the same spaces that are littered throughout the global economy. Anonymous shell companies, real estate, private investment vehicles, free trade zones, and on and on and on. Raymond gave a very good list of what those are like. Of course, we are sitting in the epicenter of global money laundering. According to Janet Yellen, this is the best country in the world to launder money. Certainly a dubious distinction, to be sure. But we do have a long history with this sort of thing. We were one of the first countries to offer a tax dodge with a bill in 1921 that allowed shielded foreign held wealth from taxes here in the US. And we continue to do so today. There are secret trusts in South Dakota, non-charitable foundations in New Hampshire, and of course, high value real estate from coast to coast. But we're not the only ones who do this, of course. Switzerland, Cayman Islands come immediately to mind. But the globe offers a cornucopia of options to any fraudster, cocaine, cartel, corrupt government official, human trafficker, shady businessman who want to move, hide, and launder their money. There are no fewer than 141 jurisdictions that offer some sort of vehicle that enables the laundering of money in the evasion of taxes. Indeed, for the discerning criminal, they have a wide variety of time zones, languages, cuisines, and vacation spots they can pick from if they choose to do so. They fancy warm water and palm trees. BVI is probably the place for golf, beaches, and anonymous shell companies. If they prefer Singapore, excellent food and nightlife, and an almost opaque financial system. The options are almost endless. And what I want to do now is just take a brief minute or two to introduce you to a new component of our website, which is a map of secrecy jurisdictions where you can search on all 141 jurisdictions that offer this type of service for their clients. You can zoom in, and I'm just going to pick a couple just to give you an example of what we're looking at. Well, that one didn't work. I might have lost my internet connection. Let's try that again. There we go. So each one of these 141 countries has about 100 word blurb or so. It gives you a little bit of history behind some of the activity that took place in each jurisdiction. Clickable links so you can find out more about some of the specifics and have some idea on what's actually happening in these jurisdictions. A lot of them have been highlighted by ICIJ's excellent work. And it gives you an idea of what they offer to their clients. We also have a drop-down menu that can be used for any particular country. Let's just pick one at random here. Dominican Republic, let's say. You can go to any one of these and click on a link. See if we get that. There we go. So one of the things the Dominican Republic advertises is their free trade zones and they're very proud of the secrecy that they offer through those. So I encourage you to go to our website. It's gfintegrity.org. Take a look. Works on your mobile phone as well. And this is the last thing I want to say is this is a very sort of dynamic thing. We're going to be updating it regularly. If you see something you think should be added in there, definitely send us a note. We'd love to hear from you. And now I'm going to turn it over to Jim Henry. Thanks very much. Good morning, everybody. Delighted to be here and I'm amazed at the group of extraordinary people who are in the audience. Starting with Raymond, Jack Blum. Many of you are longtime contributors to this area that I've known for literally decades. I'm reminded of Johnny Carson interviewing Howard Hilton on his television show and asking him, well, Howard, is there something that you, very successful, distinguished businessman, worldwide experience would like to say to the American people? And he thought and he paused for a minute and he said, turn to the audience and he said, yes, there is one thing I would like to say to the American people. Put the shower curtain in the bathtub. I have thought long and hard about how to talk about the history of the work that I've done in this area. And when I first started out, I would say, studying the underground economy in the 1970s as a graduate student at Harvard, there were only a handful of economists and activists who were anywhere close to analyzing this. Developmental economics was still the rage. There was a general assumption that capital would be flowing from first world countries to developing countries. We had concepts like illicit financial flows, the demand for big bills, the underground economy itself, global capital flight, the stock of offshore wealth, these were all to be developed. And it was only by a kind of handful of misfits, really, who were kind of in various positions in the world to notice this going on, that we started out to launch this measurement exercise, which has turned into a really fascinating kind of approach. Raymond's book has a whole lot of numbers in it. I won't try to do battle with that, but we have different approaches. I've emphasized more the fact that when all of these flows leave where they're coming from, from the source countries and go elsewhere, capital flight and illicit flows through the trade system, they actually have to go somewhere. Someone has to be involved in managing them. A lot of them get invested offshore and don't come back. They accumulate earnings offshore. And so you have to take into account the stock of value. And you have to understand who's doing it because it's not just a passive activity. It's an activity that's mediated and is profited from by some of the largest financial institutions in the world, some of the most prominent law firms, accounting firms, corporate registries. And it's not just third world tropical islands. As Raymond pointed out, a lot of the industry is based here. We have had some of the most important financial secrecy laws in the world. We've seen tremendous inflows of capital from countries like China and Russia into the United States. And so point number one is I think this is a man-made problem and it can be unmade. And all we have to have is the political will to do that. And that's the important lesson of all of this work beyond all of the particular estimates. It's large, it's growing. My numbers now are about 60 trillion worldwide, 10 to 15% of worldwide wealth. McKinsey's latest estimate for net worth for households, 95% of world wealth is owned ultimately by households, is about 510 trillion, so it's about 10 to 15% of that total. And this has been growing at an explosive rate. That doesn't include the trade discrepancies that Raymond has pointed to and is really the authority on. I've seen a lot of the trade abuses that he's described. In South Africa, we found one of the largest investors in South Africa was a Kazakhstan company that basically acquired possession of the entire chromite industry. It's the largest chromite industry in the world, it's essential to producing stainless steel, parking all of its profits in Malta. The miners' union was upset, we sued, we did the analysis, and there's a big contest going on in South African courts right now to take that company to task. Zambia, if you look at Zambia's copper exports, they report no copper exports to Switzerland. One of the biggest investors in Zambia for the last 20 years was Glencore, a Swiss trading company. Switzerland reported no copper imports. Where were they? Well, they were parked in the BVI. No copper ever physically ran to the BVI, but it all ended up being booked there as a book entry. So I have, being an ex-McKenzie consultant, I've naturally come up with a lot of slides, and I'm going to talk a little bit about this as much as I have time for it, but the topic is the global haven industry. We did notice outside Washington today a spy balloon. We're kind of concerned, but it looks like it's from Germany, so it may be secure. We also noticed some spies, and this one in particular came up last week. It was a concern to me because in 2018 I'd done some work on President Trump's financing. And now who financed Donald Trump? First of all, why was there Vladimir Putin to begin with? What happened to Russia in the 90s? That's a whole subject. But secondly, who was actually lending to this guy at a time when he'd had six bankruptcies in the 1990s and no US bank would lend to him? Well, it turned out that there were several sponsors to that question, but a lot of them had to do with Russian and former Soviet Union oligarchs and a particular bank called Deutsche Bank. This fellow in the middle was the guy I talked to about my information. I had identified Rudy Giuliani and a guy named Felix Seder laundering money from Kazakhstan into the Netherlands, setting up an elaborate network of shell companies. And I innocently gave this information to the New York FBI office. And I was surprised, nothing happened. Now we know. So the global haven industry needs a framework, I think. We need to think carefully about what we mean by offshore if we're going to measure it. And then we can get into the various components and try to estimate those. Panama Papers, ICIJ has done outstanding work, you know, led us to believe that it was kind of an archipelago of individual jurisdictions. Secrecy jurisdictions have individual properties, almost as if they're isolated from each other. But, you know, there was, we saw when the network of jurisdictions we found in that one law firm in Panama, and there are hundreds of law firms in Panama, about 215,000 companies which were located in the BVI. But that's just the tip of the iceberg. We had a lot of leaks and this kind of leak journalism, I think, is one very, well, has positive, pluses and minuses. I mean, I guess I enjoy it when journalists actually go out to the front lines and investigate things and find out the facts themselves and they're not reliant on whistleblowers or leaks or a lot of data dumps. The data dumps are helpful, but they encourage us to believe that havens are these individual entities, many of which are remote. And here's an example, the EU's lists, black lists of havens refers to places like Palau, the Vanuatu, they leave off the list, the largest havens in the world, Switzerland, the United States, the UK, spider net, and that's simply for political reason. That's where the money is ending up. Nobody wants to invest in Palau. Those are conduits to the major locations. So this is not a new problem. These are not just tax havens. It's not just an archipelago of distant to kind of unrelated disconnected secrecy jurisdictions. It certainly isn't, you know, a term that some lawyers will use as well. It's all legal. Dennis Healey, the British chancellor, once said the difference between legal and illegal in the tax areas with the prison wall, you have KPMG saying that any audit practice that they pass, that they believe will pass with 25% probability is legal for them to advise on. So it's kind of a probability distribution. And it's certainly not of modest size. Here's what I saw when I went to Iceland in 2016 in the wake of the Panama papers. I was invited to participate in this study group that looked at offshore assets. And it was literally unauditable, this cross-holdings network. It was a network, not an individual haven. And they were everywhere. And the volumes for the 330,000 people who live in Iceland were extraordinary. Here's what we found when we looked at Chiquita Banana, you know, setting up this elaborate network of interrelated companies, all of which are subsidiaries, to basically pay no taxes on their exports of bananas. The banana is starting in Ecuador, 20 cents a pound. And the Cayman Islands network charges 12 cents a pound for the purchasing network. The Luxembourg subsidiary charges 12 cents a pound. The Ireland subsidiary charges 6 cents for the use of the brand. The Isle of Man subsidiary 6 cents for the insurance. Isle of Jersey charges 6p for management services. Bermuda charges 26 cents a pound for the use of distribution. The finally ends up in the UK. And the only taxes they paid are in Ecuador, on the export tax. So, you know, this is another example of the network nature of this problem that we're facing here. The third idea, as Raymond has emphasized, is just that there is no bright line between offshore and onshore anymore. There's anonymous assets in the United States, and so what we really need to be measuring is anonymous wealth. We have no idea who the owners are, who the beneficiaries are. And this domain I wanted to mention four heroes of mine just in passing who have helped me understand this industry. One is Robert Levinson, who became an authority not only on Panama and Latin America and Russia, but also disappeared in Iran in 2007. To this day, I have no good story for why Robert Levinson was not brought back by his government. He was a great friend of mine, and we worked together on many investigations. David Dirk, lieutenant David Dirk, a circus partner in New York City Police Department, and Sam Jaffe, who is Richard Jaffe, who was the guy who did the Castle Bank and Trust case back in the late 60s, early 70s. One of the first offshore banks of any significance for the United States was the Castle Bank and Trust. And it got shut down. In that case, we found a list of 300 depositors. Norman Casper provided me with that list. It included all kinds of folks, but the Pritzker family, the Gucci Annie penthouse, quite a cast of characters. They were never prosecuted for tax dodging. These were arguably quite illegal trusts. And to show you the long line of historical research, the kind of the long tail it has, just this last October, I finally got the treasure of the Castle Bank and Trust, which is based in Nassau, which we now know has been a haven to FTX and has been a haven ever since. Well, Jack will tell you about the history of Nassau going back to the Civil War. But this fellow had two offshore accounts at the Castle Bank and Trust. And so we're looking into now on the anniversary of Watergate what Richard Nixon did with those accounts and what his brothers did with those accounts, but that's an incredibly disturbing phenomenon because here's the second U.S. president we found deeply involved in the offshore industry. The other big theme that we discovered was when looking at this industry was that the banks were deeply involved. This is a case involving Morgan Stanley in South Africa. You may have heard of Morgan Stanley. They were one of the largest investment banks. Well, they respect the laws in the United States, but when they go to South Africa, they help the wealthiest investor in South Africa evade taxes. And this is a scheme involving 13 offshore companies, foreign Namibia, one in the Cayman Islands, one in Delaware, two in Mauritius, et cetera, et cetera. So complicated that South African revenue authorities could not audit it. And to this day, it's gone unprosecuted, involving, you know, a billion dollars of tax dodging. That's outrageous. Here's the case of HSBC. I'm not connected to it. Let's go back. I'll just tell you about the data. HSBC in South Africa, deeply involved in laundering money for the Guptas and President Zuma. So, you know, this is a disturbing pattern, I think, that we turned up here, repeated time again. I've been investigating kleptocrats in more than 50 countries auditing their debt. In every case, we found banking involved, irresponsible banking. This is a case of Ferdinand Marcos parking $7 trillion that he stole from the Philippine Central Bank in Switzerland. This is a case involving Angola, where KPMG and a bunch of Swiss financial advisors helped the son of the former president of Angola manage his $5 billion sovereign wealth fund. This is the case involving Equatorial Guinea. The patterns go on and on involving offshore institutions. In the case of Russia, we saw 150 state-owned companies being sold to the private sector and some banking institutions for a grand total of $9.7 billion in 1995-96 with the support of some U.S. government institutions. The Lord helps those who help themselves. Let me get to the estimates. Well, first of all, the pattern, in other words, is one of impunity for banks. So if you want to explain why we have the system that we do, you have to take into account the fact that this is one of the most powerful lobbies in the world and that these institutions are not losing their licenses when they commit crimes. The top 22 global banks committed more than 650 felony-scale offenses across 14 different categories from 1998 to 2015. They received a total of about $300 billion of fines ultimately, but all of those fines came at the end of the process. And so the profits were realized up front on a net present value basis. This was a profitable activity for these financial institutions. Nobody went to jail in the 2000s except a few lower-level traders. No one lost their licenses. Right now at the Department of Labor, we're dealing with Credit Suisse's ability to advise U.S. pension funds, to have a status as a qualified pension fund manager. The Department of Labor has the power to say that someone who's been convicted serially of a U.S. felony corporation that's engaged in that can be kicked out of the QPAN system. Make a long story short, in 2014 they were convicted. $2.6 billion fine didn't lose their license. Nobody went to jail. And the DOL gave them a waiver for their QPAN status. The waiver again in 2019, just this year they finally decided because of Credit Suisse getting convicted again with respect to loans to Mozambique that they would be pushed out of the program. But there are dozens of other banks that have been engaged in similar activities around the world that are not losing their status. So this is the global haven industry. It has many parts. And it's like the Star Wars bar scene. You have all of these various actors, the crooks, the kleptocrats, the tax dodgers, the money launders, you know, the people who are stealing trade rights are using these places and the common facilities that they share, the financial secrecy, the weak regulation, the low taxation, but also the sophisticated enablers to continue this. Now, the estimates that we've got, I mean, I'm just going to jump to the chase here. I started estimating stuff back in 1976 with an article on why we have so many hundred dollar bills in the U.S. economy. Nobody could explain why there were four outstanding per capita. Well, you know, the answer was most of it was offshore. And today it's about 2.5 trillion dollars of big bills that are floating around. In addition, we have another, you know, depending on the day of the week, 500 million to a trillion dollars of crypto. All of that is potentially regulated by central banks, especially our central bank, but it has chosen not to do so. I proposed a currency recall back then. And Larry Summers, my friend from Harvard, was finally agreed with that after he was Treasury Secretary in 2014. It was a little late, but he came up, you know, he came to the party at that point adopting this idea. The estimates that we've had for offshore wealth have gotten a lot of attention. We first identified U.S. as a tax haven in 1989, and the price of offshore revisited for TJN was 2012. Missing 20 trillion as of 2010 has since, you know, using our estimates, estimate methods has now increased to more than 50 trillion dollars, 50 to 65 trillion. Again, the traditional capital flight estimation process looked at flows. The trade flows analysis does something similar. I'm suggesting that we need to get at stocks, and there are three different methods to do so. I don't know how much you want to know about penguins, but I will, I'll be happy to tell, to answer any detailed questions about this. But just to give you a very broad overview, first of all, one source of the data are the private banks themselves. They actually publish assets under management every year, much of which most, almost all of which are owned by offshore wealthy individuals. And so, you know, we find them fessing up to a grand total of, you know, at least 12 trillion dollars, top 50, as of 2010. Secondly, you can look at cross-border deposits that are tracked by the Bank for International Settlements. And you can assume that those are a fraction, reasonable fraction, based on surveys that we've done of private investor portfolios. And you can scale up those actual numbers to get an estimate of private cross-border financial wealth. And that's the second basic methodology. By the way, the numbers that we use for that, the OECD in 2020 decided, you know, TJN, you were actually kind of right. You know, they were underestimated because they only included 40 countries. They didn't include domestic deposits between asset managers. The final method was to capitalize capital flight. And there's elaborate models, country by country, that do that. When you do that, you find that the offshore retained earnings that are not brought back are a huge fraction of the total investment. So it's very important to look at the earnings on the offshore flows. You can disaggregate using this method for the developing world and for key countries like China and Russia. You can get quite interesting results. There are all kinds of measurement problems. You have to figure out how much is being repatriated to Hong Kong back into China. But we can do that. We can actually go to the field and interview people and find out what's going on. So when we add all that up, we get an interesting list of key players, source countries in the developing world that are contributing to this global sourcing of capital. And it shows that, you know, countries like non-democratic countries are basically parasitic on our financial institutions because they can come here and they can use the courts. Jack will tell you all about that. But that's an irony here. The biggest investors are usually people from countries that are not democracies. Globally, when you add it up, global flight wealth, I call it, is greater than developing country debt. I mean, it's a huge hidden cost to this industry that when you add up the offshore wealth from developing world and debit out the official reserves and the, you know, the gross external debt that they have, they are actually net creditors of the first world to the tune. This is as of 2014 to the tune of $13 trillion. That's a substantial number. They're also a big source of our billionaires and our inequality problems. The U.S. now accounts for just 28% of billionaires. And China and Russia are closing in. So when we add up the totals as a share of the wealth, we're finding as of 2020 on the order of $60 trillion is a plausible number. Our original estimates left out real estate, which was not important as of 2010. It's become very important. In fact, much of the increase in wealth in the last decade, dramatic increase global wealth, has been in re-evaluation due to Federal Reserve interest rate policy. So if you really wanted to have an impact on inequality, you would talk to the Fed. That would be another important component of this because that's really driven up a lot of the investments that have been going on in real estate. The total then is, I think, reasonable, but we need to do the kind of analysis I did and spent years on for the earlier estimates again. How does that affect inequality? Well, it's not ordinary people who have these enablers. And all of this offshore wealth is owned by a tiny fraction of the world's economy, .001% in this 2010 estimate. Less than 100,000 people accounted for a third of the offshore wealth. I think this is another kind of analysis that we can really refine and go much farther with. But my summary today is, we have all of these sectors of the offshore industry. It's not just about private banking and offshore wealth. It's also about creptocracy, tax dodging, human capital flight, which is another grotesque phenomenon. And I think ultimately it is, as Raymond has said, about who's going to run the show and whether we have a democracy to look forward to in the future. My biggest concern is that all of these wealth estimates are basically numerical. The real wealth that we have to worry about are the expectations of young people, of the next generation, of what kind of world they're living in. And I think if you poll them today, a lot of them have fairly grim outlooks on the future, especially the next decade. I think that's an important source of our wealth estimates, is to understand how people feel about their futures, as opposed to just running the numbers. So thank you very much. Jim has a certain amount of credibility, it would seem, always very impressive. Now we're going to hear from Jack. I hope you appreciate the continuity management, because Jim has dropped what Jack should talk about at least. We'll see what he does talk about. And we're ahead of schedule, which is extraordinary. Maybe we'll keep it that way. Who knows? First, I promise not to go back to the history of the Bahamas and the Civil War. Although I personally investigated it at the time, I don't think you're ready for that discussion this morning. Now this stuff has been going on for a long time, and we've had one investigation after another. I want to say we've made enormous progress. For 150 years, bankers had no responsibility whatsoever under the law for what their clients did. If you were a banker, you were a public utility. So if somebody came in with a bag of cash that was stolen from wherever, you took it, put it in your coffers, and went on about your business. And it wasn't until the Patriot Act that we got to the point of saying you bankers are responsible for what your customers are doing. And you better know who they are, and you better have some idea what they're doing with their money. We've had tremendous success enforcing information out of the bankers and a little less success in enforcing the law that that information would enable enforcement of. But it's a huge turn in banking law. We've also had disclosure of beneficial ownership, which is an enormous step forward that it'll come into effect. There are new regulations. We'll see how that works. And I think that it's a great tribute to those of you who've worked on it. The Enablers Act was about to become law in the American Bar Association, which by the way fights all these reforms tooth and nail. The American Bar Association put out in the newsletter a couple of weeks ago that one of its major legislative achievements of the past session of Congress was blocking the Enablers Act, which I think is a tribute to the people who were working to put it forward because many of us thought it really wouldn't have had much of a chance. It tells you that we are going in the right direction on some of this, but we're left with a real set of problems. And this is where I think I'd like to make you all focus in and figure out what do we do from here? When I say we have a major set of problems, you just look at the trail of disclosures that have gone on over the last now 30 years about money laundering, offshore, bad behavior. And you've heard the litany, and I want to say that Raymond's book has as devastating a list of all of the things that have been disclosed as you'll find. And the question then that you all have to ask is why isn't disclosure by itself working? We have the idea, and certainly journalists do, that if people know the truth, it'll result in some action that in turn will solve the problem. And what we're confronting is a situation where we've had disclosure to the point of almost exhaustion. You can hear these horror stories one at a time and you say to yourself, my God, were there that many? Well, it isn't working and something is really wrong because a disclosure isn't bringing about change. And what I want to explore this morning is why that's going on and what possibly can be done, if anything, to change it. I'm going to start with what I call my short course in criminology. The short course in criminology is this, the criminal justice system works best if you're dealing with a world where everybody knows everybody else and everybody understands the subject matter of the crime. And really this is a system at least for us that grows out of the common law. And we're talking about 17th century England. Somebody stole my cow. Everybody in the village knows what a cow is. The cow is on the commons. A guy is arrested for having stolen the cow. Now there are 12 jurors who come along and the evidence is presented and everybody can say unanimously he did it, send him to jail, do whatever. In those days he probably would have been hung but whatever, the system works. That is especially true for crimes which are crimes of violence. So every time that somebody murders somebody else, there's a corpse with a knife sticking in it. There's a corpse with a gun. Somebody's got his head bashed in. We've all seen the police procedurals on TV. So it's clear the cops have to do something. There has to be an arrest. You have to clear the cases. If you then take things down the scale and start going into other kinds of crimes, you get crimes of fraud, you get crimes of the financial variety, and they're harder to prove, take a hell of a lot more work, and you suddenly don't have a group of villagers who all understand what the underlying set of facts are that led to the crime. But still there's a will and a willingness, especially if the police have a victim, and if that victim is in the jurisdiction and if the evidence is available, there'll be a prosecution and there's a reasonable chance that somebody will go to jail. The problem with the system that has evolved in the financial world that we've been talking about is that these are crimes of adhesion. All of the people involved in committing the crime, at least at the working level, are happy with the results. The guy who's hiding the money, the people who are managing the money, everybody thinks it's terrific stuff. The crime, the victim in this crime, is society. The victim in the crime is democracy. How do you sell that to a jury to send a specific person to jail beyond a reasonable doubt? And the answer is it's difficult. And if you take that up a notch and say, well, the evidence is scattered all over the world, the laws are, who knows what, in terms of getting evidence from those places. The ability to make a witness come and testify from some other jurisdiction is well-nigh impossible. And the upshot of that is that these crimes rarely get prosecuted. And if they are prosecuted, they're prosecuted in a very narrow way so the case can be won by the prosecutors, but not in a way large enough to create the deterrent effect. And this is where we have to do a little more understanding of criminology, because the ability to control crime is based on deterrence. That is to say, how can we scare enough people with the prospect of going to jail so they stay honest? A professor of mine, Leon Radzenowitz, who ran the Cambridge Institute of Criminology, who was I think one of the most brilliant of the criminologists of certainly the 20th century, said, as an example of the inability to control crime without policing, conviction, sentencing, was the case of Denmark after the Nazi invasion. The Danes arrested the entire Danish, the Nazis arrested the entire Danish police force. And they did it because they thought the Danish police would be disloyal to the Nazis. What happened was in quiet, peaceful, Scandinavian Denmark was an immediate crime wave. And that's because there was no fear of prosecution. And now let's just talk a little bit about fear of prosecution. About, I would say, 50% of the body politic behaves, obeys the law. I like to refer to an old FBI agent friend of mine who grew up in the Bronx. And he said he personally thought God would whack his hand if he ever stole an apple. Half the population is like that. Now there's another 40% of the population. And that chunk of the population includes a large number of my law school classmates, a large number of bankers who take the attitude, well, I'll do it if I can get away with it. If I can get away with it, it's fine. But if I really run the risk of going off to the pokey, maybe not. And here is where deterrents comes in. Because they need to be reminded repeatedly that there's a real threat. They'll spend some time in what we refer to as the gray bar building. The problem here is the system then depends on the bottom 5 to 10% of the population. The sociopaths who the cops can focus in on drag off to jail and uses the examples to scare the 40%. But that system simply does not work when you get to international financial crime and the kinds of models that we're looking at for attempts at prosecution. So now let me sort of take this another step, another step further. Some years ago, I was in Bavaria, and I had a meeting with the Staatsrechtsanwalt, as they call him, the state prosecutor of Bavaria. And in the run-up to the meeting, two investigators for the state prosecutor were telling me about this wonderful global investigation they did of a ring that was stealing computer chips and making a fortune doing it. And they had tracked the ring, they located the guys, they focused in on where the money went, and it was one gem of an investigation. And into the room, after they gave me the story, came the actual elected Attorney General of the state of Bavaria. And he said, why did you guys waste all that time and money on this investigation? I get elected based on my ability to control street crime here in Bavaria. And you've taken all of these resources, and you've gone out and become world travelers and great investigators, and what's that going to do for my effort to get re-elected? So now what we're focused on is who takes responsibility for doing some kind of global investigation. And now you're really up against the wall because a global investigation is one expensive undertaking. It requires traveling. It requires a lot of time. It requires translators, competent translators. It requires documents and multiple languages. And it runs up against all kinds of problems that people don't even think about. So for example, if I'm a prosecutor in New York and I want to have a witness come testify from Portugal, the result will be good luck. Can't do it. Why? Portuguese will not honor a subpoena from a grand jury in New York. Period. End of story. What the prosecutor can do is request a letter rogatory with written questions that a Portuguese judge will then ask someone who is a prospective witness, who then responds with written answers. Now anybody who's done a financial investigation knows that if you can't ask a follow-up question and somebody has the opportunity to fudge a written answer, it's a total waste of time. Not only that, the time involved is stunning because by the time this process of making the request and getting the reply goes on, we probably are beginning to run the statute of limitations. Problems like that make the will to do cross-border prosecution very limited. And the number of prosecutors who have the resources to send the investigators around the world, CBS's FBI International notwithstanding, is close to zero. Now if you take that and then translate that to the tax arena, we're dealing with an internal revenue service that hasn't had the money to open the mail for two years, much less send investigators around the world, much less try to get information from countries that don't want to provide that information because they're financial secrecy countries. Even where there's a tax treaty, there's a reluctance to employ the tax treaty. And I've been on that on both sides, both working as a consultant for IRS and I've worked with the tax authorities of a foreign government. And in both cases, getting anybody to use a tax treaty to actually do a big tax investigation is really next to impossible. Now I'll take you to another scene. This time it's the audit of a major American corporation. Now a major American corporation will file a tax return that's a stack of paper, well actually it'll be done electronically, about YAI. And there'll be all kinds of things in that paper and what happens is IRS assigns a team of four or five or six people to that corporation and they work in that corporation's offices. Usually they get some very uncomfortable folding chairs, we're in a room with marginal air conditioning, and they sit there going through the tax return and periodically picking up the phone and calling the tax contact in the corporation. There always is a designated one and they'll call up some documents and they'll review them. And then we get to the moment of truth. The bosses in Washington call the team and say, why the hell are you guys still working on a five-year-old tax return? We've got to clear it. We need the numbers. Okay. The head of the team says, all right, we'll get down to it. So now they do what you have to do in a tax case, which is reconstruct the taxes that IRS thinks the company owed and then present that to the company to say, do you dispute any of the things we've talked about? And at this point, tax counsel for the company comes in and says, yeah, we dispute all of it. Yeah, you're asking for 400 million. How about one and a half? Okay, we'll settle for two. Bang. Deal closed. Well, it's not anybody's fault that this isn't working. It's rather there's no money, no time. And the way these tax returns are constructed, there is a absolute impossibility of testing the truth of what's in that tax return. And it makes corporate taxes almost a voluntary matter. And all you have to do is look at the number of companies that haven't paid any tax and you'll know how many have volunteered to actually pay their taxes. So what do we do about that one? Well, one idea that I've tossed out boy, it makes people go crazy is to say all tax returns of corporations over a certain size should be public record. They're all secret now. Why isn't that public? There are several other possible ways of coming at this. But it seems to me that the current system is a complete loss. It's it's not working. It can't work. And there is no penalty for faking it. You know, if if somebody puts some bad numbers or something happened on that tax return, who knows how that will ever be caught and who would ever be punished. And that takes me to another problem with this whole business of how do we enforce the law. And that's the question of management responsibility. There's a terrible tendency to push responsibility for any bad acts down to bad apples in some department or other. The boss didn't do it. I was involved working with a cooperative witness in a case involving a large American accounting firm that had been selling tax shelters. The group that was putting together fake tax shelters and they were ultimately judged criminal fraud on tax and selling them to people so they could evade millions and millions of dollars in tax. The firm had a collection of damn near three quarters of a million emails. And for reasons which I'd rather not explain, I had to review most of those emails if not all of them. There was no communication, zero communication in the emails from the team that sold the tax shelters. Never mind that this team had generated 70 million dollars worth of profit to the accounting firm and never mind that on top of that they had gotten bonuses for their superb performance. No emails between the unit and the management, huh? Right? So there were a couple of mid-level accounting partners who went off to jail and the firm went merrily on. This is the problem. No arrests, no prosecution, no deterrence. And if there isn't senior management responsibility, it's a real loser. And we've been through that time and again. So now we get to one other problem and that's the problem of the democratic institutions and what it says about democratic institutions. The working assumption is that if the people know, the people will vote out the bums who support the bad stuff, vote in people who will do the right thing and that will solve the problem, although it'll take a bit of time. We'll get there. Well, the difficulty I have with that proposition is the voters here will be voting on whose governor of, you name the place, Illinois, Mississippi, wherever. They'll be voting on a president who picks an attorney general, but what do they do about the legislature and the attorney general of Malta? What do they do about the president and the attorney general in Cyprus? What do they do about the president and whatever passes the law enforcement in Panama? That democracy won't help what's going on in those countries. Our efforts to control what other countries are doing to facilitate criminal behavior in the U.S. is really seriously limited. We negotiate treaties, we negotiate conventions, but they're all compromised and they never do seem to produce the results they're supposed to produce and it's happened time and time again. And I sat in the room with people who've done the negotiation and their motivation is to seek a compromise so they can say we have a convention that deals with that. But does the convention work and how are we going to find out if it works or it doesn't work? And here there's a major positive development which is there is a civic society, civil society group that's trying to make at least one of the conventions work properly. But anyway I'm going to wind up by simply saying these are the issues we have to pay attention to and it seems to me that in the discussion there hasn't been enough discussion of can we make law enforcement work? How do we pay for it across borders? How does a prosecutor get evidence and how do we get some top level people who are making all the money out of this system sent off to the pokey where many of them belong? Thank you. Well we were slightly ahead of schedule but interrupting Jack is a very difficult thing. So I think this morning has been kind of interesting because we've had in the same place Raymond Baker, Jim Henry and Jack Blum who are really the three greats of their generation on this subject and I think there are a lot of people in this room who would not disagree with that. So we're going to move on to somewhat different formats with the first panel after the coffee break and sorry that we're three minutes behind but we'll start right at 1040 with the first panel maybe 1038 but certainly 1040. Thank you. Think that the Russia-Ukraine war is due to the financial secrecy system. All right we see just a few hands go up. One more. Another one. Okay all right well that's a little bit the premise of this panel and actually I'm going to grab my notes. So all right so as you may have noticed we're not introducing panelists and people because this is all up on the screens and everything and it saves time and keeps things a little crisper that way. So we're going to look at this question from various perspectives. I mean Nino runs a very important think tank in Tbilisi, Georgia and she's going to bring to us the perspective rather specific perspective from her country. We have with us David Kramer whom a lot of you know who I think could lead off addressing this very simple question that was posed a little bit and then Jennifer Gould is a very eminent journalist from New York City and you may think because she writes the New York Post you know and she actually writes about real estate a lot just about glamorous transactions of rich people and used to do a lot of restaurants but she's also written extraordinary and fearless investigative reporting on kleptocrats and issues associated with offshore wealth or the financial secrecy system as we are calling it. So do you want to kick it off David? You don't want to kick it off now all right. Well then why don't we start Jennifer with your experiences I mean over the years and also Jennifer was in Moscow in the 1990s so she lived through that whole episode and over the years how have you seen this financial secrecy system in action in terms of the very specific reporting that you've done which has been mostly on Russians I guess and Russians in New York City for that matter. Well thank you David thanks everyone I'm really happy to be here I loved hearing the talks earlier this morning you know I started my career I had one year at the Philadelphia Inquirer and then I quit I moved to Moscow to cover the collapse of communism and at that time the West thought it won the Cold War guess what we all know now we didn't win the West did not win Russia changed strategy and I kind of witnessed the beginning of that in the 90s and continued it continued watching it the same people in my reporting over the next three decades. So Moscow 1990s financial secrecy actually went back to the late 1980s I remembered one night at the dacha of one of the last heads of the KGB who helped organize a coup against Gorbachev that real estate had transferred to a young KGB colonel who told me stories about Western Front Company set up in the late 80s the Russians knew their system was failing they knew they'd have to change and not in a friendly way to the West as Raymond talks about this separation between capitalism and democracy we saw it in in action a sort of weaponization of capitalism extracting the democracy strengthening autocracy weakening our democracies I got so you know I saw these young oligarchs at the time would go for dinner with them the first millionaires club the first raves the first big parties a very exciting time in Moscow rigged privatization we've all heard of but it wasn't just rigged privatization it was partnering with Westerners that initial money coming in raw materials going out of the country come back to the to New York late 1990s and that Russian money is already coming in Chelsea market 10 million dollar investment from men who were linked to criminal organizations in Russia you know had created really the Chelsea market the redevelopment of the west side of New York 2018 that property sold for 2.4 billion dollars so that was the first sort of wave in New York of investment and by the time of Putin the 2000s we had the tip of the iceberg coming out which is these oligarchs coming in and they were buying properties and they were buying big properties and my background kicked in I could find out which oligarchs were buying what properties it was a lot of fun to write um but that was really just the tip of the iceberg so you know they would buy in LLCs we didn't have leaked documents so it was really speaking to people going out doing the reporting talking to the brokers and finding out who these people were who were buying the properties and they still have them on that level the same you know so we go from the real estate to Russian investment and everything I would see oligarchs come in uh with a purpose of what they're buying so somebody wouldn't just buy an apartment it would be an apartment owned by a billionaire and the oligarch would then buy that billionaire's business or a billionaire would buy a very politically connected person uh and get access so real estate laundered money it also gave access to Russians who wouldn't have had it otherwise and from there we saw more investment than came the reputation laundering through think tanks universities you know this is this is all things we've seen and we know political donations we're still seeing the results of that enablers coming in um you know helping these oligarchs now evade sanctions but I can tell you that right now uh since the war there has been no uh high stakes Russian investment in New York as far as real estate goes but Russian money is in a lot of the big towers along with Chinese money and other money um that have really grown since 2010 in New York and across the U.S. it wasn't just New York New York isn't as fun as Miami for a lot of oligarchs um but you know the political donations and the connections that these oligarchs made made this you know made it difficult when it came to sanctions some companies the companies sanctioned not the oligarch uh some oligarchs are sanctioned but not their businesses so alpha bank for example there's a lot of high-profile real estate that's still there that people who are not sanctioned still own that they've rented out for a lot of money and that's okay you know so there's it's a lot of issues but really the real estate is just the tip of the iceberg and without this financial secrecy system we wouldn't be in this situation it shouldn't be about people knocking on doors and really trying to figure out who owns what or you know where the money comes from the there should be public registers for journalists or anybody else to to look and and get curious and find out who's investing know who your neighbor is we have situations now where the FBI is in buildings owned by criminal organizations you know that should not be happening so um we're in this situation because of financial secrecy and it's been going on for decades and you know we're obviously nowhere near the end of us so that's my great thank you Jennifer i see david has notes so i'm not going to pose a question but i think the thing what we did know what we just discussed is the whole issue of uh western enablement of corruption kleptocracy and how this has been an issue for russia and for ukraine uh and so why don't why don't we get into that sure well charles thanks it's great to be here thanks for including me and congratulations rayman on the book and it's also great to be with jack and jim here and i've followed for for a long time and with all of you um i i'd start by saying putin well under putin russia's greatest export is corruption but in order to export it we import it and so we need to do a much better job of closing off the opportunities for russians to sash their ill-gotten gains here and to be clear it's not to say that every russian who comes here puts money in the united states uh it comes with ill-gotten gains but there there are certainly those who are doing so it's interesting the timing of this event occurs the same week when putin just signed legislation allowing lawmakers not to disclose the uh sources of their income their expenses their property at the same time that ukraine is moving ahead with anti-corruption investigations dismissing some officials arresting others we'll see how serious that is but it does i think reflect the different trajectories that these two countries are on where ukraine which has been plagued by corruption for sure for many years now i think has a zero tolerance for this kind of activity there are too many people who are losing their lives fighting in this war and the last thing they want to see is oligarchs government officials or anyone else siphon off funds that are intended to help ukraine not only defend itself but to win this war and i think this is finally a an epiphany for many ukranians who have had a high threshold for corruption in their country and yet in russia we see just a kind of sinking in a resignation among many russians even with nabal and these exposés they don't seem to have that great an impact and generating russians to go out in the streets and to demand better from their own officials ukraine i think is also recognized or ukranians have that the corruption that they have allowed in their system for many years left them vulnerable to russian influence and we see this in other countries in the region too and you know i know we'll talk about georgia but in allowing this kind of activity to occur russia takes full advantage of this and that weakens these countries sovereignty their independence and i think there is a growing recognition that in their own self-interest and their ability to maintain their independence and their sovereignty there needs to be a crackdown on on this kind of behavior corruption has been in russia it was part and parcel in the 90s jennifer was just describing some of this when she was there it's been going on obviously in the soviet time although perhaps not as blatantly and not as ostentatiously as we we have seen it um the yeltsin years of course we're no paradise for this the loans for shears deal was arguably one of the worst that occurred that contributed to the corruption in russia and we look the other way and this is where i think we also do have some role in this some complicity in this by winking and nodding and saying well the alternative could be worse if we spoke out or if we did something about this and look at where we are now again it's not to ship responsibility and blame to us but we do have some share in this and it's important to i think to recognize that i think what we have seen in russia is the impoverishment of millions as a result of this kind of activity certainly the standard of living is higher but there's still tremendous impoverishment in russia and the enrichment of a small few and in some countries that leads to popular backlash we'll see if that reaches such a point under prudent of course the oligarch scott the message after the arrest of michael hodakowski in 2003 hodakowski i'd rather prudent doesn't have to go after every oligarch uh to to send the message go after the richest guy and the rest will either learn their lesson or get defenestrated um the more corrupt russia has become particularly under putin the more authoritarian it becomes and it is this connection between corruption and authoritarianism i think that brings us to the russia-ukrainian war where ukraine's efforts to show that it was responsive to popular sentiment whether in 2004 with the orange revolution or 2013 and 14 with the revolution of dignity um or more recently under zelensky where ukraine's efforts to try to demonstrate its independence its determination to determine its own future um those kinds of things pose a threat to the corrupt authoritarian system that putin oversees in russia and so i would argue it is on that basis that putin invaded ukraine so a financial secrecy the way the russian system is operated certainly um but also the very idea that people in ukraine could determine their own future and their leaders would actually follow popular sentiment that's something that putin can't stomach um and so we've also seen one of the development that i would just flag and that is i'm going to make up a word the mercenaryization of russian policy um with in particular the bogner forces operating in various parts of the world in particular i i would argue the damage they're doing in places in africa and this is in pursuit not of russian national interests but in pursuit of corrupt interests trying to take over various assets in these countries i think it explains progosian's pursuit of bakhmut and the area around it for these salt mines not quite sure why russia needs to control these but progosian has a clear interest in it for corrupt reasons and so i think this is a particularly dangerous phenomenon that we're seeing in russia um the there is one good part about corruption in russia which is that it actually weakened the russian military the the siphoning off of funds that were meant to go to modernize the russian military its equipment has actually left it in a much more innovated state than it would have been otherwise and so russia as a result of this is not the formidable military that uh many people played it up to be so um there there is uh an irony that i'll end with which is i do think the russian oligarchs want to protect our capitalist system because they can take advantage of it at the same time that they try to weaken our democracy but not destroy it because if they destroy or help destroy our democracy then the very reason why they use our system which is they don't trust their own system they're afraid of their own system they're afraid of confiscation if they left their funds in russia um they worry the same could happen to them here in the united states so it is a little odd that they want to preserve some of what we have but not necessarily the best parts of it right thank you david that's really and that may not be the capitalism that raymond baker was talking about the russian the russian desire for capitalism in the west is somewhat in conflict with what we're putting forward um so uh nino ebukinidze has a has to live with a horrible case study really of the financial secrecy system in action in her country and she's going to address that i think thank you so much child and i cannot say that i'm happy sitting in this chair today and talking about the very bad stories about my country because all my life i'm doing that i i was promoting my countries because i was very proud of my country since we got the independence after 200 years off like you know the occupation and denunciation from russia were the one of the like front runners in this region to build the democracy and to build the institutions and to be a number one country to defend the to defeat the corruption in the world uh and everything started like to make it short the last 30 years history of georgia uh you know because we were fighting for our freedom and democracy even georgia was three times attacked by and invaded by russia first in early like you know the nineties but no one was talking about this at that time you know and uh there was like a democratic russia and the elzim's regime and no one paid to this but it was like a really ethnic cleaning of the georgian people because the 10 000 civilians died in this world and the 500 000 georgians were to leave their own places and became the like you know the internally displaced people in their own country and the second time you know when the georgia started to making the reforms despite the fact that we were like you know the occupied by russians and so on we lost our territories uh and we were promoting the reforms and we became again the number one country they started the blocking gas you know that there was an energy cut and uh whenever like you know i was few weeks ago in kiv and david was telling me you know there is a energy cut there there is no water or nothing i've told david for 10 years we do not have any energy or any heating or any water but we survived because we were known that we are fighting for our freedom and the next time when in 2008 because the vladimir putin decided no one have to be performed in the region uh they they started to attack the georgia and they invaded the georgia and after the war started with support of the us uh like georgia do not lose like the capital of the city and the government at that time was not cracked down from from their power and you know it's a sad story because it took georgians the 13 years because the russian disinformation and the money and why the these financial secrecy is like is so important the money they were laundering in the western european countries was used to blame georgia that the very tiny 3,500,000 people started the war against the russians you know and that the world buy this even the state like a heads from the different even our partners they were blaming for 13 years the georgians that we provoked the russian we provoked the vladimir putin otherwise he is a very rational guy you know and it took the european court of human rights 13 years to recognize and to make the statement no it was not georgians it was the russia who started the war but at that time and until that we lost everything you know but we do not lost the fate that one day we're gonna like you know the crackdown the devil empire together with our ukrainian friends and what is going right now in georgia that russian uh like after after this like you know this invasion and so and they realized that they cannot uh concord the georgians they they started using the different like instruments to uh to make the mess they started to like exporting the corruption as david mentioned and some other measures you know to to capture the state and if i can say now the 20 percent of georgian territories is like you know occupied by russians and the rest is captured by the russian oligarch vizina ivan ishvili who right now is supporting the russians to avoid the sanctions and avoid the sanctions and also help the russians to win against the ukrainians and why i'm telling this because we have a like a proof of this uh before the war started in ukraine the georgian economy was like a connected with the russian somewhere five or six percent and now it's like you know uh our trade turnover is tripled and unfortunately we are a very small country and we don't have anything to sell in russia even the like you know the products or whatever we are not producing anything like this and i mean all this international media is talking now about that the georgian government is supporting the russian putin's regime to avoid the sanctions and no one pays the attention and we're talking about the victims of the kleptocrats and the victim of the kleptocrats is the ukrainian people who are uh fighting now right now not only for their own homeland but for all of us all around the world and they're sacrificing their lives and uh just like a final final message that uh this this government do not represents the georgian people i i want to underline this because the georgian people 85 percent of the georgian people it's a recent polls and they do not change few few months later that they support the ukraine and saying that the war in ukraine in their war it's their war because we strongly believe that then i just want to bring the data you know and the poll is not going to make me to lie that the 3000 georgians are fighting against the russians in ukraine and we we have a 39 casualties none of other countries after ukraine has such amount of like you know the casualties and again this is a good indicator of statistical information how the georgian people feel and think about this war what is going right now there and the victims after the ukrainian people this is a third president of georgia he looks like this i'm pretty sure you met him several times and he was quite big guy and he looks like nowadays he weighs the same same kilos like i myself right now and i'm very short and it hits like a photos you know and the first time in the georgian history the head of the independent media iqa guaramia is sitting in a jail and there is no response and yesterday just just the final one there was a like a biden speech and he i think that the repeated 11 or 12 times that they finished the job and we as a like you know freedom fighters all around the world and especially the ukrainians and georgians are looking for this to finish this job you know to finish this like a imperialistic like a empire of the russia and all this like oligarchs and their monies is going to be disappear because unfortunately when we're talking about the west west created this system and especially the western europeans to make this economy theory of interdependency of energy infrastructure and some other economic projects and the germany for example for many many years and decades were putting this as a main foreign policy agenda and who was the victims of this agenda and having this interdependency policy with the russia it's georgians and ukrainians and if we not stop the russians right now it's going to be in other doors very soon thank you so much thank you nina jennifer you jennifer wanted to add something briefly to this yeah very very brief but it's really really moving and it reminded me of going back to the 90s and there is this direct line i mean i always looked at it as like the first post-cold war proxy war between the u.s and russia and america's first cia officer post-cold war was assassinated in tbilisi 1993 it kept going into your point of going back to that time and not saying anything and winking and nodding saying elections are free and fair when they weren't and watching this corruption happen the provocations of war it's the same thread the same playbook and yeah and even the president sarkashvili is shevardnadze the second president of georgia was attacked three times by the russians by terrorist attacks you know and the killing this fbi guy in georgia was one of the part of the russian special operation because at that time we are making the decisions that the georgia is going to get this pakut bilisi jhan pipeline project and it was not going into the russia's interest having this kind of like a politics georgia and the rest of the region connected with the west and share the same values and the same like you know the dedication for freedom and democracy right but what we see also in georgia right now is that the political control uh is completely obscured by the financial secrecy system so you've got this economic opacity with a guy who made his fortune in russia during a certain period of history where we know there's only one way to do that uh in terms of how you position yourself politically and uh david touched on uh the uh how we enable all of this and i mean just setting setting up paul nobody raised their hand at the question i posed trying to get people in from the coffee break but one no i'm sorry elena over here raised your hand about that but i i think this enabling system which others touched on especially david obviously has made uh the kleptocrats of that region extraordinarily arrogant and so what i was was sort of tilting at is just the notion of what uh what attitude what this has done in terms of the attitude towards towards the west uh and thinking that they could get away with anything i mean is we're we're servicing their yachts bending over backwards to help them hide their money in the system that was described so eloquently this morning by our three great experts uh so that is i think it is a much bigger factor than than people are giving credence to and paul who breezed in after that probably agrees uh somewhat yeah and and and let me you know first things first apologize for uh arriving late to my own panel a very palmasaral move i suppose um i was talking to ukranians this morning who are on the front i talk to ukranians almost every single day these days um and i guess i also want to point out that for all the reforms and everything that we need to do the most effective anti-corruption tool on the planet right now is weapons for ukraine i mean getting ukraine hymers getting ukraine javelins getting ukraine tanks whatever it is that is by far the number one priority for all of us it has to be um and i guess i i i i take on board and agree with everything david said i think it's a great analysis i might go a step further and say that actually yeah they do want to destroy capitalism i might i might say that you know when i when i look at the last year i think we misunderstood something here i think we were i think we were right that corruption is the mo of russia but i think we missed the deeper ideological imperial aspects of russia and i mean i think that when one looks at this war right it's long since stopped making economic sense i mean if it was just an economic thing if this was just corruption or anything like that they would be gone no it's genocide this is about wiping the ukrainians off the face of the earth and further than that beyond just colonizing ukraine it's about wiping us off the face of the earth this whole thing is about the destruction of the west so when they pump their money into our systems they're trying to destroy us that's their goal they're not trying to preserve capitalism they're not trying to take advantage of it they don't want crony capitalism they want no capitalism at all they want the end of the entire system they want tyranny and totalitarianism and that's russia and that's china but i mean this is this is a big i guess it is the the the elephant we missed and i think we missed it in part because we didn't listen all that closely to ukrainians we didn't listen all that closely to the polls we didn't listen all that closely to the Baltic states and so on and so forth many people in this town listened a lot to the russians listened a lot to to moscow talked almost exclusively with moscow and when one speaks with ukrainians they say this they say this very clearly they're like yeah of course they want to destroy you they want to destroy us they want to destroy everything they have for you know centuries this is the same imperial state that was the soviet union that was the czarist regime it's the same thing it's just never reformed now we did have an opportunity to reform it and we failed i think that that's very true um but at this point we're in a much much worse situation than that they're their their money's here they want to take us down which makes i think the urgency around these reforms so much more important i mean this isn't we're not just losing out on the reform of these countries we are under siege we are this is a this is a threat for our entire system and i think we see this every day in this town i think we see this in our politics in the way that foreign interference has become just a extremely normal thing to see on the news i mean i see i think we see this in the way that all our former politicians work for foreign regimes i mean of course you know i mean we could talk about garard shrewder or france afion or whatever in the in you know the top dogs but of course the level down from the top dogs it's massive everybody does it you know i mean it's this this this town is filled with mercenary lobbying firms that are stock full of former officials who lobby for the chinese who lobby for russian oligarchs who lobby and they have pushed us into destroying ourselves you know so when it comes to this enabling of i mean of course i mean they they view us with absolute disdain i mean our adversaries have have discovered that yeah you can't beat us on the battlefield but all you have to do is offer half a million dollars a year and they'll do whatever you want they'll do the whole jig i mean it's it's crazy how cheaply we sell ourselves it's it's it's truly unbelievable so yeah we are complicit in this we caused it and it's much much much much worse than we believed it to be this is not just potentially you know the very obvious failure of democracy in russia or the possible now loss of democracy in ukraine this was very much russia's idea of finally destroying the west the invasion of ukraine was the beginning it was going to be ukraine she was going to go after taiwan there would be some kind of incursion in nato and that would be it i mean we we got saved by the skin of our teeth thanks to the bravery of ukrainians and i want us to really sort of recognize that now i can talk a little bit about the reforms if we just one thing i can't see the schedule from where i am how we have until when 11 30 okay great so yeah why don't you talk a little bit about that i mean i was i was gonna ask uh is the situation you're talking about goosing enthusiasm for these reforms in any way and then if you can keep that pretty short we'll have time for a few questions it is it is boosting enthusiasm i think that's demonstrated by the fact that last congress as many of you know we got very very very close to the enablers act i mean i describe what the enablers act is of course would finally mandate due diligence for lawyers accountants you know company formation agents company and trust formation agents so on and so forth we're going to give that another shot we were defeated ultimately by now retired senator pat to me so he's no longer there it's very nice uh when you're defeated by a retired senator new senator um but but you know we'll see we'll see where that goes another big initiative is on this authoritarian revolving door stuff some of you have heard of the the shame act that stop helping adversaries manipulate everything act which would prevent anybody anybody from accepting compensation for lobbying for our sort of countries of concern our adversaries china russia north korea syria venezuela and iran we'd like to extend it beyond that obviously this should also be applied to frenemies eventually of course that's a tougher sell with the national security establishment um there was in the last ndaa i think it kind of went undercover but for those that don't know there was a provision that is now law that will ban former secretaries of state former deputy secretary some ever consulting or advising or or working in any capacity for a foreign country i mean it was it's not an it's not an amendment to far it's not amendment to the lobbying disclosure act it just bans it all together uh senate confirmed officials now have a three-year cooling off period for any country and are permanently banned from those six countries i name the country's of concern we want to you know expand it from there that is law now so we want to we want to get it to defense obviously not a week goes by when we don't see a retired general who's working for you know a foreign state uh we want to expand it to intelligence officials we want to expand it to treasury and so on and so forth i mean it's just you know the it's an embarrassment of riches right charles i mean it's like it's unbelievable how much we how much we left this corrupt enabling environment to fester so we have to close both the professional enablers with the enablers act of lawyers and in account maybe to close the political enablers that is all these former officials and also those that really never were former officials they're just professional lobbyists wonderful well not wonderful uh david uh jennifer nino any very quick comment before we go uh to questions or anything come on well too quick thanks i couldn't agree more paul about um the way to deal with this is to help the ukranians win not just defend themselves that is far too insufficient um it is to help them win and win means driving every single russian invading and occupying troop troop from ukrainian soil including Crimea it's a shame we have to add that since Crimea is part of Ukraine but that's true um we will take the i think we do have a slight disagreement about Putin's and and the oligarch's aims i actually don't think it's to destroy us it's to exploit us and to use us um and we may self destruct in the process if we're not careful um but i think they actually want they certainly want to weaken us no question about it but i actually think they almost need us because they don't trust their own system their own leadership and they need some safe place to stash their ill-gotten gains and and they like the freedom that we have um so they're beholden to their leaders um but they also like what we have to offer the only the only danger there is will the oligarchs and kleptocrats of this world have the wisdom as they infiltrate us will they know where to stop in terms of where they've pushed well the only thing i would say i don't know you want to Jennifer but um look it is insufficient to freeze assets we have to seize the assets so these ill-gotten gains never go back whether it's to oligarchs or to the russian state we have three over 300 billion dollars and on hard currency reserves and those should never be returned to russia well and can i add that the the authority we passed last congress to allow those assets to be transferred we got the first transfer 5.4 million from maliceus and hopefully a lot more is going to come down the line 5.4 million not a billion but hopefully a lot more start okay jennifer very quickly and then we're going to take a question you know very quickly this idea of whether oligarchs want to be part of our system or not they definitely want to weaken it what we have seen are oligarchs going back because they're forced to go back to russia they don't want to be there but that's where their money is the other thing are the children you know you've got the foreign minister's daughter people trained ivy league universities here oxford cambridge and they're not participating as westerners they're back in russia and that's the biggest problem that's thing in the 90s everyone was talking about robber barons the russians were going to be the exact same as american robber barons and it did not happen and we thought i'd take that into account yeah great so uh i think that over there i can't i can't see everyone uh john john herbs question actually for paul but for anyone all russian russian state assets you referred to the mala fave oligarch assets um are a very important resource to help ukraine sustain its economy now as the russians have crushed about 50 of it and then to rebuild i know there's interest in parts of all congress to pass a law enabling us not just to freeze those assets which already happened but then to transform to ukraine what's the status of that sure so so i think you're absolutely right it's it's it's the treasure load essentially right i mean i you know i just said 5.4 million from mala fave this is 350 billion so i mean this is this is this is some serious serious dough um i would not all in the united states about 60 about 60 30 60 again these these are all from like this peterson institute report and then he's an oligarch okay but just say two cents more uh a bad oligarch he's a bad other any other he's a he's a he's a bad very no this is this is different money so get the 2.4 yeah okay ever since since before yes that's right um so this money is different so this money is state assets okay so this is one of the issues we ran into with the oligarch assets from the beginning is it's understood to be private money in our legal system so it has to be forfeited under a due process procedure which of course we thought was ridiculous because obviously oligarchs are holding state assets but under our this is part of the problem we face in kleptocracy right is that they they don't have a public private differentiation we do um but getting to this state assets the nice thing about state assets is they are public assets very obviously under us law so in fact they don't enjoy due process so a judge needs to be no part of this there's no due process protections for state assets um under my interpretation of this and some lawyers i've spoken with i mean there's there's agreement on this that the president could already do this i mean the only thing stopping them is foreign sovereign immunity but that could be waived under reciprocity under the notion that like look i mean russia's broken every single aspect of international law just take it but this administration is very very very hesitant to go down that course for essentially reasons that that have to do with the supremacy of the us dollar and how this could make china feel to seize sovereign reserves how could make our allies feel who hold an enormous amount of dollars in the united states and so on and so forth so we we really want to do this with allies i think this could be sold to g7 also because as david pointed out the majority of this is held in europe not in the united states so so a lot of it's held in european central bank so it really should be done in a g7 fashion now would there need to be new law again i don't think there would need to be with this administration it always helps to give them an explicit authority that they can do it so that they have sort of the political cover to do it and and yes i i i think in the next month or so there will be a bill which will hopefully move that will allow this to proceed will give an explicit authority to allow it to proceed again the problem though is one of a political debate not a legal debate this is different than the private assets where you really needed legal authorities okay we're gonna take charles can i know you're gonna go to ilia and others but i'm real quick when when we talk about sanctions there are two that people talk about there are visa sanctions and there are asset sanctions visa sanctions are discretionary no one can challenge that in a court of law a state department official can deny someone a visa when you seize someone's assets you have to be able to have that stand up in a court of law so it is a a higher threshold an evidentiary threshold that treasury has to be okay we're we're essentially out of time so we're actually just going to be able to take one question i'm afraid over alina she raised her hand at the beginning of the session so she gets thank you so much i will ask one question what can we do i think it's very convenient for us to keep on putting the door the dirt at the somebody else's doorstep yes there are problems with Saudi Arabia Egypt Egyptian military russians you know there are plenty of problems out there but the issues as you pointed out russians changed tactics they started learning from the best and we have a part of our economy finance trade which gives them a wonderful space in the basement or in the attic to have their field party and i think it's extremely as david and others have pointed out it's extremely important to acknowledge the dirt is also in our house so what can we do next and it's very good that you asked the question about russian reserves of 300 billion the 100 billion number comes from the russian authorities we haven't seen confirmation from our banks as in look i'm holding this much of russian reserves i'm happy to put it forward we haven't had the confirmation from our authorities about what what is where so what can we do one point from each panelist if you may all right it's gonna have to be one sentence okay well i mean obviously we got a bunch of federal reforms to do but i also find it funny that like so many of these issues are at the state level right i mean like go become a resident of south dakota and tell them to stop with their trust industry you know i mean there's there's a bajillion different reforms that we need in the united states so i've already named a few but i mean it goes so far beyond that too we need to close the revolving door we need to limit professionals and force them to do due diligence and also stop the states from constantly engaging in this race to the bottom david transparency disclosure and sourcing jennifer i would say the same thing corporate transparency any journalist any citizen should be able to go onto a database and find out who owns what and who's getting what government money anything should all be open you know i think the transparency and accountability is the most important part of this and also the showing the like you know that the uh us stands for their values and their you know because they were always a leader of the free world and we all from the like countries toward just small countries and very vulnerable countries always looking for the our beacon of democracy united states and when you see in the signs that the this kind of crazy stuff is going and the same time the US government is financing like gongos in georgia it makes me very sad and i don't understand why it's going what kind of stuff is what the hell is going here okay great so uh we need to mic dan a priest and the fourth state now thank you very much i'm so happy to be here um i have to say that palmezaro whenever he speaks i feel like i have to record it and then turn it turn it down to very slow rpm because there's so much i'm very stirred up right now paul wherever you are uh this is the media panel and since we're talking about transparency we're an integral part of that uh i'm taking jack blum's suggestion that we not just talk about our problems that we also talk about uh what is it that we've written about on corruption or other types of corruption that really actually promoted reform what's the combination of reporting and political will which we really don't have anything to do with that has uh prompted reforms of systems that have been in place for a long time but i also want those up here who have dealt with uh collaborative journalism to talk about the difficulties of that i had my first foray into that recently with forbidden stories and spyware um nso group working with uh 12 different countries and and a couple dozen journalists and it was really fun but frustrating and uh difficult as well so um we have fergus especially up here who's represents probably the most experienced uh group of journalists to have done this uh before i start questions i i'm going to take the prerogative and just point out two things one is i i have done some stories in my life that have made a difference and i think that one of the things that i've heard here uh relates to one of them which is i did a uh series then a book called top secret america after 9 11 in which really we we just counted the number of organizations that had grown up after 9 11 to suck out the money that the congress was throwing at the government to try to deal with counterterrorism and in the physical world it is possible to count things that in the real world we can't actually get behind the door because they were classified so we literally counted the buildings in washington dc and discovered the clusters throughout the country of other um other clusters of buildings mainly contractor buildings that lo and behold grew up around different huge intelligence agencies to serve them and looking at tom cardamon's map you know and listening to other people talk about the system that exists i think visualizing that system could be a very powerful a very powerful tool and then secondly i did a series about walter read medical center when it was not caring for its veterans who came back to be rehabilitated from the wars in afghanistan and iraq and that uh i remember my colleagues and others saying well you know the military has never really treated its veterans very well well first of all as a journalist ignore that that doesn't mean it's good but what made that story work is the human beings inside of that the human beings who we could whose lives we could talk about so you can do scope but you have to do human beings in my view in order to make it relate to people who were reading it and maybe compel it you know off the front page and into some other uh forum and jennifer we're going to start with jennifer because she's done i was just reading your last um real estate uh you know buying and selling your columns and you just take a dozen of them and you say you know they're tens of millions of dollars who are these people what's going on so i'll give you one example that i wasn't going to give when you ask this question but i thought about it a little bit more so in 2009 i was the first journalist really to write about joe low he was the so-called architect of the one mdb scandal you know billions of dollars stolen from the sovereign wealth fund in malaysia and um the way it started was through real estate you know all of a sudden a broker would call me hey this guy just bought you know not just one apartment but 10 in a certain building for all his friends and you know p diddy at that time was living in the building and he had a bunch of escalates but then this young kid had more escalates you know clogging the front of this building bergdorf goodman shopping bags coming in so you know who was this guy and um in the first story um i i did my columns where i wrote about some of the properties he was buying but the first time we outed his name i wrote it with uh another reporter who was working the club scene you know who was this guy sending $10,000 bottles to paris hilton so we put the two together we named this guy but one of my favorite quotes came from this one uh broker who off the record said you know nobody spends their own money like this you just don't you don't spend this crazy way um charter planes and see two two new year's eaves in one night hire the best of western celebrities to come seeing and and models who are now married to billionaires give them apartments give them Birkenbags give them diamonds you know a lot of that they have this guy had to give back at the end thanks to the justice department um but that line you know no one spends their own money like this i was told later helped investigators start looking you know at this guy who was he who was this guy spending all of this money so that's why real estate it really is like a chip of an iceberg there's so much underneath but you know that can be a little little way in so did you find yourself um taking advantage of some of the of the justice department folks who are investigating or did you feel like you had to compete with them and it's a good question uh my sources were fantastic but they were they you know like with every reporter you know the the sources aren't who you would think they would be you know they would come it could be someone who was an ex-poly who was terrified for their lives you know it all over the place real estate enablers working it could run the gamut of of who who they were but you know that that ended up there were investigations around the world several international investigations before something actually happened yeah that's fantastic and it reminds me of how important lawsuits are because even lawsuits that seem obscure can give journalists the the clue more and more clues that might lead them somewhere um so i'm a big proponent of lawsuits for that reason uh fergus okay if you don't know icij you're probably not in this room but um every you know a dozen leaks i wish they were a more um elegant term for that but they are important and uh your organization has really made such a name for itself and and helped uncover this so how do you can you explain a little bit of how that works and uh what you need and how you how you get people to is it just randomly or sure no problem um so uh when um Charles asked me to come to speak here today i was thinking about what we do and what we do at icij icij is a tiny organization there's only about 35 of us were scattered across the world we have been responsible in the last four years for the two biggest in journalism projects in history uh the pandora papers had more than 600 in journalists in more than 170 in countries uh fincan files had had more than 400 journalists in more than 100 countries what icij is about is the truth what we um our ambition is to uncover the truth that's what we were about uncovering the truth is extremely difficult but it's vitally important it's more important than ever there's a tsunami of fake news out there and we are at the forefront of trying to resist it we're at the forefront of trying to resist it because we believe we believe in our hearts and our souls that democracy depends on the truth without the truth there's no democracy and without democracy there's no journalism so we're fighting for our existence how we do this is we uh bring journalists from around the world to focus on a particular topic to uncover complex financial arrangements order and cover how the chinese set up the zinjiang camps it depends on the topic but i'll just name two characters in three projects and then i'll try to explain so two characters one isabel da santas who many of you may know was heralded by the west as a champion of uh female business leadership in africa and silamen kerimov one of the richest men in uh russia who made his money through gas gold oil etc so we go to isabel we did a project called luanda leagues we were given 400 000 uh uh sort of 700 000 documents uh from a guy called rui pinto we didn't know at the time rui pinto is in the news if you if you like soccer you will know that manchester city the football club is in big trouble they're in big trouble because of financial miss uh financial payments which were allegedly um corrupt anyway rui gave us a whole lot of documents and we were able to uncover by working with reporters in 20 countries that isabel da santas had got billions of dollars because her father was the autocrat in angola as a consequence of that uh isabel has had her assets frozen uh companies have have gone out of business isabel has been sanctioned by the us people that worked with her by have been sanctioned so there's one character isabel da santas once africa's richest woman second silamen kerimov silamen kerimov came up again with isabel in the pandora pavers and the finse and the files the finse and files was where we were a tiny number of documents only about 2000 and as a result of those 2000 documents suspicious activity reports we were able to show more than two trillion dollars trillion dollars of dark money flowing through western banks and amongst the people that were sending the money through the western banks were isabel da santas and silamen kerimov and now the last project pandora papers the biggest one in history who should pop up again isabel da santas silamen kerimov and so what you can see here is this huge system it's a system that will do anything for short-sighted commercial considerations it is a system of western banks western lawyers western accountants western governments who enable the destruction of democracy in other countries and what happened to kerimov after this was yeah so kerimov is now in trouble he's been sanctioned some of the people who were saying this is an amazing story about kerimov this is one of my favorite stories so kerimov moved 700 million bucks that we could see in the finse and files and the pandora papers kerimov has worked 30 billion so 700 million is not a lot to him but what was very amusing if this amused us greatly was one of the ways he moved the money was 300 million bucks he moved to a tattoo artist in switzerland the tattoo artist was a friend of a guy called alexander stutthalter who is a accountant in switzerland he lived in the same village as him and you will see him if you go looking for him you will see him on his mountain bike covered in tattoos and he moved 300 million bucks and as a result partly of what we've done stutthalter has been sanctioned kerimov is sanctioned soon you know it is a crazy world yeah and if you're following corruption you're going to run into these characters and so part of I think the the challenge is to find the ones that can tell that can symbolize the story they don't have to you know you can get into a story in so many different ways and through people is probably the most effective even though it's the system that you're really pointing to yeah okay uh diane francis has been at this for an awfully long time so can you tell us what you've learned about or how you see the trend in journalism right now and how difficult or easy or uh welcoming these kind of corruption anti-corruption investigations are yeah just briefly a bit about my career I hate to admit it but I've been nearly 50 years a journalist and uh I was the editor-in-chief of the equivalent of the wall street journal the financial post in Canada when I emigrated there many years ago was a it was a dirty little place uh it has a clean reputation it's still one of the biggest most powerful secrecy haven places in the world in fact the entire skyline of Toronto and Vancouver are built with dirty money and nothing gets done about it so that aside everybody's got the problem but I've also written 10 books four about white color crime ran a newspaper doing financial stuff and was an investigative journalist so I'm just going to give you some of the horror stories that have occurred not just to me but just are out there and I really fear that off jack's point that not only are prosecutors and legal systems incapable of preventing or deterring crime but the fourth estate is also also in that situation and it's for there's five issues involved here number one with the exception of the washington post the new york times and a handful of others the business model for traditional newspapers and networks is imploding that's the internet it's imploding and that's where all the really that's where enough money was was was secured by journalistic organizations that could in go after and do extensive investigative work nobody can afford this anymore as I say the newspapers are we're burning our furniture to stay alive the networks the major networks have also done some very good investigative things they're going to be in trouble in 10 years because 60 of the american networks for instance their revenues are based on covering live sporting events and all the teams are going to have their own streaming channels so no more normal money there and the eyeballs are now on social media and the internet and they don't do investigative reportage and far worse they print anything they publish anything that that comes to their heads or that they've been fed by the russians or whoever so the business model is imploding in those institutions private sector or public sector journalistic institutions that we were relying on and did some really fabulous work over the years the second problem is the weaponization and globalization of legal liability so it doesn't matter where you publish but if it's on the internet I can say it was published in my country and I can take you to court in my my banana republic and I can see you there uh first case I came across was oh my god I don't know I don't know how many years ago but I think it was NBC did a piece on the dirty money in the Bahamas and they sideswiped general west marland don't know why maybe he was a director on a bank or whatever so he sued he sued in the US court and you know he didn't sorry he didn't bother to sue in the US court because he was a public official and they were fair game but not in canada and because canadian eyeballs watched us tv NBC tv he jurisdiction shop found a judge where we have very strict libel laws like the british do and public public uh there's no exemption for public officials so he sued NBC in toronto and got a settlement out of court and this is going on of course everywhere I think that was the first one to innovate that way but now as we all know many many cases end up in the british courts where libel laws are very tough and so the russian oligarchs that's their favorite place to drag you and they can drag you there even if you're not a british newspaper publication or website just because some eyeballs in britain saw them and there you go so that's a huge problem for for uncovering the truth and and investigative journalism the third problem is all of this means that you know liability insurance is exorbitant for newspapers that's another problem it's out of reach for individual investigative journalists I have a friend who was an author wrote a book in canada big publisher they abandoned her and she lost everything because she wrote a very hard hitting book about some crooks in canada and so you know there's no insurance for this and it becomes ruinous personally I'm talking about white collar crime now you know if you're writing about real criminals like the russians you can get killed but I'm talking about white collar crime and they they use that that power of that money to weaponize the legal system that's most friendly to their case or they bought I think that the other the other the fifth issue is that if you do as jack said if you do investigative journalism even the times or whoever my goodness the cost the cost of curation the cost of curation period is is exorbitant as well as the lawyering there were a couple of years when I was attacking the vancouver stock exchange which was a sewer until we closed it I was attacking that regularly as the editor financial post and our legal counsel got paid more to read my stuff than I got paid to write it it's it's expensive it's a big overhead so so these are the things now solutions that's what we need and that's what we want first of all I think the work you do is part of the answer you have to be internationally placed that many nodes you have to have financial backing you have to put yourself in offshore jurisdiction make yourself judgment proof and you have to rely on other newspapers to amplify it and you need lots of bodies to do all the legwork and the readings seven hundred thousand documents and it's horrible so this is what we need we need more of these and this is this is one of the answers the other thing we need is in the united states get rid of section 230 they have ruined not only political discourse but allowed hate and libel and threats and disinformation from the russians to proliferate and swamp eyeballs because section 230 bill clinton thank you exempted them from having to curate they were exempted from liability for the content and their argument was then and still is now we're not publishers we're platforms well they're platforms who publish and so nobody nobody has been policing this there's no responsibility to police themselves and there's no liability and that has to go immediately and that has to go globally and so the result is social media just takes up everybody's minutes and time and headspace with garbage and no curation required so those are those are the two solutions I don't mean to sound you know even more depressing that we're already hearing today but I think that our days are numbered of having having reliance that works on a fourth estate as we now know it so we have to come up with other models there are other of course sneaky ways to do it I used to be frustrated sometimes my lawyers wouldn't let me do something in print because you know we had to chase down documents we didn't have time and so on but it was timely and so what I would do which you can do in the parliamentary system in Canada is like the internet in the United States parliamentarians have complete immunity if they say something in the house so I would leak to a member of parliament the scurrilous allegation I couldn't write about but everybody in the press could report on once and they would do it because a they thought it was right or b they got attention so you have to find your other ways to get out the news and that's that's a pretty pathetic thing to have to do and and there was no curation necessarily involved so that's my sad tale I think we have to come up with new not-for-profit models I think that a lot of good journalism is done by foundations and some think tanks is depends on who they take their money from and this sort of thing and I think that's very important okay thank you uh so obviously she's just made a grand pitch for not-for-profit news and for funding of that so all of you who represent corporate foundations here I'm sure you paid attention to that it is it is the future and the in the legal issue we found that in our investigation of Pegasus spyware that it did help our partners in who were operating in shaky democracies and even a couple authoritarian states to have these same stories published in the u.s because we gave them somewhat of a shield and so far we've been lucky in terms of lawsuits so I have a another question is can you can you describe how you how you pitch a story to an editor and what you need and I'm asking you this because sometimes people who are not in the media really don't quite get why you have to ask certain questions and and why you need certain details that may seem ridiculous to pull out and I'm doing this because as sources it's really good it's very effective if you can understand what we need because you're often closer to the material and can think about who is this per you know how can I personalize this how can I give you information how can I give you names of the little people involved in this problem but how what do you need to convince an editor to let you go forward with the story that's a great question for a long time so it's not much you know I have this idea great go for it but another way of looking at that question is there will be people who will you know I'll get pitches I have a great story for you a great story I'm like okay send me three sentences on it you know and if I get a page and a half I know there's no story there you know it's a mess but if there's something that you can you know break down and it's so specific then you kind of know that that's the story that's very different from a source coming up hey you know this is happening you might want to look into this and you look in then you go back to the source but you know it's really trust so if someone's new with this and starting out they better have you know everything down I think before they go to an editor and when you've been in business for a long time then it's really fun it can be a collaboration if you're lucky enough to have a good editor you'll you'll have someone get you to ask questions you didn't think about asking and make something better and um Fergus you're pitching to about a dozen editors at the same time so what ingredients do you need to win them over yes so what we do is first of all we consider an idea then we conceptualize it and then we retail it it's very simple so we we sell an idea to hundreds of news organizations around the world and try to engage them in that that idea if they buy into the idea they will give us reporters and then our team of reporters and editors will build that story and that story we will give to everyone for free and they will use it to influence their own reporting so where our bar is really quite high so first thing we look at hardly any reporters look at this I don't know why it's a trick so if you're a reporter here here's the trick you look for a broken system there's a broken system you almost always have a story okay but almost no reporters look for the broken system right that it's a really it should be a simple thing but they don't they don't look for it so you don't look for if somebody has it buys a broken car you know through one of the websites the cars aren't working they have an issue that's personal but if if that website is selling thousands of cars that aren't working that are being refurbished after storms then you have a story if those cars are being sold sold across the world you have a better story so this is how we work so what we do is we look for a broken system a broken system that crosses borders if we have a broken system that crosses borders we're almost there has to be in the public interest that's a very difficult test and the last thing that's really vital is there has to be a victim if there's no victim there's no point in doing the story excellent Diane well I I'm pitch free it has to be an elevator pitch it has to be three graphs it has to grab them right away has to be something none of their staff are doing and they have to have space for it if it's investigative nobody's going to take it on because of all the things I mentioned as far as my own journalism I mean I brightest indicated column across Canada I have a sub stack newsletter it's a shameless promotion and that allows me to write about a lot of different things that I'm interested in and not have to deal with copy editors who are very often even in the major papers now people that you're dealing with first on copy editors who who are under 30 and think history was the last website they visited could not recognize Reagan in a lineup so you know this is what you're dealing with so it's it's very tricky as it as it shrinks and deteriorates it's very gloomy but but there are as I say a lot of us writing on sub-stack I supplement it to what else I do and the book business is also hard book publishers are very low to take on something about the mafia or Russian it's it's a problem one just as a Canadian as a Torontonian I totally agree with the problems and the landscape the real estate there but two things about stories you really need to build trust as a journalist with an editor and if you have that you can really still run with a story saying that there are issues with oligarchs different people threats I'm very lucky to work for a newspaper where we have really been disdainful of certain threats that was literally harassment I've had publicists at one point working for an oligarch calling literally one day every hour until my furious editor said this was harassment and my communication stopped and everything was referred to an editor who then referred it to the top editor and you know it's really great to have that support I'm sure you felt that and it's a great thing the other thing I wanted to say is that you can be you know I was fortunate enough to be on this the first panel maybe that was a zoom panel for DC forum when I think somebody asked a question you know if you're not part of a great network like ICIJ you don't have access you're not working with you know journalists around the country what can you do and one example came to mind was a blogger who lived in Brooklyn and walked by a house and it was covered in garbage there was you know construction everywhere it was just a disaster no respect for neighbors no respect like construction that started and stopped so this young blogger did some digging well the owner was Paul Manafort and you know this was right during 2015 you know right before an election he was very much in the public eye I wrote about it I picked it up in the blogger he called me on the very very interesting conversation but you know you can be anywhere and right see something that looks funny and all you have to do is start asking questions you know even if there are LLCs and you know there's still ways sometimes there aren't but sometimes there are ways to find out what's really going on so you're making me think of a a haven for LLCs and offshore money which is the state of Delaware and why is it do you think that given that we have a former senator from Delaware as our president now that we haven't paid more attention to Delaware and what or what he hasn't done to stop that if he cares about money laundering and question the superstar of course is South Dakota right but Delaware has been at it for so long about a few years ago they passed this law for trust anonymous trust and tax free and they've gone from zero dollars to half a trillion dollars under management there yeah half a billion sorry Fergus have you ever looked at South Dakota we did a whole project on it around us so as part of Pandora one of the stories we looked at was trusts and we looked at trusts in Delaware and trusts in South Dakota and Alaska and yeah trust sorry a huge problem a massive problem because again it goes to that question of short-term uh commercial interest against the interests of the world and so the promise of trust for place states like South Dakota and Delaware and Alaska is that it will give you jobs so that's the promise that they when when it comes in when one lawyer conceptualize the South Dakota industry when and the promise was we will we will we will create wealth in beyond cattle in your in your state and you will get a job and you will have lawyers and accountants and they will they will make a lot of money and the state will get more prosperous the reality is the state hasn't got more prosperous the reality is has been a huge disappointment and I think in part the answer to trust is um is a public relations campaign to say look the price you're paying here is just far too high here you've sold your souls for um little return um but it also goes to the enablers act which in part flowed from some of the work we did and really um we have to tackle lawyers and accountants you just you know I know the American Bar Association is fighting to the nail to stop um any sort of um responsibility in this area but unless you tackle lawyers and accountants you cannot stop it I mean Isabel de Santos moved money to 400 companies through 49 offshore and jurisdictions billions of dollars that were stolen from the Angolan people some of the poorest people on the planet and she did it because of lawyers and accountants Solomon Karamov is able to move it um I know there's been a lot of talk about Russia but we should also talk about Ukrainian corruption Ukraine is a very corrupt country and one of the one of the um most corrupt figures there was sanctioned the other day and he's moved money through steel mills in Ohio and so one of the dangers of the war in Ukraine and the the push to get behind it to to resist the awfulness of the Russian system is that we all enable Ukrainian corruption which is very substantial and um yeah so I'm going to tell my one Ukrainian corruption story oh and then take questions sorry I was uh in Kiev for um PBS frontline documentary staying at a mid-level hotel and we were in the lobby and a big car come escalate pulls up and five guys with Uzi's jump out and a little guy in basketball silks walk in who is protecting who they're protecting and he goes into the corner and they surround him and he sits down and someone comes over and so I went up to the the desk and just very casually said hmm what's going on and he said don't worry he's Ukrainian I thought okay that makes me comfortable okay a couple questions we've got two minutes left two minutes left okay uh yes Frank my name is Frank Vogel uh very quick two two two questions same same issue protecting journalists uh most of the anti-corruption investigative journalism is done actually in many foreign countries not by american journalists many of those journalists are either given harassed killed whatever your view on how can we do more to protect them second point also protecting journalists a couple of days ago the swiss justice authorities announced they're investigating the leaks behind the uh the swiss leaks uh story uh that revealed massive dirty money accounts of credit swiss the swiss banking and justice authorities said they would not be investigating credit swiss they're going after the journalists who published the story how do we change that and protect journalists thank you I'm going to take the first part of that and give you the example of Maria Ressa in the Philippines who who uh unearthed the complex network of disinformation um people linked to Duterte who then sued her uh dozens of lawsuits threatening years in prison and she with she withstood this for almost a decade uh and the the reason why she never got I think killed or put in prison was the attention that the other media gave to her and the Nobel Peace Committee finally but attention attention is really the issue and I want to say that at least at the post we are finally paying attention to our colleagues around the world who are in trouble all the time and have no recourse and no protection other than to ask for exile in in our various countries uh this we're out of time actually sorry um so ladies and gentlemen thank you so much for being with us today uh my name is Rachel Rizzo I'm a non-resident senior fellow at the Atlantic Council's Europe Center I am thrilled to have with us today for a fireside chat the UK's minister of state for security Mr. Tom Tuggenhet uh minister thank you so much for being with us today very nice to you um I will give you the microphone in just one second I know you have to be in a car at 1 p.m. which is why we're starting a few minutes early so um please continue to to eat your lunch while at the same time focusing on what will be a fascinating conversation I'm sure so I wanted to hop right into it and sort of build off the conversations we've been having this morning um so let's start by talking a little bit about the intersection of illicit finance and the disintegration of democracy I think over the last decade we've seen a degradation of trust between the governments and institutions of democratic countries and the people and citizens uh which those institutions are supposed to serve and when the selling point for many leaders is democracy uh it becomes really difficult because a lot of people look at this as something that doesn't work for them um there was an interesting Pew Research Center survey that was released in 2019 of 27 democracies around the world and it showed not only high and growing levels of dissatisfaction in most of the country surveyed but a weak a weak rule of law as a prominent factor in this I know this is something that you've thought a lot about so I'd be curious as to your opinion on not only if but how corruption illicit financial flows and hidden money plays into the health of democracy today Rachel thank you very much indeed for the welcome this is exactly why I got into politics I remember very vividly my time in Iraq and Afghanistan seeing two extraordinarily tragically failed states they weren't alone they were particularly dramatically failed but they were really strong examples of what happens when the rule of law when the ability of a society to talk to itself when the ability of individuals to act cooperatively falls apart now the challenge for all of us is how do we stop the erosion a long long time before we get anywhere near that level and we're lucky we're blessed in the United States and the United Kingdom that we have such deep wells of traditional norms the rule of law that allows people to predict the future in ways that other countries really struggle with that means that we are or at least we feel isolated and insulated from those forces but the truth is of course we aren't that democracy in our own countries can feel under pressure and it can challenge the legitimacy of the states that we rely on for our future security but we've seen in the US various pressures in recent years we've seen in the UK various pressures in recent years and these various different elements are what inspired the UK government under Prime Minister Sunak to set up the defending democracy task force which I chair and why we're taking illicit finance so seriously because exactly the reason that Raymond sets out in secret money and the reason that you set up this global financial initiative was to address exactly as you put it Rachel the deficit of trust that can arise when people see the reality of secrecy where there should only be privacy and where they see the unaccountability of different movements now we are at a very very early stage in this and we have absolutely the ability to respond and defend ourselves against it but we shouldn't pretend that communities like ours can't have problems from this we know that in some communities not dissimilar to ours this perception between secret money unaccountable power has led to conspiracy theories and sadly topograms and mass murders as sadly the history of Europe spells out over the last century or two so this is a very serious issue it's one that I think all politicians need to take rather more seriously than many do and this is an area where I think we have a lot to do together absolutely so sort of building on those comments obviously the UK is one of the largest economies in the world it makes it an attractive place for a legitimate business but that also means it's an attractive place for illicit business obviously this issue has been in the headlines this year because of the war in Ukraine because of western sanctions and the crackdown or at least attempted crackdown on illicit funds and cash flows and kleptocrats and oligarchs so in light of the war and the fact that Russian kleptocrats are in the news what are the specific ways that the UK and you are addressing this you mentioned the defending democracy task force what does that look like and what more are you going to be focusing on and doing sure so let's start off with a few things that we've already done we've already sanctioned more than 100 individuals we've already frozen quite literally billions of pounds worth of assets we've worked with friends and partners in the european union in the united states and many other countries to make sure these sanctions don't just apply in the UK but actually apply almost globally and quite apply to countries like russia but they apply as widely as we can get them and that's made already a huge difference and there's a lot of work to do to transfer to translate freezing into seizing that's difficult nobody's yet found the correct legal answer and there's a lot more work to do but that is something that a lot of us are talking about and it's something that prime minister sunak is is committed to exploring as well so you know i have a very strong backing to try and get there in the UK system though i admit it is difficult that's the first stage the second stage is what we're doing legislatively if you look at the UK parliament today one of the acts that we're passing is the economic crime and corporate transparency bill now that is game changing in the way that we're addressing dirty money in our own system and hidden money that could be moving through our system now there's many things that we've already done the register of overseas equities that we've entities sorry that we've already brought in that should i think it was the end of january was the deadline for registration and now we're getting into the process of looking at who needs to possibly be sanctioned in various different ways in order to encourage them to act a little bit quicker but what the economic crime bill is setting out is taking this even further but of course you're quite right to say that the UK is one of the largest economies and we're very proud to be so but we're not the only one there are many other economies around the world the United States being even larger than ours who i know take many of their responsibilities seriously but with all of us there's a bit further we can go absolutely there was one interesting issue from last year was this tier one investor visa that the UK is cracked down on which is basically a way for foreign investors who spent i think it was at least two million pounds in the UK offered them fast track for for residency and obviously that was a program that was massively exploited by by by russians and so what sort of work are you doing on both this and other sort of citizen based investment schemes so citizenship by investment is a is a principle that has uh well it became popular sort of over the last 20 30 years and many different jurisdictions have introduced them i'm not quite sure how it works in the united states but certainly many jurisdictions have introduced them in various different ways and we found that it was so open to abuse that we have to stop it and so we've closed down tier one visas and we're going through the process of making sure that none of those loopholes are left within our existing visa regime because that is clearly an opening sadly that means that we've got to look at some other jurisdictions because as you know there are some places that have visa waivers with the United Kingdom probably with the United States as well who are offering effectively this loophole we simply cannot have visa waivers with backdoor economies it just doesn't work i don't know about you but whenever i fly in i flew in here yesterday you'll see in in-flight magazines a various different legal entities offering various different citizenship by investment offers the island of dominica was uh one of the ones that appeared in the in-flight magazine and all i can say is that's a visa regime that needs looking at interesting you mentioned flying here to the to the u.s. yesterday we're having this conversation in washington uh these are issues that we're trying to tackle here at home we've had a lot of conversations earlier today about things like beneficial ownership and real estate investments um but it also seems like maybe information sharing between allies isn't the level that it should be um so what are some of the hindrances you see to deeper cooperation say between the uk and the us on these issues and what mechanisms are we working on or should we be working on together so the the first thing to say is we do share a lot of information already so this is not starting from a position of zero it's starting from position of very high trust between our different jurisdictions but there's always more that we can do and the reality is if you look at uh the way that our systems are structured they're much more structured for domestic enforcement for tax enforcement at home quite understandably than they are for global cooperation now that's obviously historically where you would start of course of course your uh treasury funnily enough does want to raise taxes off the american people in order to pay for whatever it is that your government votes for and funnily enough his majesty's treasury wants to do rather the same thing uh in the uk but we do need to look at this in a different way not just as a form of tax collection but also a form of national security because the reality is what we could be seeing in the ways in which corporate structures are raised is not uh what it should be a legal vehicle for the sharing of risk and the future profit which is a healthy corporate structure but instead in some cases we're seeing it as a way of disguising illicit activity the exploitation of some of the world's poorest and most vulnerable and indeed the corruption and erosion of the rule of law in jurisdictions like our own absolutely um one of the conversations that we've been having um in the us and the uk and europe about the ongoing war in ukraine is how this translates into uh the public sphere the role that citizens play and the role of or how important it is should i say uh to talk about this openly with uh members of society to talk about why it's so important that we uh continue to support ukraine i would ask this question on these same issues when it comes to things like anti money laundering and transparency how important is it for the public to really understand how this works and how do you focus on sort of translating these issues into into citizens of of the united kingdom so i think it's hugely important i mean let's not forget who i work for um i i don't work for the prime minister i don't work for the home office i work for the rich people they are my direct and immediate employers and it is my responsibility not just to do what i can to advance their interests but also to explain what i'm doing uh in order to maintain the legitimacy of the actions that we have and i think that's just true of every democracy now what we haven't always done as well as we should is explain why these things matter it can sound somewhat esoteric to pass beneficial ownership laws or to require the registration of uh overseas entities or whatever it happens to be it's not it's fundamentally about uh the individual prosperity and liberty of British citizens and by association americans french germans and whatever else because if we get this right what we're doing is we're ensuring that the tax base is legitimate we're ensuring that the structure of our society is open and free and that what people are able to do is to collect together to share risk to advance ideas and i and pursue innovation in ways that actually does defend their future if we get it wrong and i'm afraid this is where ukraine in the past demonstrated this failure you end up with the erosion of the rule of law and the rise of the oligarchical societies that sadly threatens democracy now one of the reasons i'm so impressed with presidents and his leadership and he's truly one of the world's great leaders is not just the obvious war leadership that he's demonstrating which is frankly heroic to a point that i don't think we have seen in 70 80 years but it's also his leadership in peace i don't know if you've been following the news recently but he's been taking anti-corruption principles very seriously in ukraine now this is a country as we know that is currently at war that currently has larger areas of its territory occupied and yet he's not resting on that he's realizing that in order to win the war he needs to prepare to win the peace as well and he cannot simply wait until the war is done to deal with corruption at home and i have to say what he's demonstrating as well is that if you want to have accountability if you want to have a national effort that really works as a whole nation effort against an occupier like russia you need to make sure that you're standing up for the principles that unite a nation too and that's why i think the anti-corruption work that he's done and that he's doing the arrests that he's made are so fundamentally important not just to him but actually to all of us to you know you have to be in the car in just about 10 minutes so final question here um it sort of seems so i think it was david kramer earlier that made a really good point where you said the more corrupt russia becomes the more the more authoritarian it becomes um i think that was you that said that and and so i wanted to build on that comment a little bit um it seems like this is a bit of a cat and mouse game where autocrats and kleptocrats seem to always find a way to game the system and exploit the weaknesses in how democracies are trying to tackle these issues now you've obviously laid out a whole host of ways that you're trying to sort of close the gaps here um but why is it that we always seem to be one step behind do you think that we seem to be one step behind and how do we get one step ahead so i i don't to be fair i don't think we are one step behind i think the nature of uh the nature of human existence is that people who are trying to steal will always find gaps but the reality is our democracies are extremely resilient and that's why we're seeing sadly these corrupt entities trying to exploit them by investing in them in a mild way they're actually doing they're not trying to spread corruption to the uk they're trying to hide their money in the uk so that they can be corrupt at home the effect of that is to spread corruption but it's absolutely the nature of all dictatorial societies to go towards corruption because the moment you're in a dictatorship is because you've eroded the rule of law you can't be a dictator you can't be a tyrant in beijing or in mosco uh unless you've eroded the rule of law it doesn't work because the moment you have the rule of law you have property rights you erode the power of the state and so on so any dictatorship whether it's china or russia or north korea or iran is by definition a lawless state what follows once you have a lawless state is absolutely automatic it's absolutely inevitable it's the rule of force because if you cannot predict the future in the basic algorithm of human existence which is the rule of law and the rule of law is after all you can dress it up as what you like but it's a it's a very very simple concept it's an ability to say if this then that which is all that an algorithm is all that it is it's the most basic human algorithm it's a way of predicting the future through a very basic concept if you can't predict the future by agreement the only other way to predict the future is by force and all human beings want to have some ability to predict the future to make sure that their children will inherit some of their wealth to make sure that their ability to wake up tomorrow is not interrupted by some wandering viking tribe as it happened so far too often in kent and indeed you know to make sure that the investment they've made into whatever corporate entity they made returns a return and so that ability that base ability to predict the future is what we're all trying to do we have two ways of doing it one we agree the principles that we're going to share we call that the rule of law or we don't we call it the rule of force and I'm afraid every dictatorship inherently ends up with the rule of force and that's what we're seeing out of Russia today that's why we're seeing and you know if you look at the move from the 1990s where democracy tried and failed to where we are today we've seen an exaggeration in the rule of force because at every step the rule of law has been eroded more and more and more and therefore force has been required a good note to end on maybe not happy but a powerful message for everyone here there is a happy note yes which is that it inherently fails that is the happy note good minister Tuggenhot thank you so much for being with us today hi everybody this is Drew Sullivan from the organized crime and corruption reporting project sorry I could not be with you this week in Washington I'm out in California doing some work but I thought I would call in and give you a quick talk on organized crime and their their ability to do things beyond what people think they're willing to you know back in 1989 there was kind of this perfect storm where the Berlin wall fell if the internet started to come around and there was a rise of the offshore industry that started getting more active in the hedge fund industry and that really led to this kind of perfect storm with globalized organized crime and corruption and built this giant kind of enabler industry worldwide we're still living in that world but what a lot of people don't know is the kind of people who came out of that the the types of organized crime figures that are out there you know these people are worth tens of billions of dollars maybe even hundreds of billions of dollars and so I want to talk a little bit about them and and their audacity and how they do things so let's let's play a little thought exercise here let's pretend I'm an organized crime figure and I've earned a couple billion dollars from drug trafficking which is you know a typical number of a of a good regional drug trafficker and I've got a couple billion dollars and I'm an audacious thinker you know what do I do with that money how how might I exploit that money to my advantage well the first thing I'm going to have is lawyers you got to have good lawyers you have lawyers in London you have lawyers in New York and those people are really valuable to you because they not only protect you from lawsuits but they also help you enable you to do all these types of things that you're doing they enable you your crime they set up things from money laundering they set up all the offshore companies that you need to hide your assets they do all this kind of work that really keeps that crime thing going you know you you're able to to set up more and more firms so you can self-deal you can evade taxes and you can embezzle funds and you can bribe people with these offshore's so the lawyers are really important but you know if you're thinking big you need to think beyond that and so you want to have some politicians in your pocket or maybe some law enforcement so where do you get those well the nice thing about the United States is you have all these lobbyists that you can go to Roger Stone Tony Podesta those kind of people not very ethically oriented and willing to do what you need to for the right price and so these people can help you make connections to all the types of politicians that you need to know the kind of politicians who are willing to do business with you and they'll also set up business with other types of people that you should know you know that guy doing the Russian money and that libertarian billionaire and those other people and so you know they've really helped build this kind of you know mutual team of billionaires and Russian money and you know plutocratic money and organized crime that has really kind of helped feed a lot of the political action that's been going on in many of these places such as Grexit and UK and other things in the United States so I want to join that group and I want power and I want a couple of politicians in my pocket and of course you know you can do that in America because you can put money into a super pack and so I might put three or four million dollars in the super pack of a politician that I particularly like and I know I can get them to meet with me anytime and I know that they will take everything I say seriously and try to do it so I can get laws passed and I can get you know potentially somebody coming in and asking about an SEC or an IRS investigation to kind of put pressure on people to say you know you really shouldn't be doing this so that's what I really need you need political protection or Crescia as we say in Russia for roof to give you that kind of protection you need more you need media you need some people saying great things about you well media is pretty cheap it's a poor industry and you can find that you can hire individual journalists and pasting place ads or I'm sorry stories in newspapers especially some of the online ones but you know there are whole organizations that are fairly corrupt and you can get them actually working for you during the course of the year so you pay them a few million dollars in some fake advertising deal and you've got your own media organization and a lot of these media parrot each other especially when they're in the right and I will firmly be in the right hand side of the political base so next I need some pressure I need some people that can get stuff done when I need something done and that's often you know if I was in Europe I'd be hiring hooligans in the United States it's extremist parties you get your supremacists you get your white nationalists you get your skinheads and you can hire those people and they can come up and they can beat up people when you need them you know if there's a protest going outside your headquarters some people come in and beat up people and you got that kind of muscle that you need so you're discouraging other people from doing stuff to you then I'm going to lay out a large number of bribes I'm going to lay out bribes to media you know other politicians people in the administration law enforcement you know we know organized crime people who have heads of intelligent units you know heads of police all in their pocket and you'd be surprised how cheap people are $30,000 it goes a long long way in bribes that's the most effective way that's for instance Russia gets what they want you see all those people parroting Russian stuff many of them have been bride so consequently I'm going to bribe a lot of people and that's not going to cost me a whole lot of money the next thing I need is I need a troll army I could get that there's plenty of you know Cambridge Analytica lookalike firms that are out there that I can hire you know I'm going to probably need a murder squad because I might want to really get rid of some people maybe you know a crusty prosecutor is causing me problems you know murder squad is fairly easy to find you talk to your you know you're an organized crime you know you know a lot of other organized crime people but it's probably million dollars to kill somebody not that much in some cases it's as low as $50,000 to kill journalists the world was cheaper and so consequently you could use that and that's a really powerful tool and the thing you have to think about you know you're saying this is extreme but this is not this is the way these people think you know their word for you you and me the people are just kind of regular citizens is victim they use the term victim to refer to us they may have two billion dollars in the bank or in some nice American hedge fund you know you know fronted by some blue blood Harvard guy um but the rules don't apply to them they'll they'll have all that but they'll still drive a stolen car they'll be a eligible bachelor but they'll still have trafficked women that they use and so none of the rules apply that's a sign of weakness um they they're too strong they've moved outside the system the system applies to you not them you're the sheep in the system you have to think of them as these are people like Elon Musk and that type of thinking but they can kill I'm Drew Sullivan uh thanks for taking the time we knew Drew would be would uh tell a story pulling it all together that was what he uh said he was going to do and Drew actually used to be a stand-up comic early in his career which some of you may not know and uh so we're sorry not to have him actually here because then he would have sort of really let loose um but hopefully he'll be at the next DC forum uh so we are going to pick up uh from uh Raymond Baker in a sense in the remarks about capitalism this morning going more directly at that subject and I'd like to mention again something rather distressing which as I see a lot of books still on the table that are not for sale and uh we hope that everyone walks out of here with at least one uh so uh we'll keep an eye on that um this is going to be a little bit of a uh untraditional panel I don't know whether we should call it a panel because we do hope to take Q and A but that depends how long they go so they're each going to make a little speech approaching capitalism from different angles it's sort of this is going to be a military operation the left flank the right flank the frontal attack kind of uh and then uh we will see what questions you may have to tie it all together if they leave us time uh so we'll see and we're going to start off uh with Nils great is my mic working great uh thank you so much for having us and thank you so much so much for organizing this Charles and everybody else who's been involved in this um so my name's Nils Gilman I'm currently working as a senior vice president of programs at uh an institute in Los Angeles called the Gruen Institute uh I think the reason I'm here though is not so much because of the work I do there which I'd be happy to talk to any of you about later um but because the work I was doing about 10 years ago on uh which eventually culminated in a book that was titled deviant globalization and was looking really at the ways in which the facilities of globalization that have emerged over the last 40 years are not used only by listed actors we normally think of globalization as being about the free flow of goods services uh money people all over the world and of course all of those things have a dark side mirror image right so there's the global flow of bads whether it's garbage or e-ways to what have you there's all sorts of illicit services of the sorts we've been talking about today there's human trafficking which is the flip side of immigration and so on and so forth and as I was doing that work I really started to be interested as a historian which is my background in where this system came from and why we allowed this globalization of crime to grow up over the last 40 years and what I realized is that actually the things we're talking about in this room are one of the lynchpins of it we were talking this morning about the money laundering and illicit use of finance but we're also talking this morning I think it was it was jack worm who's talking about this about how these same services are used by elites who don't think of themselves as criminals and in fact the the the Venn diagram of burns and institutes doing illicit finance and one's doing illicit finance is actually almost a perfect circle and there's some people maybe who are really good and don't do bad things or some organizations that do that but it's really almost a complete overlap and I want to suggest that that actually proposes or presents a challenge to us from a policy perspective as Rene Baker suggested this morning the U.S. and by the U.S. I mean here rich americans corporations and I have to say intelligence agencies are the biggest users of this kind of system that we've been discussing today and until we recognize and look square early in the eye the fact that there are many beneficiaries very powerful beneficiaries of the system in the United States I don't think we can begin to develop a political strategy to really take this on so I guess that's the first point I would make the second point and this is something that both James Henry and Jack one were also saying is that we're in a system where there is a tremendous amount of elite impunity I have to say I'm a little bit skeptical of some of the ideas that have been put forth today that like transparency is going to solve these problems because there's lots of people out there who feel like what they're doing is perfectly fine and they don't and they have you know they're fairly shameless about what they what they're engaged in and they're interested in protecting their interest on that rather than in apologizing or being shamed at anything we live in a shameless age this town has been taken over by shamelessness over the last 10 years in particular I think we need to confront that directly about what that means about a political strategy for effectively taking that on so a second point that might throw some sand in the ointment of what things we've been discussing here when I wrote that book duty and globalization the basic methodology was to look at a whole bunch of different illicit industries we looked at money laundering and illicit finance but we also looked at human trafficking we looked at drug dealing we looked at gun running we looked at antiquity smuggling wildlife smuggling and then we tried to basically do an assessment of the structure of these industries and it turned out and also which kinds of abatement efforts have been effective historically against and addressing these different things and one of the major takeaways I came away from doing that study was that no illicit industry has ever been abated from the supply side alone I'm all in favor of passing the enablers law and trying to stop the various service providers to the illicit finance to to illicit actors and bad actors but there's almost an endless supply of enablers in the same way that there's almost endless supply of street level drug dealers but it's not just that there's an endless supply of street level drug dealers it's also that even at the top levels if you were to start taking out the elites within these banks and within these law firms who are doing this there's always more people who are willing to do that we could send Tijan Thiam who's the CEO of Credit Suisse or Kristen Suing who's the head of Deutsche Bank or Jamie Diamond to jail but this won't I don't think stop the things that we're seeing going on any more than taking out El Chapo stop drug trafficking from the United States or put the narcotics industry out of business I mean there is almost an endless supply of people who are willing to do this giving these stakes and the money that's involved historically if you look at the systems that have been effective for cracking down on illicit activities things that we morally disapprove of for one reason or another you have to go after the end users I'll give two examples both of which are you know show you the draconian level of things that might take place you know China in 1949 something like 25 percent of all the men were opium addicted and Mao decided he was going to get rid of the opium problem and he told everybody they had to take the cure and if they couldn't get the cure he was going to execute them and estimates are that about you know most people took the cure and about 200,000 people were ended up being executed in China now I'm not at all proposing that that's the solution we should have to drug addiction but it's it was a solution I mean by the mid 1950s there were hardly any drug addicts left in China so that that's actually an effective way he also went after the triads that were supplying the drugs to to China but fundamentally you have to go after the demand side well that could make for an interesting amendment to the enablers act it could sorry to interrupt another example much more approximate test is antiquity smuggling there's been a huge amount of antiquity smuggling over the last you know 20 years particularly in the wake of the iraq war there's so many you know the evicting the national museum was looted but also so many of the archaeological sites throughout the middle east it's been in this condition of chaos who's buying all those things well it's art collectors all over the world one of the most effective ways that shut to to drive the shutdown of the antiquities smuggling business was the prosecution of mary and true who was the head of acquisitions for the getty getty is obviously the number one buyer for antiquities in the world and going after the number one buyer put a chill on the whole market because rich people who collect art they may really want these antiquities but they don't really want to go to jail when they saw one of their own go to jail on the demand side that radically decreased the demand for these things it didn't drive it to zero but it was really effective in really reducing the demand for smuggled antiquities so I just think we should also think about the about you know the demand side for these things and this goes back to the point that Raymond Baker was making which is the demand side for these things are often very rich and powerful people here in the united states um all right I'll make one third point and I won't fill a buster for too long because I know we want to have q and a um the history of this stuff um this system of capitalism that we're operating under somebody used to word neoliberalism this morning I don't always love that label but it basically emerges in the 1970s there's a bunch of different things that happen at that point a lot of it is about sort of states getting out of direct interventions into the economy I think that that's changing right now it's for those who watched the state of the union last night you'll see that biden is definitely pushing for industrial strategy in a way that hasn't been done since the 1970s but the key thing for this group is that another thing that happened in the early 1970s is we moved from a system of the breton wood system of fixed exchange rates and capital controls to a system of floating exchange rates um and and free flows of capital um and once that started taking place it massively increased the speed and volatility of financial flows all over the world and started to create the conditions for the money laundering and other kinds of illicit finance that we've been discussing here today um I think as we're moving out of this world that we've been in since the 1970s towards some kind of a new system and I really do believe that we're moving towards that we can debate have to take questions about what that new world would look like we should be rethinking some of our assumptions about the way in which international finance necessarily has to work we've been assuming it has to work the way it's been working since the 1970s and it doesn't necessarily have to work that way last point on this illicit finance was at the heart of the transformation that led to the floating exchange rates in the 19 of the 1970s um it was in the 1960s that the euro dollar market began to emerge in in uh in europe basically first of all in the uk basically banks in london started creating allowing clients to open dollar-based accounts and this was explicitly a regulatory arbitrage move to get away from financial services regulations in the united states the euro market there was a lot of reasons that that grew up there was a lot of demand for these kinds of services but people wanted to be able to put their money away in dollars but outside the scrutiny of the regulatory systems that were here in the united states in the 1960s illicit finance has been at the foundation of the motivation to build the financial system we have right now it's not coincident to it it's not just a bad actor thing it is fundamental and core to the design of the system and again unless we confront the fact that this is a systemic problem and that it's got deep historical roots and huge powerful backers i don't think we can have an effective political strategy for addressing it i'll stop there i am yes my turn okay and i i think uh raven's book was it was terrific it's very important and uh obviously we we now know better that not only democracy and capitalism is at risk as a result of secrecy and corruption but so is global security and exhibit a is ukraine and i want to give you a little bit of background that people may not be aware of but we're all we're all finally able to spell it and find it on a map and uh i've been going there for 30 years uh since 1992 when it first became independent and it was just a sleepy kind of agrarian with some industrialization large country the size of france and germany bigger than germany and france with a lot of people and and an educated group of people and at the same time of course what russia was doing was becoming an oligarchy and uh so what russia has done is create the world's most powerful oligarchy by and they did it simply by getting control over a country with the greatest resource endowment in history anywhere and then stealing it stealing title to it and then skinning from the ongoing operating profit and ukraine was an intrinsic part of this scheme which is why i would say probably putin if you add up all the the ill-gotten gains in the hands of his cronies is a trillion there and it sounds crazy but this is how they did it very simple scheme they um and by the way that i described this in 2015 in an in the land of council piece i did white paper i did called stolen future it's still available online so you had oil and gas in in russia and you had european customers and connecting them was a pipeline pipelines many pipelines through ukraine when ukraine went independent that was a bit of an issue so they wanted to protect the fact they had the transportation nobody getting uppity no nonsense no skimming so they started to skim it themselves and so what they did was they set up an offshore trading entity in cyprus and the gas prom executives and putin and his guys would skim all of the money that they could and it was sizable from the revenues that were going through the ukrainian pipeline they didn't have to control ukraine militarily they did it through carrots by co-opting so also in on the skim was every president ukraine had most of the politicians and then they also had co-opted with this massive skim of all the oil and gas that went to europe for 30 years they co-opted ukrainian oligarchs ukraines want they wanted their own oligarchs so that's fine they got them but they were mostly in partnership and still are with the russian oligarchs and this arrangement of oligarchs in ukraine started in 1995 and basically the president of that day carved up all of the national assets as they did in in Moscow and he handed it out to five guys and then they handed it out some others so ukraine yes it was had corruption but it had it has spent 30 years trying to get out from under the the russian corruption through the scheme which has paid off all the politicians inside their country to rig elections not go after people fix judicial decisions and all of the rest of it and so that's what you have ukraine has spent 30 years i've been an anti-activist in ukraine for 30 years has tried for 30 years to get out from under it and and it's just it's insidious it's difficult and of course russians own the media or control that these oligarchs in ukraine control the media they control the elections and finally in 2019 you know Zelensky was elected first actually a free election as a reformer and i think that's when they realized well they're going to get up and eat we were having such a good time okay we were getting so rich all the time so that is when the real battle started in 2004 the orange revolution were millions of ukranians on freezing cold streets trying to overturn a rigged election of a guy named Yanukovych who hired paul maniforte to print him up and paul maniforte made a fortune off Yanukovych he was put in the puppet and then they had to do it again and go on the streets in 2014 when that same crooked president who is estimated stole 60 billion dollars from the country was was not going to let them join the european union and then we know how it spiraled down from there so ukraine is is a victim 10 times over and the the corruption that that pervaded ukraine and still exists and as it exists in canada whatever but but it was was russian created russian influenced russian supported and that's how they controlled that country until they didn't so this is modern day capitalism and action this is this this is this is state capture by using all of the secrecy and corruption tools and the russians did it bigger and better than anybody else and they took an entire country out of out of commission and so now for all the reasons other people say we have to help them we have to help defeat the oligarch this is this is a war against oliverks and and and there is an element of genocide and all kinds of other crazy things in it so i think it's really important to look at the situation from that point of view this is the first example of global security threatened by this ongoing growing cancer capitalistic cancer we have and that's why we have to really hit it with everything we have and as i say they they took over ukraine because they perceived that the europeans were going to help them get out from under your uh russia they were getting up aty so it was like they made an unfriendly takeover the shareholders got upset and they they're showing the shareholders a lesson that's what we have that's my metaphor well adam smith is turning over in his grave grave indeed and uh that's the title of this panel and don griswold i think actually brought adam smith with him hi i'm don and uh i'm a tax avoidance enabler that's what i'd say if this was avoidance a call a haul like synonymous right um i was for for three decades i switched sides a little over a year ago um praise for you briefly how i was apparently the willing victim not of state capture but of i think i'd call it ego capture grew up in a conservative household went to university of chicago to study economics under milton freedman the guy wins the nobel prize three months later and i never see him in a classroom but they did make me buy this is the bison keniel university of chicago issue of wealth of nations they made us buy it and of course in chicago you got to read every single long book and we had to read this thing just to happen upon book one page 477 the invisible hand you know this is the foundation of neoliberalism this is the foundation of rare economics this is the foundation of trickle down economics if and what is it essentially selfishness is a moral act that does the good for everyone if everyone just follows their own self interests then miraculously as if by an invisible hand smith's most famous phrase as if by an invisible hand the benefit and good for all will be enhanced i learned also in smith besides really being i mean this he's he's the guy that the neoliberalist chicago school picks to build their their framework on we can talk later but he also praises tax avoiders as the fourth of his four tax maxims and i brought it so i can quote it if anybody doesn't believe it but i get out of school and actually the main thing i reject it as you can see most of freedman's teaching but one thing stuck with me unfortunately somewhere in the late 70s he wrote an op-ed for the new york times titled business is an ethics free zone somehow i didn't question that and i'm eight years into my career i get a call from a big four firm kpmg that wants to build what they called a state tax minimization read avoidance practice me and ten other guys we built a handful of people in a decade to a 600 person corporate tax avoidance practice focusing on the 50 states uh during that i was i was the chief avoidance innovator i will take issue nils and maybe i should scoot over here because you quoted shakespeare john the butcher first thing let's kill all the lawyers let's kill all the tax avoiders i'm a little worried how about converted ones not sure but um in that time i was the chief innovator of corporate tax avoidance strategies on the state side uh and unlike my colleagues i discovered later on the international side i considered myself a boy scout i never would have considered that venn diagram to be identical as you said nils um i believed very clearly a that business is an ethics free zone you're playing a chess game and so long just stay within the rules anything is okay i believe that nonsense i genuinely believe that and i believe that my search for tax loopholes which is what tax avoidance is it's lawful loopholes although i didn't think about how it's also the creation by the avoiders of those loopholes wasn't put into into together that was quite distinct from what some of my colleagues were accused of on the international side which is criminal tax evasion so i and a fair number of folks believed that we were just well i used to call myself a highly paid toilet cleaner figure you know without toilet cleaning the world would be a much worse place and without capital flows smoothing flowily it would be a much worse place but both were essentially a moral jobs neither morally positive nor morally negative i believe that for so long i um uh was recruited into uh big law where i then spent decade and a half um defending all these tax avoidance plans um courts around the country and then my my best client hired me to go in house and for a short time i was executive tax counsel in Omaha at Berkshire half away the pandemic happened and um changes in the industry happened and i started listening to tax justice network podcasts on my morning exercise reverse chronological chronological order 100 of them and at the end i had a conversion that oh my god what have i been doing with my brain all this time uh announced publicly on linkedin sometime in late 01 um given up my corporate clients and um doing some tax justice work and so i consult with some liberal um progressive um think tanks and uh i have a column uh column now in Bloomberg on tax justice and the cool thing that happened though that i think is most relevant here is that i was invited um in June of last year to uh symposium of 40 people at MIT um cosponsored with the world bank their goal was to found it on the work of sandy pentland and made MIT's top data scientist to find a way to um improve the state of things financially and tax wise around the world i furiously started calling a handful of anti-corruption attacks justice leaders that i began to meet in that time and they all said one thing donny got this seat at the table push beneficial ownership transparency i had to look that up but when i did i realized this really is it um that's the one issue that got traction at that symposium and i went out later and assembled a group of extraordinary folks the goal is to marry out i'll tell you the name of the initiative is tech for transparency um we uh the goal is to marry up uh transformative digital scientists with folks like you in this room in fact two members of my work wrote tom cardamone and gary cowman are are here so we're marrying up the scientists with the activists to actually achieve what the goal of beneficial ownership is to go after that number i've been saying 50 trillion jim said now it's 60 60 a number was 75 trillion dollars of hidden wealth the 480 billion dollars a year of avoided and evaded taxes but let's do that in a way that works um and some of the ideas that we have are pretty straightforward with existing technology um gfi uh has as one of its goals blockchain in every port solve the money laundering etc problem with global shipping shipping by making sure you can't lie on the front end what you did on the back end that's pretty much existing technology but then we've got a real problem and this goes i think to jack i think jack and nils you both were saying um sunlight isn't doing it is it well i think it's and i'll stop here with this one charles um sunlight is only part of the way the rest needs to be enforcement and it's especially not going to work as the future kept catches up with all of us in terms of technology think back to the days before we had high speed trading on the stock market with these algorithmic just rapidly going through trade trade trade trade right you think that's not going to happen to the creation of shell corporations and the creation of financial transactions among them when we have what we need which is digital digitized government we've got to have new transformative digital technology or we are all toast well that was not only pretty good but we have time for dialogue at last so uh do we have microphones ah there's a there's a pair of glasses that's been raised in the air uh and we'll see where that takes us great thanks so much i'm alex jacobs from the joffy trust thanks so much don that's a wonderful story very much appreciate you telling us that for years we've been hearing um the big four and others say yeah we used to do that stuff we sold schemes we'd a lot of tax avoidance it all stopped 10 years ago and someone from i'm from the uk someone from big law firm said that to me very recently they said look yeah we used to have a problem it's okay it's different now this different world even five years ago it was terrible now it's okay should we give that any any time of day at all absolutely none thank you next question howdy i'm thomas ford um i'm an economist but i've worked around the globe um the uno-fantai and money laundering and so forth i've worked with buzal and deloitte pwc the world bank for nine years usa id one of the biggest problems that i see here is today and i know it might be focused just on russia but i think we're missing the big animal or the what i call the big bear in the womb which is china to me um rush is a little child the money is small compared to what rush china's got china's got much more invested in here it's that's where the real money is and that's where the real concern is because it's in the investments and i think that's the big thing we're missing in this bigger picture of what's going on um and with that you know you're going to see that i'm very active in communicating sharing different things out there so it'd be great to hear more from you guys can i make a comment on that um so diane you were talking about oligarchs who had the word oligarch has appeared many times here i'm often amused or be mused i think is maybe the right word about the way the way that people here in the west in the united states use the word oligarch as opposed to billionaire which might be the term that we would use here but Matt dust was in here earlier and he would have some things to say about this um what's the difference in a billionaire in the west in an oligarch in china or russia um it's not just a semantic difference actually i think there is an important difference um and it's not one that's entirely flattering to us i have to say um the big difference and it's actually worth going back to the history of what happened in the 1990s in russia and former soviet union you had a first generation of oligarchs who you know to quote the title of famous book on the subject stole the state stole a lot of these assets um and then these people were actually almost all defense traded uh when putin came into office kordakovsky was mentioned earlier but lots of other people were effectively exiled um and some of them were even possibly murdered and we're thinking of the random people like uh guzinski or barzovsky or um kordakovsky notably almost all of this first generation of russian oligarchs were jews or half jews and this new generation of oligarchs are not what is it that happened in the early in the early aughts when putin came into power um and similarly what's happened since she took power in china to your point is that people who were previously somewhat independent from the regime were all either tossed out or curbed in their independence from the state the big difference in the united states is that billionaires are not totally subordinate we have the rule of law billionaires therefore can behave with impunity billionaires in russia and china cannot behave with impunity with respect to their own state okay they can be paid with impunity with respect to ours but they can't behave with impunity with respect to their own state they are fundamentally subordinated to the interests of their own state um that wasn't true in the 1990s in russia it wasn't completely true in china prior to she coming in and changing the regimes this too i think tells us something about the difference kinds of strategies that we can have again i want to advocate that we adopt the strategies of russia or china with respect to our billionaires but the point is in those countries their billionaires we call them oligarchs are in fact subordinated to the interests of the state fundamentally um in ways that the billionaires here are not and there's tradeoffs to both sides of that you have independent billionaires protected by the rule of law they can behave with impunity that's our system their system is the billionaires are subordinated to the interests of the state by the authoritarian leaders of those states there's pros and cons to both of those but it's worth thinking about the structural difference thank we have a corrosive capital that has a question hi yeah thanks eric cons from the center for national private enterprise um so dan your question is primarily for you you know i've worked in ukraine a lot and you know to my mind in ukraine you had these two types of capitalism essentially co-existing one oligarchic captured building modes with that connection between the state and the other very entrepreneurial very uh uh opportunity seeking uh you have what six ten unicorn uh it companies in ukraine prior to the invasion you had companies like nova posta which you know single entrepreneur driving a truck back and forth between a few cities developing that business out horizon capital very active in the country facilitating that constructive capital uh investment so how do we navigate this where it exists uh contemporaneously in a state this this good capitalism and this bad capitalism and what can the west do uh for lack of a better term to encourage more of this this good capitalism and to push out or crowd out the cronyism this is besides increasing the budget of site yes okay yeah i indeed uh ukrainians are very entrepreneurial and very talented people and i was involved in the it business i was a software developer there too i did that and one of the one of the tenants we all had was is that do not seek government contracts work for the fortune 500 do offshore work or work for a legitimate private entity inside ukraine but do not take a government contract because that's when it starts can you employ my you know stupid son can you give me a bribe can you do this can you do that so they were able to kind of navigate around it and there was a very um talented uh group of people but make no mistake the russians really good at this stuff and they controlled ukraine they controlled the ukrainian oligarchs even though some of them now are going around doing philanthropy and pretending they're victims they should all lose everything they owned in ukraine when this is over the real way to do this is i think the european union did a wonderful job as a midwife and they took in the soviet satellites and they said you will have this kind of judiciary you will have that kind of police force you will have these you know guard rails and so the european institutions while maybe not perfect uh were very important because no they didn't have to reinvent the wheel so that's really the solution once hopefully putin is defeated and i think he will be they will join the european union and they will have european institutionals and guard rails and then you will see that country explode because it's very entrepreneurial back of the room and this gentleman i should say is one of the authors i don't know if he was the prime author of the famous peace and foreign affairs strategic corruption the prime nag i would talk for herosin starting up in geo hopefully you'll be hearing from us in a couple of weeks called the declutocracy project but my my question i see the way russian corruption worked in ukraine almost is a colonization and you see this happening in austria there austria is effectively a russian colony at this point when is the way what will it take to wake the west up to enforce sanctions it's it's just going from memory but i don't think there's been a single western company that's been prosecuted for enforcing sanctions despite there being many many transgressions put in the newspaper what what what does that go in what's what do we need to enforce the law here well you need a an uncorrupted judicial system you need police that aren't corrupted you need a political system that's transparent and open and open to these ideas and you need institutions with guard rails i don't know what else you can do people will be people and they're pretty lousy look for the most part i agree with jack i grew up in chicago okay i i this is where i learned first hand you know how despicable a lot of people are and a lot of things are and that got cleaned up through some very wonderful exposés and the local papers who took them on and then some very powerful and courageous attorneys general and and judges who started to make it was it was mostly the mafia and started to make example and started to to go after corrupt politicians and it took a long time but it was it was a real mess when i grew up in the 50s and 60s and and it's it's it's it can it can get fixed any other questions oh my name is karen greenway i'm an fbi agent retired i'm an attorney and i am also on the commission to select the next director of the national anti-corruption bureau of ukraine um and um my question is uh actually not about about that i would say though i would make one uh kind of correction to what you said miss france it's about it's i don't think it's operating profit it's operating income that the oligarchs take from because what i've seen through our investigations is that basically they use you know particularly the russian russian ukraine and oligarchs use the operating income of the state-owned enterprises to just scoop out what they want and they want to spend on their yachts and so what happens is and i flag this for everyone particularly the the the reporting done by the pittsburgh star gazette on what mr colomoisky did in the united states is what they take out of that operating income is what should have been spent on safety protections on what should have been spent on paying the utilities in you know in in these places and and this isn't ukraine right this is the united states of america these are our workers and our citizens so there is a victim here from all of this but my question is in the international financial system one of the things that i and deblau provide my colleague who's also here in fbi retired looked at in in trying to trying to find some of the yanukovic money was you know this great mystery of ukraine and government bonds and you know it came up again under you know mr juliani's investigations you know that there was all this money that had come into a financial services company in the united states that was selling ukraine and government bonds that were part of a bond portfolio you know that had done very well over a number of years and that you know there must be some sort of corruption in in that and so i did a number of interviews in trying to really understand this sovereign you know sovereign wealth fund sovereign issuance of government bonds both deb and i of course were in the fbi and part of the unit that did the one mbd melasia case um but that whole process and evaluation of investing in in the sovereign and what i was told is is that corruption is not was not an evaluator for whether or not a sovereign was a good investment and so my question to the panel is um is there not something in part of what we're doing here that needs to really examine the evaluation of these countries as an investment because guess what in addition to our citizens being victimized by these individuals we're all invested in all of that i will tell you i was an investor until i realized that this was ukraine and bonds i was a small you know investor in in that bond fund having no idea that my money was going into float you know victoria nikovic that i then go to ukraine on multiple occasions and see the the you know the horrible damage that was done to ukrainian citizens you know from that investment so i think one of the things that really needs to be present and i would like to hear the panel's voice and that is how do we you know what what are the potential solutions to this evaluating investing in these countries you know um you know through sovereign wealth you know investment funds of some kind thank you thank you karen i don't know if that's a question it was absolutely fascinating a lot a lot of us know in the room no no karen and the incredible work she's done uh and not in particular in ukraine do we want to respond to that or there's someone in the audience who could respond to that quickly you know why are russian companies listed in london okay really i mean americans are kicking off the chinese ones unless they behave themselves so really again we get back to the enablers the investment bankers who don't do their due diligence and don't you know have red flags and the way they rank and rate these things is obviously sometimes accidentally wrong or what would have possibly would have been impossible to get right but uh i think that's a good point yeah i'll just build briefly on that i do think this is an area where transparency and reporting can help um i mean i you know i'll admit my night as an investor i don't always read the fine details on the funds i buy into but if there was a big red section at the front that says these are the political uh commitments that you're taking on by investing in this particular fund or this particular company and there was a kind of a political audit of those sorts of things that might be an area where it would it would drive decision drive changes in the same way that you know divestment from south africa was in fact a major push to end apartheid in the 1980s so these things can work but it has to be really sustained over time and transparency i do think can help on this front a lot don't do i say all right well we are approaching the end we need to mic up inequality and uh i pointed pointed at him a minute ago frank vogel would like to say something because in his book the enablers there's a whole section on this issue of bonds and all of that and he's pissed off at me that i'm not letting him speak but we need we'd need good 10 minutes or something like that but i can't recommend you to enough frank's uh book the enablers in general and particularly for tackling this issue of bonds and i'm not aware of any other book in our space as marketers or want to say uh that addresses this and uh frank is someone who's been on the inside of the banks and all of that and who knows finance and uh it's the the real reference on this subject so thank you very much and uh now for uh inequality thank you very much welcome everybody to this uh one of the the afternoon sessions uh so we'll be focusing on inequality uh my name is Pascal Dua i have a background in um anti-corruption starting in uh international development and then i moved on uh from there um i'm always very happy to be in a in a different crowd even though i know a lot of the people here because one of the things and i think it's pointed out in your book Raymond um our worlds are all very siloed you know you have the world of uh anti-corruption guys you know you've got the world of illicit financing and the money laundering and within that group uh you hear more and more now also about you know the uh the tax evasion guys guys when i say guys guys and gals uh and so um it is it is very good to see that more and more now uh pushes being made for having uh more of a merger between you know all these all these different uh worlds so um i'm particularly um uh happy given my my my background originally in um in um in development i remember when i first started in in international development the world was relatively simple you had poor people you had rich people and so many many many years later what you started seeing and so i remember reading the first time or hearing the first time about the term shared prosperity and having to look it up and saying you know what is this right and so when you see that uh these days there are more billionaires uh in the emerging markets you know all taken all together then they are uh in for instance america uh it shows you that if you want to do something about uh eradicating poverty you have to do something about um having increased share prosperity which is you know uh in another word of saying you know inequality so uh we have a very exciting uh panel uh today um daemon silvers um and who he pointed out to me is the um senior advisor um fpl uh cio um uh jim henry whom you heard of uh before and of course uh reyman baker who uh you know reyman your book is fantastic i i must admit i haven't read every page of it but i'm almost there so and i'll tell you the moment that i i i started reading the beginning and then sort of the end and then you know i'm i'm back at the middle so we're gonna be starting and could i have um the slide that is yeah there we go okay so um back yeah great so um we'll be reading together uh these three things um and um we'll have our speakers um uh discuss them so uh paul krugman said that political polarization has marched side by side with economic polarization um as income inequality has soared darin walker president of the fort foundation said make no mistake the exploitation of a democratic capitalist system is intentional and then joe stiglitz economic inequality translates into political inequality it is not just our economy that is at stake we're risking our democracy so are they right starting with daemon silvers well first uh let me just say what a pleasure it is to be here i want to particularly acknowledge my new friend raymond uh for having both written on this subject as i think everybody knows and for having i i've been the sort of convient convening spirit here today um and um and i think that we've just uh seen in these quotes the key the key uh thing to understand here about the relationship between the essentially the escape of large amounts of the world's uh wealth uh from both visibility and taxability uh into uh spaces of opacity the consequences of that um which are larger than you think right meaning that uh uh as pascal said there's a certain siloization that goes on in these conversations and so we tend to have a conversation about this phenomenon from the perspective of anti-corruption or from the perspective of of fiscal policy and revenue but what we are really talking about is something that is a phenomenon that is um a core driver of the shape of the world's political economy and a fundamental threat to the survival uh and sustainability and stability of democracy as a form of government and if it's can we bring those quotes back up on screen because i want to drive home this point with those quotes excellent um uh i want to focus on what paul krugman and joe stiglitz uh said because they are the two pieces of this puzzle and they're and they're saying something different right and it's important to understand why they fit together as one piece so what what joe stiglitz is essentially saying is that when you allow capital when you allow wealth to accumulate in a profoundly unequal way and then when you don't tax it that the result is the people who have that wealth have disproportionate political power and they will use that political power to entrench their wealth and that's not a particularly controversial thing and it would appear to be a threat to the very the very notion of how a democratic society is supposed to work that fundamentally in a democratic society people count not dollars right from from the perspective of political decision-making but the actual threat here is worse and that's where you have to look at what krugman says because when what stiglitz says happens when the political process is essentially corrupted by great wealth which then uses their power to prevent themselves from being taxed and to hide their money the public doesn't respond passively the public is not inert in relation to that development and what what arises out of that and in a way i can rieve in what darin walker said what arises out of that is a popular reaction and if there isn't a political channel for that popular reaction to express itself effectively in in a context that is within the democratic framework if for example both political parties in a two-party system are captured by this dynamic then what happens is that the political reaction to the inequality joe stiglitz is talking about expresses itself in authoritarian terms and that is what krugman means what krugman is saying is that it's not just that we then have an unequal system within our democracy it's that large parts of the public give up on democracy itself and political forces arise who in the french context are outside the republic now this in my view having lived through the last 10 years in the developed world this in my view is the inevitable consequence of what is described in this book there is no that that it is not just that the rich dominate our democracy it's that our democracy is at risk of becoming a battlefield between authoritarians and plutocrats and the challenge that faces us right now and president biden spoke about this last night with some eloquence the challenge that faces us right now in the united states and globally is the challenge of whether or not the democratic political process can reverse what is laid out in this book before there's no more space within democratic society other than the space occupied by by authoritarians and plutocrats and that is the true stakes and that is the true stakes uh when we allow a large portion of the world's private wealth to go dark and be untaxed thank you jim can i can i jump up absolutely okay well i think uh my problem is an economist in the room is that i this is abstract empiricism c right mill's called so i want some some data we've seen top one percent captured nearly twice as much new wealth as the rest of the world over the last two years that's from oxfam's recent report at davos and we see close to 40 percent of multinational profits being shifted to tax hearings uh is this good for democracy or not well i spent a lot of time in the country of south africa working with the number of groups there and what's happened in the last 10 years is that the a and c which had about 60 percent of the vote has been slipping and the reason is inequality has been rising the performance of the a and c in governing society has uh been lousy and so there's probably more democratic activity now more chance for new parties uh and new voices to go uh to come to the fore so it's not a universal uh claim that you know you increase political uh polarization when you increase inequality nor that you necessarily challenge democracy but there is a kind of inequality that i think we need to address that we're not really talking about when we just talked about infra country inequality if we levelized inequality in the in the united states and other countries within uh we would reduce the ratio of the most wealthy to the least wealthy by factor of two to five if we're talking about really astronomical uh ratios of inequality of wealth in the world we have to address the fact that a growing fraction of the of the world is simply sinking into dire poverty becoming failed states facing what they call climate migration on a scale that we have no idea about so far and so i'm concerned that unless we address address the inequality that is addressed in this report oddly enough by credit suites my favorite bank um you know we we really have to worry about the concepts that kind of inequality for example a lot of the immigration that we're seeing on the Mexican border right now is driven by the fact that Central American countries like Honduras and Guatemala are becoming unlivable um we've just missed the climate targets for 2030 in order to keep the world at 1.5 to 2 degrees by 2100 uh we were supposed to cut greenhouse gas emissions by 45 percent they will actually increase by 11 percent uh current course in speed uh what's that going to do we have 8 billion people on the planet now we're going to have 12 billion people by 2100 when the average temperature level in the world is increasing by two degrees the sub-saharan cotton and the Central American areas increased by four to five degrees literally cannot live in those countries anymore you think we have a border problem now you know that's going to be the fate that we're facing so i'm concerned about the inequality definition that we're focusing i'm also concerned about um you know as Lucy Parsons the IWW organizer once said never be deceived that the rich will permit you to vote away their wealth and so far with the exception of crises periods like world war two um we are uh she's been right we've seen a lot of liberal democrats opposing reforms and in New York state I tried hard to get a financial transactions tax that's already on the books uh to being rebated to wall street a 0.1 percent tax on stock trades it would generate 25 billion dollars a year uh the democratic assembly and and uh the senate supported it the governor Homo who is in the pocket of wall street vetoed it and then the current governor is opposing it most of the tax would be paid by non-new yorkers they need the money it's a 0.1 percent tax that no one would miss so if I can't get that through the New York state democratic control legislature what on earth are you guys going to do down in washington Raymond thank you let me tell a short biographical story I went to Nigeria in 1961 managing a business employed by somebody else and one of the early people that I talked to I asked him how do you do business uh in Africa and he looked at me like I was a complete uh idiot and said to me I'm not trying to make a profit I had no idea what he was talking about just having finished Harvard Business School one of the early people I talked to he says I'm not trying to make a profit what he was talking about was transfer pricing he his his subsidiary of a parent company in the UK was not intended to earn a profit it was only intended to ship the money back to the UK within the invoices the transfer pricing the misinvoicing of trade that I talked about um set up on my own got married Pauline and I kept ourselves alive through the Nigerian civil war and finally as it was ending um having taken huge risk both business and personal we decided to reward ourselves with a house um on a creek a nice place with a beautiful patio and shade trees overhead and I sat hours and hours and hours on that patio looking across the water at the American Embassy and the Soviet Embassy and asking myself why is neither system neither America's capitalist system nor the Soviet Union socialist system working for the poor people of Africa and I asked that question time and time and time again among other things I was curious that economists development economists because they never to this day put on me on the table both sides of the equation for economic development how much money goes in how much money comes out we've never done that never the development economist community has never looked at how much money comes out anyway Pauline and I moved back to the states corruption was uh it was terrible uh in Nigeria we moved back to the states I did business all over the world until the mid 1990s and segued into the Brookings institution and in order to study this uh uh further I went into the Brookings institution thinking that corruption the cross border flow of corrupt money was the biggest part of the problem there are three components of the cross border flow corrupt criminal and commercial I thought the corrupt component was the largest I went to 23 countries and interviewed 335 people and I came out of that realizing that the corrupt component and talking about the cross border flow the corrupt component is the smallest the criminal component is next and the commercial component is by far the largest part of this problem of cross border um financial flows and that leads you with understanding that led me into the realization that I had to I had to dig deeper into the motivations and the mechanisms by which the capitalist system was doing this I have no idea after thinking about this for many decades how you strengthen democracy amidst rising inequality rising economic inequality whether that inequality is in perception or in fact whether it is what people feel or what it is or it is what they can see in statistical data I have no idea how you how you strengthen democracy amidst rising inequality what I'm saying is that addressing the problem of economic inequality is a necessary step in strengthening democracy thank you we'll have some focused points starting with Damon Damon when you're looking at the current political situation in the US the political angst too and this is a leading question but you know this inequality impacts the current political angst I think the answer will be yes but if you can explain some more and then if we could also jump into facing the future and what you see one or two points that you think may actually help okay um let me let me say the the contributions of my fellow panelists got my mind going uh and I hope to come to something that both uh is that usual uh sometimes have something that professor Henry said several things he said which I think we're are worth going into further depth on speaking as a veteran of financial transaction tax battles here in washington uh and uh and I think there's something very very profound about what Raymond said about corruption and trying to understand the myths that we teach us the myths we have about corruption and some of the realities of it particularly when you're talking about between the development the developing world but let's talk about the united states for a minute you got to first begin with understanding the nature of inequality in the united states and there were two critical facts about inequality in the united states that are not well understood right and perhaps that's because lucy some of what lucy parson said that they're not well understood the first is the first is that income inequality and wealth inequality are different income inequality drives sort of daily experience wealth inequality drives power income inequality is has been growing in this country quite rapidly uh since over the last 40 years after a 50 year 60 year period of decline the united states is from an income perspective is a radically more unequal society than it was in 1968 radically more unequal right uh we are back to the levels of the mid 1920s probably now surpassed them particularly I think if you actually got the full measure of of income which is a sort of what we're talking about today and more importantly because it drives politics which is the question effectively all of the gains all of the gains of productivity growth since 1980 it's important to remember by the way productivity since 1980 grew more or less at the same rate as it did during the post war era during the post war era from 1945 to 1980 that productivity growth was broadly distributed through american society in the form of rising incomes since 1980 it has all gone to the top 10 of the population all of it right that is not a recipe for a stable republic secondly as a result of that plus the complete deterioration of the tax system wealth inequality is funded wealth inequality is now fundamentally different than it was in the post war years now I'll just tell you what it is because again it's not well understood and I'm going to do it in broad strokes and if you can go check the numbers and they're more what I'm telling you is more or less right but I don't know what the exact numbers are today half of this country half of the households in this country effectively have nothing their wealth is zero and it's not literally zero it tends to be about roughly the worth of a used car half the households the 25 30 percent of the households and by the way this is heavily racially defined heavily right the next third of the of the distribution from 50 from the meat from the median to about 80 85 has a roughly has roughly around $150,000 of net worth per household roughly what that means is they own a home and they have a tiny amount of money saved for retirement secure retirement in relation to their needs for retirement pretty much nothing there's a breakpoint somewhere in the mid somewhere around the top 15 percent and after that you see real financial assets right multi-million dollar 401ks and beyond and then up a you know logarithmic curve not logarithmic curve up a exponential an exponential curve I didn't get my second cup of coffee but here's that but here's the here's the punch line you could fill one table in this room with people who's collective net worth and I am not talking about people with and you could leave Jeff Bezos and Elon Musk out of it you didn't have to include them each of them by themselves has enough for what I'm about to say but you could fill any table in this room with eight people eight billionaires from a couple of families I ran this number 10 years ago it's expanded since then you could put Mike Bloomberg the Koch brothers and the Walton family a couple of the Walton heirs at one table and they would have their net worth would be greater than that of 50 percent of the American people right now how does that play out in our politics the people the American public is not dumb the American public has has internalized what professor Henry was saying about his effort to pass the financial transactions tax they have internalized to quote both politicians of the left and right that the game is rigged there are few items that you can pull out that will get a higher percentage support from the American public than the notion that the wealthy incorporation should pay a greater share of taxes that proposition gets between 70 and 80 percent approval and yet it doesn't happen that that is the underlying driver of how did you put it the anxiety that is the angst that is the underlying driver of the angst that possesses our politics and the belief across the ideological spectrum that that we are not participants in a republic right but subjects of some opaque regime of power that we are not included in and do not understand right that concept is growing in our society everywhere and is is open to be exploited by demagogues and turned in frankly horrifying directions but its root is inequality and i will end by saying this inside this is tax check out check out peter teals or mit romney's 401k and ira mit romney i believe in 2012 when he was running for president had 80 million dollars in his 401k if you if any of you have a 401k you might ask how does somebody get 80 million dollars in a 401k well the power of tax-free compound interest if you're an insider in a private equity firm is truly staggering and the key word there is tax-free and you have to analogize from these little these little spotlights right the little spotlights that we have courtesy of the tax laws courtesy of i don't know why we know what peter teals has in his in his tax-free account again it's a just gigantic sum but they give you an idea of what is happening across the entire u.s. financial system and where that wealth inequality is coming from and how it's being driven thank you very much it's very um so this the next questions we're going to deal with data and what data is telling us about hidden money and the impact on inequality and also our inequality and poverty the same or different issues i think during the conversation we've already touched upon you know several several of those items so given that we have 15 minutes left i suggest that we focus on solutions and what in your opinion could be could be done and we'll start with raymond given that you already gave one idea about you know the taxation of the stock market so raymond how can we reshape capitalism which in your book says until further notice is still the best system right to fight inequality and inequality being something that can very much undermine the current democracy of the dream of of democracy over to you most people think that we have to um fight poverty i think we have to fight inequality economists essentially do not have any theory of inequality economists have lots of theories about poverty and this is part of the reason why they focus on that that part of the problem um as being the solution besides economists many wealthy people seem to believe that any quality doesn't matter only poverty matters therefore if you just give alms to the poor you are doing whatever is appropriate and moral in the circumstances um the tax cuts and jobs act was the personification of this getting six hundred dollars on average to the poor people in tax relief and fifty thousand dollars to the rich in other words there is no limit to inequality so long as you let the poor increase the poor in the middle class increase a little bit globally inequality has been decreasing between countries but increasing within countries and this is part of what is driving authoritarianism in so many situations even where there may be rising um uh uh general uh GDP levels when it becomes so stratified authoritarianism is the consequence of that do we have the first credit suice picture that i want to put up there this is the picture of global wealth at the present time put together by credit suice um the top 10 percent of the world has has 81.8 percent share of global wealth well what's the solution to this a lot of people think that if you just take some money out of the top and put it in the bottom you will solve the problem um you know we just we we take some money out of that uh top uh decile that top 10 group and put it in the hands of the poor people uh this will solve the problem um let's do that let's take enough money out of the top 10 percent and make everybody in the lower half of the global um uh income uh spread uh equal to the sixth decile take all five of the lower desiles and put that then take money out of the top put it in the lower five desiles to make them equal to the sixth decile what does that look like got the picture is that much different you got 76 percent now belonging to the top uh 10 of the world my point is that the major problem with inequality rests at the top of the scale much more so than at the bottom of the scale it is the top of the scale that has to be addressed if we're going to solve the inequality problem much more so than the bottom of the scale that is the opposite of what many people think and certainly many of the rich thank you very much um over to you Jim and as as a moderator I would also like to to um uh uh ask all of you um uh in in your book uh Raymond you uh um uh cite heraclitus learning many things does not teach understanding and I I think this is something that um I I often think about and you know true teaching over the years and you know looking at issues of of intercorruption the data is out there these days right I mean thanks to institutions like you know I see here the head of TI USA you know thanks to increased transparency I mean over the years there has been increased transparency more and more people you know understand the issues and and more than that I think younger generations really want to do something about it yet often nothing happens and so understanding the issue is obviously not the same as you know just having access to the data so with all this incredibly uh important and um uh you know catching data uh how can this be used to try and um open people's eyes because if you try and convince push people too much they may you know back back away but how can one uh make sure that people not only have access to the data which is more and more the case but also understand and then do something about it let me start with Jim and then we'll go with you I think we need to organize I mean I think the I once ran for superintendent in Southampton town which is the Republican district and I was one of three candidates and I came within 15 votes of winning and I discovered that if I got Christie Brinkley and to go door to door with me and campaign I got a lot better reception and a lot better communication even with republicans one of the decisions I made was not to go just to democratic doors I decided to try to go to everybody and have conversations to understand them that's one of the problems I see with progressives in this country we're not talking to our friends on the right enough about why inequality should be an issue we put out the statistics we put out the data and we say what is wrong with you people you see the outrageous trends you see the outrageous numbers it's getting worse and they're not buying it they're concerned about identities they're concerned about their daily lives we need to figure out how to sell this damn product if you want to reduce inequality you've got to come up first of all I mean the left in the country for a long time would you know have ups and downs but it was always in the business of producing positive proposals and as Richard Rorty said in his book 1999 book called achieving our country is that we we need to get away from spectatorial academic kind of cynical criticism and to get more engaged with people that were trying to get to vote for us and that's you know partly getting christie brinkley to come along with you but it's also partly I think a matter of understanding why this really should be a bread and butter issue for ordinary americans how are they going to actually benefit I spent a lot of time with the biden tax reformers in the last two years on the american for tax fairness committee we would meet every week and they were talking about billionaires taxes and billionaires income taxes we went through a lot of iterations what they didn't understand was that as john zogby's polls showed americans don't particularly dislike billionaires they don't necessarily believe that they all deserve to pay great lobs of money that they're not paying already they don't understand what you're going to do with the money they see headlines about seven frigates that the navy wanted to cancel that don't work that cost four billion dollars and the lobbyists in washington put it together and they you know they they got that bill they see waste in all kinds of areas of government so we need to be better I say as being making positive proposals to our our consumers our audience and that's organized thank you damon and then last word to ring me I think and here I'm going to follow my threat to comment on my fellow panelists remarks I think we're talking about three things here the first is and and jim said this you said this in your initial remarks the first is crisis right we are in a crisis and I'll say what that is in the second two is policy this was your challenge what do we actually do it's plenty to find to say that inequality is is is running away from us what do we do third is there is power how do we do it or as jim said organize first crisis we are in we are right now in an accelerating crisis that must be dealt with if we're going to have a future worth having and the accelerating crisis is partly about climate change and it's partly about the political and geopolitical consequences of climate change which are this is not about something's gotten 30 years from now it's happening now right and I just jim understated the threat to climate change poses okay the the ipcc the un says climate refugees will pass a billion by mid-century a billion that is the entirety of the refugee crisis that has afflicted various parts of the world over the last 10 years is less than 10 million that includes syria central america and the sahel a billion is unimaginable two meters sea level rise there isn't a major coastal city in the world that can withstand that and there are large parts of the world whose geology can't be defended starting by the way with the area surrounding mara lago all right check out six feet check out what the bedrock is there all right and thirdly thirdly and i think reyman probably knows something about this if we're if we stay where we are three degrees means tropical food production food production in the tropics geograph geographically defined will drop by 50 percent what those just think about what that would mean these things have to be stopped and we need states and a global political order capable of stopping it which means we need revenue all right and we need states that are capable of independent publicly public oriented action or we face true catastrophe of a scale that has not been seen in modern history i can talk about some ancient examples but that's the point that's the crisis now what is what are the policies obviously we need effective climate policies but we need effective tax policy we need effective tax policy to raise the money to do the investment to fight climate change on a global basis and we need the tax policy to restore the essentially the integrity of of of democracy what does that look like it is not a mystery right it involves essentially this it involves very significant increases in the in the in the top in least in the us it involves very significant increases in the top income tax bracket it involves restoring a globally normal level of corporate taxes in the 20s at least it involves restoring a parity between capital gains and and and earned income right between work and coupon clipping right and it involves a financial transactions tax as as uh as jim said and globally it means both transparency and a and it means both transparency a corporate minimum tax and an end to tax havens in particular it means that the global tax evasion strategy being run by the united kingdom needs to end right which is the center of the center of this game all right now that that's the policy now how do we get it the reality is right that in order to get it you have to have political power that is serious about it and and and the and what i mean by that is just think about the fact that the carried income tax the carried interest tax exemption which is the single most outrageous aspect of the us tax system at every president for the last 20 years going back to george bush in 2008 has said that they are intended to get rid of it and it is exist today now that tells you something about the real political and it democrats of control congress republicans of control congress donald trump said he was going to get rid of it barack obama said he was going to get rid of it joe biden said he's going to get rid of it he still could maybe where do you get the political power and i would suggest to you and you won't be shocked when i say this that the most effective thing you could do in the u.s. political system to turn the to turn the level of political power would be to see to it that howard schultz who's one of the beneficiaries of all this stuff stopped breaking the labor law bargains with his union i see that we are out of time so and i don't want to stand but we don't want to stand between you and the coffee break so thank you very much and for the solutions by the way i was going to ask raymond what his solutions were they're all in the book okay so make sure that you read them thank you very much everybody right so hello everyone so thank you ladies and gentlemen thank you global financial integrity and thank you charles for the opportunity to speak here at the mayflower hotel today the mayflower what's in a name maybe nice and cozy but let's just pause to think about it the pityless gales of that ocean crossing are an apt metaphor for the world we find ourselves in and the political journey we need to be on for 15 years it has felt like a storm has been blowing ceaselessly with our boats up against two hurricanes financial volatility and authoritarian aggression and oddly enough these two storms are connected in a way that would have seemed however far back they may be intuitive to the pilgrims with their suspicion of riches now let's look at them in the face those two storms financial volatility and authoritarian aggression these are both fueled by a system one brilliantly exposed by raymond baker in his new book invisible trillions a system built by the super rich and our super powered corporations an entire parallel financial system a secrecy system in fact made up of tax havens secrecy jurisdictions falsified trade and more which conceals revenues avoids taxes hides wealth abets crime and fuels corruption and as we sit here and ever so slightly overheat our two hurricanes financial volatility and authoritarian aggression are being worsened by this this system making the weather increasingly hostile to democracy let's start with our first tempest financial instability from the 2008 market crash to the 2022 crypto crash this is something being made worse by those invisible trillions balance sheets lose their reliability revenues can no longer be trusted in excel partners can no longer be trusted face to face just this month the indian adani group could see 100 billion of its valuation wiped off following the accusation which it denies of brazen stock manipulation and accountancy fraud by a single short seller's report their ties into offshore vehicles in Mauritius could no longer be trusted near total wealth wipeouts on this side of the Atlantic this should be familiar territory only yesterday finance the biggest cryptocurrency exchange in the world halted us dollar bank transfers and they're also familiar on my side of the Atlantic where it was little over 18 months ago the green seal capital which included a former prime minister david Cameron in fact as an advisor collapsed into insolvency when its secrecy cloaking accounting was exposed adani or green seal these are not isolated events they're part of a pattern a pattern that is fueled by the secrecy system that threatens to corrode what a functioning market needs most trust reliability between partners and the variability to believe the figures put in front of you now authoritarian aggression our second wind it is also getting colder let's look at it stage by stage how the kleptocrats began in fragile new democracies it was the secrecy system that warped the politics of post-communist Eurasia it ushered them into a golden age of money laundering it shaped them our bankers and lawyers introducing them to our rules of the game explaining to their first Russian clients capitalism had another dimension offshore where secrets could be kept and treasures hidden this system our own enabled the kleptocrats as a class it's hard to imagine them as powerful without it and help them in stage two the kleptocrats global surge from Mayfair to Santa Pei was not just a story of them as individuals but a structure empowering them across Eurasia it was the secrecy system that facilitated that takeover of these society's politics by authoritarian strongmen giving them offshore tools to play the politics of corruption as they consolidated power and it was this secrecy system that enabled the biggest kleptocrat of them all Vladimir Putin to go on the offensive in the west let's take a moment to let this sink in the United States believes that Russia has spent over 300 million trying to influence foreign elections since 2014 it was the sinews of the secrecy system above all anonymous companies that brought it to bear in the west threatening our national security taking various forms from compromise campaigns to form a front-ranked politicians on the play roll so you lawmakers actively under the influence all threatening the most fundamental thing about a democracy the ability to govern ourselves that's the kleptocrats final stage the one we are battling so what are the kleptocrats want well Mayfair property it would seem but not only that they want the compact between capitalism and democracy to fail they want to degrade this the rules-based electrically checked popularly responsive system which the Mayflower opened up but we're helping them do it not only because the secrecy system is making capitalism unstable and not only because it is putting us at risk of kleptocratic capture but because it is corroding what ties us together at home liberal democracy relies on a series of compacts between the state and the people between the old and the young between the rich and the rest one of those compacts is taxation it's a bill it's a check i know but it's also an ethic that everyone in a society will contribute what the secrecy system does is undermine this it enables the rich to opt in and opt out of taxation pushing what they owe onto the shoulders of the poor giving the super rich even greater resources and power creating inequality building resentment fueling populism as they learned on the Mayflower we can only survive the storms if we stick together the pilgrims are many things but in england in holland they never took no for an answer they look for solutions even ones as audacious as this so what can be done about it the financial secrecy system cracking our beams the US government has over the years taken some modest steps in the right direction but even a basic inspection of these reveals glaring holes take the 2020 corporate transparency act leaves out trusts partnerships hedge funds and private equity funds money services businesses and more and crucially it doesn't stop foreign shell companies from doing business in the united states so quite simply and forgive the nautical theme here it's not seaworthy we don't have laws up to what they've been tasked with now let's have a look at the administration's boost to fincern which needs no introduction in this room as the financial crimes enforcement network just received an 18 percent budget increase taking us to just over 190 million dollars is there a lot of money well let me tell you how many f-35s that would buy you it would buy you precisely two and a half and it has a staff of roughly 300 people well below the 540 working in germany which i don't need to remind you either is an economy a fifth of the size we simply don't have enforcement tools up to the task it's as pathetic as trying to catch a whale with fishing rod now take international cooperation as i argue in my latest report co-written with the wonderful francis shinn from the elantic council we simply lack an international coordination platform when it comes to catching the kleptocrats transatlantic allies have the following problems their laws don't match allowing kleptocrats to find their discrepancies their enforcement is patchy allowing kleptocrats to pick locations their data sharing is a mess allowing kleptocrats to buy valuable time the administration should commit itself to fixing all of the above we can no more navigate this alone than the may flag could without sales america was once a dream one the pilgrims revised not to waste their time on and the purpose of a conference like the dc forum is to dream big to shift the overton window as the jargon goes and this is where ramon bakers invisible trillions is full of ideas we should together campaign for no us financial institution to receive money from an anonymous company and for no financial institution in the world to send money to the united states that it received from a shell company let's not get lost in the complexity of this fight let's look at the clearest shot at the secrecy system and popularize it so this brings us back to the may flag it's a name that resounds to me not only with the difficulty of the journey the ice cold winds the waves as up and down as canyons it's a name that carries this message that difficult things deemed impossible can be achieved it's a name that carries with it to a strong moral sense that can all too easily be forgotten in washington of what a good society should be like now no matter of how much of what the pilgrims actually believe might seem medieval to us today they had a healthy suspicion of mammon let no man seek his own but every man's wealth was a line they were fond of quoting as they were our riches shall not be in pomp but in strength you can tell they came from britain saying that from there all of this came from their disdain of aristocratic privilege which in our day the secrecy system abets it's also a scary journey when a beam broke halfway across the atlantic and the storms they considered making a bout turn to uh to england but they didn't and i think that should inspire us might seem hard and daunting to dismantle the secret system today but we should not forget it's hardly as difficult as crossing an ocean in a bunch of hammered together pieces of wood ladies and gentlemen thank you we're going to talk about that this panel we're going to talk about the solutions or at least ideas for solutions so i'm mike abramowitz the president of freedom house is it like to be here thank you to charles and all the organizers for organizing this really fascinating discussion we have a great set of panelists here to discuss the issue what to do about the problems of corruption financial secrecy and so forth the the one thing that we just offer as an introduction is that you know at freedom house we look at the state of democracy the state of freedom in the world every year and we have our 50th version of this report coming out in a few weeks and i think it's fair to say that during this period of democratic decline rising authoritarianism over the last 16 years that we've chronicled that the issue of corruption and transparency is just shot through that and so that the countries that have done very poorly on our scores are you know tend to be the countries that also are highly corrupt but it's been a huge plunder of state resources and so i think we really see this issue as being very connected together democracy and corruption democracy and secrecy so i'm just going to sort of start by going through this panel and asking people just very quickly to kind of i'm going to ask sort of the same question to each of you which is from your own perspective what would you what would you think like the one or two things that you think ought to be done from a policy point of view to address this i'm going to start to my immediate left with alise and alise is a former staff director and chief counsel for the u.s senate permanent subcommittee on investigations and was a long time aid of senator carl levin uh we then have ian gary from the fact coalition uh which is an incredible coalition that is fighting offshore tax abuses and promoting transparency then we'll go to gary colman who's the executive director of transparency international here in the u.s uh which uh does yeoman's work on the issue of fighting global corruption and then joe divatory from uh georgetown university's wall school of foreign service uh so alise what should we do be it what should we be doing about this problem well i would say the single most important thing to do right now are beneficial ownership registries uh we've gotten underway in the last few years the u.s has started down that journey and it is the single thing that we could do in the immediate future that would make a big difference and can just say more about that just explain what the concept is and what you and what these registries mean so we've been talking about shell corporations and shell entities trust partnerships people where you don't know the human beings behind these legal entities and they are some people have said the getaway car for all of the people engaging in wrongdoing so the beneficial ownership registry is an attempt to find out who are the human beings behind the entities that are organized within a particular jurisdiction so the uk led the way europe followed and the us has followed and there are others many others as well uh but it's slow going and there's a lot that we need to do so we have the legislation but it's the implementation that's the implementation state and it's going slow well we have actually they set an effective date of january 1 2024 i think that's pretty remarkable i think that's a fantastic date and we need to get there by that date they said they want three rules to implement the law they've completed the first one it was pretty good there were some issues all right the second one has a lot more problems that's the one that's going under comment now uh and they recently released some forms the actual forms that people are going to have to fill out uh for this beneficial ownership registry in the united states and the forms from my perspective are the worst i have seen in my career in government they say on the forms for each one out of about 14 questions these are very basic basic questions what's your name what's your address who are your and you have to get that about each one of your owners an identifying number from a passport or a driver's license and for four i think it was 11 out of these 14 questions it says you can also check this box i'm unable to provide the information i'm unable to provide the information they don't tell you why you're unable or any sort of standard i would think the first thing you would say as well uh this entity is formed in the virgin you know virgin islands they have secrecy laws therefore i don't know who's behind this company and of course if you take that position it guts the entire law these were just remarkable forms they actually got the entire law i've never seen a form you know when you you fill out your f bar you don't get to say oh i'm unable to provide the information my bank account number so that's a major major problem it is one that can be fixed but it just shows you the the bumps along the the way so so that's a very uh that's a very helpful set of answers and i like the clarity of the recommendation so let me just turn to uh ian uh can you give us one strong recommendation that you would have to address this problem i know you have many but i know it's like choosing the choosing many of yours but what do you think the single the thing that will be the single most effective thing if there is there a silver bullet to this from your point of view well understanding what my other panelists might also okay sure and something that hasn't really been highlighted as much today is the issue of tax secrecy and the need for public country by country reporting by multinational companies that will reveal the kinds of profit shifting and tax avoidance strategies that multinationals are employing and we're seeing massive movements toward public country by country reporting now including in other jurisdictions this is something that the securities and exchange commission could do today they don't need legislation and it's in their existing mandate what kind of disclosure requirements are there now just say less in the united states well if you if you would look at a 10k um you go on the sec website into their database you can look at a company like exxon and they'll talk about the taxes they paid in the us and then there could be a column for the rest of the world and that doesn't give you any actionable information whether you're a policymaker a member of congress a civil society activist or very importantly an investor and so now we're seeing that there are trillions of dollars of assets under management that are voting in favor and and calling for public country by country reporting so as part of the political strategy discussion that I think is really essential for us to have and I'm glad we're starting it today we need to look at new constituencies and I think investors are a powerful constituency investors need actionable information and financial secrecy prevents them from having it I see so it's really giving getting the corporations more information out of the corporation and what about individuals wealthy individuals is that also that is also very important then goes to kind of the mutual benefits around the things that Elise was talking about are important to understand tax evasion by rich individuals but also the illicit financial flows and corruption that we've been talking about okay and you're saying the sec could do this with a stroke of a pen well nothing is fast in America how long would it take it like we have the administrative procedures act and things like that but I mean they could issue a proposed they don't need legislation they don't need legislation they could issue a proposed rule this year and we could have a final rule do you think that's on their agenda it is very much on their agenda in fact in December the sec's investor advisory committee organized an entire panel about public country by country reporting and the sec chair gary genzler said that this is something that they're actively looking at okay I like this because we're developing a good policy set of policy asks for freedom else and other organizations so thank you for that gary can you add to the policy list sure so in addition to understanding who's behind the companies Elise talked about through beneficial ownership transparency there's also been a lot of talk today about the enablers and the gatekeepers to the US financial system and on a number of the most important gatekeepers some of this needs to be done through legislation but some of it can be done by treasury also does not need legislation do not have to deal with the congressional process and the two things two industries I'll highlight here is one a real estate sector I can't remember who said it but one of our earlier speakers is talking about the sixty trillion dollar real estate market in the United States that is a very attractive target right if you want to hide a few hundred million dollars or a billion dollars you can't go to a small jurisdiction you can pass it through that jurisdiction but somebody mentioned the one mdb scandal the prime minister sold four and a half billion dollars the entire gdp of the Cayman Islands is three billion dollars literally he could have bought the entire Cayman Islands and still had a billion dollars he didn't know what to do with so you have to move it into larger economies and larger jurisdictions and so the United States is very attractive we have no responsibility no rules or obligations for real estate professionals to monitor who's buying real estate in our in our country so if you have an offshore account yeah the beneficial ownership bill won't get to you because we don't have information on who the company is you can buy if you don't go through a u.s bank you just wire the money from a foreign bank then you can buy into the real estate market the financial crimes enforcement network has announced that they want their intention to put out a draft rule in april and so we're eagerly awaiting that the one other profession that i will say that they should start on would be investment advisors it's an 11 the private investment industry has no responsibilities uh and so it's an 11 trillion dollar market by the way if the private investment market where its own country it would be the third largest economy in the world so again a huge big target with no responsibilities they have the authority to do that through existing law they need to move forward can you just sort of make this a little bit real for us so like if you're an investment professional and you uh what do you want that investment professional to be required to do so right now if i go around the world and recruit money or an agent of someone comes to me and says hey we have a bunch of money and it's in an offshore bank account my responsibility is to make sure that you can afford the risk right you are a qualified investor that you can afford to lose the money this is meant to protect uh riskier investment professionals from recruiting grandma's pension funds right but it's nothing about whether or not that money is corrupt or whether where that the source of the money comes from so they look at the bank account they go oh there's 10 billion dollars they want to invest a billion they can afford to lose it i can take that money and invest it and i have no responsibility to know where the source of that money is as long as the bank account and the company that's coming from that itself is not on a sanctions list so i just set up an anonymous company i'm not in the sanctions list even though i may the person behind it is sanctioned i have no idea i have no responsibility to ask don't ask don't tell i take the money and i invest it in the u.s markets okay jody uh do you have a do you have a favored policy prescription i have another question for you if you don't but i want to give you the opportunity to ask the same question that i asked the others so i would like to approach things from a hard power perspective today kind of building on what ben juda talked about and it's less about a policy and more about everybody asking more questions and so the next time you're watching television or reading the newspaper and you see whatever corrupt authoritarian firing on the anti-democracy protesters to ask some questions ask the question of where did those weapons come from what was the supply chain that brought those weapons who trains on those weapons who maintains those weapons and most importantly for this room what is the financing for those weapons look like and that's true whether we're talking about a large military like russia attacking the democracy of ukraine that's true whether we're talking about iran firing on brave women protesters in iran whether it's the bahraini government firing on its shia minority there whether it's libyan warlord general heftar firing on the other libyan people there to maintain his control of the country using mercenaries and the reason i asked that is a multi-fold one is the role that the arms trade plays and hard security plays in the illicit financial flows we're talking about today in many countries that is not uncommon to see the military budget be 10 20 30 percent of the budget and by law minimal to no oversight allowed often there is no auditing allowed parliament is not allowed to ask questions you have 20 to 30 percent of the budget no one's allowed to look at it it's completely secret you can guess what's going to happen we know well in this room what's going to happen so one is that particular role the specific illicit finance and it's not surprising we talk about nigeria with sanny abacha we talk about jane kudzuma in south africa the role that the arms trade played in enabling their kleptocracy and their just incredible amount of illicit financial flows but secondly is the role that weapons play in maintaining that authoritarian corrupt regime as we see in iran today as we saw in belarus a year ago in the end state when the protesters don't want the corrupt authoritarian leader there it's about using violence against those protesters or if we look at it from a state perspective when putin doesn't want a democracy next door he uses his weapons and his military forces thinking ahead of great power politics to taiwan when you have a successful democracy that gives shijin ping a model of what a democratic chinese system looks like just as a democratic ukraine is very threatening to the putin regime a democratic robust taiwan is very threatening to the shijin ping regime and think about where those weapons and where the financing and the training and so forth go for and then if you're particularly if it's western weapons ask how did they get there what is missing in my legislation and regulations that got those there let me just follow up on that because i think you're touching on a point so your answer suggests that people in washington or london or other state or other international capitals you know they should be all over this agenda uh the fighting corruption agenda the exposing financial secrecy agenda because that's gonna hopefully make the world a safer place and make sure there are less weapons in the hands of some of these bad guys so what is your sense right now of how receptive policymakers are to this kind of argument we've seen some improvements it feels a little bit like the larger financial issues in this room which is there have been some marginal improvements but not the larger systemic ones that will make the great difference i'll speak specifically for the united states of course um the united states has probably the best legislation and regulation when it comes to the arms trade and yet as transparent international defense and security especially colby goodman if you have not pulled colby goodman's reports by tids on how the arms trade works both the service side things like private military contractors and the loopholes there and in the arms trade and see just how wide those loopholes are and realize it only gets worse from there for 194 other countries around the world that will tell you a lot but there's a strong this is one of those situations where the state has to step in where business won't as a good capitalist you know business job is to make a profit and if you're in the arms trade you can be the most ethical arms trade if you want i know some people it's noxie martin anyway you can be the most ethical you want but the reality is in the end of the day you want to make a profit and making a profit is about selling weapons or selling services and you're going to do that just like the tax avoidance gentleman who talked earlier and so forth same sort of same sort of uh incentives and so this is where states have to come in and say yeah i know that selling uh ar-15s which is the civilian version of the m16 is is very profitable to you but guess what you're not going to make a profit on that because it gets people killed including our own american citizens so you're just not going to be allowed to do it let me just put press on one other issue concerning the united states and specifically the by the administration so of all the issues involved with democracy writ large i would think that in terms of actually on paper they've sort of put forward a strategy around fighting corruption is that a is that strategy from what you've seen a significant strategy is it would it move the ball or is it is it a good strategy but not being implemented what's your sense of the by the administration's anti-corruption strategy again i'm a retired air force officer and and one of the formative events in my military career was 9 11 of course i was a captain at the time and it was all a blur of trying to get you know personnel and stuff like that overseas quickly realizing that the air force had absolutely zero posh dunandari linguists for example at the time and so forth um but i watched how quickly the regulations changed to meet the needs with the patriot act and so forth and so while i've seen some changes on the margins we have not seen the kinds of systemic change and the kinds of going up against the very strong vested interest that we saw in the few months after 9 11 there the enablers act is an amazing piece of legislation and it is somewhat of a victory that it actually was put forward in congress but really should that be considered is that our bar of victory the patriot act passed by november 2001 and that was a much bigger systemic change that we're still relying on with ukraine and yet the enablers act a similar level of legislation the united states couldn't go forward um the emergency we talked about real estate the emergency exemption that's been there for whatever 20 whatever years that came in after 9 11 didn't suddenly get lifted even though we recognize the role that real estate is played in russian oligarchs and their ability to maintain the war against ukraine and so yes and no ian did you have a comment yeah just on the strategy i think it's groundbreaking that and also sad that for the first time ever the u.s. has an anti-corruption an anti-corruption strategy a whole of government anti-corruption strategy that in theory elevates the fight against corruption as a national security priority but when push comes to shove anti-corruption loses every single time when it's up against another national security priority and so when you're looking at things like geopolitical competition with china or trying to respond to the energy security pressures that the world has been facing since russia's invasion of ukraine anti-corruption always files by the wayside in favor of quote unquote more urgent and short-term priorities and i think we need uh in terms of uh say competition with china we really need a longer term and values driven approach so if you're engaging with the government of equatorial guinea which is you know symbolic of dictatorship kleptocracy um stealing energy resources from people the u.s. should not be sending political signals that all of that is okay just because the ruler of that country is enticing a chinese military base so we have to look at those kinds of trade-offs that are happening all the time well sadly that's probably true about the other pieces of the democracy agenda two including you know human rights um let me ask alise a question um and i would love to get everyone's take on this uh in terms of advocating on the hill right now in the current climate do you have a thought about like what the best way to to make the case for some of the kinds of initiatives that you are pushing uh you know what what what resonates in the current uh congress because i think you know while i get freedom house and a lot of people in this room i suspect you know we have a more values you know oriented democracy pro-democracy kind of strategy that might fall in deaf ears sometimes on the hill now or the more realist approach might you know be be i'm just kind of curious how you think about talking talking on the hill right now well the good news is that the people in this room and many other people have spent years building this as a bipartisan issue uh there really are people on both sides of the aisle that are worried about illicit finance uh one of the reasons is that russia and china which is a concern on both sides of the aisle engage in a lot of illicit finance uh and they are making their money off the western financial system so i think the most important thing to do on the hill right now is to keep it as a bipartisan issue sacrifice what you need to to keep it bipartisan you can still get a lot done and to spend the time with republican offices uh to convince them that this is something that's worth their their time worth their the work the fact that we get these things into the ndaa these days there's only really two kinds of legislation get through the ndaa appropriations and then of course there's always something else you know infrastructure whatever but you have to think about these uh issues in that context and we have started this tradition over the last you know a few years of including an anti-money laundering part in the national defense authorization act so i think that that's something to think about that it's not just the financial committees not just foreign affairs it's also national security concern gary what what what are your thoughts about this in terms of the case to congress yeah so just building on what ali says i think uh one of the things that this uh coalition has done well that has had i think pay off um has been you know most people try and start by getting bipartisan support and convincing individual legislators and getting a republican and democrats assign a bill and introduce it and while we've done that the focus has actually been on constituency groups that is there's not a lot of groups when we were passing working on the corporate transparency act for for example it was that part of the fight was at the height of the black lives matter sort of controversies and you know protests and all of that we managed to get um civil rights organizations to sign on to this you know essentially the same legislation um as the paternal order of police they weren't sitting in a lot of rooms together at the time uh dow chemical and friends of the earth on the same letter the banks uh some of the big banks uh in support of this for various reasons to help them with their compliance um but also a number of the consumer groups like public citizen and so looking at some of the constituency groups that then the legislators look at and go oh this is safe for me to go to the go into the water or i have to be in there because i want the local sheriff to endorse me when i run for reelection and so i think the focus on those constituency groups has helped us to ground this not as a oh we had we found one legislator who might retire and then we're done because we don't have somebody else to replace him or her but in fact have grounded it in a bipartisan set of constituency groups that hopefully will allow us to get some things passed in the future as well let me uh let me just throw another issue on the table uh picking up on the discussion about the enablers act so like i've been a before i was at freedom house i was a reporter for a long time and like when you're in washington you just realize the extent to which you know law firms and public accounting firms and uh pr firms and comms firms uh they're all kind of in bed like with the bad guys right and i wouldn't say all of them but there's a healthy chunk that are and uh a really question for each of you has there been any progress over the last 10 to 15 years in really making that not something that people should do or is there just too much money involved in representing the emirates or the Saudis or the other groups that it's just a hopeless sycophian task i'm really curious anyone want to tackle that issue well i'm sorry to say i haven't seen much progress um back in 2016 i think it was a global witness did this sting where they went to uh over a dozen different law firms uh and they had somebody pretended they were representing a corrupt african dictator who wanted to invest in the united states and 12 out of the 13 law firms they talked to said well let's talk to you about that let's talk about structuring and let's talk about uh shell entities etc only one lawyer said i don't do that get out of my office only one and so one out of 13 are we still at that percentage today i haven't seen a lot of evidence to the contrary the a b a is still one of the main opponents uh a lot of this legislation what's their what's their uh what's their case what's the a b a's case you'll have to ask them okay just to just to pick up on the a b a thing and so i agree with the least that we have a we still have a long ways to go i would say that um there's a lot more awareness and there there has been some progress although it's slow um in that for example the national association of real estate so the real estate industry is divided loosely into two there's the commercial and the residential side the residential folks which is largely the national association of realtors and the larger of the two associations has actually not knee jerk opposed regulations on the real estate industry they're protective of their members so i don't want to give them too much credit but it is it is an opening that we have been able to work with them um over the last seven or eight years i will say and i also have to say within the a b a there are lawyers that we have contacted that have opposed certain other lawyers so the human rights lawyers the anti-corruption lawyers have a conversation going on with the real estate lawyers and the estate and trust lawyers but the good guys have well let me just i have to if folks haven't seen this because it just happened either yesterday or monday um that the american bar association had its february meetings and they passed a resolution a new resolution that they adopted on beneficial ownership really the law has been in place now or had passed two three years ago and the bar association has suddenly decided that for the first time ever they're going to say that collecting and reporting beneficial ownership information to a government agency is okay that's about as far as they went lawyers should not be held accountable and there's a million caveats but yes it is so are we beginning to make progress it is slow but i do think that we are starting to see some incremental movement from certain corners that hopefully we can exploit into the future to make some additional progress so just to it just happened so i thought i did judy you want to weigh in on this issue sure i'll talk to it from the the dod perspective um i remember wanting to sign my ethics forms and i retired from the military and realized that while there are some requirements on it you could drive a mac trucks or what and basically it would have been impossible for me to violate those ethics rules because i wasn't what's called a cotar contracting uh relevant contracting officer i could do almost anything i wanted um as paul massaro pointed out today trying to get dod senior leaders to no longer be able to work for foreign governments particularly those against us interest or autocracies or corruption will be tough i do think speaking of the constituencies one area potentially to work with are those lower level officer or lower level soldiers and so forth who've left and their families um the demographic that most of your soldiers come from and your airmen sailors etc is that same demographic that we're talking about in the prior panels the same demographics that come from mostly rural areas where incomes have staggered and so forth being able to go into the military is a big step up in life in the way ahead in the way to go to college etc etc these are the individuals who have missed four or five six christmases away from home and who felt the fall of cobble and the mission failure in iraq very personally because they'd been there or were wounded or otherwise um i also see it in comedy in humor um there's a very politically incorrect blog called the duffel blog um and it has excoriated senior officers every time they jump on to the board of directors of something or how much of the taliban was funded by us gear that fell off the quote unquote back of a truck um they were probably one of the best educational systems for how to understand the role that corruption plays in undermining our own military and our own missions and our own national security and democracy i think that anything is a professor i could ever do flat out if i could also offer just one note of hope uh i had i helped staff center levin on his first anti-money laundering hearing which reyman was uh one of our witnesses and that's when we met that was in 1999 back then banks were taking in double bags full of cash in the united states in washington and our nation's capital there were just a whole range of their bankers private bankers were actively helping their clients hide their money that isn't true today it's 23 years later okay took a while but the banks now have to hide that if they want to do it they have to hide it and many banks don't do it anymore there has been a significant change within the banking community in terms of acceptance of their anti-money laundering responsibilities and a willingness to actually take action and invest to do that work now do we have miles to go of course but i i just want to let you know that in the 23 years i've seen a significant change and so i believe that we can continue to make progress i just want to give ian a chance to go and say something on this subject before we move on about enablers uh no okay by the way i think we're sort of running charles how much more time do we have does anybody have any questions i'm enjoying the show what let's see how much to what do you have seven minutes does anyone have a question that they want to ask i have one more question but uh in the back of the room and i know that rayman who wanted to make a comment we say have seven minutes go ahead sir project i had a question why is it that we instantly grasped towards a congressional solution why don't we use aipa or something like that and we do it for sanctions why don't we say that it's an actual security threat for banks to take money from uh from from anonymous corporations and i say in the background i spend more time than i'd like to admit on in the company registry in russia and it's a thousand times more transparent than the best one in the u.s but it's not an elixir for there are problems the problems are the lack of regulations which are i mean that is after all the draw of our economic system is the transparency and the lack of it is a security threat i don't think anyone's ever arguing against me on that it's a non-governmental responses maybe so anyone want to tackle that fall mentioned the global magnet ski act is one of the things that we've been using to go after corrupt people there's been an increasing usage of you know denying visas to people to come to the united states which a lot of rich corrupt people want to do but you're right i'm sure that there is more that we could think about i'm not an expert in that area but i think that's a great thought to try to look at those laws and see how we could use them in a more creative way and there's also an international network of those kinds of laws of imposing sanctions and perhaps we could use that more as well just two quick things i do think that we are trying or if this wasn't clear before i do think we are trying to say what are existing authorities that we could use to get at this problem and so some of the things that you've heard we did have to pass the corporate transparency act but now it's about the regulations and then we talk about the enablers act but there are as i said before a number of enablers that are already covered under existing law and so moving the administration to do this and i realized they didn't actually answer your question earlier which was what is it exactly that we want them to do and so this would be an example of something that the administration can do without having to go through congress to get the lawyers and the investment bankers to or the investment advisors to have what we call due diligence requirements and by that what we mean is there's basically right there's two aspects to customer due diligence one is are you the person that you say you are like do i run the company right but that's not the whole story right if Vladimir Putin walks in and with a passport and goes hey i i'm Vladimir Putin that's your that's great well it's also the second question is are you somebody we should be doing business with and that's what we want the investment advisors and the real estate folks to do is to look into you know who is this person are they on a sanctions list are they you know is their money coming from legitimate means those sorts of questions that they then document it's very much what the banks do under their full due diligence requirements we want to extend those to the other gatekeepers in the financial system Ian you had a point I was just going to mention that if you've done something useful that has an impact in the US a primary indication of that is that you will be sued and so one of the things I think we need to discuss as a community is having a strategy around litigation and defense of our wins because we're often scrambling to do that the corporate transparency act there's already a lawsuit facing it section 15 who's a lawsuit against it is a national small business association they filed it yeah they filed it but I think the bigger point is if whether it's a can you know we get something passed through congress or an agency uses existing authority you know there's a whole array of potential litigants and people with deep pockets who can pay for that litigation so as a community we need to think through not only winning getting a strong regulation out but how we defend it in the courts and that's just the reality in the US okay okay quickly I'm just gonna mention one other thing that is a possibility for the future that we should think about the UK has now started a real estate registry for offshore owners of property just when active January 31st so it's brand new they have 32,000 offshore entities that have signed up 13,000 of them haven't actually said who their beneficial owners are but they are already scrubbing that thing they found criminals they found all kinds of patterns and it's another thing we should think about we ought to know who owns the ground under our feet and a lot of times that is an offshore entity with not a US entity a foreign entity and we don't know who's behind it so real estate registries is another tool we could try to use okay we're just about out of time Raymond you asked for the floor I'm gonna give it to you for one minute thank you I want to single out the single greatest accomplishment of Elise being when the Patriot Act was being considered in October and November 2001 the the money laundering provision which was in the Patriot Act succeeded in taking shell banks off the table shell banks were just like shell corporations banks that could operate without anyone knowing who owned them the Patriot Act contains a provision that says no US corporation can receive no US financial institution can receive money from a shell bank it goes on to say no US financial institution no foreign financial institution can send money to the United States that it has received from a shell bank with this clear-cut provision and it made it clear that this even refers to wire transfers that might touch a correspondent bank account in New York for a split second before flitting off somewhere else with this very clear-cut prohibition shell banks which had existed in the thousands were wiped out just like that gone you do the same thing with shell corporations if you want to at least mean is responsible for this she will deflect responsibility to her boss Carl Levin don't buy it for a minute she put it in there join me please in a rousing hand the fingerprints of endemic corruption are not all over the crime scene it would be a mistake to single out corruption is the main cause of democratic decline and breakdown everywhere but it is usually a contributing factor and it is often the main factor people lose faith in democracy when they see their parties and politicians serving their own interests rather than the countries they get angry and rightfully so when the country's economic health is mortgaged in eclectocratic frenzy to extract as much wealth as possible as quickly as possible for the governing elite and when the country's sovereignty and long-term fiscal health are mortgaged in secret and highly unfavorable deals with Chinese companies or government officials when there is no transparency very bad things happen countries are sold out and ruined inequality intensifies to grotesque levels democracies wither and and die but it is not only the looted countries that suffer this is one of the most important points that Raymond Baker makes and his brilliant new book invisible trillions the so-called advanced wealthy democracies the ones that brag about having transparency accountability and a mature rule of law are also damaged and distorted the money looted in countries with weak governance does not stay in those benighted countries it is laundered and recycled through the multi-layered washing machines of the kleptocracy industry in the us uk and other parts of europe it is as it is ushered through our banking systems real estate markets corporate and philanthropic registries and so on this illicit money corrupts our own democratic systems of governance while entrenching broader patterns of financial secrecy and illicit capital flows which by now amount to literally in baker's words invisible trillions of dollars in this vast conspiracy to disguise deflect and defraud democracies of rightful tax revenues the big losers are the ordinary people who are losing faith in both democracy and capitalism it is of course an illusion to think that authoritarianism will provide a better answer in the absence of democracy the rule of law is even weaker and transparency shallower neither can we blame capitalism as such after all private enterprise is the greatest engine of wealth and job creation in human history but where capitalism is untamed by regulation and monitoring greed is likely to erode market competition and too much of the spirit of innovation will be directed to searching for easy rents today those rents are pursued by the complex global industry of lawyers bankers consultants accountants lobbyists agents brokers and fixers that has risen for one shared purpose to help place trillions of dollars of wealth beyond the reach of public accountability regulation and taxation in this process this global industry is weakening both democracy and capitalism severely exacerbating inequality and robbing countries of the tax income they need to meet public interest this industry of financial secrecy and greed must be exposed and held accountable with stronger laws and regulatory processes governing corporations banks and accounting firms at the clap the at the kleptocratic source we must commit more funding to support independent journalism and investigative reporting through innovative means such as the international fund for public interest media as well as civic monitoring and anti-corruption groups we have reached a critical juncture either we renew this precious system of democratic capitalism through fundamental reforms to improve regulation fairness justice and transparency or the spreading stench of corruption greed and insider privilege will gradually consume public faith in our institutions and this is the final panel of the afternoon and I must say I'm amazed at the number of people who are still in the room so thank you all it's difficult to go through an entire day even though we've been on schedule listening to these discussions but I'd like to begin by asking Damon Wilson we're going to talk about democracy at risk and he is the president and CEO of the national endowment for democracy I'm going to start with you and see what you have to say about it and then we can pitch in and say all kinds of things terrific that I'll dive in Charles thanks for getting all of us together thanks for running the show up here today this is really important Charles that you brought together so many people working this from so many angles because what we've been faced with is a systemic challenge to democracy with piecemeal responses and part of what I'm excited about coming out of this this work is how are we thinking about systemic responses to the systemic challenge so let me just start with a little bit of framing and then we can get into a bit of a conversation we all know from the amazing work of freedom house that we've been in nearly two two decades of a democratic recession but the truth is it's been a little bit different in the past decades been sharper more of the democratic resurgence as Larry has talked about and it's a resurgence that's we've seen with a sharp authoritarian repression at home producing extraordinary democratic diasporas but it's become more difficult more dangerous for democracy around the world because it's also linked with the export taking the show on the road the export of the tools technologies and techniques of repression of these are autocrats in an environment where technology is levered information is used and financial networks kleptocracy the financial networks allow for a glue to help bind together with and apple bomb and others have talked so eloquently about autocracy ink and so you hear today president biden talking about the big challenge between autocracy and democracy many people here and actually see a competition because of a rise of a of a prc that has generated wealth the idea of authoritarian capitalism versus democratic capitalism and yet the reality is authoritarian capitalism becomes it is kleptocracy and so what we're dealing with is the web of deals that fuel what is behind the scenes of an autocracy ink of autocrats working together of engaging in the world in which it undermines democracy helping to cement and solidify and bolster autocratic power around the world while protecting ill-begotten wealth and this is why this is such a fundamental defining challenge to democracy today in our area in our era and it is the financial secrecy that is behind all this that enables the obscuring of these illicit funds so this is probably why at the endowment we're in the midst of a big process right now about how we continue to accelerate our learning from a real regional state-based analysis of problems a real grounding in grassroots activity that are authentic to countries that are you know investigative journalists do remarkable work but begin to think about what this means in a more systemic cross-cutting way across countries and across regions again how do we harness our power for systemic responses to the challenge and so this is where we've got to marry what Larry was just talking about some of the extraordinary grassroots organizing individual investigative journalists that are doing work by embedding this in a broader response and I think about it in a couple of ways you know we have amazing investigative journalists in Ecuador who do research behind what's led to big corrupt deals in their country and yet each time they're doing it they bump into China but they don't actually know much about how China operates in the world and how how its engagement is really undermining democracy in their own area so part of what we're trying to do is how do we foster defeating a network with a network which is why conversations like this are so important to connect these dots so maybe I'll stop with this with just a sense of beginning with getting democracies working together to close off kleptocratic access to our own financial system something that I think the administration spotlight the congressional action this effort has been really important for how we continue to adapt our own approach as we see the kleptocrats adapt evading sanctions moving financial centers to UAE or other places how we invest in that exposure the the core hard work of investigative journalists protection for whistleblowers the legal defense funds to support people and can't security measures for people doing this work and then embed it in an intentional effort of collaboration across countries across disciplines across regions so that we build the more sophisticated network to respond in a way that can defeat the sophistication of the network we're dealing with so I'll stop with that as a kickoff the framing David do you have some things to add I'm sure well jack I did speak earlier this morning on a panel and I said to Charles I don't think I have enough interesting things to say once let alone twice but and I should warn you I'm sitting in a comfortable chair it's warm in here it's the end of the day so if I bore not just all of you but myself and fall asleep just make sure I catch my flight maybe I'll just pick up on a few things that came up during the day in the conversation one is someone said that the oligarchs in Russia have been subordinated to the to the state I think that's right but I actually would frame it differently I would argue they have been subordinated to an individual and that individual I don't think is necessarily the same as at least what we would consider a normal state in Russia that may be the case which is the state and Putin are more or less the same but I would argue actually there is a difference between these kind of corrupt authoritarian leaders and what is ordinarily in a country's national interest it's not in Russia's national interest to invade a neighboring state and alienate the population in those countries but it's in Putin's interest to do so so I actually do think it is important to differentiate between the oligarchs being subordinated to see some of the oligarchs that were mentioned Berezovsky and Businski were in very good standing with barice Yeltsin but after Yeltsin left and Putin came in one of the first things Putin did was to take their tv stations away from them and then throw Businski in jail Berezovsky of course left and as was said earlier died under mysterious circumstances so I do think it is important to underscore the role played by these leaders who are running this kleptocratic system and that isn't necessarily in the interest of the country or of a normally functioning state. Rachel was kind enough to actually listen to something I said earlier and when I said the more corrupt Russia becomes more authoritarian it becomes and let me just elaborate on that for a second the more corrupt it comes the richer it becomes and the less it can afford to lose power and so the more corrupt it becomes the more it will crack down on any perceived threats to that grip on power and once it runs out of domestic enemies or perceived enemies it's likely to project on two others and it's the old expression that the way regime treats its own people is often indicative of how it will behave in foreign policy and how it will treat others and if Putin doesn't respect the human rights of Russian citizens he certainly isn't going to protect care about the human rights of Ukrainians and Belarusians or anyone else for that matter so this is why I think that this point is important to understand that this corruption does as you were just saying the connection between the two is is vital and it is threatening not just from a corruption perspective but from a force projection perspective as well it doesn't happen with every corrupt authoritarian regime but for those who can't I'll give you one quick example that you wouldn't necessarily think of Belarus which is run by a thoroughly corrupt authoritarian leader Alexander Lukashenko who when I would we actually were in the government together we sanctioned the regime of Lukashenko and forced at least the release of political prisoners Lukashenko's problems don't stay inside Belarus we saw this with the hijacking of the Ryanair flight going from Athens to Belarus that could have killed 130 I think some odd people on board if the pilots didn't land it we started with the weaponization of migrants by Lukashenko from Asia in the Middle East so if you think that these problems are over there none of our business don't affect us I think again the debate Paul Massarro and I had well it wasn't a debate but the disagreement we had over destruction versus exploitation here again I would differentiate I think Putin sure would love to destroy us because he feels he doesn't have to necessarily use our system or safekeeping since he's the one in charge and can decide whether to confiscate or not he's less interested but I think the oligarchs don't want to destroy our system they want to enjoy it they want to exploit it as someone else said they want to send their family here they want to send their kids here to study and so I think there is a difference the last thing is sanctuaries what do I mean by this I think we have to be we really need to be more careful and not tell me our enemies let's say Russia for example what we won't do and that's true whether in a military sense where we publicly say the Ukrainians are not allowed to attack Russian forces if those Russian forces are on Russian soil even if they attack Ukraine self-defense in my view Ukraine should have the right to attack those Russian forces if those forces are attacking Ukraine similarly we shouldn't let the Russians oligarchs or anyone else know that there are exceptions in real estate or in other kinds of business activity we are giving them sanctuary which means we are letting them off the hook and we're telegraphing to them what we won't do and generally that's not a smart way to pursue policy I'm assuming that sure well I'll start with good news which is since you made it to the end of the day David and Damon promised me they would lead us in an interactive jig if anyone wants to get up and move around no I think all three of us and our organizations do so much work with civil society and human rights defenders on democracy issues you could probably shuffle our note cards and hear a lot of the same things but there are a few things I'd really emphasize I think one the name of this panel you know I know we all love a good title democracy at risk I don't think that's actually an overstatement in this case the linkages that we see the correlations that we see between a decline in democracy and corruption and financial issues there's as as you see low political rights and civil liberties transparency international tracks high perceptions of corruption I would direct you to page 73 of this excellent book thank you Raymond Baker for doing a little show and tell for me where there's decline in democracy you see rising income inequality we know the linkages between human rights abuses and corruption so there's just so much overlap and I know that I am in a room of researchers and I have a lot of research colleagues who get nervous when I start using anecdotes but I come from the hill where all you need is a single anecdote and you're off to the races with a new piece of legislation so I would just say I've been at freedom house for almost a decade now and the human rights defenders and civil society folks I meet with I would say a good two-thirds if not more have interacted in their efforts to strengthen democracy in their own countries they're encountering corruption in one way or another whether they are journalists who are reporting on corruption whether they are environmental activists who are seeing companies come in and you know just really pillage the earth many of those companies are semi-state companies with authoritarian regimes or are you know doing business with authoritarian regimes and so I think the policy panel we heard previously was great this is a key moment where we really have to get to work tackling some of this and in the U.S. really address the enabling role that we play. One of the things that I would ask you all about is the effort to recover money that these characters who are kleptocrats have stolen after they leave office and the track record on this has not been terrific we hear of things like salia bachas six billion dollars stolen a billion recover and everybody cheers saying wow look at what we did there are provisions written into various international agreements that now say we should focus on asset recovery but it seems to be a very specialized field that have some very specialized very high price lawyers and not getting the results that we'd like to see and what do you have any thoughts about what we can do to enhance the effort to recover some of those monies so that you know you can't steal a country blind and then ride off into the sunset and live well examples Marcos Mobutu you know just to name a few how about Luanda Luanda papers and the family you know Santa de Santos you know almost incomprehensible amounts of money stolen and yes some has been recovered some has been frozen but in the main it's a pretty clean getaway I'd like to have their 401k well I'll try actually let me if I can Jack also just mention at the Bush Institute Jessica Ludwig and Albert Torres who are here are leading a new initiative for us and and really please and Jessica produce this new policy brief that we have on our website about countering corruption and kleptocracy which doesn't fully answer your question but let me put it in context because part of that challenge is complicated when we have a leader whom we want out of power yes and so there are policy considerations that are weighed how quickly can we get ex-leader out of power and and inducing usually it's a hymn to leave we allow them to take what they've stolen um she'd be gone Duvallier got us to fly his toys and she won 30s from Haiti to France kind of embarrassing I mean Marcos is another one yeah that you mentioned a lot of shoes I mean yeah exactly Shah I mean Shah we weren't inducing yeah you had to and on it goes yes it does so I think I think it is do we stop making those trade-offs that's hard to do in the policy world when when you're trying to stop other problems so it's a matter of weighing which one but if it is somebody who is voted out or is removed from a popular movement seems to me those are assets we should go after okay I might just add to it maybe even turn the question back to you because you've got something to offer on this and I'm not an expert enough on the on the details but maybe there's three quick points one we're in a paradigm shift of thinking about what's possible particularly in this field in fact after the invasion of Ukraine we had a town hall at the endowment to talk about everything we've been working on that's been hard we didn't think progress was possible let's reconsider take a look at it because we saw how the impact of the rush of Putin's invasion of Ukraine changed the parameters in which politicians the public legislators are willing to think about issues and so use the recovery of Russian assets to fund Ukrainian reconstruction we've only frozen we haven't followed this through so we're in a paradigm changing moment and if we can follow through on that it can help set the scene further for what you're talking about let's see it through and Ukraine is a paradigm changing moment on how we recover assets for much that it can be used to rebuild Ukraine second over time if democracies start to think about democracy as strategy rather than democracies the thing they put over here in drl or something but as a as a north star to how develop strategy among democracies that it's fundamental to the national security of democracies that they have strategy that is about the bolstering support for democracy around the world which is giving life to real national security backed up and teeth by what kleptocracy countering the kleptocracy strategy policy should look like it can open the door to more serious efforts to take this forward on asset recovery and specific instances going forward and third let's not rely on governments it is the ingenuity of extraordinary digital forensics researchers that have revealed so much and so how can we continue to empower independent actors journalists civil society with new tools of learning from with new tools of learning in a way that we can force this issue they can force this issue by being able to actually more systematically track those resources in a way that is accessible to the public and not subject to the decision or a whim of a policy decision about how to paper over something else how can we empower independent actors to force some of this so those are some thoughts put on the table but I turn it back to you where you have some expertise in this I don't have full answers to these questions I'd love to have more I've been through a few a few rounds of trying to set up independent asset recovery operations trying to get an international route to work on the problem because it requires expertise real expertise and it requires a lot of money and of course we quickly discovered the world bank wouldn't finance those efforts and that governments once in power the succeeding government once in power for a while begins to like the idea that the assets haven't been recovered because a new guy says aha my chance to steal and that's why the recovery and and putting in motion something that recovers the money is so important I think now if I may I'd like to shift the subject yeah add one quick thing I apologize I'm picking up on what both of you're saying there is you hear these arguments particularly when it comes to the hard currency reserves of Russia the argument against moving from freezing to seizing that if we do that the Chinese will pull their money out my response as the Chinese invade Taiwan I'd seize their assets too otherwise we essentially are telling the Russians the Chinese or any other government you are free to invade country X or do why human rights abuses as long as you've got billions or more in your in in the United States so we're basically saying we'd rather keep this kind of money that could become blood stained and instead of doing the right thing you hear this much less on individual assets but you got to remember that these assets particularly on the individual scale but even on the other are polluting our system are corrupting our markets and are driving up prices in real estate I mean I used to live in Miami sunny aisles is a perfect example of this exactly exactly the price goes up and up yep and that's why I think it really does go back to your earlier point about political will some of this is the political will issue you know we understand the legal constraints in the US with seizing the assets but where we do have the interest and desire and will to do so we should and there's so much overlap also with sanctions and the big debate those of you who work on sanctions will know do we also impose sanctions on family members if we know that these folks are hiding money in the accounts of family members and so I think we have to you know they're serious about what they're doing we have to get serious about what we're doing so now I'd like to turn the discussion to a different threat to democracy which is dark money in political campaigns we've been through a situation where the US Supreme Court as an effect said a corporation as a citizen can contribute what it wants to and on we go and this business of dark money has now taken over an awful lot of the American political system what do we do is this the kind of threat that I personally think it is my own experience on Capitol Hill tells me that when congressmen are elected they're set off to the national committee headquarters on both sides of the aisle given a list of donors to call and have to dial for dollars three hours every day we also know that there are certain cherished committee assignments so there's a big scramble who gets to be on the Ways and Means Committee why because it's the best committee to raise money on and then the question we had earlier today is to why for example we can't repeal simple things like carried interest and the answer of course is that people have bid to get on the Ways and Means Committee and in the process of doing that they pledge to give some of the money they can raise with their seats back to the party and a lot of the money that winds up going to them is absolute dark money nobody knows where it came from it might as well be coming out of the great void so what do we do about all this and how do we solve that campaign finance problem and I've worked on it for a long time and I'll just add one thing about the problem which is that we look to the people who are at the root of the problem to be the ones to solve the problem so congress gets to decide what the transparency of their funding is uh based on their needs as opposed to us stepping in and doing something to say we better then we'll find out who's giving you money well listen I sat on the hill for eight years and I think campaign finance is a big issue but I would say it's not so much that you have members of congress for the most part knowingly taking funding from a nefarious foreign government right the real risk and threat I think comes in these groups that have one or two or three layers of cover lobbying on behalf of a foreign government but without the a very clear linkage if you're a busy 23 year old staffer and you're supposed to tell your boss what to do and you don't know any better some of you will remember a few years ago there was a bipartisan delegation that went to Azerbaijan and it turned out that the organization that had financed that did have links to the government staff and members had tried to do due diligence and get ethics clearance there was also some funny business going on where folks accepted beautiful oriental rugs and the gift limit is $50 so we'll just set that aside but I think this is the issue we see over and over again with education associations and linkages to the ccp or you know many of these middle eastern countries and so it's probably directly you know and to your question about campaign finance I'd imagine it's the small dollar bundling that's much more of a concern than knowingly taking foreign finance further thoughts well I guess the only thing I would add is there is now a matter before the house ethics committee that is about as big a softball as one could throw and were it not for a narrow majority in the house I would like to think that this case would be handled expeditiously the member is entitled to due process of course but it isn't just where did that 700,000 come from there appear to be some links to a Russian oligarch through a cousin I think it is so if they can't deal with that then your point about the fox what's the extra fox in the hen house or whatever it is is really born out you know jack I'll first of all I'll caveat it was saying we're the national dominant for democracy supporting democracy around the world not working in the United States but the concept of democracy is that it's hard work it's not self-executing it requires civic engagement and this is kind of what makes it beautiful to be having this debate in our country rather than in an autocracy and so how does democracy work you've got to identify problems you've got to be able to document it you've got to be able to build coalitions you've got to be able to have an open debate about it you've got to be able to push responsive institutions to reform you've got to build movement behind it like it it doesn't it's not supposed to just happen and so that's partly how to think about what are the muscle movements of a self-correcting mechanism which is the essence of the health of the health of a democracy that it doesn't require outsiders to say this is your problem it requires us to figure it out so let me talk about this a little bit more one of the things that's happened is the cost of running a congressional campaign has so soared that it reaches numbers that are literally unobtainable in the constituency where the congressman is running the second the second part of this is that the only way that somebody running can communicate really is using advertising means because the constituencies keep growing and we've had the houses is set in size by law so the house could actually increase its membership and the last time it did that I think was 1912 what would you think of the idea of doubling the size of the house and maybe cutting the staff in half and forcing the members forcing the members to deal directly with their own constituents all right former health staffer so I know everybody's looking at me so I worked on the senate side and the house I will say the thought of doubling the members in the house gives me pause for a variety of reasons I do think that there the current expectation you know there are not enough staff for each congressional district that's just a fact and understandably salaries are low but what that means is you get some of the best folks you'll ever find on the hill and some of the worst folks you'll ever find on the hill and so there needs to be I think some sort of right sizing how do you equip members to have more direct contact with their constituents and fund experts juries out personal opinion on whether I would double the size of the house well it was years of trying to figure out how to deal with some of these problems that has led me to propose what are pretty radical ideas I guess in the current environment but uh we really have to rethink about how does democracy work when the representative gets further and further removed from the constituent simply because the size of this constituency goes up and up and up and you know I look at some of the foreign legislatures which are not terribly democratic but which proportionately to ours have so many more people and I wonder you know is that a direction to go in but if not what other ideas can we have to make the reaction and interaction with constituents more direct where people can get the feel of what their constituents are going through very directly instead of this kind of a performative way of approaching constituents I don't really have a view jack on whether to expand the house and I take the point that as districts get larger and larger they become more distant from the voters um I guess what what I would say is we just have to be mindful that how we conduct ourselves and what we do does not just stay inside this country let alone the city it has global repercussions and so when we have candidates question the integrity of our elections we shouldn't be shocked that in Brazil they follow that example or elsewhere I mean in the past when we were in the government we would go after leaders who would steal elections and we still will and we still should but let's not give other countries and other leaders some ammunition in their what aboutism counter arguments when they say yeah well what about what just happened January 6th 2021 in the United States what about calling the media the enemy of the people I wish we would be a little more mindful that how we behave and conduct ourselves as serious implications around the world and making sure that our leaders are accountable are subject to election and are in touch with their constituents is an important part of that absolutely I couldn't agree with you more on that one and we certainly have been through a period where we've been setting a rather rude example for the rest of the world and I hope we're coming back from that and we'll be showing people that we can recover I think we we've taken the conversation up here along the way but I'm sure there are some questions and and room for some discussion so why don't we open it up yeah in the firm Cambridge Analytica which owned a UK company called SCL and a colleague of mine in Kenya described in great detail how in the 2013 election Kenya president in 2017 election Cambridge Analytica exploited Facebook data profiling to manipulate the elections there and this is a company that's funded by you know well known US investor and a big contributor to politics here and I'm wondering what are the sanctions that we should impose to be consistent to have a you know to live up to our democratic values on US entities that that do this kind of grotesque profiling it was really quite quite powerful intervention in Kenya also from same firm went on to intervene in Trinidad in in several other countries in Africa and the intellectual property for Cambridge Analytica has been sold to Eric Prince so it's still an issue there's a pretty grand tradition of American political consultants after successfully managing an American political campaign going off around the world consulting for other other characters who are running for office good bad and indifferent and for that matter people who are pro-addy or otherwise the United States is that a business that ought to be regulated should we be saying that if you've run a political campaign here for reasons of national interest and security you should keep your politics inside the United States I think there's a lot to unpack with that one so I would say Cambridge Analytica was I think eye-opening and extremely upsetting to anyone who was paying attention but I think these issues of privacy you know there are a number of companies that have access to this information and a number of ways that users continue to be exposed so one of the things we've talked about at Freedom House is the need for comprehensive privacy legislation and we are aware of the uphill battle that that would be but that we think is one of the most effective ways to actually protect American consumers I think you talked on two more issues that I wanted to talk about one in relation to the the last point where so much of this problem is about the discourse which relates to the manipulation of elections right in politics there's a saying if you're explaining you're losing that's a problem we need to get folks to the point where we can have intelligent conversations and you know when you do polling on congressional districts people generally give high marks to their own congressperson but very low marks to congress as a whole well each congressperson arrives in Washington thinking they're helping and in fact both sides really skew talking points and then you add in the manipulation of elections which you know we've seen around the world it's not just a US issue and so I think we have to get serious about addressing some of that and to your point of foreign lobbying and the business of of political campaigns I do think it's something that we need to seriously look at okay what you added to to Jim's point Jack I would just say it's important to differentiate between Americans getting involved advising other countries political campaigns electoral campaigns and organizations like the Ned and the IRI freedom house others who are not going in uninvited but are responding to indigenous interest and having the support and training and knowledge that these organizations can offer and so what these organizations do is to try to help interested parties operate in a more democratic fashion well you're you're building the democratic infrastructure exactly teaching them how to run the democracy how to run a proper campaign which isn't necessarily a victorious campaign but how to run a good campaign a decent campaign that you can at least look back on and be proud of how to conduct good elections for all of the controversy and uh claims of stolen elections we actually know how to conduct elections really well not perfect we do pretty well we do a damn good job overall and uh so so they look to us for that kind of expertise and training and advice which I think is absolutely indispensable point of degree but I'm I'm talking about the guys who uh like James Carville who after Jimmy Carter uh after we we had Carville running one or two campaigns went off around the world selling his services and uh you wondered about some of the people who were his customers well he's not the only one obviously yeah no I'm just pulling him out of the air as as one example but there God knows we're plenty of others and uh some of them you know I'll I'll just talk personally about my own feelings but Bannon has been around the world promoting a kind of the form of authoritarianism and uh boy oh boy I don't think that's in our national interest particularly um so my my point is should that kind of activity be in some shape or manner be regulated well look I would just say contributions to campaigns here are from foreign sources are illegal right and some countries they're not and that may be at least one way to start to tackle the issue that you're talking about I mean remember in the French presidential campaign a while back Marine Le Pen openly took uh was at a 10 million dollar loan from Russia right and was bragging about it so um seems untoward to us but it was legal in France sure okay other questions other points for discussion hello um thank you panelists for great discussion my name is Ilya Zaslavsky I work on Ukraine and at Eastern Europe programs at the Center for International Private Enterprise my question is on quantifying risks for democracy so today a number of numbers were floating around so about 50-60 trillion dollars in offshore accounts taken out of democratic capitalism but at the same time say Russian oligarchic money it's maybe tens at most hundreds of billions of dollars going into US UK making maybe less than even one percent of New York stock exchange and GDP so really a drop in the ocean at the same time kleptocrats are very good at keeping silent when necessary and then amplifying them their message about numbers today someone said that they say we bring jobs to Dakota with these investments and last number which sticks in my mind is that recently it's been said a lot that with a three to five percent budget of Pentagon US is now managing to deal with one of the key adversaries through Ukraine meaning giving money and help to Ukraine a small fraction what's great for democracy in the world so my question is would it make sense do you think to quantify risks to say at the current stage say 10 billion dollars of more Russian money allowed into this country will result in 20 more billion dollars to have to be spent on democracy and I don't know 50 more billion dollars to be spent on national security would that connect the dots and help the risks or that's not enough anybody want to take a crack at that or no to be honest I don't quite see the through lines so interested in how site develops the concepts of this so I can see it better because there's a there's a generalization there that does this hold so partly what I've been so bullish about is where we can make sort of positive innovations this is the constructive capitalism work of site or the the corrosive capitalism work of site that's been so crucial and getting private businesses invested in these outcomes it's the infrastructure of what we can support what David was saying part of this is how you know I'm I'm not here to bleed and to to talk about the domestic side of it we have to figure out how capitalism and services work right I mean that's that's that's part of generating wealth that's part of a global economy that should be a strength that we contribute got to figure out those parameters but the way that we do it is as David was saying the ability for first of all what the party institutes in the IRI nonpartisan open to all allowing and I would say more democratic learning we're actually not that we don't really run election I mean I wouldn't say we're there to teach people how to run election that's not the point really is democratic learning together where increasingly it's actually bringing experts from around the world from democratic partners on shared experiences of best practices it is with a heaping and healthy dose of humility that we're going to be effective in this work and so that's why you know yeah we we can talk about the problems we have in the United States in some respects I own that because that's the story of what you've got to do the hard work to make democracies work and it makes us humble in our work with our partners overseas and without that we're going to make dumb mistakes we're going to be you know get and go down difficult paths so I don't quite see I just don't quite get it I don't quite see it yet so I'm interested in seeing how Sypes work plays this out I do think is as you referred to Annie backing up the correlation between freedom and prosperity helping to draw the connection between rule of law being the research demonstrating that rule of law is objectively the factor that leads the most rapid growth and prosperity and opens societies I think backing this up with those case studies does help inform the right sort of policy decisions does help underpin sort of what is a values base for the the data that the supported so interested to see more on that front familiar democratic peace theory yeah how that helps us so among other things what I do is volunteer during campaign finance reform in Virginia for those of you who live in Virginia please raise your hands do you realize that we have no campaign finance laws in Virginia we have no personal use prohibition on campaign finance donations in Virginia so I can run as a candidate and raise a bunch of money and use that to pay my kid's tuition and expensive school or take a vacation Virginia is one of only two states that does not have that prohibition and I'm I was as a part of this volunteer organization I've sat and listened to our legislators you know on you know the bills that we have supported other legislators to bring forward to reform you know this system go before the legislators and and I've heard delegates from one of for example a far western part of Virginia say things like well well you know citizens shouldn't donate to campaigns to elect somebody they don't trust but in Virginia we just had the most expensive election in the United States ever and I my question to all of you particularly those of you live in Virginia but to my panelists is I'm in as part of doing this work we are connected to other you know states that are trying to bring you know campaign finance reform in their states in a variety of levels like public financing of elections for example rank choice voting for example and and an in an inordinate amount of time is spent trying to a educate our legislators but they are just as guilty of being addicted to this money even more so I would say than the federal so my question to the panelists you know as you sit up there and we're having these discussions these international discussions where we're giving our expertise one of the things that happened last year was that a bill was passed and the legislator it was a is a really thoughtful good guy but the bill that got passed was to prohibit local organizations to assist with for example signing up people for voting that bill cut out anybody that was like a local NGO that was like just doing voter registration help to to for those who who you know inequality you know or you know or economically challenged on or disability challenged and so you tried to of course regulate this year and of course couldn't even get past committee so my question the panel is this it is we're having these discussions about the international scene don't we need to start with helping our NGOs and civil activists at home and citizens and ensuring that we really are having fair elections and that we really are addressing the dark money because the dark money is coming into our elections it's coming into our state elections everybody I've talked to which is hundreds of activists and legislators can see it and I think we are missing that as a part of this discussion and if we are going to go and talk to other people how to do their work you know and how to make their democracy better shouldn't we start with our own well I'm afraid we're out of time so let's keep the responses very very quick and then we'll be wrapped up yes I mean like 15 second response I think that the quick way of solving the Virginia problem is to really focus in on the state legislature and and really kick them hard in Maryland it's pretty easy to go directly to your state legislate legislator and have the conversation and really be insistent and they listen because state legislators are usually pretty close to the constituency and to the ground so that's a state lobbying question really right well thank thank you everyone so I'm afraid we're out of time we said we'd say on schedule it's been a it's it's been a long day and Raymond and I and Jack and Tom the executive committee thank you for for joining us and this is the first DC forum this project will continue and we'll be in touch with a lot of you regarding feedback and stuff so email us if there are any comments or suggestions you have and we'll be in touch with many many of you in the next two months I'm sure so thanks so much and onwards they've turned off my mic but