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Sunday, 12 May 2019

Kleptocracies and Kleptocrats

Today The Sunday Times published its annual Rich List. As it happens, I’m also reading Guy Shrubsole’s new book, Who Owns England? Both reminded me of an old Blog, published here on 2 June 2011 (probably responding to that year’s Rich List) and now re-published more or less unchanged:

Half the world's nastier regimes are often described as kleptocracies. Those in power are motivated by a desire to steal money. So money coming in as foreign aid is siphoned off to private bank accounts and income generated from oil or mineral exports likewise. It's as easy as this:

An aid agency contacts the local Ministry of Finance and asks for bank account details so that it can shell out. Back comes the numbers of half a dozen accounts, no names, but actually: the President's personal account, his wife's personal account, his brother-in-charge-of-internal-security's personal account ... and ten percent to an account from which the Ministry of Health will spend money on the projects for which aid is being granted.

Much of the money will then be transferred abroad to countries like Switzerland and the UK from where it can be accessed if the Day of Downfall ever arrives - but also, just for shopping trips abroad to buy new houses, cars, yachts, shoes .....  See now Tom Burgis, The Looting Machine ( ). Nicholas Shaxson's book on tax havens, Treasure Islands also provides a lot of relevant detail.  

It's gone on for decades like that since the End of Colonialism and is part of the deal by which the West has kept oil- and mineral-rich regimes on side. France is one of the worst offenders: for fifty years, its governments have supported any regime in ex-colonial Africa so long as it is uncontaminated by any belief in Liberty, Equality or Fraternity.

But kleptocracies are nothing new. They have dominated world history.

I just finished reading Tony Faber's Faberge's Eggs, a careful and well-written study of the famous Easter Eggs which the Court Jeweller, Carl Fabergé, prepared for Russia's last two Tsars to give to their wives and mothers at Easter.

The Romanov family held on to absolute power in Russia for just over three hundred years - from 1613 to 1917. The veil they passed over their own kleptocracy was ingenious: since their word was law (that's what "Autocracy" means) whatever they did couldn't be stealing, could it? You can see where the communist idea came from.

Old style kleptocrats were less likely to keep their money in bank accounts, but they liked to keep a lot of it portable - just in case. So when in 1918 the Bolsheviks took the last of the Romanovs down in to the cellar of the House of Special Purpose in Ekaterinburg and lined them up to be shot, the Tsar's daughters obstinately refused to fall down dead from the bullets and required additional bayoneting and beating. Why? "The reason only became clear when Yurovsky [ in charge of the operation] began disposing of the bodies. The corsets of three of the grand duchesses contained eighteen pounds of jewellery, enough to make them armour-plated" (Faber, page 148). But the jewellery they had smuggled into their final exile was no more than a grain of sand from what the family really held.

Lenin famously sent out instructions to "Loot the Looters" - the modern equivalent would be "Freeze their Bank Accounts". And so by the beginning of 1919, "thirty-three warehouses around Petrograd were filled with antiques and other objets d'art", the contents of which were sold off over many years - notably in the USA -  to supply the new regime with much-need foreign exchange. There was much more besides, more valuable items, kept in secure vaults rather than warehouses.

Carl Fabergé's son, Agathon - a gemmologist - had been imprisoned by the Bolsheviks in 1917 and eventually saved his life only by agreeing to describe and value the jewels the Bolsheviks had amassed. He eventually fled to Finland and passed the rest of his life as a stamp collector - my own work as a stamp dealer often brings me into contact with material from the vast collections he accumulated.

Occasionally, kleptocratic families harbour real kleptomaniacs, though they might be able to pass a veneer over their habit. Faber writes this about Queen Mary of Teck, wife of Britain's George V: "Owners of private houses were said to dread a visit; they would prepare by hiding whatever they had that was valuable or beautiful, for they knew that if Queen Mary saw an object, she might well admire it with open covetousness, dropping heavy hints until the treasure was offered to her. She would take it away with her there and then" (page 194). [ For more insight into the Royal Family's Grandma Swag, Jane Gardham's Old Filth has some entertaining details of her war-time evacuation to Badminton].

Kleptocracies are nearly all family affairs - modern ones are often called "republican dynasties".

There is one important exception: the Vatican. This is an institution which has sucked blood out of rich and, mainly, poor over centuries and has accumulated fantastic wealth, much more opaquely held than that of, say, our own Royal Family* . But it cannot be passed on as in a family because of the rule of priestly celibacy. You only get life-time enjoyment. That's not the kind of enjoyment the rulers of North Korea and Kazakhstan and a hundred other regimes are interested in.

* On the Sunday Times Rich List, the Queen is currently in position 257 with personal wealth of just £300 million, including a stamp collection, jewels, cars, horses, shares and properties personally held (Sandringham, Balmoral and others). Excluded is the Crown Estate (valued at £6.6 billion but controlled by the Treasury) and the Royal art collection (valued at £10 billion)

© Trevor Pateman 2011 and 2019

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