Corruption is a danger to national security. Europe is exposed to a rising security threat in the form of dirty money, whether from Russia, China or terrorists. Transparency is the only cure. It must no longer be acceptable that people in high places receive money of unknown origin, and that thousands of multi-million dollar properties are owned by unknown people.
Europe knows how to deal with such challenges. In the 18th century, aristocrats ruled Sweden allowed themselves to be bought by foreign powers. The British envoy in Stockholm wrote to London, urging His Majesty’s Government to provide him with larger funds so that he would no longer be outbid by his Russian and French competitors in that pervasively corrupt country.
Sweden introduced radical transparency, and it has stuck. In 1766, the party of commoners promulgated the first Freedom of Information Act in the world. All public information became open to all, with exceptions made only for national security and medical records. This law has survived in Sweden, as well as in Finland. In 1771, Denmark introduced similar legislation, which has persisted there through today. Norway, which was a part of Denmark at the time the laws were written, has also seen those laws survive.
The impact of this far-reaching transparency has remained extraordinary. In 2015, the Corruption Perception Index of Transparency International ranked Denmark, Finland, and Sweden at the top with oil-rich Norway in the fifth place.
Absurdly, many Western nations favor the hiding of ill-gotten wealth, under the guise of “privacy,” over transparency. Reporters Without Borders, which ranks press freedom in the world, in 2016 put Denmark, Finland, Norway, and Sweden among the top ten freest countries. Greece was 89th out of 180 countries, and Italy was 77th, France came in 45th, the United States 41st and the United Kingdom 38th. In the United Kingdom and in the U.S., media freedom suffers from far-reaching libel laws which severely reduce the freedom of speech. Freedom of the press is further reduced in these two countries by the extensive use of gag orders issued by judges prohibiting both information and comments about court proceedings from being made public. (Donald Trump has publicly committed himself to limiting U.S. press freedoms further.) As a consequence, critical journalism of rich crooks has become almost impossible in the English-speaking world unless the individuals in question have already been sentenced to prison or have been sanctioned.
At the recent anti-corruption summit in London, British Prime Minister David Cameron called for the revelation of the beneficiary owners of the nearly 100,000 buildings in the United Kingdom that are registered in the name of anonymous offshore companies. In the United States, this number is several times larger, with Delaware taking the lead as the foremost “off-shore” haven in the world allowing large-scale anonymous ownership. In 2012, The New York Times reported that a single building in Wilmington was the legal address of over 285,000 separate businesses.
In 2014, the private First Czech Russia Bank provided the French extreme right National Front with a loan of €9 million, with no indication as to how this loan was supposed to be paid back. Party leader Marine Le Pen proceeded to ask for €27 million in 2016. Financing of the UK’s Leave campaign has also been less than transparent. Europe needs to defend its democracy by prohibiting such dubious forms of financing, as the North European and Baltic countries already have done. Britain, France, and Italy need to tighten their political financing if they are not to be lost in corruption, which may come from Russia or elsewhere.
The time has come for the United States and European countries to catch up with what the Nordic countries did 250 years ago. From time to time, Nordic representatives have proposed that the European Union and individual EU countries adopt similar legislation, but so far they have encountered overwhelming resistance, especially from France. In the face of dirty money financing terrorism and subversive activities this is no longer permissible. The EU needs to get its act together.
To begin with, the EU should adopt a transparency directive, requiring all EU countries to adopt strict transparency laws. Both the EU and all the EU countries should be required to have a proper definition of lobbyists and demand that all lobbyists be registered. Non-EU lobbyists should be subject to special registration as is the case in the United States for representatives of foreign interests.
The European Parliament and all EU countries’ parliaments need to clarify which additional incomes are permissible and which are not. At present, members of the European Parliament are allowed to have consulting contracts with private companies, and the MEP in question is only required to register it. The situation is far worse in many EU countries. Such side incomes should not be allowed for parliamentarians or any other public officials.
Anonymous ownership should not be allowed. Here the biggest problems are in the United Kingdom and the United States. Even Ukraine has managed to force all its banks to reveal their beneficiary owners. All European countries should do the same both to stop tax evasion and to strengthen national security.
In response to the global financial crisis of 2008, tight controls have evolved within the banking system. A bank is not allowed to open an account for any customer that it suspects of violating laws. However, one blatant hole persists in the “know-your-customer” rules, namely for Russian state corporations. No company has been accused of more corruption than Russia’s state giant Gazprom. The murdered Russian opposition politician Boris Nemtsov made a well-documented case backing such accusations. Such information is usually more than sufficient for European banks to prohibit a company from opening an account with them.
In a word, the West needs to start to take its national security seriously.