Leaders Convene to Explore Corruption: The Root of Illicit Economies

Senator Bill Cassidy (R-LA) discusses approaches to combat trade based money laundering at the launch session of the International Dialogues to Fight Illicit Economies series. Meridian House. March 5, 2020. Photo by Kaveh Sardari.

On March 5, 2020, 40 individuals - foreign diplomats, U.S. government officials, NGO leaders from good governance entities, academics and corporate visionaries - convened at Meridian for the first session of the International Dialogues to Fight Illicit Economies series. The conversation explored how good governance can help bolster security and raise the effectiveness of development by outperforming corruption and organized crime.

The session took place over two hours and was structured in short presentations followed by sub-group discussions. Following series kick-off remarks by Ambassador Stuart Holliday, Meridian President and CEO, and Hernan Albamonte, PMI Head of Illicit Trade Prevention, Frank Vogl addressed how illicit economies thrive thanks to both kleptocrats and complicit Western nations. Vogl is Co-Founder of both Transparency International and the Partnership for Transparency Fund.  Longtime Congresswoman Ileana Ros-Lehtinen was the second speaker. Now a Senior Advisor at Akin Gump, Ros-Lehtinen focused on the prerequisite of good governance to prevent a nation from spiraling down a path of corruption and provided several personal anecdotes on the effects of corruption on society.   U.S. Senator Bill Cassidy (R-LA) rounded out the presentations by emphasizing that interagency cooperation is required to effectively combat corruption.  He also referenced his recent white paper on trade-based money laundering.

Several themes and key points emerged over the course of the morning with participants in general agreement of the following:

Corruption is a global, intergovernmental issue that crosses all borders and sectors

Despite the common perception of graft and fraud being a great concern for only developing countries, corruption is universal and virally spreads to fit different economic and political environments. Terrorist groups and transnational organized criminal networks use funds from illicit economies to finance operations, compromising national security and fueling instability around the globe. Without corruption, illicit economies cannot function and vice versa. As corruption spans the world, there is an opportunity for partnerships among governments, transnational organizations and the private sector. Without partnerships, corruption will find another foothold within the sector, country or region.  As such, it is critical for this cooperation to take place.

With that, systemic norms must be established in order to build international consensus on good governance

Solutions to rooting out corruption through good governance must be agreed upon by all actors.  With high turnover in many government positions, there is a need for policy elevation and investment from the public sector. By putting in place a permanent high-level apolitical institution to maintain good governance and by raising the wages of federal and local law enforcement, these needs can be addressed.

The demand for corrupt activities must be reduced by the provision of basic services and opportunities for citizens

The focus in the past has been on reducing the supply side of illicit economies, but that can only go so far. Reduction of the demand for corrupt activities can help in weakening the hold illicit economies have on global markets. Governments must provide their citizens with basic services, security, and opportunities to thrive in order to diminish the power that organized crime groups have within affected communities. Additionally, civil society can help foster a cultural shift to diminish demand through PR campaigns led by journalists and news outlets.

Technology can play a crucial role in mitigating the effects of corruption’s impact on illicit economies

Blockchain technology may provide more open tracking and monitoring of trade flows. This could allow for economic transparency and help uncover bribes and other corrupt financial transactions more quickly.  However, there is also the concern that these technologies can fall into the wrong hands, which, if possessed by corrupt state or non-state actors, can further fuel illicit economies.

Incentivizing private sector involvement is critical

Governments and NGOs should better articulate the benefits for the private sector to refuse to engage in corruption. These incentives include increased profitability from not paying bribes, stability due to rule of law, and reputational gain in the public eye.

Meridian is partnering with PMI IMPACT, a global grant initiative by PMI to support projects dedicated to fighting illegal trade and related crimes, on this six-part convening series over the course of 2020-2021 to raise awareness on the tribulations of illicit economies. The series will conclude with a July working group meeting to discuss recommendations and next steps.  PMI IMPACT is the funding sponsor. The next session, to be held in January 2021, will focus on environmental crimes, including wildlife trafficking.



Project summary

Leaders Convene to Explore Corruption: The Root of Illicit Economies
Number of Attendees: 40
Regions: Africa, Europe and Eurasia, Near East and North Africa, Western Hemisphere
Countries: Botswana, Colombia, Egypt, El Salvador, Guatemala, Mexico, Spain
Impact Areas: Business and Trade, Governance and Transparency
Program Areas: Diplomatic Engagement
Partners: Private Sector