"Poor People Can't Be Engineers"
Free Market Corruption, Neoliberal Pretexts

by Toni Solo

February 21, 2004

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Newsweek recently ran an article on money laundering in Latin America. It identified Nicaragua's ex-President Arnoldo Aleman as one of a super-corrupt elite along with Mexico's Carlos Salinas and Guatemala's Alfonso Portillo. Portillo recently high-tailed it to Mexico. Aleman is in gaol. But, these individuals barely reach the ankles of their United States and European counterparts. Corruption has a history, context and consequences the self-censoring corporate media seldom connect.

Some Context

To put Portillo's and Aleman's fraud in context one just has to recall the puny US$1.5 billion fines imposed on Citigroup’s Salomon Smith Barney, Credit Suisse First Boston, Merrill Lynch, Morgan Stanley, UBS Warburg, and Goldman Sachs, after an investigation into foreign exchange fraud by the Attorney General of New York. Or the multi-billion dollar tax frauds organized by major US banks to shelter income for their super rich clients.

More recently in one of the United States' favorite satrapies, the Dominican Republic, when Banco Intercontinental – the country's second largest private bank - went bust, the government bailed out wealthy shareholders to the tune of US$2.2 billion, equivalent to over 60% of the country's annual budget. The New York Times had the nerve to accuse the Dominican Republic of being incapable of making necessary structural reforms to the country's economy. Meanwhile under the deregulator's favorite regulator, Alan Greenspan, the US is currently relieving its international creditors of tens of billions having let the dollar fall in value by 20% over the last year. [1]

The Nicaraguan Variety – Small Cerveza in the Isthmus

In December 2003, Arnoldo Aleman, former Nicaraguan President and strong man of the country's right wing Liberal Alliance, was sentenced to 20 years imprisonment for fraud. He had leeched the public finances of tens of millions dollars during his six year presidency. Even without his stupendous larceny, Nicaragua, unable to sustain basic services, faced intractable socio-economic problems.

Begun in the war years of the 1980s, social and economic failure deepened through misconceived neo-liberal policies in the 1990s. That failure continues to this day, accompanied by a profound moral failure manifest in the endemic corruption that bedevils Nicaragua and its Central American neighbours. The very institutions that decry corruption are the ones that engendered it in the first place - the IMF, the World Bank, USAID. Corruption has become an easy excuse for these institutions to explain away their depressing track record of failure.

Education - Now You See It, Now You Don't

Education is emblematic of Nicaragua’s difficulties. Neo-liberal policies have destroyed Nicaragua's education system since the late 1980s. With the national education system in crisis, the government has bowed to yet more stringent "free market" medicine from the International Monetary Fund and the World Bank. For 2004 it is cutting back the already inadequate education budget by over 10%.

Last September in the northern Nicaraguan city of Esteli, hundreds of local students protested about increased charges imposed by the prestigious local agricultural college (run by the local Catholic diocese). They occupied the city's cathedral for over a week and strung a huge banner between the twin cupolas. It read "Un pobre no puede ser ingeniero" (a poor person can't be an engineer). It was what the rector of the college had told them when they protested against the increased charges.

At the end of 2003, only 6000 students were able to pass the main national university admissions exams for a total of 22,000 available places. 90% of students failed their exams. Amid much public soul searching in Nicaragua, the main culprits for this colossal policy failure have escaped attention. For over a decade, neo-liberal ideologues have ground down health, education and social spending to levels far below the level capable of sustaining adequate services. Miscreants like Aleman are convenient scapegoats for the neo-liberal failure to deliver social justice for the 70% of Nicaraguans living in poverty. [2]

“He may be a son of a bitch - but he’s our son of a bitch”

Whether or not he serves his sentence, as seems increasingly unlikely, the main reason Aleman is currently behind bars may have little to do with stealing millions of dollars of public money. Roosevelt’s reported quote about Nicaragua’s corrupt dictator Anastasio Somoza has applied to many US clients over the years and still applies today. The parade of corrupt US clients is familiar by now. The US supported the Shah of Iran, General Noriega in Panama, Saddam Hussein in Iraq, Ceausescu in Rumania, the Duvaliers in Haiti, Ferdinand Marcos in the Philippines, President Suharto of Indonesia, Sese Mobutu in the Congo, Anastasio Somoza in Nicaragua, the list is long and tedious.

US and European government support for corruption has a long, dishonourable history and Aleman’s debacle is merely one of the latest chapters. Like Manuel Noriega and Saddam Hussein, Aleman is a creature of the United States who got too smart for his own good and went out of control. His main crime was probably to displease the United States government by negotiating quotas of power with Daniel Ortega and the Sandinista opposition party.

How These Things are Done in Old Europe

Aleman may well have modeled his deeds on big names in European politics. In Germany, Helmut Kohl and his right-wing Christian Democratic subordinates illegally accepted millions of dollars for political campaigning from wealthy individuals and businesses. Much of that money was lodged in personal accounts in Switzerland and may have been used in private business deals. In France, the recent conviction of Alain Juppe does little to enhance the image of his political patron Jacques Chirac, himself implicated in more than one corruption case.

Chirac enjoys immunity from prosecution as a result of a decision in December 2000 to grant him that perk by a commission he himself appointed. Before Chirac, socialist President Francois Mitterand helped assure the re-election of Germany’s right wing Christian Democrat leader - yes, that Helmut Kohl again - with tens of millions of francs. Mitterand’s fellow socialist Edith Cresson’s nepotistic ways led to the mass resignation of the European Commission in 1999. Cresson was also caught up in the Elf scandal in the early 1990s, being paid over three million francs by Elf – the French oil multinational.

A spin off from Mitterand's help for Kohl’s re-election campaign was a favourable deal for Elf to buy the Leuna oil refinery in the former east Germany. During the second period of Mitterand’s presidency (1988-1995), Elf’s senior managers stripped out over 305 million euro. The company was rotten right through. Of 37 officials accused 30 were convicted.

Elf was created by De Gaulle in 1963. Intimately linked to structures of government in France and its former colonies, it played a king-making role in Africa from the start. It has been described as “a parallel Oil Ministry”. Elf was also involved in the sale of six frigates to Taiwan under the second Mitterand presidency involving the payment of 780 million euros in illicit commissions – bribes. Foreign Minister Roland Dumas was convicted in that particular scam in 2001.

Elf offered Europe-wide welfare for top politicians. Not only did the company help finance Kohl’s election campaigning but also that of Felipe Gonzalez, former Spanish Prime Minister. Inside France itself, it emerged during legal proceedings against Elf that Mitterand struck a deal with Elf’s chief so as to spread its political funds more equally among the rival political parties. Before, Elf had favoured only the Gaullists. Judicial examination of the Leuna refinery deal elicited this memorable saying from one of the accused, Alfred Sirven “Lobbying without cash - that doesn’t exist.”

Mitterand’s successor Jacques Chirac has his own history of dodgy transactions to explain. Despite the conviction of his ally Alain Juppe, Chirac himself remains untouched. To borrow Gaullist writer Andre Maurois’ quote from Montesquieu “The law is like a web, big insects fly right through it, only the little ones get caught…” [3]

The Italian Job – All Too Human Comedy

When Bettino Craxi died in Tunisia in January 2000, he was on the run from Italian justice. Craxi had led the centre-left coalition that ruled Italy during the 1980s. His government was a political mafia that was exposed after the arrest of a leading socialist politician in Milan on corruption charges.

Craxi had been sentenced to 27 years when he fled the country. Silvio Berlusconi along with many other leaders of the Italian business and political Right attended the funeral. Now Berlusconi, worth around 10 billion euro, has his own problems, accused of tax fraud, bribing judges and false accounting. Last year his parliamentary majority enabled him to pass a bill granting him immunity so long as he remained Prime Minister.

In January this year that bill was ruled unconstitutional. Berlusconi has wriggled out of numerous minor investigations since his election in May 2001. The upcoming trial will be an incomparably more severe and high profile test for Italian justice. It comes when the multi-billion dollar Parmalat scandal has shown up Europe’s business and financial culture just as Enron did for the United States. [4]

BCCI – Making Enron Look Small

The BCCI fraud that came to public light in 1991 outdoes Enron or Parmalat several times over both in terms of money and political reach. The CIA knew as early as 1985 that BCCI was operating dishonestly. But it wasn’t until six years later in 1991 that the billion dollar fraud finally washed up. The John Kerry-Hank Brown Senate investigation into the BCCI fiasco found that: “The professed lack of knowledge by the CIA about the activities of its foreign intelligence liaisons and operatives who were BCCI's major shareholders and customers is perplexing and disturbing”. Only if you want to pretend the Reagan White House was not deliberately using BCCI for illegal covert deals like those in the Iran-Contra scam and funding for Afghan mujahhedin – both involving the laundering of huge quantities of drug money.

While former CIA chief Bush the Elder was deeply involved in covering for the Iran Contra gang, securing pardons for them, Bush the Younger has benefited from the culture of secrecy and obfuscation so effectively created by his father’s colleagues and political friends. When George W.’s Arbusto Energy company was struggling in the mid 1980s, he was helped by James Bath, someone with many links to important figures in the BCCI debacle. Then after Arbusto was taken over as Spectrum 7 by Harken Energy in 1986, the company received more help from Abdullah Baksh whose banker in Saudi Arabia was a principal in BCCI, Khalid bin Mahfouz.

The massive amount of material on the BCCI fraud is daunting. Through it passes a phantasmagoric cast of individuals working chicanery from Pakistan to Georgia, the Persian Gulf to Geneva , from Little Rock to Luxembourg, London and Washington. This may be nothing more than the perennial double-dealing and purposeful confusion characteristic of the capitalist financial system, especially at its imperial edges.

But a fundamental question comes up about George W. Bush. According to his 1997 personal income returns he earned 271,920 dollars. In 1998 that figure swelled to 18.4 million dollars. How does a mediocre oilman build up that kind of money in a year? Mainstream media like Newsweek, tend not to ask that question. It’s easier to run easy copy spreading racist stereotypes of corrupt Latin American strongmen.

Most of the difference came from the sale of Bush’s stake in the Texas Rangers baseball team. Bush was able to build up that stake as a result of the suspicious sale of 212,140 shares in Harken worth around US$850,000 immediately prior to the 1991 Gulf War. Subsequently, the Harken share price plunged to less than a quarter of its value at the time when Bush sold.

When Bush did sell, a typical daily trade in Harken stock was around 1000 shares. Only months earlier, tiny Harken’s stock had soared on the basis of a quasi-miraculous deal awarding Harken drilling rights in the state of Bahrain while oil industry giants like Amoco were cut dead. As the Wall Street Journal recorded, “…Harken officials, while denying that the Bush name played any specific role, acknowledge that having him on their board is an asset.”

Bush only informed the Securities and Exchange Commission eight months after the normal deadline for filing details of the transaction - when Desert Storm, the first Gulf War, had been and gone. Who bought Bush’s stake? Only the parties concerned know. Some speculate it was in fact the Harvard University investment fund. But given the secrecy involved, one’s entitled to ask whether the buyer might not have been some BCCI player in one of the typically convoluted deals that were BCCI’s specialty. Why all the secrecy? [5]

Corruption Works for the Super Rich

Elf, BCCI, Enron – all this typical multinational double-dealing underwritten by major banks and investment houses, undercuts the chances of a decent life for the great majority but makes fortunes for a tiny corrupt elite who hold themselves above the law. They shadow the absurd, smug interventionists at the IMF and the World Bank and all the other self-serving ideologues of “free trade”. For themselves they contrive luxury, power and immunity, deliberately engineering international economic arrangements to leave the poor majority facing starvation, ignorance and disease – never mind what their bogus mission statements may say. In Europe, it’s possible Chirac and Berlusconi may have their day in court. But in the USA, it seems Montesquieu was right.

Toni Solo is an activist based in Central America. He can be reached at: tonisolo52@yahoo.com

Other Articles by Toni Solo

* Energy and Repressive Politics in Central America
* Robert Zoellick and "Wise Blood": The Hazel Motes Approach to International Trade
* Authentic Americans: US Martyrs Pose Questions for John Negroponte
* CAFTA Thumb Screws: The Nuts and Bolts of "Free Trade" Extortion
* Trashing Free Software – More Neo-Lib Flim-Flam
* Coming Soon to the United States? Plan Condor, the Sequel
* How Do You Like Your Elections - Fixed and Murky?
* Colombia: The War on Terror as Waged by Outlaws: Interview with Caitriona Ruane
Terrorists, Their Friends and the Bogota 3
Neo-liberal Nicaragua: Neo Banana Republic


1. “La economía de la República Dominicana está en quiebra”, La Estrella Digital/Rebelión www.rebelion.org 29 de enero del 2004.

- “Banks Moved Billions to Shelter Income From Taxes”, Glenn R. Simpson, Wall Street Journal, August 7th 2003.

- “Reforming corrupt practices on Wall Street”, C. Gopinath, Financial Daily, Hindu Group, 30-12-2002.

- “Wall Street blow as FBI arrests 47 currency traders “, James Dow, Scotsman, 20 Nov 2003.

2. "Dos visiones sobre el fracaso de bachilleres", Lucia Nava, El Nuevo Diario 22nd January 2004

3. “France: Affaire Elf, les condamnations révèlent la corruption aux plus hauts niveaux de l'Etat.” Antoine Lerougetel, 25 Novembre 2003

- “Kohl, Craxi, Mitterrand: la corruption tranquille”, Gerard de LaLoye, GLOCAL, January 25th 2000.

- “Chirac feels the heat as ally faces corruption trial”, Henry Samuel in Paris, Daily Telegraph, September 30th 2003.

- “Chirac granted immunity in corruption cases”, The Independent, 13 Dec 2002.

4. “Berlusconi to face bribery charges as court withdraws his immunity”, Peter Popham, The Independent, January 14th 2004.

- “Berlusconi faces tax fraud inquiry”, Dominic Timms, June 13, 2003.

- Report on Berlusconi by Sophie Arie, The Guardian, May 6, 2003.

5. “A Report to the Committee on Foreign Relations of the United States Senate”, Senator John Kerry and Senator Hank Brown, December 1992, 102d Congress 2d Session Senate Print 102-140

- “Tracking bin Laden's money flow leads back to Midland, Texas”, by Wayne Madsen. Original Link: http://www.inthesetimes.com/issue/25/25/feature3.shtml

- Report in The Wall Street Journal by Thomas Petzinger Jr., Peter Truell and Jill Abramson, December 6, 1991.

- Charles Lewis of the Center for Public Integrity suggested in his book, The Buying of the President 2000, "The available evidence suggests that the investor was Harvard. The university increased its holdings in Harken around the time. No new institutional investors appeared on the scene."







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