Review: Kleptopia, by Tom Burgis

[Russ Allbery]

Kleptopia
by Tom Burgis

Publisher: Harper
Copyright: 2020
Printing:  September 2021
ISBN:      0-06-323613-3
Format:    Kindle
Pages:     340

Kleptopia is a nonfiction chronicle of international financial
corruption and money laundering told via a focus on the former Soviet
republic of Kazakhstan. The primary characters are a British banker
named Nigel Wilkins (at the start of the story, the head of compliance
in the London office of the Swiss bank BSI), a group of businessmen
from Kyrgyzstan and Uzbekistan called the Trio, and a Kazakh oligarch
and later political dissident named Mukhtar Ablyazov, although the
story spreads beyond them. It is partly a detailed example of what
money laundering looks like in practice: where the money comes from,
who has it, what they want to do with it, who they hire to move it, and
what countries welcome it. But it is more broadly about the use of
politics for financial plunder, and what stories we tell about the
results.

The title of this book feels a bit like clickbait, and I was worried it
would be mostly opinion and policy discussion. It is the exact
opposite. Tom Burgis is an investigations correspondent at the
Financial Times, and this is a detailed piece of investigative
journalism (backed by a hundred pages of notes and detailed
attributions). Burgis has a clear viewpoint and expresses it when it
seems relevant, but the vast majority of this book is the sort of
specific account of people, dates, times, and events that one would
expect from a full-length investigative magazine piece, except
maintained at book length.

Even aside from the subject matter, I love that writing like this
exists. It's often best in magazines, newspapers, and on-line articles
for timeliness, since book publishing is slow, but some subjects
require the length of a book. Burgis is the sort of reporter who
travels the world to meet with sources in person, and who, before
publication, presents his conclusions to everyone mentioned for their
rebuttals (many of which are summarized or quoted in detail in the
notes so that the reader can draw their own credibility conclusions).
Whether or not one agrees with his specific conclusions or emphasis, we
need more of this sort of journalism in the world.

I knew essentially nothing about Kazakhstan or its politics before
reading this book. I also had not appreciated the degree to which
exploitation of natural resources is the original source of the money
for international money laundering. In both Kazakhstan and Africa (a
secondary setting for this book), people get rich largely because of
things dug or pumped out of the ground. That money, predictably, does
not go to the people doing the hard work of digging and pumping, who
work in appalling conditions and are put down with violence if they try
to force change. (In one chapter, Burgis tells the harrowing and
nightmarish story of Roza Tuletayeva, a striker at the oil field in
Zhanaozen.) It's gathered up by the already rich and politically
connected, who gained control of former state facilities during the
post-Soviet collapse and then maintained their power with violence and
corruption. And once they have money, they try to convert it into
holdings in European banks, London real estate, and western
corporations.

The primary thing I will remember from this book is the degree to which
oligarchs rely on being able to move between two systems. They make
their money in unstable or authoritarian countries with high degrees of
political corruption and violence, and are adept at navigating that
world (although sometimes it turns on them; more on that in a moment).
But they don't want to leave their money in that world. Someone else
could betray them, undermine them, or gain the ear of the local
dictator. They rely instead on western countries with strong property
rights, stable financial institutions, and vast legal systems devoted
to protecting the wealth of people who are already rich. In essence,
they play both rule sets against each other: make money through
techniques that would be illegal in London, and then move their money
to London so that the British government and legal system will protect
it against others who are trying to do the same.

What they get out of this is obvious. What London gets out of it is
another theme of this book: it's a way for a lot of people to share the
wealth without doing any of the crimes. Money laundering is a very
lossy activity. Lots of money falls out of the cart along the way,
where it is happily scooped up by bankers, lawyers, accountants, public
relations consultants, and the rest of the vast machinery of
theoretically legitimate business. Everyone wins, except the people the
money is being stolen from in the first place. (And the planet; Burgis
doesn't talk much about the environment, but I found the image of
one-way extraction of irreplaceable natural resources haunting and
disturbing.)

Donald Trump does make an appearance here, although not as significant
of one as I was expecting given the prominent appearance of Trump crony
Felix Sater. Trump is part of the machinery that allows oligarch money
to become legally-protected business investment, but it's also clear
from Burgis's telling that he is (at least among the money flows Burgis
is focused on) a second-tier player with delusions of grandeur. He's
more notable for his political acumen and ability to craft media
stories than his money-laundering skills.

The story-telling is a third theme of this book. The electorate of the
societies into which oligarchs try to move their money aren't fond of
crime, mob activity, political corruption, or authoritarian
exploitation of workers. If public opinion turns sufficiently strongly
against specific oligarchs, the normally friendly mechanisms of law and
business regulation may have to take action. The primary defense of
laundered money is hiding its origins sufficiently that it's too hard
to investigate or explain to a jury, but there are limits to how
completely the money can hide given that oligarchs still want to spend
it. They need to tell a story about how they are modernizing
businessmen, aghast at the lingering poor conditions of their home
countries but working earnestly to slowly improve them. And they need
to defend those stories against people who might try to draw a clearer
link between them and criminal activity.

The competing stories between dissident oligarch Mukhtar Ablyazov and
the Kazakh government led by Nursultan Nazarbayev are a centerpiece of
this book. Ablyazov is in some sense a hero of the story, someone who
attempted to expose the corruption of Nazerbayev's government and was
jailed by Nazerbayev for corruption in retaliation. But Burgis makes
clear the tricky fact that Ablyazov likely is guilty of at least some
(and possibly a lot) of the money laundering that Nazerbayev accused
him. It's a great illustration of the perils of simple good or bad
labels when trying to understand this world from the outside. All of
these men are playing similar games, and all of them are trying to tell
stories where they are heroes and their opponents are corrupt thieves.
And yet, there is not a moral equivalency. Ablyazov is not a good
person, but what Nazerbayev attempted to do to his family is appalling,
far worse than anything Ablyazov did, and the stories about Ablyazov
that have prevailed to date in British courts are not an attempt to
reach the truth.

The major complaint that I have about Kleptopia is that this is a
highly complex story with a large number of characters, but Burgis
doesn't tell it in chronological order. He jumps forward and backward
in time to introduce new angles of the story, and I'm not sure that was
the right structural choice. Maybe a more linear story would have been
even more confusing, but I got lost in the chronology at several
points. Be prepared to put in some work as a reader in keeping the
timeline straight.

I also have to warn that this is not in any way a hopeful book. Burgis
introduces Nigel Wilkins and his quixotic quest to expose the money
laundering activities of European banks early in the book. In a novel
that would set up a happy ending in which Wilkins brings down the
edifice, or at least substantial portions of it. We do not live in a
novel, sadly. Kleptopia is not purely depressing, but by and large the
bad guys win. This is not a history of corruption that we've exposed
and overcome. It's a chronicle of a problem that is getting worse, and
that the US and British governments are failing to address.

Burgis's publishers successfully defended a libel suit in British
courts brought by the Eurasian Natural Resources Corporation, the
primary corporate entity of the Trio who are the primary villains of
this book. I obviously haven't done my own independent research, but
after reading this book, including the thorough notes, this looks to me
like the type of libel suit that should serve as an advertisement for
its target.

I can't say I enjoyed reading this, particularly at the end when the
arc becomes clear. Understanding how little governments and
institutions care about stopping money laundering is not a pleasant
experience. But it's an important book, well and vividly told (except
for the chronology), and grounded in solid investigative journalism.
Recommended; I'm glad I read it.

Rating: 7 out of 10

Reviewed: 2022-05-28

URL: https://www.eyrie.org/~eagle/reviews/books/0-06-323613-3.html

-- 
Russ Allbery (eagle at eyrie.org)             <https://www.eyrie.org/~eagle/>