April 22, 2011
The Guardian Unlimited, April 22, 2011
Corruption takes many forms, and if the United States seems like it has less of it than many developing countries, this is partly because we have legalized so much of it. Election campaign contributions are only the most costly and debilitating form, a legalized bribery that, for example, gives the pharmaceutical and insurance companies a veto over health care policy and generally hollows out our limited form of democracy.
This legalization of corruption reached a new milestone last December when one Lewis Lucke, a long-time U.S. Agency for International Development (USAID) official turned influence peddler, sued a consortium of firms operating in Haiti for $492,000, for breach of contract. As Lucke would have it (sorry!), he was promised $30,000 a month, plus incentives, to use his influence to secure contracts for these nice fellas. He got them $20 million dollars worth of contracts, but they cut him off after two months. The defendants in the case are Ashbritt, a U.S. contractor with a questionable track record, and the GB Group, one of the largest Haitian conglomerates. Together they formed the Haiti Recovery Group, which they incorporated in the Cayman Islands, to bid on reconstruction contracts.
Lucke was well positioned for the job, having formerly been in charge of the multi-billion dollar reconstruction effort in Haiti for the U.S. government. (He was also previously the USAID Iraq Mission Director – we know how that reconstruction turned out.) His lawsuit states that when he worked for USAID “He met with Haitian officials, former United States Presidents Bill Clinton and George W. Bush, the State Department, World Bank, and other participants . . .”. He was then hired by Ashbritt to, among other things, make “strategic introductions to key stakeholders, organizers, and brokers of Haitian recovery efforts…” Bill Clinton and George W. Bush established the Clinton-Bush Haiti Fund to help Haiti “build back better,” and Clinton is co-chair of the Interim Haiti Recovery Commission (IHRC), which has met about six times since the earthquake, and has been widely criticized for its lack of Haitian representation in decision-making.
And then there’s the World Bank, which has spent many years complaining about corruption in developing countries, often using it as a convenient excuse for its decades of failed policies. Lucke scored big with the Bank, landing a $10 million contract for his clients. (The ingrates!) The other $10 million contract was with the Haitian government.
Politicians here are quick to blame the Haitians for the lack of progress since the earthquake, and corruption is often assumed to be exclusively a Haitian problem. But it is clear that some of it comes from outside. Maybe a lot.
For example, influence peddling might help to explain why not a single U.S. government contract for Haiti’s reconstruction in the last five months has gone to a Haitian company. In fact, out of $194 million awarded since the earthquake, just $4.8 million, or 2.5 percent of the total, has gone to Haitian companies. USAID has given out $33.5 million, none of which has gone to a Haitian company; some 92 percent of USAID’s contracts have gone to Beltway (Washington DC, Maryland, and Virginia) contractors. Now isn’t that a geographical oddity? About 15.5 percent of contracts in January 2010 were no-bid, which presumably could be justified because of the urgency; however this proportion has increased to 42.5 percent over the last five months.
Nassim Nicholas Taleb, author of The Black Swan, has pointed out how legalized corruption affects policy in the United States, and has compared it to bribery in African countries, often with delayed payments. Former Clinton Treasury Secretary and top economic advisor to Obama, Larry Summers, pulled down $5.2 million from a Wall Street hedge fund for part time work, along with hundreds of thousands of dollars from financial giants including Goldman Sachs. One has to wonder whether this influenced his decision-making in the Obama White House, which often seemed to go against his prior academic writings, his columns in the Financial Times, or even what he has said since he left office.
I think I’d rather have some of the poorer countries’ corrupt practices that don’t have so much influence on policy — like paying a bribe to get my passport renewed — than the ones that give us 25 million people unemployed, underemployed, or having dropped out of the labor force.
But unfortunately our corruption is an even bigger problem for the Haitians, who are desperately poor and can afford it much less. As a result of two centuries of foreign intervention that has caused more damage than the earthquake, including the overthrow of two democratically elected governments in the past two decades, Haiti has been reduced to dependency on foreign aid.
This week, 53 members of Congress, including Democratic leaders such as Eliot Engel and Steny Hoyer, sent a letter to the Obama Administration lamenting the “appalling conditions” that continue to prevail in tent camps and calling on organizations receiving U.S. funding to “demonstrate that they are making concrete progress in the camps.” It’s time for the “international community” to clean up its act.