Kleptopia

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 of which he was accused. 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