• Airtight institutions
    February 05,2014
     

    There was a time, long ago, when it was broadly understood that official corruption was rampant in several cities — including New York, Boston, Jersey City and Kansas City — where powerful and self-serving political leaders called the shots.

    Journalist Lincoln Steffens secured his reputation as a leading muckraker in 1904 by writing a book — it was actually a compilation of magazine articles he’d written — called “The Shame of the Cities” twhat laid bare the rampant criminality of these cities’ political leaders.

    There no doubt still is corruption here in the United States. Certainly there are suspicions that it has been recently practiced in New Jersey, for example, and most of us probably believe it exists in some fashion at virtually all levels of government. And the fact that, as The New York Times recently reported, 1,650 former congressional staffers have joined the ranks of Washington lobbyists raises questions that are at least somewhat related to corruption.

    But the biggest recent story about official corruption came this week from a place few of us might have expected: The BBC, among others, reported that corruption has cost the member nations of the European Union a stunning $150 billion, or the equivalent of the union’s annual budget.

    “The extent of the problem in Europe is breathtaking,” wrote Cecilia Malmstroem, the European Union’s home affairs commissioner, in Sweden’s Goeteborgs-Posten daily.

    Malmstroem said corruption was eroding trust in democracy and draining resources from the legal economy.

    “The political commitment to really root out corruption seems to be missing,” she complained.

    And while she conceded there are strong suspicions of official corruption in every member nation of the European Union, it appears that the most egregious examples involve — surprise! — the Mafia in Italy.

    On the Italian island of Sicily, a Mafia boss who recently defected from that storied organization revealed just how some of this money was steered into the Mafia’s crooked hands. Antonio Birrittella told his story to a BBC reporter in a private room in a backstreet hotel in Palermo, the capital of Sicily, long the base of many Mafia operations.

    “All these funds from the EU were seen as a gift to the Mafia, easy pickings, especially the development of wind farms and renewable energy,” he said.

    Birrittella told the BBC that today’s Mafia has reinvented itself as a “white-collar organization that has siphoned off millions in EU funds through a combination of shell companies and the infiltration of regional bodies which distribute the subsidies.”

    Here’s how he said the scams worked: “First the Mafia had an interest in many of the companies which obtained public funds, and they owned many of the companies which won the contracts to build wind farms, and finally they claimed fake transactions and issued double payment invoices.”

    The Mafia used intimidation tactics to obtain the land to build the wind farms and threatened any construction firms that refused to pay its extortion fees, he said.

    Meanwhile, in Britain 64 percent of respondents to a survey said they believed corruption to be widespread in their country (the European average was 74 percent). In several other nations, between 6 and 29 percent said they had been asked for a bribe, or had been expected to pay one, in the past 12 months.

    The problem is human greed. The solution is to create airtight institutions. The European Union created an anti-fraud agency but gave it too small a budget to be effective.

    Effective vigilance may be expensive. Its absence costs even more.

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