The Kremlin and the Chinese Communist Party, as well as other U.S. adversaries, practice kleptocracy, an authoritarian governance model in which political leaders routinely engage in illicit self-enrichment, maintain power through corrupt patronage networks, exploit democracies to conceal and protect stolen assets, and use strategic corruption as a tool of foreign policy.
Kleptocracy now poses the most serious challenge to democratic governance worldwide. President Biden has declared countering corruption a core national security interest and Congress has responded with a series of legislative proposals to fight kleptocracy both at home and abroad.
On November 18, the Commission on Security and Cooperation in Europe brought together experts on kleptocracy to examine how the United States can confront foreign corruption. In particular, witnesses discussed the ways that the United States can fortify its system against the taint of corruption and hold kleptocrats to account.
The first panel featured testimony by Representatives Tom Malinowski (NJ-07) and María Elvira Salazar (FL-27), while the second panel included witnesses Leonid Volkov, Chief of Staff to Alexei Navalny; Elaine Dezenski, Senior Advisor at the Center on Economic and Financial Power; and Scott Greytak, Advocacy Director at Transparency International.
Helsinki Commission Chairman Sen. Ben Cardin (MD) opened the hearing, noting that corruption both sustains dictatorships and helps them conduct foreign policy. Corruption also erodes democratic structures from within and creates patronage-based systems in which autocrats pay their cronies to retain power. Chairman Cardin thanked Representatives Malinowski and Salazar for their work on the counter-kleptocracy caucus and highlighted several of the counter-kleptocracy bills currently in the House and the Senate.
Helsinki Commission Co-Chairman Rep. Steve Cohen (TN-09) stressed the importance of going after the enablers of corruption, not just the kleptocrats, saying, “They work with these folks to poison the system, so they are in essence agents of corruption.” He added that the United States needs to clean up its act at home and reinforce its defenses against the national security threat of corruption.
Helsinki Commission Ranking Member Sen. Roger Wicker (MS) called corruption a “pernicious foreign policy tool” that undermines and co-opts democratic systems, and highlighted the corruption and abuse of INTERPOL, which he described as being hijacked by mafia states and weaponized to pursue political opponents. China and Russia are the most prolific abusers of the system, he said, pointing towards the TRAP Act as a legislative tool to counter such behavior. Sen. Wicker, who co-leads the Global Magnitsky Reauthorization Act alongside Chairman Cardin, stressed the bipartisan nature of this issue.
Helsinki Commission Ranking Member Rep. Joe Wilson (SC-02) echoed Sen. Wicker’s statement, adding, “It is not an exaggeration to say that corruption is the new communism.”
Rep. Wilson mentioned the six Helsinki Commission counter-kleptocracy bills in the House National Defense Authorization Act (NDAA), underlining the bipartisan nature of the fight against corruption. “To protect American families we must fight corruption,” he said.
During the first panel, Rep. Malinowski described fighting corruption as the key to winning the contest between democracy and dictatorship. Corruption is not only a way for autocrats to stay in power, he argued; it also is their greatest weakness.
“When we catch them stealing from their people and putting their money in our banks, that is what embarrasses them,” he said. Referencing the six counter-kleptocracy bills currently pending in Congress, Rep. Malinowski suggested the United States. has potent tools to go after corruption.
Rep. Salazar testified that corruption is a threat to freedom and human rights. Using Venezuela, Cuba and Nicaragua as examples, Salazar explained how corrupt leaders use stolen funds to finance campaigns that portray them as the saviors of the countries that they actually loot. Salazar pointed towards her work as founding member of the bipartisan Caucus against Foreign Corruption and Kleptocracy (CAFCAK), as well as the importance of the Combating Global Corruption Act, introduced by Chairman Cardin in the Senate, and the bipartisan ENABLERS Act
Leonid Volkov began his testimony by describing a natural pathway from corruption to authoritarianism, born out of the necessity to hide crimes by silencing the press and co-opting the courts. He outlined how the Navalny anti-corruption initiative, through hundreds of investigations, found billions of dollars stolen from Russian taxpayers. What stood out, he said, was how successful kleptocrats need to operate in two countries: their home country, where the absence of rule of law allows them to steal, and another country, where the rule of law ensure the safety of their money. Therefore, corruption is a global phenomenon, which also necessitates fighting corruption on both fronts. Volkov endorsed the series of Helsinki Commission anti-kleptocracy bills and asked to “fight this fight together.”
Scott Greytak described corruption as the lifeblood of autocrats abroad and pointed toward the Pandora Papers, which revealed that the United States is a leading secrecy jurisdiction for stashing offshore funds. He emphasized the importance of Congress ensuring that the six counter-corruption bills in the House National Defense Authorization Act (NDAA) make it into the final NDAA. Doing so would enhance the U.S. ability to deny kleptocrats access to the financial system and increase transparency. The National Defense Authorization Act (NDAA) is legislation that Congress passes each year to make changes to the policies and organization of United States defense agencies and provide guidance on how military funding can be spent.
Greytak also mentioned the Corporate Transparency Act and expressed hope that Congress would ensure that the new Treasury FinCEN rules are in keeping with the spirit of the law. He added that passing the Foreign Extortion Prevention Act (FEPA), which would criminalize foreign officials requesting bribes from American companies, is an important step many of our allies already have taken. Lastly, Greytak emphasized the need to target enablers of kleptocracy in the U.S. via the ENABLERS act, to prevent crimes such as the theft of over $4 billion from the public investment fund of Malaysia, aided and abetted by U.S. law firms.
Elaine Dezenski’s testimony focused on China and corruption through the Belt and Road Initiative (BRI). She described the BRI as a geopolitical enterprise through which China seeks to redefine its engagement with more than 140 countries.
Because the BRI is designed to undercut normal development, it gets rid of safeguards such as anti-corruption, environmental, and labor standards as well as open and transparent bidding, according to Dezenski. By doing so, it creates long-term dependencies fueled by corruption and debt traps. More than 40 countries are now indebted to China equal to or greater than 10 percent of their GDP, Dezenski said.
A slim window exists during which the U.S. can offer clean alternatives to the BRI, alongside increased efforts to educate citizens and support civil society to counter this threat. One key step, said Dezenski, is pivoting critical supply chains out of China and towards allied countries. Another step is taking care not to give domestic infrastructure contracts to foreign kleptocrats’ companies. Finally, countering disinformation and misinformation campaigns is of the essence.
Responding to a series of questions from Co-Chairman Cohen, Volkov explained that his organization had to move outside of Russia due to being designated an extremist organization but nonetheless is working to produce content highlighting Russian corruption. On the topic of censorship by Apple and Google during the Duma elections in 2021, Volkov stated that the threat by the Russian regime to imprison employees of U.S. companies should they not go through with the censorship is serious and should not be dismissed.
Asked by Rep. Wilson what he saw as Russia’s future in five to 10 years, Volkov explained that Putin is unpopular among Russia’s youth and that many people want change. Putin’s strength lies in his TV propaganda machine, which is less effective at reaching younger, more internet-savvy people, he said.
Volkov explained that under Putin, Russia has more political prisoners than the Soviet Union ever had after Stalin and expressed hope that this would lead to cracks in the system and, finally, regime change.
On the question of how present-day corruption differs from that of 30 years ago, Scott Greytak explained that corruption is more sophisticated than ever, aided by complex financial vehicles created by Western enablers which make it easier to move money. Responding to a question from Helsinki Commission Member Rep. Ruben Gallego (AZ-07), Greytak explained that although Russian and Chinese corruption are similar, Russia perfected state-run corruption, while China adopted corruption to grow its geo-political influence.
Dezenski answered a question on China’s long-term view by explaining that the United States needs to be more strategic about the short-term implications of individual actions and ensure long-term commitment to democratic norms. Because China takes a longer view than the United States, they have outmaneuvered us, Dezenski said.
Asked if any projects concerned her most, she answered any projects related to digital infrastructure, due to the risk of authoritarian regimes monitoring and managing communications lines. In addition, Dezenski mentioned projects that would give Beijing military influence, such as strategic ports in the Indian Ocean or the South China Sea.
Chairman Cardin thanked the witnesses for their expert testimonies and said he looked forward to consulting with them on several of the points brought up. To end the hearing, the chairman pointed out South Korea as an example of a country that turned around its corruption problem, stating, “We can make change and plant the seeds to enhance the welfare of all the people.”