Kleptocrats love buying property, partly because it’s a good way to get rid of a lot of money at once, but mainly because it tends to be both a good investment and gives one a nice place to live. So kudos to the authors of this report for showing which countries aren’t doing enough to keep the kleptocrats out. 

“Real estate has long been known as the go-to avenue for criminals and the corrupt for laundering their ill-gotten gains. Seeking security for their investments, they often target the world’s most attractive markets to place their dirty money,” the report states.

Many countries can be a bit lax about cracking down on these purchases, because they see them as useful investment into their economies. In fact, they have a bad habit of offering golden visas alongside the property to further incentivise purchases, although some countries – including, earlier this month, Spain – have begun to realise these are not the convenient source of free money they were presented as, precipitating as they do housing shortages and rising rents.

TI divided its analysis into two halves, highlighting not just flaws in the anti-money laundering architecture, but also in the availability of data. If journalists, analysts or activists can’t see who owns what, then no one can tell if kleptocrats have been allowed to sneak through the net. It’s worth reading in full, particularly because of the way it shows that these two halves of the problem feed off each other, for good and ill. 

South Africa, Singapore and France get singled out for praise, with the worst performers – Australia, the United States and South Korea – losing out because they were marked down dramatically on the weakness of their anti-money-laundering protections. When it came to the opacity of ownership information, the worst offenders were Japan, India and the United Arab Emirates (surprise! Okay, not at all a surprise).

I hope that this report informs national and international discussions about fighting kleptocracy. But I also hope someone points out that TI needs a better acronym before OREO becomes entrenched. My suggestion for a new name, after literally minutes of intense thought, would be Lax Ownership Of Property Hurts Ordinary Law-Abiding Entities (LOOPHOLE). 

Although I concede that “entities” isn’t a great word at the end there. Neither is “lax” at the beginning, to be honest. 

WITH ‘FRIENDS’ LIKE THESE

While on the subject of acronyms, thank you to a reader for alerting me to the existence of the “Mobilizing and Enhancing Georgia’s Options for Building Accountability,
Resilience, and Independence” bill, which has been put forward by a bipartisan group of US congresspeople. I am a sucker for a daft acronym, and suspect this is the first time a Georgian word has featured in a proposed piece of American legislation. “Megobari” being, of course, Georgian for “friend”.

Georgia has been suffering from political turbulence for some time, with the Georgian Dream political party – backed by the country’s richest man, the Russophile oligarch Bidzina Ivanishvili -- cementing control over the country. Transparency International’s Georgian branch has been publishing a list of high-level officials who hold what it considers to be questionable wealth. There are worrying signs that Western companies are happily enabling what’s happening in the South Caucasus. Georgia used to be a rare success story when it came to combating corruption, as well as a staunch Western ally in a difficult part of the world.

We would be fools to let it slip back to its bad old ways, without at least trying to arrest the slide a little, so I hope the Megobari bill makes some progress. “This bill provides Georgian Dream officials with a choice to abandon the would-be dictator Ivanishvili or face sanctions,” said Congressman Joe Wilson, Republican of South Carolina. With the “MEGOBARI” Act now being approved, it marks at least legislative support for Georgia’s EU-leaning democratic aspirations.

WHO NEEDS ENEMIES?

And sticking with acronyms, the House and Senate bills put forward to (under-)regulate the stablecoin industry, and which Donald Trump wants rushed through by August, have the acronyms STABLE and GENIUS, which is witty if you like that kind of thing. 

Back in the latter days of Trump’s first term, Representative Brendan Boyle (Democrat of Pennsylvania) introduced the STABLE GENIUS bill, to try to force the president to undergo a mental acuity test. There’s probably some deep lesson in the fact that an acronym that was intended to mock Trump in his first term is being used to flatter him in his second. But frankly it’s all too depressing to contemplate, so let’s move on.

Though onto a topic that’s also depressing. Here’s an interesting column about how Russian oligarchs are apparently back in the market for New York real estate. It’s been a tough few years for rich Russians, since sanctions have forced them to stay away from their traditional playgrounds in London, Manhattan and the south of France.

But, according to real estate brokers in New York at least, they’re back. “We’re seeing a lot of Russian nationals,” a broker said. “I’ve had five Russians look at properties in the $10 million to $20 million range in the past few weeks -- condos and townhouses.” Over the last couple of years, the broker confirmed, “oligarchs couldn’t buy anything in the U.S., and Putin put pressure on Russians not to buy here or in Europe.”

I’m a little bit suspicious of the claim that Russians are once more hunting for NYC real estate, since I think it would be a foolish oligarch who trusted a large amount of money to there being any stability in U.S. policy towards Russia. But if it is the case, it does highlight some of the issues raised by the OREO (ugh!) index, particularly in the light of the Trump White House’s decisions to scrap much of the anti-corruption architecture. 

That said, I wouldn’t expect much dirty money to be coming from Russians at the moment. Russian buyers have been drying up in Turkey and the UAE, which suggest the Russian economy is not generating the kind of cash that leads to property splurges, not least with U.S. tariffs leading to potentially lower oil prices. In my view, real estate brokers might do better to look more towards the old faithful klepto-gushers of South America and China.

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It's also the current home of Jim Kingman, a Texan lawyer who was invited to the commonwealth in 2023 to act as special prosecutor in a baroque corruption scandal featuring former ex-Governor Ralph Torres, who had been acquitted along party lines in impeachment proceedings in the islands’ senate the year before.

A LESSON FROM SAIPAN

And for Kingman, it’s been basically downhill from there. His attempts to investigate, subpoena or prosecute have been frustrated at every turn by a local elite that’s decided it doesn’t really want him to make any progress. “Where are the feds? Where is the oversight? Where are the ethics committees? Where is the bar? What are we even doing out here?” he asked in a fed-up Facebook post, a year into the corruption trial, with almost no progress made.

With the change in government in Washington, DC, Kingman is clearly concerned about the future of his mission on the islands, and has given an interview to a local journalist who also described the sheer extent of obstruction that Kingman has faced. It’s a bitter read, but it has a defiant tone, a commitment to fighting corruption, that leaves an optimistic aftertaste.

“One promise that I can make is that I won’t quit,” Kingman said. “I can’t promise the desired results in a process I don’t have control over. There is a fundamental change that needs to happen to set up a more sustainable government and that will have to come from the people here. The forces that I have been facing have made it clear that these changes will not be received from an outsider.”

Kingman is just doing his job as a lawyer, but the reason I single him out is that he’s looking pretty unusual among American lawyers at the moment. Faced with hostile politicians, Kingman is choosing to fight. Far better paid, better networked and more powerful lawyers than him are choosing to take a different route and roll over when threatened. 

I’m glad Kingman is sticking to his principles, and wish him luck. If anyone hasn’t read about what Pakistani lawyers did over a decade ago to preserve judicial independence in the face of an interfering autocrat, I highly recommend this piece. Faced with far tougher circumstances than those confronting New York’s white-shoe firms, Pakistan’s lawyers and judges took their struggle to the streets and found that most people are sympathetic to the idea of an independent judiciary that can act as a constraint on a dictatorial, power-hungry executive.

SLOW PROGRESS

Of course, lawyers can take to the streets. But the authorities’ chronic neglect of offices that investigate and prosecute corruption and financial crime has critically hampered their effectiveness. 

The U.K. non-profit “Spotlight on Corruption” has produced a really useful dashboard to track how the British authorities have fared in their efforts against financial crime. Long story short – it’s been pretty bad. If anyone needed proof that underfunding investigative agencies for years and years was an ineffective way to tackle complex criminality, then here it is.

And more evidence has been provided by Transparency International UK’s Ben Cowdock who has produced a fascinating summary of the progress the British authorities are making in reforming its corporate registry. Long story short – it’s not going very quickly. 

With an assessment by the Financial Action Task Force (FATF) on the horizon, the “pressure is on to get Companies House reform right,” Cowdock notes. The FATF sets international standards for tackling money laundering and runs mutual assessments of its members on a regular timetable, and the UK is due to be assessed in December 2027. Before that, however, in February 2026, will be the assessment of the United States and there could be fireworks.

MADE EVEN SLOWER

Donald Trump has just pardoned a corporation for the first time. He decided to cancel the judgement against the founders of a crypto trading company that was fined $100 million last year. Authorities said the fine reflected the expectation that the digital assets industry “takes seriously its responsibilities in the regulated financial industry and its duties to develop and adhere to a culture of compliance.” But Trump appears to have given up on enforcing corporate transparency, which is a central pillar of the FATF’s approach to tackling illicit finance.

“What the getaway car is to a bank heist, the anonymous company often is to a fraud scheme,” said Transparency International U.S. in this useful factsheet of cases in which American shell companies have enabled fraud and financial crime. The Trump administration’s response to this has been to not only do nothing, but to stop what was already being done. There has not yet been a time when the American government has so egregiously flouted the FATF’s core principles. And the U.S. was central to crafting FATF back in the late 1980s, so we are drifting into uncharted and rocky waters. It's hard to imagine the FATF approving of what’s happening, and harder to imagine this White House reacting well to being criticised, so you’d hope the FATF is preparing for the fallout. 

If it is, however, it’s not showing any sign of being ready for battle. Its most recent publication is almost aggressively dull. And the latest public pronouncement from its president suggests that, while she might have some thoughts about the arrangement of the deckchairs, she’s not got much to say about the iceberg up ahead.

I am personally not a huge fan of the FATF, which has been very good at producing documents and very bad at stopping money laundering. In fact, I sometimes wonder if money laundering experts aren’t the modern day equivalent of the self-perpetuating lawyers lampooned by Charles Dickens in “Bleak House”. “The one great principle of the English law is,” Dickens wrote, “to make business for itself.” Still, we might find we’ll miss the FATF if it’s gone. 

AND FINALLY, WHAT IS A KLEPTOCRACY?

I was in Oxford last Thursday to chair an event for Professor John Heathershaw and Tom Mayne, two of the authors of Indulging Kleptocracy, a book about how British professionals have helped foreign thieves and crooks to steal, keep, protect and spend their fortunes. The week before I was in Washington and had lunch with Jodi Vittori, professor at Georgetown University, and author of this recent piece in Foreign Policy headlined “Is America a kleptocracy?”.

These are noted experts on kleptocracy, with lots of very interesting things to say, but they have different definitions of what the word means. In the U.K., Heathershaw and Mayne use it to describe the multinational networks that allow corrupt officials to steal money from places like Nigeria or Kazakhstan, launder it offshore, and spend it in London, the French Riviera or Miami. In the United States, however, Vittori and Casey Michel use it to describe a system of government (like a corrupt version of autocracy, democracy or any other -cracy).

I think these two definitions are the sign of something quite interesting. The United States has so much diversity in terms of how wealth is treated between individual states that crooks and thieves are able to build a kleptocracy within just one country. And the task just became easier, with a specialized team at the Justice Department investigating kleptocrats’ deals and assets now deemed unnecessary by the Trump administration. Not entirely surprisingly, the team’s investigations had irritated some of Trump’s closest advisors and allies.

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Crypto people complained bitterly under the Biden administration that regulators were treating them unfairly, by restricting their ability to do business. Many observers pointed out that crypto people were being regulated exactly the same way as everyone else, and that the reason they were struggling was that their product only makes money if it can break the rules, but the crypto people didn’t agree and responded by spending over $119 million on political donations before the 2024 elections.

MONEY WELL SPENT

The lobbying has paid off. Victorious (and well-funded) Republicans have responded to the crypto industry with a degree of enthusiasm that is positively overwhelming. Supposedly dead under the Biden administration, crypto has been brought back to rude health. “I'm so excited for all of us,” said House Majority Whip Tom Emmer. “This has been a long road to get here. We are on the precipice of actually making this happen. And guess what? That's only the beginning.”

He said Congressmen and senators were determined to get a bill onto President Trump’s desk by August that would regulate the stablecoin industry, thus providing the kind of legal certainty that would allow these “digital dollars” to explode even more dramatically than they already have. A lot of this will be overseen by the Office for the Comptroller of the Currency, which has already moved to scrap the cautious approach of the old days (i.e. last year).

“I’m creating a bright future for banks in America to use digital assets. Financial inclusion is the civil rights issue of our generation,” Rodney Hood, Acting Comptroller of the Currency, told a side session at the conference. “I have removed the sword of Damocles that was hanging over the head of the financial services industry.”

Millions of people lack bank accounts in the United States, and they are overwhelmingly the poorest members of society. Governments have failed to do enough to make sure everyone has access to financial services. And if crypto really could help vulnerable people access banking, then I’d be all for it, but I fear – certainly on the evidence of what I saw last week – it won’t.

Perhaps the most alarming discussion was that concerning World Liberty Financial, the Trump family’s own crypto firm. Donald Trump Jr., beamed in by videolink, appeared to be seated on what looked like a white throne. He loomed over the stage like a permatanned deity in an inadequately-buttoned shirt. He explained that he’d only realised the power of crypto after his father had come out as a Republican and the family had all been cancelled. “You put that little R next to your name,” he said, explaining the need for crypto. “And I sort of realized very quickly just how much discrimination there is in the ordinary financial markets.”

The other three founders of the firm, which was created last year, all took to the stage in person. Zachary Witkoff – the son of President Trump’s special envoy tasked with helping to negotiate a ceasefire in Ukraine – spells blockchain wrong on his LinkedIn bio, and got the dress code wrong by wearing a suit and neglecting to grow a beard. Zachary Folkman, who once ran a company called ‘Date Hotter Girls’, wore a bomber jacket and facial hair, which matched the mood more precisely. Chase Herro was the most hirsute and casual of the lot, in joggers and a white baseball cap, and he explained that they would be targeting ordinary Americans, with the aim of getting them to use crypto to buy ham sandwiches from a bodega, as well as aiming to transform the cross-border payments system with their own stablecoin – USD1. 

The idea that these four nepo man-babies would be given the keys to any kind of financial institution was alarming, but the prospect of them doing so under permissive new regulations and an administration headed by one of their dads, was terrifying. “So one of our biggest goals is to kind of bring everybody back together and realize that this is a free market and, like, let the free market dictate who survives and who doesn't, and who thrives and who doesn't,” said Herro. Trump’s sons, incidentally, have also just invested heavily in a bitcoin mining company. 

WELCOME BACK, ALL IS FORGIVEN

The pace at the conference was frenetic, and every other session seemed to have Congressmen and/or senators explaining how cryptocurrencies would do their bit to make America prosperous and grand. Even three Democrats held a side session called “keeping crypto non-partisan”. No one was listening, though, partly because all the lawyers were talking to each other in the hallway but mainly because the Republican chairs of the Senate and the House banking committees were on the main stage at the same time explaining how America would remain the world’s crypto capital. 

Crypto is Trump’s project now, and no one cares what the Democrats have to say. If you want to see how much the industry has embraced the president’s talking points, check out this comically politicized advert from the blockchain company Solana, home of the $Trump memecoin. Even on X, the backlash was so fierce that Solana had to delete it.

What does this mean for the rest of the world though? American politicians seem to have decided that cryptocurrencies – and, particularly, dollar-denominated stablecoins – are good for America, that they bring business to the country, and help find customers for the Treasury’s debt. Anything that gets in the way of crypto therefore is bad for America. With great power comes great opportunity, as Peter Parker’s Uncle Ben might have said if only he’d had more donations from a pro-crypto SuperPAC.

Bo Hines, the hatchet-faced head of Trump’s council of crypto advisers, said his message to any crypto people working offshore was: “welcome home”. 

As for Tom Emmer, even the prosecution of the founders of Tornado Cash – the software that, prosecutors say, allowed criminals including North Korean hackers to hide $1 billion of stolen wealth – was governmental overreach. “We need all that innovation, all those risk takers and creators in this country, that's what is the definition of success. From that you'll get that economic growth,” Emmer said.

There is a terrible irony that cryptocurrencies – an idea much of whose popularity stemmed from the public anger sparked by the deregulation and greed that caused the great financial crisis of 2007-2008 – are becoming a new nexus for deregulation and greed. And I worry about what the backlash will bring when this too collapses. And I worry about all the bad behaviour that will be enabled before the collapse happens.

As Corey Frayer, who served in the Securities and Exchange Commission under Joe Biden, once said: “Crypto is a machine where fraud and money laundering go in one side, and political donations come out the other end.” 

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Sevastopol is the largest city on the Crimean peninsula, and was stolen from Ukraine by Putin in 2014 on the grounds that it had once belonged to Russia. “It was only when Crimea ended up as part of a different country,” Putin told the State Duma over a decade ago as justification for the annexation of Crimea, part 1 of the full-scale invasion of Ukraine in 2022, “that Russia realised that it was not simply robbed, it was plundered.” Most Western countries do not accept this logic, and have tried to punish people involved, which is why Ovsyannikov was sanctioned by the European Union, the United States, and the United Kingdom.

WESTWARD BOUND

Ovsyannikov left Crimea in 2019 for a position in Moscow, but his political career came to an abrupt end after a scandal at a regional airport. He then did that thing Russian officials do and headed to Britain. In 2023, he moved into his brother’s house in London, where his wife and children were already living and attending private school.

Private schools, however, have to be paid for, and prosecutors say that arranging those payments was tantamount to circumventing the UK’s sanctions, so he was charged along with his wife and brother, and this month they went on trial. The alleged wrongdoing is fairly small-scale, but it’s an important test case. We have a few weeks to wait for an outcome, but there are some interesting points to draw out from it already.

The first is about spelling. If you’re trying to avoid notice as a Russian (or a representative of any other nation which uses a different alphabet to ours), it’s an entry-level stratagem to play around with transliteration. It’s noticeable that in the court documents, he uses a different version of his name -- Dmitrii Ovsiannikov – to that favoured by the Kremlin in the good old days, which is a switch between two common transliteration systems. His brother, meanwhile, spells his surname Owsjanikow, which uses yet another. I’m hoping there’s a third sibling, who’s gone all pre-revolutionary with Ovsiannikoff.

The second is about his citizenship. Ovsyannikov left Russia for Turkey in August 2022, which many Russians did after Putin invaded Ukraine, though admittedly most of them had not been senior officials in the occupying administration. He then applied for a British passport, which he obtained early the next year. 

Apparently Ovsyannikov’s father was born in Bradford, in the north of England, in 1950. How did a Yorkshire lad hook up with a Soviet lady at the height of the Cold War? Did their eyes meet over a discussion of production quotas? If there are any authors of “socialist realist romance” among my readers, this could be your time to shine. Ovsyannikov himself is 48, so he must have been born in 1976 or 1977. 

The third and most important thing about his case is whether he should still have been subject to sanctions at all. The U.K. may have continued to sanction Ovsyannikov, but in 2023 he challenged his EU designation and was removed from the bloc’s sanctions list on the grounds that he was no longer in a position of power or responsibility in Russia. Some may think that’s a weak reason, but I am inclined to think sanctions lists should be adapted if people have ceased the offending behaviour. Sanctions are a foreign policy tool, not a law enforcement instrument, and if the aim of the policy has been achieved, they should be cancelled. 

There are lots of oligarchs and officials who would be willing to do quite a lot to get off the sanctions list, much of which would severely inconvenience Putin. It may feel icky, but I think our governments should be open to such deals. The point of all this is to undermine the Kremlin after all.

AND IT’S STILL ALL ABOUT THE BENJAMINS

This is not to deny that it does indeed feel icky to see sanctioned individuals try and evade those sanctions to buy Mercedes SUVs, as Ovsyannikov did. He used his brother as a proxy to buy the car. It reminded me of company owners who nominate proxies offshore to hide the real ownership structure. Since 2016, companies in the U.K. have been obliged to name a “person of significant control”. The idea of the law was to stop people hiding behind opaque shell companies to commit financial crime, but is anyone enforcing it?

Apparently not, since lawyer Dan Neidle has been able to publish a map with the location of 65,000 foreign companies that own U.K. entities, none of which are declaring who is in control of their operations. You can search on the map yourself. There are five companies in the Falkland Islands, for example, and there’s even one in American Samoa: are these remote jurisdictions making late bids to become offshore tax havens?

Just as I was thinking about the efforts of Companies House to rein in fraud, I was still thinking about the use of cash money by launderers from last week. I was reading this article, and I was struck by the claim that the US aerospace sector is due to export $125 billion this year, making it the country’s second most successful exporting industry. 

In 2023, the Bureau of Engraving and Printing produced 1,326,976,000 $100 bills. That’s not all profit, because each bill costs 9.4 cents to print, and there’s some dispute about quite how many of those go abroad, but serious estimates range from 80 percent to 70 percent. Once you’ve done the sums, you end up with profits from $100-bill exports in 2023 of somewhere between $92.8 and $106.1 billion.

We don’t have the figures for 2024 yet, but the Federal Reserve said it would be ordering between $155.8 and $160.6 billion worth of $100 bills, which would yield profits of somewhere between $109.0 and $128.4 billion. 

Look at that number again: at the top end of the range, that would nudge aerospace into third place, and establish the $100-bill-printing industry as America’s second most successful exporter. Even at the bottom end, it would be fourth, ahead of brand name pharmaceutical manufacturing ($103.3 billion), and quite a lot bigger than natural gas liquid processing ($62.9 billion). Who says the public sector can’t contribute to the economy?

Before someone writes in: yes, I know that banknotes are technically loans made to a government, rather than products sold by the government. But it’s more fun this way, so I’m going with it.

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A WELCOME FALL

After Russia’s full-scale invasion of Ukraine, and subsequent public concern about kleptocratic wealth infiltrating the UK, the government pledged to improve Companies House, including by giving it powers to check information, and obliging corporate directors to provide proof of identification. These are baby steps, but they’re already having results: “the companies register shrank during the period October to December 2024, for the first time since quarterly reporting began in the period April to June 2012”.

There were 5,408,707 companies on the register at the end of 2024, which was 19,879 fewer than at the end of September. That was a decline of 0.37 percent, so not a huge deal, though that did not deter some people. “COMPANY NUMBERS CRASH IN BUDGET FALLOUT,” shrieked the tiresome rightwing blog Guido Fawkes, which attempted to claim the falling numbers were because recent tax rises were scaring entrepreneurs away from starting businesses.

There is a strange belief among supposedly pro-business people that the easier it is to create a company, the more economic growth you will get. This is true, up to a point. But after that point, companies are so easy to obtain that they’re registered for the purposes of fraud, money laundering and corruption rather than honest enterprise, which will obviously impede rather than encourage business. 

So it is good that Companies House is finally trying to keep the more obvious malefactors from hiding their identities behind what anti-money laundering expert Graham Barrow calls burner companies. “None of these companies that were got rid of,” he told me, “were contributing anything.” 

Barrow runs a compliance firm called RiskAlert247, which trawls Companies House data in the quest for fraudulent firms with a programme called “Spider Sense”, which spots signs of dodgy behaviour. A mere five-minute demonstration was enough to convince me that the number of companies registered on Companies House has a long way to fall before it starts to reflect the actual quantity of legitimate firms in the country. There are hundreds of thousands of tax-dodging and fraud-enabling vehicles still on the registry although hopefully when new powers are brought in, they too will be winnowed out.

In the meantime, if you’d like a laugh, or simply to see how bad things were before the government got round to acting, look up “JOHN SMITH 3A LIMITED” – registered address 1 Any Road, Area, Anytown, United Kingdom, ZB2 2ZZ – on Companies House, and click on the “people” tab.

ANOTHER WELCOME FALL

The value of all the euro banknotes in circulation peaked in June 2022 at €1.60 trillion, and has been trending infinitesimally downwards ever since. In January this year, it was recorded at €1.57 trillion. This is as it should be: fewer people use cash for payments, therefore people take fewer banknotes out of banks, and so there are fewer banknotes in circulation.

What’s odd, however, is that – for decades – the opposite has been happening all over the Western world. The usage of cash has been in steep decline, but demand for banknotes has remained consistently strong. Although euro printing has begun to decline, it is only a recent phenomenon. The total of euro banknotes out there is still a lot higher than the trillion euros that were in circulation a decade ago. Central bankers call it a paradox, which is their way of saying they have no idea what’s going on.

While the value of euro notes in circulation has fallen, however slightly, the value of British pounds in circulation hit £90.5 billion in the first week of March, up more than three billion from last year, which was also an all-time high. And the value of cash dollars in circulation hit an all-time high of $2.36 trillion in January, which is twice as much as there was in January 2015, and that in turn was twice the total of January 2005. 

Ruth Judson seems to be the Federal Reserve analyst tasked with trying to work out who’s using all the dollars the Bureau of Engraving and Printing keeps churning out. Her latest paper estimates that more than half of them are circulating outside the United States. 

BUT IT’S STILL ALL ABOUT THE BENJAMINS

To me, the most interesting observation Judson makes is that demand for smaller denominations is declining, so the growth is overwhelmingly coming from people wanting more and more $100 bills. My personal theory is that, as money laundering rules have become more stringent, more criminals have turned to storing and moving their wealth in cash, and they naturally prefer to do that in large denominations, because you can get more value in a smaller space. It’s the criminal economy, stupid.

But why are they choosing to use $100 bills, rather than the even more valuable €200 or €100 banknotes? That is a bit of a mystery. Or a paradox, if you will.

Considering the destruction that the White House has wreaked on U.S. anti-corruption work, I should be pleased to see the announcement of tougher anti-money laundering measures. But I’m sorry to say I’m not. The Treasury Department has decided that money service businesses along the Mexican border must now report any currency transaction over $200 in a supposed action against cartels. This is catastrophically misguided. 

At the moment, all currency transactions over $10,000 have to be reported, and that is already producing a colossal deluge of paperwork. In 2023, Fincen received almost 21 million Currency Transaction Reports. Just imagine how many they’ll get now the threshold is $200, and the policy won’t even work at stopping the cartels.

According to the U.S. government’s own figures, Mexican cartels make $19-29 billion a year. They are NOT transferring these profits back home $200 a time via corner stores in Maverick County, Texas. Obviously. Even at the lower end of the estimate, that would involve more than quarter of a million money transfers every day, or more than 37,000 from each of the counties that the Treasury Department is imposing new measures on. 

If they actually wanted to stop the cartels, they should look instead into who’s taking all those $100 bills off their hands, since by their own estimates $25 billion is smuggled across the southern border in cash each year.

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BUKELE’S BITCOIN BET

But first to El Salvador. News of the death of its bitcoin project appears to be exaggerated, with the country buying yet more of the cryptocurrency just days after agreeing a $1.4billion deal with the IMF that seeks to “confine government engagement in Bitcoin-related economic activities.” On X, El Salvador’s president, Nayib Bukele posted: “No, it’s not stopping. If it didn’t stop when the world ostracized us and most ‘bitcoiners’ abandoned us, it won’t stop now, and it won’t stop in the future.”​​

El Salvador has many problems – not least excessively high levels of debt and a sluggish economy – to which Bukele has presented Bitcoin as the answer, including by making it legal tender in 2021 and obliging merchants to accept it for payments. Under pressure from the IMF (which says Bitcoin’s “widespread adoption could threaten macroeconomic stability and raise fiscal risks”, without elaborating), the El Salvador government has cancelled those reforms. But Bukele’s latest tweets suggest he’s not given up on his plans.

I don’t think anyone outside the IMF is nostalgic for the days when the lender used to bully the countries of Central and South America. But I doubt the IMF will take Bukele’s taunting quietly, so we’ve presumably not heard the last of this.

Personally, given my interest in financial crime, I think Bitcoin is a bit of a sideshow. It’s clunky, it’s expensive to use, and it’s wildly volatile – all of which mean it’s great for speculation, but not much good as a money laundering tool. Tether, on the other hand, now that is something to keep an eye on.

TOO LITTLE TOO LATE?

“What El Salvador has achieved, thanks to President Bukele, is truly incredible and will be narrated in history books,” posted Tether’s CEO, the emollient Paolo Ardoino, after Bukele said he would keep buying bitcoin. Tether issues the world’s biggest stablecoin, which is a cryptocurrency that’s worth the same as a dollar, but doesn’t suffer from any of the restrictions imposed by the kind of squares who comply with anti-money laundering rules at banks. Tether, incidentally, relocated its headquarters to El Salvador in January, so technically Bukele’s government is responsible for regulating it (lol).

Unlike Bitcoin, Tether is cheap, easy to use and non-volatile, which is why it’s become a funding vehicle of choice for Hamas, Hezbollah, the gangsters of the Mekong region, Russian money launderers, North Korea apparently, and almost any other baddies you can mention. Also unlike Bitcoin, Tether is a centralised operation, meaning it can freeze its currency if it wants to. The fact that it so rarely did was either a mark of its commitment to financial inclusion, or a sign that it didn’t care about enabling rampant fraud. But it looks like it may be trying to clean up its act.

Because bombshell news: almost three years after the U.S. sanctioned Garantex, a Russian cryptocurrency exchange, Tether finally got around to freezing its digital wallets. Before we get too delighted about the stablecoin’s decision to cooperate (the EU having also sanctioned Garantex last month), this was the result of the US Secret Service – in cooperation with Germany and Finland – working to cripple the exchange’s infrastructure. Tether presumably had little choice but to do what it did. 

In the meantime, sophisticated obfuscatory skills have allowed Garantex to move $60 billion worth of crypto since the US imposed sanctions. Still, there will be many annoyed Russians who will now be on the lookout for an alternative exchange. “We have bad news,” as Garantex announced on Telegram, “Tether has entered the war against the Russian crypto market… Please note that all USDT held in Russian wallets is now under threat. As always, we are the first, but not the last.”

THE CRYPTOCRATS’ LAMENT

If Russians who use crypto are struggling with sanctions, American crypto investors are increasingly annoyed by the suspicion that still shrouds the industry. “None of the federal banking agencies have actually overturned any of the anti-crypto guidance,” said Caitlin Long, CEO of crypto-friendly Custodia Bank. “It is still presumed unsafe and unsound for a bank to touch a digital asset.”

Donald Trump won substantial backing from crypto folks in last year’s election, thanks to his promises to cancel what they felt was excessive regulation of their activities. “We can't live in a world where somebody starts a company that's a completely legal thing, and then they literally get sanctioned and embargoed by the United States government,” said Marc Andreessen on the Joe Rogan podcast in November. Remarkably self-pitying, considering Andreessen’s a tech billionaire,

He and his fellows complain about widespread debanking – by which they mean that banks are closing the accounts of crypto companies and/or their owners, because of concerns about money laundering – and the fact there is no appeal process against such decisions. Crypto industry leaders insist the practice is really driven by banks’ determination to smother a competing technology in the cradle, and has unfairly targeted right-wingers. Trump promised to end the practice, but in truth this is a complex issue, and Long’s comments suggest they’re losing patience with his failure to master it.

The Senate Banking Committee held a hearing on debanking last month, which featured three representatives of the crypto industry. But the witness who impressed me most was the Brookings Institution’s Aaron Klein who made it clear that the real victims of debanking are not crypto bros, but the kind of people without the money to effectively lobby President Trump.

“Approximately one in ten Black, Hispanic, and Native American households lack a bank account, about five times higher than for whites. Being unbanked is even more likely among those with a disability, with an unbanked rate above 11 percent,” said an excellent 15-page primer he submitted as evidence, which is well worth reading (it can be downloaded at the bottom of this page.)

The core of the issue is that banks face onerous regulations, worry about being fined, and therefore can’t see the value in providing accounts to clients who are more likely to cost them money than earn it. Yes, some of those clients work in crypto, but most are poor immigrants just trying to get ahead. (Check out quite how many of the FinCEN enforcement notices relate to convenience stores that cash cheques, rather than multi-billion-dollar money laundering schemes, and you’ll see what I mean.)

There is no easy fix to this, but the roots of the problem lie in the global rules against money laundering set by the Financial Action Task Force, which is currently holding a consultation on the issue. Should you have a lot of time on your hands, and an exceptionally high boredom threshold, you can read it. Perhaps you could send in an opinion too. Everyone has known about the problem for decades, and no one has ever been bothered to do anything about it before, but perhaps this time they will. Or perhaps they won’t. 

What we’re still waiting to learn is how the Trump administration intends to regulate crypto, or if it intends to regulate at all, given the investigations being dropped, last week’s crypto industry summit at the White House, and the mooted creation of a national cryptocurrency reserve.

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The post Cryptocrats fear regulation will stymie a new crypto era appeared first on Coda Story.

The first bit to go is the last part of the phrase – “by the corrupt” – because winning elections is the easiest thing for crooks to achieve in a society with well-established institutions. It’s the other stuff that gives the crooks trouble. Once corrupt people are in government, the middle part of the phrase – “for the corrupt” – does not necessarily follow. If the institutions remain run by honest people, kleptocracy not only may not take root, but the corrupt politicians may be pushed out of office by the next election.

HOW KLEPTOCRACY TAKES ROOT

So something I’ve been keeping an eye on since Donald Trump’s inauguration is how the Securities and Exchange Commission  treats Justin Sun. In case you don’t remember him, Sun is a Chinese crypto billionaire who spent $6.2 million on a banana, then ate it.

In March 2023, the SEC charged Sun and eight celebrities (including Lindsay Lohan, which I was disappointed by, being a fan of both Mean Girls and The Parent Trap) with fraudulently promoting crypto tokens. “Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation,” said Gurbir Grewal, head of the SEC’s enforcement division at the time. “This is the very conduct that the federal securities laws were designed to protect against.”

Six of the celebrities agreed to pay up to settle the charges at the first opportunity, another did a few months later. But Sun was in no hurry, which may have been a sensible policy. Last week, lawyers for Sun and the SEC wrote to the Manhattan judge overseeing the case asking that it be put on hold, saying they’ll come back with a status report in two months’ time. Now, this may all be procedural and above board, but it also may not be.

By September 2024, Trump began to talk about a new crypto company he was launching called World Liberty Financial. It had the admittedly clever tagline: “Be DeFiant” (DeFi of course meaning decentralized finance, the term for digital peer-to-peer transactions). But Trump’s venture struggled to hit its fund-raising target until it found a cornerstone investor: Justin Sun, who put in $75 million.

“This guy,” said World Liberty co-founder Zak Folkman at a forum in Hong Kong last month, with a gesture towards Sun, who was sitting beside him, “saw that regardless of the outcome, this project is a monumental move forward for the entire crypto community.” It is not yet clear what if anything, besides fundraising, World Liberty actually does, but at the same event, Folkman – who once set up a company called ‘Date Hotter Girls LLC’ – said its success came despite there being “no special treatment to anybody who purchased the token."

Hmmm, about that. Now, it’s clearly not true that the Trump White House is going easy on crypto just because Sun gave Liberty Financial $75 million. The SEC has already dropped a case against Coinbase, and last summer Trump was already telling a crypto conference that “when we see the attacks on crypto, it's a part of a much larger pattern that's being carried out by the same left-wing fascists who weaponize government against any threat to their power.” 

Since his inauguration, Trump has issued an Executive Order promising to make the United States the “crypto capital of the planet.” Pausing the investigation into Sun could just be part of a general reluctance to enforce regulations or crackdown on crypto. And the cryptocurrency Sun founded was not named as part of the national crypto reserve mooted by Trump.  

But the Sun case didn’t ever really have anything to do with crypto as such anyway, and the SEC was always careful to make clear it was charging him for the way he marketed his token, not for the fact of it. “We’re neutral about the technologies at issue, we’re anything but neutral when it comes to investor protection,” said Grewal.

So, from the point of view of people who don’t want the United States to tilt further towards Rajaratnam’s definition of a kleptocracy, it would be nice if the SEC maintained its case against Sun or else made very very very very clear that any decision to drop the case was in no way connected to the fact that he gave the US president’s company a nine-figure sum. It would also be nice if the Trump White House was prepared to promise action against some of the more egregious crypto frauds, but not many people are holding their breaths.

PROTECTING THE PRIVACY OF KLEPTOCRATS

On an unrelated note, it appears that Sun also shares the Trump White House’s, er, particular approach to which kinds of free speech should actually be free. Sun, reportedly, put pressure on a crypto trade publication to take down an article critical of his stunt with the banana. Spending six million dollars on a banana should, apparently, be above reproach. 

Talking of free speech and those who believe themselves to be above reproach: the authorities in the uber wealthy Swiss town of Cologny were not cool about the idea that some journalists might stage walking tours pointing out homes bought with the proceeds of some of the more egregious bits of financial crime enabled by folks nearby.

“The residential area perched above the lake is a popular refuge for certain kleptocrats, potentates and other financial pirates,” the event’s publicity announced, before it got cancelled because the local authorities wouldn’t give permission for it to go ahead. Which is to say: the world may be changing more quickly with each passing minute, but Switzerland isn’t.

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The post Of the corrupt, for the corrupt, by the corrupt appeared first on Coda Story.

OLIGARCHS CAN’T HANDLE THE TRUTH

It was partly the revelation of how gross the fallen kleptocrats’ greed had been; it was partly the realisation of how complicit Western enablers had been in the corruption of these kleptocrats; it was partly how Russia’s bought-and-paid-for proxies used blatant lies as cover for its annexation of Ukrainian territory; and it was partly the way that corruption had crushed Ukraine’s ability to respond. Ultimately, it was the combination of all four factors working together that convinced me there was nothing more important to the future of democracy than bringing illicit finance under control.

This is why it was so appalling to see the president of the United States repeating the Kremlin’s lies about Ukraine last week. Corruption of truth plus corruption of morals plus corruption of money equals the destruction of democracy.

Now I’m not going to pretend I have any influence over supporters of Donald Trump. Let's face it, not many of them read this newsletter, and if they did, they wouldn’t listen to me anyway. But it has made me think about what needs to be done in response.

The core of Putin-style politics is what he understands winning an argument to look like. When his opponents are too scared, confused, exhausted, or dead to continue, he thinks he’s won. Sometimes he has: murdering anyone who disagreed with him in Chechnya, shattering an entire city, plus driving out hundreds of thousands of people, did indeed pacify that poor, beautiful place, though it did not work so well as a strategy in Syria.

But here’s why the truth is so troubling to oligarchs, and why Trump unleashed his inner troll when Zelensky said some anodyne but true things, because, no matter how loud you shout, no matter how many people you imprison or murder, two plus two always equals four. And “if that is granted, all else follows.”

SO LET’S CONFRONT THEM WITH THE TRUTH

No matter what the trolls say, actual free speech is not just about letting your opponents say what they like, but about creating structures in which everyone can speak, everyone can be heard, and everyone can agree that the point is to arrive at the truth, not to shout louder. A marketplace of ideas, like any marketplace, can’t function without fair regulations.

And if our rulers refuse to abide by those regulations – like Trump or Putin or, in the U.K., former Prime Minister Boris Johnson – then it is everyone’s duty to call them out. So, it was great to see that Josie Stewart, a British civil servant who lost her job for exposing falsehoods told by Johnson’s government about the withdrawal from Afghanistan in 2021, won a tribunal case for wrongful dismissal.

“We can’t have a system that says stay silent, no matter what you see, and forces dedicated public servants to choose between their conscience and their career,” she said. The usual boring people will claim she was part of the deep state or “the blob,” or whatever, but actually Stewart and people like her are a crucial safeguard against corruption.

Incidentally, in Wales, parliament is debating a new law that would mean politicians could lose their seats if they deliberately lie, which is an interesting idea.

LIKE THE TRUTH ABOUT THE DAMAGE BEING DONE BY MUSK

The good folks at Accountability Lab and Humentum have continued their work to assess the effect of Elon Musk’s decision to destroy USAID (all to save the equivalent of around three and a half days’ worth of the U.S. budget deficit). They have responses from 665 recipients of aid funding, and have broken down how much those organisations will lose and what it means.

The money was spread across many areas, but the largest group affected have been organisations that provided healthcare services, followed by those working in “governance” and “anti-corruption”, with the impact potentially catastrophic even for those who didn’t rely on USAID for all of their money.

Here’s another estimate: after one week of the freeze, almost a million women lost sexual health services; after a month, that figure will hit four million. After 90 days, the supposed length of the freeze, almost 12 million women and girls will be denied life-saving care. That means, if previous trends repeat themselves. 4.2 million women will become pregnant without wanting to, of whom 8,340 will die.

Clinics were one of the few places in rural Afghanistan where women could still work, but now that’s gone. “To be honest, it was one of the worst days of my life,” a midwife in rural Afghanistan told Service95. Imagine what other days an Afghan midwife has likely lived through, and marvel that somehow Elon Musk has managed to make it worse. The knock-on effects in terms of increased misery, increased corruption, and increased terrorism are impossible to calculate, and how any of it benefits the United States is a mystery to me.

WAITING OUT SANCTIONS

While the U.K. is talking tough on sanctions, it is unclear what the Trump administration means to do about the sanctions on Russia and its oligarchs as it continues to negotiate peace. I found this UK Financial Threat Assessment nerdily fascinating. Particularly for its description of some of the mechanisms used by sanctioned Russians to evade restrictions on the movement of their money. Take this choice sentence: “Neo-Bank fails to detect that the regular deposits it receives from Global Bank into the account of Seafarer Z are made by Manager Y, which is funded by Company X, and therefore indirectly by the (sanctioned individual).” 

The British government has promised to keep oligarchs with ties to the Kremlin out of the U.K., where they once bought their most expensive toys, including mansions, newspapers and football clubs. But the oligarchs are sitting tight. For instance, superyachts are expensive toys. And Roman Abramovich hasn’t moved his 162-metre monolith for three years. Mooring fees alone cost more than $200,000 a year. If oligarchs are prepared to go to all that trouble just to keep the crews of their yachts paid, what will they do to buy weapons?

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The post Why the future of democracy depends on controlling illicit finance appeared first on Coda Story.

Their plan was to hire a “medium sized” private jet, obtain a few shrink-wrapped pallets of banknotes, then get a friend who had been in the US Special Forces to fly them to the Democratic Republic of Congo and pick up 150-200 kilograms of gold. This would then be flown to Dubai, refined, and sold on. He was determined to keep things simple, so wouldn’t be using diplomatic immunity this time, just quickly in and out, and there’d be a few hundred thousand dollars in profit for everyone, including himself and his interlocutor, who was called Martin.

CONFLICT GOLD 

Rwandan-backed M23 rebels continue to advance in mineral-rich eastern Congo. Control of the DRC’s mines is one of the major prizes in the region. Gold is Rwanda’s biggest export, despite it having few if any mines of its own. Westerners’ willingness, for whatever reason, to buy these minerals are thus a major reason the war continues. The man on the train for example.

I did wonder for a while if the whole experience was an elaborate joke. I write about financial crime for a living and I was on my way back from a conference on that same topic. It seemed too much of a coincidence that someone would be discussing an extremely crude example of that very phenomenon two metres away from me. But the longer he went on – and he went on for a good half-hour – the more I came to understand he was just a real prick.

So-called “conflict gold” has been sanctioned by all major Western countries, and my fellow-passenger appeared aware that his trade was risky – “loose lips sink ships, Martin, let’s keep this to a tight circle” – but not sufficiently so that he didn’t broadcast his intent to an entire train carriage.

What was interesting though was the one thing he was afraid of, and the reason he wanted $10,000 from Martin – the risk of Donald Trump putting sanctions on gold while his jet was in the air, since that could upend the market and wipe out their profits.

The U.S. government’s decisions affect everyone on earth, even when they seem technical and unimportant. This is why Trump’s decision to smash the US government’s anti-corruption efforts will ripple outwards, causing misery and distress in places like Eastern Congo. 

WHY ANTI-CORRUPTION POLICIES MATTER 

Here’s an interesting new paper that shows that, if a country is targeted by US prosecutors investigating offences under the Foreign Corrupt Practices Act (which Trump ended enforcement of last week), the country’s leaders respond by burying their wealth more deeply behind further layers of shell companies. 

“When the United States investigates corruption in a foreign jurisdiction, we find that elites from that jurisdiction quickly and substantively move their money abroad. Using data on 275,000 offshore incorporations, we illustrate that flows are directed to tax havens that have uncooperative relationships with the US,” academics Lorenzo Crippa and Nikhil Kalyanpur concluded.

This may make it look like investigations are a waste of time. If the result of prosecutors’ actions is that criminals not only keep their money but also make it harder to find, then why bother? In fact, the opposite is true: this is a sign that the FCPA is doing its job. No one thinks that stopping corruption and money laundering is possible, unless we can somehow re-engineer humans so we’re not greedy. The aim of legislation is not to stop these practices, but to make them expensive and perhaps not worth the trouble. 

If a kleptocrat has to set up new shell companies, in inconvenient jurisdictions, as a result of prosecutors’ actions, that costs the kleptocrat money and – on the margin – makes some crimes unprofitable. So, Donald Trump is wrong to say the FCPA has been holding back U.S. companies. On the contrary, it has been helping companies by forcing officials to think before demanding bribes. 

Of course, criminals learn to adapt to enforcement efforts. Here’s a fun example from British lawyer Dan Neidle’s Tax Policy Associates, showing how efforts to bring transparency and verification to the UK’s corporate registry is forcing criminals to recruit proxies via Facebook to put their names on the necessary documentation. Upcoming reforms in March that will oblige people to present proof of identity when filing corporate documents will likely lead to an exponential growth in the recruitment of such proxies. 

The ability of criminals to keep finding a way around the law may make it look like the regulations are a failure. But actually the way criminals are having to hide behind ever-more complex screens is a sign of success here too. The transparency of the U.K.’s Companies House, which can be searched for free, allows sleuths like Richard Smith or Graham Barrow to spot what criminals are up to, and force them to engage in ever-more elaborate and expensive forms of deception. 

Sadly, progress on the Corporate Transparency Act, which would start the United States down the road towards an open register has been halted by yet another federal judge in Texas. Back in December, a court in Texas issued a nationwide injunction against the enforcement of the CTA. The U.S. Supreme Court stayed the injunction. 

But now another injunction has been granted, this time in response to two people called Samantha Smith and Robert Means who own property through companies. “Plaintiffs  will  be  irreparably  harmed  if  they  are  forced  to  comply  with  the  new  law,” the Texas court’s ruling said. 

It's not entirely clear what irreparable harm the law would cause them, though it is ironic that a court case they brought to stop anyone knowing they owned their companies – Sage Rental Properties LLC, and Oak Alley LLC, respectively – means that now everyone does. 

While anti-corruption is stalled in the U.S., the European Union is hurtling towards a bright future when its long-promised Anti-Money Laundering Agency will actually do something. Well, maybe not “hurtling”.  

After a year or two of discussion about where the new agency would be based, the choice of Frankfurt was made, as everyone knew it would from the very beginning. In January, AMLA gained a chairperson. And an office will, presumably, open at some point in the next few months. AMLA’s now going to consult on some “implementing rules” and should choose which entities it will supervise at some point in the next two years or so, before becoming fully operational in 2028. Tremble, criminals, the EU is coming towards you. Very, very slowly.

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The post Trump’s gift to kleptocrats appeared first on Coda Story.

Except now it is. 

The president of the United States has given that person free rein to commandeer the forum but it’s not possible just to log off. Elon Musk’s tiresome jokes, gross politics, and crass ignorance are no longer confined to X, or even the Oval Office, but have been unleashed onto the world’s most vulnerable people. “Corruption is development in reverse, devastating the outcomes we seek across all sectors, eroding the rule of law, and undermining citizen trust in governing institutions and processes,” said a (now grimly ironic) mission statement from USAID, issued just two years ago. A statement that now can’t be read on its web site because Musk has shut it down.

He has used X and his status as “Special Government Employee” to dismiss the world’s most important aid agency – in words that presumably landed well with his acolytes on X but signified nothing to me – as “a radical-left political psy op.” Just from my own knowledge, I can say this vandalism will benefit no one but America’s enemies and undermine its friends.

A FORCE FOR GOOD

Take, for instance, the Anti-Corruption Action Center in Kyiv. It has done more than anyone to cement honesty in Ukraine – which, a decade ago, was arguably the most corrupt nation in Europe – and was 20% funded by USAID. Or the Journalism Development Network, which has exposed corruption and misgovernance throughout Eastern Europe and beyond, its reporting helping considerably to prevent the Kremlin from buying influence. It too was funded by USAID. These projects aren’t just important for informing curious people, banks’ compliance departments rely on news reports like these to assess whether a potential client is a crook or an entrepreneur. Without the journalism that USAID funded, the world’s anti-money-laundering guardians will be blind. 

And that’s not all. The Kurdish guards of a camp for former Islamic State fighters and their families are able to keep it safe, and its inmates fed, thanks to money from USAID. Here’s a USAID-funded programme to combat corruption in sea ports; here’s a story about a radio station in Afghanistan that also received USAID funding. USAID helped spread the practice of democracy into places it had never been. The agency’s $43 billion annual budget may sound like a lot, but it’s less than Musk paid for Twitter before he trashed it, and it’s barely a fifth of the increase in his own personal wealth in just the last twelve months.

A MATTER OF LIFE AND DEATH, NOT POLITICS 

Of course, not everything USAID has done has been ideal. But there is an incredible degree of idiocy in failing to appreciate that the cheapest and easiest way to win arguments is not to have them in the first place. USAID is the world’s single largest donor for humanitarian causes. Spending money to win friends is a good investment.

“Elon Musk is the world's wealthiest man and right now he seems to be calling the shots with decisions that are literally going to be life or death for the world's poorest people,” said Giff Johnson, the laconic and wise editor of the Marshall Islands Journal, the leading newspaper in a country that is both very aid dependent and very strategically located. Where the United States steps back, China will step forward. “It's an opening for anybody else who wants to fill the gap, I suppose, until Washington decides what it is doing."

On top of all this, the Department of Justice has disbanded Task Force KleptoCapture, which was part of an international effort to make Vladimir Putin’s corrupt allies and officials pay the cost of the Ukraine war. Oh, and it’s decided not to investigate foreign intervention in US politics. 

It is beginning to feel a little like the United States is changing sides here. Or maybe it already has?

THE COST OF HAVING PRINCIPLES

Also changing sides, have been the billionaires coalescing around Trump, particularly Jeff Bezos once described as a “woke philanthropist” for his funding of climate organisations and tuition-free preschools. 

In 1947, Time magazine reported on a 37-year-old Japanese judge called Yoshitada Yamaguchi who, too poorly-paid to live on his salary and too honourable to break the law, starved to death. “It is horrible these days to be married to an honest man,” his widow said.

I remembered that story when reading about how Bezos’ charitable foundation had cut funding for the world’s leading climate standard setter, apparently in order to avoid annoying Donald Trump. “Obviously Jeff Bezos and the tech companies have changed compared to eight years ago,” one source told the FT. It is clearly not reasonable to expect people to starve to death rather than betray the needs of the society they live in, but honestly you’d have thought a billionaire might be willing to go without his elevenses to stand up for some principles? What is the point of having all those commas on your bank statement if you roll over like a whipped dog when someone threatens to say something mean to you?

How different Bezos, and his flexible principles, are from the likes of Guatemalan lawyer Virginia Laparra Rivas, who dedicated her career to fighting corruption and organised crime. She won a prize in London last week for her work and her courage. After five years of harassment, Laparra was imprisoned for two years in 2022 after being convicted of abusing her authority as head of the Special Prosecutor’s Office Against Impunity in Quetzaltenango, in a process that was widely condemned.

“I wonder how many of us who speak about and act in support of the rule of law in the UK so confidently would have the bravery and the principles to do so in a country such as Guatemala,” asked senior judge David Neuberger in a speech at the awards ceremony. 

Or indeed in Washington DC right now?

NO FISH TOO SMALL TO FRY

And speaking of the courage required to take on the powerful. By the time you read this, Transparency International will have published its annual Corruption Perceptions Index, and there will be all the usual hoopla about how Denmark has gone up, South Sudan has gone down, and – oh dear – under Donald Trump, the United States has slipped to – I don’t know – maybe thirtieth? Whatever the actual scores, there will be a map showing Europe and North America in a friendly yellow, while Africa and Asia will be an angry red, just like last year and the year before that.

Please ignore it. The index is meaningless nonsense, in which “corrupt” is just a synonym for poor. And it does real harm, since the CPI’s metric filters into so many of the ways that aid agencies make funding decisions, and companies decide whether to make investments or not. I’m convinced the only reason TI keeps producing it is because everyone talks about it so if we stop, maybe they will too.

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The post Elon the Terrible and the folly of bullying USAID appeared first on Coda Story.

THE GRAND OLD DUKE OF WASHINGTON

This friend’s experience made me wonder about the lessons that US allies will be learning from the last few presidential terms when it comes to financial crime. Donald Trump marched them all up to the top of one hill in 2016-20, then Joe Biden marched them up another in 2020-24, and now Trump wants them to head off somewhere else entirely. What’s the lesson? Well, obviously, it’s “do the minimum, do it late, and it’s all a waste of time anyway.”

And this is bad, because – partly owing to U.S. diplomatic clout, and partly owing to the global role of the dollar – tackling financial crime or tax evasion without leadership from Washington DC has always proved hard/impossible. And now Trump has sacked 17 inspectors general from key federal agencies, that is independent, non-partisan watchdogs whose job it is to weed out government corruption, fraud and mismanagement. Instead, that effort is being led by Trump cronies and oligarchs like Elon Musk seeking to score political points. It’s going to take a long time before anyone thinks it’s worth listening to the U.S. about combating corruption, no matter who’s in charge.

BUT WHAT ABOUT BRUSSELS?

Is this an opportunity for the European Union to step up and provide alternative leadership? Well, apparently, EU countries are considering buying gas from Russia again as part of a settlement to end the war in Ukraine, so the short answer is “oh my God, no.” This is like a heroin addict who’s kicked the habit deciding to start shooting smack again to improve relations with his drug dealer.

It is, however, February which is when the EU publishes its not-at-all-anticipated biannual “list of non-cooperative jurisdictions for tax purposes.” (It also publishes a list in October.) Twice every year, I hope Brussels will have decided to change its longstanding policy and start naming and shaming places that genuinely undermine global work to stop tax evasion. This time around it’s particularly important since Donald Trump has withdrawn the U.S. from participation in a new global tax treaty and undone all the work towards making multinational corporations accountable. Perhaps Brussels could start with tax havens Ireland and Luxembourg?

But, no doubt, the officials responsible for this shameful exercise will do what they do twice a year, every year – name and shame a short list of tiny, irrelevant or diplomatically feeble jurisdictions in an unlovely combination of bullying and virtue signalling. Last time, they criticised Guam, but they did not criticise Delaware; Anguilla, but not the UK; Vanuatu, but not Switzerland. 

I think it’s time I learned from my doctor friend and started ignoring these government missives but I can’t help being an optimist.

AND LONDON?

Speaking of false optimism. How’s the U.K. doing on these issues? The government, keen to raise more revenue, has pushed regulators to encourage growth. The last time a government did this, we ended up with rivers full of sewage and oligarchs buying up London. An early sign of what it might mean this time around came from the Solicitors’ Regulation Authority, which keeps an eye on most of Britain’s lawyers.

The SRA was asked to judge whether a law firm called Discreet Law had acted improperly in suing Bellingcat’s Eliot Higgins for defamation after he said on social media that mercenary boss Yevgeny Prigozhin was, in fact, a mercenary boss. Prigozhin – who died in a plane crash in 2023, just weeks after attempting to march on Moscow – admitted his connection to the notorious Wagner Group and the case was thrown out.  

To most outside observers, the case was about as abusive as it gets – it had no merit, it was going after an individual rather than organisations, and it was filed in the notoriously plaintiff-friendly UK rather than another jurisdiction. But, according to the SRA, Discreet Law did nothing wrong, which sends a truly appalling message.

“Without a real deterrent to lawfare, deep-pocketed individuals, oligarchs, crooks and kleptocrats from around the world will continue to use our courts to suppress accountability. This foul play will continue to flourish. And Britain will remain a go-to destination for lawfare,” said Labour MP Lloyd Hatton. I sincerely hope that, in their push for economic growth at all costs, Hatton’s Labour colleagues won’t abandon the progress that has been made in trying to rein in London professionals’ desire to be butlers to the world’s kleptocrats.

DEBANKING CHARITIES

While mercenary oligarchs like Prigozhin rarely have trouble finding people in London to protect their interests or launder their money, a report released last week by the Muslim Charities Forum shows that life is harder if you don’t lead a private militia. 

Ever since the 1990s, governments have subcontracted to banks the job of keeping money launderers out of the financial system; and ever since the 2000s, banks have done the same for terrorists. To make sure banks do this job, governments occasionally impose huge fines on them and, as a result, banks are keen to comply.

The trouble is that finding all of the world’s money launderers and terrorists is practically impossible, so banks err on the side of caution. They prefer to kick 100,000 innocent people off of their accounts, than let one person slide through and risk a nine-figure fine. (Unless, of course, the launderer or terrorist in question is really rich). That, at any rate, is what the Muslim Charities Forum found.

Some 68 percent of Muslim charities said they had difficulty opening bank accounts; 42 percent suffered a complete withdrawal of banking services; another 42 percent had been forced to delay humanitarian projects because of delays in transferring funds; and 44 percent said the delays had harmed their relationships with partners.

The specific problems faced by Muslim charities date back to decisions made by the Financial Action Task Force (FATF) directly after the attacks of September 11, 2001, to demand banks pay more attention to non-governmental organisations working in or for Muslim countries. The actual words were “organisations having the status of a charitable or relief organisation... targeted at a particular community,” but everyone knew what they meant. This was despite the fact that there was no evidence that charities were more likely to fund terrorism than businesses, individuals or countries.

There is desperate need for humanitarian aid in many parts of the Islamic world – not least Gaza and Lebanon, but also Syria, Afghanistan, Yemen and elsewhere – and getting in the way of people that want to help for no good reason is not just harmful, it’s also stupid, because it will alienate people we really want to be our friends.

“Evidence suggests that structural Islamophobia plays a role in these financial challenges, as Muslim-led charities are often unfairly targeted by banks for perceived risks without concrete evidence of wrongdoing,” the Muslim Charities Forum said. “Internal frustrations are high, with charity staff spending excessive time resolving financial issues instead of focusing on core humanitarian work.”

Of the many things that the FATF should reform, this excessive and unreasonable focus on Muslim charities is for me at the top of the list. But it’s easier to go after low-hanging fruit.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

Header illustration by Teona Tsintsadze/Getty Images.

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But first, a sincere apology, with the emphasis on sincere.

SORRY

I apologise if Mark Zuckerberg was offended by me calling him an oligarch, as he apparently was when Joe Biden implied it in his valedictory warning. 

Comrade Zuckerberg’s dismay is understandable. Russia’s oligarchs were extremely rich and rapacious. And they have, since the full-scale invasion of Ukraine three years ago, been subject to tens of billions of dollars in sanctions by the U.S., EU, UK and others. Whereas all the lovely Mr. Zuckerberg has done is run a social network that spreads violence, fraud and misinformation and given him a personal fortune currently estimated at $233 billion.

Personally I think we should probably stop using the word oligarch to describe Russia’s super-rich now anyway. Ever since Vladimir Putin cemented his control over the country, not least by arresting the then-very-wealthy Mikhail Khodorkovsky in 2003, Russia’s business leaders do not interfere in politics at all and just do what they’re told. Dictatorships after all only have room for one leader, not a few, no matter how wealthy.

I did wonder, briefly, if I should get in touch with Zuckerberg and explain my position. When I call him an oligarch, I’m not comparing him to people like Arkady and Boris Rotenberg, pals of Putin since childhood. As I said, these days Russia’s wealthiest people, unlike America’s tech billionaires, are cowed functionaries, not strutting kingmakers.

But then I saw a picture of Zuckerberg, Elon Musk, and Jeff Bezos sitting in the front row at Donald Trump’s inauguration, in more prominent positions than his cabinet picks (though many of them are billionaires too).  I’m sure their positioning was intended to make them look like masters of the universe. But they reminded me of those Indian maharajas who were allowed to hold ceremonial positions of honour in the British Empire, as long as they did nothing to threaten London’s control. 

Despite all their ostentatious loyalty, the maharajas ended up being cut off with nothing. So perhaps friend Zuckerberg should actually be grateful that he is being called an oligarch. It assumes that he is, in fact, a strutting kingmaker with his hand on the levers of power, rather than just another brown-nosing billionaire. As Trump posted on his social media network last month: “EVERYBODY WANTS TO BE MY FRIEND!”

If you think the comparison to the British Empire is overblown, I’m not the only one making it. As Oxfam pointed out just last week:

“Today’s world remains colonial in many ways. The average Belgian has 180 times more voting power in the World Bank than the average Ethiopian. This system still extracts wealth from the Global South to the superrich 1% in the Global North at a rate of $30million an hour. This must be reversed.”

NOT SORRY

The world was inching towards a sort of redressal, though not a real reversal, of this situation thanks to the global corporate tax deal pushed by the Biden White House which would have required multinational companies to pay a minimum tax rate of 15 percent. The deal ran the gauntlet of all kinds of special interests and finally, albeit in diluted suboptimal form, seemed like it would form the basis of the most significant reform to global taxation since, well, the days of the British Empire. 

But then along came Trump, who has killed it because it’s 2025 and we’re not allowed nice things anymore.

Frustration with the tax minimising antics of U.S. multinationals had already led to unilateral “digital services taxes” in France, Italy, Spain, the UK, India and New Zealand so the failure of a global deal may not enable a complete feeding frenzy for the not-at-all oligarchs of Silicon Valley. But Trump, who has his not-at-all oligarchs’ backs, has already told U.S. officials to draw up “a list of options for protective measures or other actions that the United States should adopt or take,” if foreign countries are found to be “likely to put tax rules in place that are extraterritorial or disproportionately affect American companies.” No doubt there will be threats of more tariffs to come.

Many activists have long argued that the right forum for global tax discussions is the United Nations, which last year launched a tax convention that is due to report back in 2027. An effective tax deal, though, would need the agreement of the world’s richest countries. That is why I supported the process led by Biden, even though it was so unambitious. But now that’s been torpedoed anyway, maybe it’s time to give the UN bodies a chance, as the overwhelming majority of the countries represented in the general assembly have voted to do. In the words of Irene Ovonji-Odida, the chair of the Tax Justice Network:

“We will all negotiate together to set rules that work for everyone. Everyone except the tax abusers.” 

Only nine countries voted against the UN process. Not surprisingly, they are among the world’s richest – the United States, Canada, the United Kingdom, Japan, Israel, South Korea, Australia, Argentina and New Zealand. These countries, as a Tax Justice Network report shows, are responsible for a vastly disproportionate loss of global tax revenues due to corporate abuse. So it’s up to the citizens of these countries (and funnily enough, I’m a citizen of two of them), to change their leaders’ minds, because they look unlikely to do it on their own.

Sadly, we recently lost a frontline warrior in this very struggle. Elise Bean did more to expose the inner workings of tax havens, unscrupulous corporations and kleptocrats than all but a tiny number of people worldwide. 

First at the U.S. Department of Justice, then with Senator Carl Levin when he headed the Senate Permanent Subcommittee on Investigations, and finally for the Levin Center for Legislative Oversight and Democracy, Elise was a source of wisdom, positivity, calm and integrity. She investigated and exposed the secrets of Enron, money launderers, commodity speculators, unfair credit card companies and more, and set an example of cross-party fact-based cooperation that was unrivalled. I was not the only person who relied on her generosity and breadth of experience and knowledge for my books and journalism.
Transparency International U.S. called her “the embodiment of effective civil service and a living example of how our government should work”. It seems particularly cruel that she should have died just when the values she represented are needed more than ever.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

Header illustration by Teona Tsintsadze/Getty Images.

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But even what scrutiny exists fails to pass muster. Elliptic, the crypto-compliance company, has been publishing some frankly terrifying reports about the online marketplace Huione. For those of you who haven’t used its services, Huione is an e-commerce site in Southeast Asia where you can buy data, technology, and money laundering services, and it’s pretty central to the “pig butchering” form of online investment fraud, run from compounds in Myanmar, Cambodia and elsewhere. 

Pig butchering is a term used for scams in which the victim’s trust is gained before they are persuaded to part with their money. Many of the people executing these scams have been forced into the work by organized criminal gangs. As the Elliptic report explains: 

“Those being defrauded are not the only victims. Reports suggest that scam compounds commonly resemble prisons, acting as both workplaces and accommodation blocks and surrounded by tall barbed wire fences and actively patrolled by security guards. They are estimated to house hundreds of thousands of workers, many of whom have been effectively enslaved.”

Although Huione has launched its own cryptocurrency, most traffic on the web site is conducted through Tether or USDT, which is a so-called stablecoin pegged to the US dollar, and extremely cheap to use. Tether is the world’s most traded cryptocurrency. It is also pretty perfect for online criminals, since it lacks the volatility or expense of other forms of cryptocurrency, while simultaneously lacking the oversight from bank compliance departments or law enforcement agencies that using dollars would bring.

Tether says it’s doing a lot to fight financial crime but its name just keeps cropping up in investigations. It was implicated in a money laundering scheme revealed last month by British law enforcement, in terrorist financing, North Korean scams, fentanyl smuggling, and much other criminal activity. So it would be nice to think that the new Trump administration is going to take a hard look at the existing regulatory framework.

But Trump (and his wife) launched meme coins just before his inauguration that, on paper, added billions to their wealth. Musk, a key advisor to Trump, endorses cryptocurrencies. And Howard Lutnick – Trump’s pick for Commerce Secretary – heads a financial services firm that not only has done a huge amount of business with Tether but also reportedly owns five percent of it. So, let’s be honest, he’s probably going to leave it alone. No wonder the crypto industry is celebrating.

Under Joe Biden’s watch, Tether was being investigated for its links to illicit finance, including its use by Russian arms dealers. But the future of these investigations is unclear.

BIDEN’S HOLLOW WARNING 

The outgoing president left office with a speech that he should have made four years ago, if not earlier. 

“An oligarchy is taking shape in America of extreme wealth, power, and influence that literally threatens our entire democracy, our basic rights and freedoms, and a fair shot for everyone to get ahead,”he said, while warning of the “tech-industrial complex.”

I lived in Russia when Vladimir Putin became president, and watched over the next few years as he and his cronies, who became billionaires, cemented their control over state resources. They used the courts, the institutions of the state, the media, and more to bully, coerce and jail anyone that got in their way.

Last week I was reminded of how in 2006 the Kremlin used the threat of environmental enforcement proceedings to bully a group led by the oil company Shell into giving up its large stake in the Sakhalin-2 project, worth tens of billions of dollars, to state-owned Gazprom. Shell’s supposed violations of environment regulations were forgotten about as soon as Gazprom had taken control. The people in power cared about the money, not the grey whales and sensitive salmon fishing areas that conservation groups said the project adversely affected.

I see a worrying parallel between this inglorious episode, of a state using its legislative machinery to wrest control of a project, and the troubles faced by TikTok in the United States. I am not here to advocate for social media companies, any more than I am here for the oil majors, but I do believe that in a democracy, the law has to be used fairly, rather than as a tool to force the owners of profitable assets to hand them over. And that is why this Bloomberg headline is alarming – “China Weighs Sale of TikTok US to Musk as a Possible Option. 

President Trump has extended by 75 days the deadline for the app’s Chinese parent company ByteDance to divest. He has suggested that the U.S. enter into a “joint venture” with ByteDance, without explaining what exactly he means. And Elon Musk, using his platform on X and his current political heft, said that while he was against a ban, on free speech grounds, “the current situation where TikTok is allowed to operate in America, but X is not allowed to operate in China is unbalanced. Something needs to change.” 

We are entering a dark time if the US starts treating foreign companies in the same way that Putin’s Kremlin did. So, while I agree with Biden’s warnings about oligarchy, I feel about his speech like I felt when Kamala Harris said Donald Trump was a fascist during the election campaign: where’s the urgency? Why didn’t Biden do something about it when he was the most powerful man in the world? 

There’s a parallel in the United Kingdom, where politicians are alarmed about the tidal wave of money that submerged democracy in Washington DC, and worry about the prospect of Elon Musk doing the same thing in London. But they’re not moving urgently to strengthen the electoral laws that would allow him to, and instead talk about maybe doing something in a couple of years.

Here’s the lesson from Moscow: once oligarchs have power, they don’t give it up. The time to save democracy is when it still exists. And giving a speech – no matter how sonorous, or how many references to Dwight D. Eisenhower it contains – is not the same as taking action. Plug the loopholes. Break up the monopolies. Do something.

TULIP SIDDIQ FALLS ON HER SWORD

Meanwhile in Britain, measures to tackle the flow of corrupt money and overhaul the country’s “highly fragmented” anti-money-laundering regulatory system will likely be slowed by the loss of anti-corruption minister Tulip Siddiq. 

She chose to resign, ironically, after being linked to a corruption scandal in Bangladesh. Shortly before Siddiq resigned, the anti-corruption coalition, a group of NGOs including the prominent Spotlight on Corruption, noted :

“In light of an investigation launched last week by the Prime Minister’s independent advisor on ministerial interests, and developments in separate investigations in Bangladesh, the Coalition concludes that she currently has a serious conflict of interests.” 

Siddiq, a member of parliament since 2015, is the granddaughter of Sheikh Mujibur Rahman, the first president of Bangladesh, and the niece of Sheikh Hasina, who was prime minister of Bangladesh until she resigned and fled the country after weeks of mass protests last summer. Media outlets have reported troubling ties between Siddiq and some business people associated with her aunt, who has been charged with large-scale human rights abuses. One such businessman apparently gave Siddiq a two-bedroom apartment in central London. 

Siddiq insists she’s done nothing wrong but, for a government that has pledged to fight kleptocracy, this was – to be polite – not a good look. Although I suppose it should be a relief that there are still politicians out there with a sufficiently developed sense of shame that their response to a scandal is to resign rather than to laugh.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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Well, Donald Trump’s back in the White House, Vladimir Putin is still waging his horrific campaign against the Ukrainian nation, and too many governments are blaming foreigners instead of oligarchs for the collapsing state of public services. Back in 1993, the then Russian prime minister Viktor Chernomyrdin observed, after yet another policy failure, “хотели как лучше получилось как всегда”. Literally translated, it means “we wanted the best, but it turned out like always.” But I’ve never found an English version that fully captures the poetic irony of the Russian original. 

THE NEW CLASS OF MULTI-CENTIBILLIONAIRES

In 2020, I marvelled at the concept of the “centibillionaire,” someone whose wealth was worth more than $100 billion. Back then, the OG centibillionaire – Jeff “Amazon” Bezos -- had just gained his first comrades, ushering in a whole new class of the super-rich.

It’s not even half a decade later, and that already looks hopelessly dated. Pah, everyone and his gran has got $100 billion these days. Bezos, Mark Zuckerberg and Larry Ellison have already seen their net worth vault past $200 billion, while Elon Musk has more than double that again. This, I think, makes Musk the richest man who’s ever lived, since the previous presumed holder of the title – Mansa Musa, the 14th-century emperor of Mali – owned  a mere $400 billion in current terms, much of which he spent on a spectacular pilgrimage to Mecca.

ONE DOLLAR, MANY VOTES

Wealth inequality will be a major issue this year, partly because the creation of a new class of American uber-mega-super-oligarchs is inherently interesting, but also because – as Elon Musk’s unhinged interventions in British and German politics makes clear – this has real consequences for the rest of the world. 

Too much discussion of inequality focuses on incomes, such as this piece in the Financial Times with the misleading headline “Inequality hasn’t risen. Here’s why it feels like it has”. If you look at how much people own, however, it’s another story. Since 1977 -- the year I was born, as it happens -- the richest one percent in America has increased its share of the nation’s stuff from 22.7 percent to 34.9 percent. That is a lot of money.

And money is power, as Francis Bacon didn’t say. If you are wealthy, you get a wildly disproportionate amount of attention, which means you can bend laws, corrupt politics, and reshape the world to suit your vision. It’s often said that modern democracy isn’t one man/one vote, but instead one dollar/one vote. In reality it’s worse than that. A hundred billion dollars buys you a lot more than a hundred billion votes.

This must be great for the centibillionaires but, for those of us who believe in democracy as a vehicle for representing the views of everyone, it’s all the more reason to try to build and/or rebuild defences against the oligarchs.

THE TRANSPARENCY BATTLEGROUND

The dirty secret of the international financial system is that the tools used by Putin and other kleptocrats to hide, move and multiply their stolen wealth were designed not for them, but for Western tax-dodgers. Once shell companies in the British Virgin Islands, Swiss bank accounts, trusts and all the other paraphernalia had been created, financial criminals realised that they liked convenience, value and discretion just as much as tax dodgers did. 

Wealthy Westerners haven’t stopped wanting to dodge taxes and scrutiny just because Putin’s a baddie, and transparency measures have proved distinctly unpopular among the one percent as a result. “Sure, I want to stop corrupt crooks from taking over the world via anonymous shell companies, but why should that mean I can’t use them?”

It explains the bizarre ping-pong that was played with the US Corporate Transparency Act at the end of last year. The CTA, passed in the dying days of Trump’s last term in office, obliges states to collect information on who actually owns companies, thus ending the race to the bottom that has allowed Delaware and Nevada, for instance, to demand less information from applicants for corporations than for library cards. This piece of legislation was a big deal. It has taken four years for FinCEN, the Treasury Department’s financial crime experts, to craft the detailed regulations that would make the law a reality, and finally – at the start of 2025 – it was due to start collecting information about who owns what.

The CTA would not actually require this ownership information to be published, it would just be collected and made available to law enforcement agencies. Even that was too much for the improbably-named Texas Top Cop Shop Inc, which sells “tactical gear” to police officers and is suing to stop the CTA.

• “Though seemingly benign, this federal mandate marks a drastic two-fold departure from history. First, it represents a Federal attempt to monitor companies created under state law — a matter our federalist system has left almost exclusively to the several States. Second, the CTA ends a feature of corporate formation as designed by various States — anonymity. For good reason, Plaintiffs fear this flanking, quasi-Orwellian statute and its implications on our dual system of government,” the complaint states.

(Off topic, but, I think we may soon need an international legal treaty decreeing that anyone who calls something Orwellian should lose their case automatically. This might sound a bit, well, Orwellian but a hard line is needed.) 

In early December, a Texas court responded to Texas Top Cop Shop Inc by granting an injunction, preventing the U.S. government from requiring companies to provide ownership information as the CTA demanded. On December 23, a higher court stayed the injunction, and the law was back on. But on December 26, a different panel of judges (who presumably hadn’t had much of a Christmas) stayed the stay on the injunction, and the law was paused again, so the government has gone all the way to the Supreme Court. And that’s where we are at the moment.

LOOKING AHEAD

Offshore tax havens that also sell anonymous companies have long been able to point to the dire state of corporate transparency in the United States and use it as an excuse not to take action themselves. This means secret shell companies are still available for the Russian regime to hide its ownership of oil tankers behind, thereby circumventing Western sanctions and continuing to fund its war against Ukraine. Around a fifth of oil tankers are now in this “shadow fleet”, which poses a huge environmental threat, as well as a financial one.

Just over two years ago, a similar challenge to transparency measures in the European Union managed to halt them for a while. Fortunately Brussels is pushing out a new package of anti-money laundering measures, which would open up corporate registers to journalists and other bona fide researchers. That’s not to say that the EU has become closed to dodgy money, as this troubling investigation from September revealed, but at least it is trying to expose who owns it.

In the year ahead, I’ll be keeping an eye on government efforts to stop financial crime and the legal challenges against them brought by the Texas Top Cop Shops of this world. I suspect there will be many and perhaps, when it turns out like always, an English-language equivalent will be found for Chernomyrdin’s wistful cynicism.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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In Damascus, as over half a century of iron-fisted dictatorship crumbled to dust, journalist Zeina Shahla described the atmosphere:

• "I have lived in Damascus through all the years of the war, and this week has been like nothing else. The first two days were really violent. Now, though, people are back at work, shops are open, somehow life is becoming normal.  The future is still ambiguous. We got rid of a dictatorship that was ruining the country. We’re waiting, though, for news about the detainees. There are  more than 100,000 disappeared persons in Syria but only a few thousand have been freed. I’m still meeting each day with people who say ‘we’re searching for our loved ones. In prisons and hospitals.’ And there are many things to worry about – the economy, education, freedom of speech, freedom for women. But we have a rare chance to build something that unites all Syrians and to ensure that the Syria we are dreaming of is going to be inclusive.” 

Dialing in from a night bus making its way to Kyiv from Damascus, Oz Katerji, a British-Lebanese war correspondent and documentary filmmaker who is based in the Ukrainian capital, told us that what happened in Syria “really did feel like a slide backwards for autocracy”:

• “The story of the last 10 years has been autocrats in the ascendancy, with the interventions of Russia and Iran. So for all this to be undone in 13 days has sent a shockwave through the international community. What I saw in Damascus was a people free and expressing themselves in public for the first time in their lives. It has struck a hammer blow at Vladimir Putin’s ‘Dictatorship Protection Service’, putting a dent in his projection of both hard and soft power not only in the Middle East but also in Africa where he has been propping up dictatorships and involving himself in civil wars.”

The fall of Bashar al-Assad, as Katerji points out, has implications far beyond Syria's borders. Not least in Tbilisi, where protests have been continuing for over two weeks against the Kremlin-friendly government’s decision to suspend EU integration. According to Batu Kutelia, a former Georgian ambassador to the United States:

• “Georgia is more than Georgia. It’s not only about a tiny nation on the eastern shore of the Black Sea. It’s part of a bigger equation and it is in the pragmatic interests of the democratic world to make democracy inspiring again and not to let authoritarians claim another success story.” 

Kutelia was echoed by the Georgian photojournalist Mariam Nikuradze, a co-founder of the English-language news platform Open Caucasus Media who just days ago discovered that she was on a police wanted list for her coverage of the nightly demonstrations:

• "I don’t see the spirit of protestors dying anytime soon. Being a journalist  in Georgia has never been so dangerous. So many of my friends have been injured. But it just makes people angrier and they are not giving up. It’s very hard to predict what will happen but it’s getting harder and harder for this government to hold onto power.” 

What happened in Syria, Nikuradze told us, “gives hope.” But, as the Ukrainian human rights lawyer and Nobel laureate  Oleksandra Matviichuk pointed out, the path ahead is long and fraught:

• "We are losing freedom. This year, half the population of the Earth had elections. But don’t be naive, 80% of the world lives in non-free or partially free societies. This means that people who have a real right to vote are in the minority. The problem is not just the fact that in authoritarian countries the space for freedom is shrinking to the size of a prison cell, the problem is that even in democracies people start to question the Universal Declaration of Human Rights. Freedom is very fragile. We have to support each other in our fight for freedom because we live in an interconnected world and only the spread of freedom makes the world safer.”

Writer Peter Pomerantsev, a contributing editor at Coda, is currently in Kyiv, where he was born though he was educated in Britain and lives in Washington, DC. Picking up on Matviichuk’s remarks about interconnectedness, he argued:

• "If you listen to someone like [U.S. vice president-elect] JD Vance, he says ‘we need to get away from the foreign policy of values, that’s been a disaster. We need to just think about our self-interest and security.’ But these things aren’t necessarily opposed and they don’t need to be opposed. Ukraine’s freedom will make the West more secure. If Georgia can maintain its freedom, it is so important for counterbalancing Russia’s ability and China’s ability to dominate possession of natural resources and dominate the Black Sea therefore undermining America’s security and economy. I wonder if we’re at a point here where we can get beyond this very, very cruel but also stupid idea that you should split apart values and interests, that they’re antithetical.” 

Edward Lucas, a London-based former journalist and prospective parliamentary candidate in the 2024 British election, did, however, strike a note of caution:

• "There’s a kind of wishful magical thinking that it ought to be obvious to everybody that Georgia is at a geopolitical crossroads and therefore it’s in the vital interest of the West to intervene to keep it out of Russia’s clutches and make it the fulcrum of Euro-Atlantic security in the Caucasus. I do worry that we’re in danger of thinking that people like JD Vance will eventually see reason because reason is ultimately reasonable but they’re coming from a different place.”

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This conversation has been lightly edited for length and clarity. 

Isobel: Your book is called “The Hidden Globe.” Can you tell us what that means to you? 

Atossa: It’s a book about loopholes and how people, companies, and even countries use them, especially those with significant money and power. The idea of a loophole, the etymology of it, is actually a slit in a castle wall that you can shoot arrows out of while you're obviously protected by the wall. And I think that that's really important to remember when you're thinking about how these loopholes work today. They allow those employing loopholes to hide behind the wall while taking advantage of the provisions that are afforded to them.

Isobel: These loopholes — this hidden globe — often exist as a physical space though. How does that work? 

Atossa: Visualizing the physicality of these spaces was key in trying to express what it was I was thinking about. For years and years I had this hunch that there was something weird going on between countries. Something we were not talking about that didn’t totally correspond to our idea of a nation state. Power was being wielded in ways that didn’t adhere to our concept of national sovereignty. 

So if you look at the map of the world, you'll see 192 countries. But what isn't shown on the map is all the stuff in between and above and beneath. Maps don’t show that laws don’t necessarily go hand in hand with territory.

In a lot of cases, it does—if you rob a bank, for example, that’s a physical crime that would be prosecuted based on your location. But for more transnational activities where jurisdiction isn’t clear, it’s not necessarily “you’re in country X, so you’re bound by the laws of country X.” You might be in a free zone with its own laws or on a ship with a flag of convenience. There’s this uncoupling of land and law, where countries create alternate rules when it’s convenient.

Isobel: Dubai is an example of this. Can you explain how?

Atossa: Dubai has its own civil and Islamic laws, but they carved out a space for finance companies to operate in a familiar legal environment. They created a court from scratch and simply imported judges and rules. This new court—the Dubai International Financial Center—uses common law. Essentially, they made up new rules and created a new jurisdiction within the existing one, almost like nesting dolls.

Isobel: And sometimes these judges aren’t even physically present…

Atossa: Right, they don’t even always import the judges; some work remotely. I open the book with Swiss mercenaries, and there’s an analogy between those mercenaries and these judges who adjudicate cases over Zoom. They’re trained in one country and then “borrowed” by another. Mark Beer, one of the judges, actually lived in Dubai, but the others hopped around in places like the Caribbean, the UK, and Singapore. Countries want to hire these judges because companies want a familiar legal environment—not necessarily favorable rules, just consistency, so that they don’t risk fines or shutdowns over compliance issues. But it’s strange that companies can make up a court for themselves, while I don’t get to choose where to adjudicate my parking ticket.

Isobel: You grew up in Switzerland and you talk a lot about freeports — these hidden spaces in Geneva, the city of your childhood, where people can hide goods and assets. Did you ever go inside one of these places?

Atossa: I never actually got to visit the Geneva Freeport, even though it’s only a mile from where I grew up. I could get into places like northern Laos and Dubai, but not the Freeport. The idea of works of art hidden away where no one can see them—that was almost more offensive to me than, say, a country compromising its sovereignty. 

Art does what it does; it can be beautiful or disturbing. But then we layer abstraction on top of it—its speculative market value, its value to an individual or as part of the art market. Putting art in crates, where people can’t look at it, for tax reasons or so someone can obscure its value from an ex-spouse feels deeply wrong. 

Historically, freeports were for storage of things like grain, which had a shelf life. You couldn’t let goods sit in a freeport indefinitely, neither here nor there. But with art, due to both the nature of the items and storage technology, they can remain there for an incredibly long time. That’s the loophole—not that there’s storage, which is fine, but that an artwork can be both “in transit” while not moving at all. This is a legal fiction that exemplifies the world I’m writing about.

Isobel: I used to naively think that people bought art because they loved art or found pieces beautiful. I didn’t fully grasp, before reading your book, that actually art collecting often has very little to do with being an art lover.

Atossa: There’s been some recent reporting that art isn’t necessarily the investment it was once thought to be—not all works will appreciate like a Picasso might. But if you’re very wealthy, there are only so many places to put your money: real estate, stocks, and art is just another asset class. When financial affairs are handed over to accountants or family offices, art isn’t exempt; it’s yet another commodity. Owning a piece of art allows you to take out loans against its value or use it as collateral. So, while many rich people may appreciate art as we do, art also serves a function as part of a portfolio.

This is where freeports come in. If art is viewed as an asset, you don’t want it to get damaged, and you may not want people to know it exists. If there are only ten da Vincis, they’re worth more than if there were fifty. So there’s a game of obscuring value, existence, and location. There’s also a tax element: you may not declare it in the same way as other onshore assets if, for example, there’s a sales or use tax associated with it.

Isobel: Tell me more about growing up in Geneva. What was it like? 

Atossa: When I was a teenager, a lot of the kids I grew up with had parents who were diplomats, so they had diplomatic plates on their cars and some degree of immunity. I remember an ex-boyfriend who was speeding and nothing happened because of those plates. Or someone would be smoking pot and the cops would say, “I know who your mother is, I know who your father is,” and then do nothing. 

It’s not like they were doing anything outrageous, but there’s this awareness of different worlds within Geneva.

Isobel: You’ve lived in New York for two decades now but you wrote about how much you missed Geneva during the pandemic — how it was almost calling to you. What’s your relationship with Switzerland like now?

I don’t think Swiss people see me as truly Swiss. It’s that classic expat feeling: in Switzerland, I feel American; in the U.S., I feel Swiss. And with Geneva, you have this city that seems quiet and boring on the surface but, as my book discusses, there’s so much going on behind the scenes. Switzerland does have a lot going for it, and Geneva is now a more progressive city than other Swiss cities. It’s not just a capitalist hellhole. But I still don’t feel entirely at home there. It’s like a haunting, almost spooky feeling. Geneva’s a place that can freak you out if you overthink it. Most people don’t do that, but I have. 

Isobel: You called Geneva the “City of Holes,” which fits this idea of a place that’s quiet but full of hidden dramas.

Atossa: Exactly. It’s strange how everyone carries on as if it’s normal. But when you realize how much of the world’s coffee or finance goes through Geneva, it’s absurd. The city punches so far above its weight class, given its size and demographics.

Once you know about these hidden aspects, you can’t unsee them. You walk past a building with a plaque saying “Offshore Partners LLC,” and it’s hard not to think, “If walls could talk…” There’s so much you want to know, so much that you can’t know. There’s this blankness you encounter—almost like an invisible wall. You want to know, but Geneva has a way of keeping its secrets.

Isobel: I’ve been working on a lot of stories about tech elites, the technopoly and so on. And something I’ve come across again and again is a “bunker mentality.” This idea that the tech bros have that they want to create their own jurisdictions, their own walled-off communities that will protect them from government regulation — but maybe in the future will also protect them from apocalyptic climate chaos, or the ravages of societal breakdown. Can you explain this mentality? 

Atossa: I think these tech leaders have convinced themselves that they’re victims, that everyone hates them and they need to protect themselves at all costs. It’s a classic persecution complex seen throughout history among monarchs and dictators. With power comes paranoia.

Some of these people aren’t stupid; they see that things aren’t working for most people. That can lead to a reasonable fear of being pursued or facing consequences for their actions.

For the tech guys, their identity is tied to being hackers. They think of themselves as clever problem-solvers, whether it’s with code or social issues. They live in a world of nations that don’t align with their ideals, so they look for shortcuts to create a future they envision. The appeal of charter cities is that they feel like a hack. The original concept of charter cities came from [Nobel Prize-winning American economist] Paul Romer, who had some honest intentions. He believed that foreign laws could bring better infrastructure to developing economies.

But for the tech elite, they thought: “We don’t even need to lobby Washington; we can create our own rules.” These charter cities would be business-friendly, with no taxes and streamlined bureaucracy. The catch? It’s not democratic. If a corporation runs a charter city, that corporation effectively becomes the ruler.

This appeals to certain tech types who are disillusioned with democracy, probably because they fear the consequences if democracy were to take real effect.

Isobel: In your book you mentioned the longevity movement — this obsession with living forever that has gripped tech bros — and how it’s connected to the idea of charter cities. What’s going on there?

Atossa: Right, the longevity hackers are frustrated with regulations, like those imposed by the FDA [U.S. Food and Drug Administration], which slow down testing for new treatments. They want faster processes and are seeking places where they can expedite those trials. This is already happening in a Honduran charter city called Prospera. 

Isobel: You discuss outer space as a potential ultimate charter city. Can you elaborate?

Atossa: Absolutely. The ultimate charter city—or tax haven—could be in space. It’s an interesting thought, as it represents a frontier where these tech leaders could establish their ideal conditions without the constraints of current Earth-based systems.

The artwork for this piece was developed during a Rhode Island School of Design course taught by Marisa Mazria Katz, in collaboration with the Center for Artistic Inquiry and Reporting.

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“Let that sink in” wrote Elon Musk on X shortly after it became evident that Trump would return to the White House – four years after losing the 2020 election, attempting to overturn the results, facing two presidential impeachments, a criminal conviction and many other criminal charges (all of which will now melt away). 

The post was accompanied by a smiling photo of Musk photoshopped into the Oval Office, holding a sink. 

The last time musk appeared with a sink was in October 2022, when he made a theatrical entrance into Twitter’s headquarters shortly after acquiring the company. That moment, which went viral, was part of Musk's takeover of Twitter, a move that would transform the platform into a hub for disinformation and political propaganda.

Musk was not the only bro excited by Trump’s victory:  Trump’s win is a win for oligarchs, autocrats and their patrons of all shapes and shades everywhere.  There was palpable, genuine enthusiasm in tweets from fellow populist leaders in  Hungary, India, and Israel. The Kremlin’s official response was tempered but there was no shortage of glee from those who speak on Vladimir Putin’s behalf. Few paid any heed to the FBI allegations that Russia was behind bomb threats at polling stations in battleground states, choosing instead to celebrate “victory over Ukraine” as the inevitable outcome of Trump’s election.  “Kamala is finished. Let her keep cackling infectiously. The objectives of the Special Military Operation remain unchanged and will be achieved,” posted Russia’s former President Dmitry Medvedev, referring, of course, to the full scale invasion.  No wonder that Volodymyr Zelensky’s message of congratulations to Trump sounded like a plea.

“Fuck!” was the headline in one of Germany’s biggest newspapers, the weekly Die Zeit. But should anyone really be surprised?  

Liberalism has been on its deathbed for a while, for reasons that are many and varied: from our inability to resolve historic injustices and address the horrendous inequities that are inherent in neo-capitalism, to the toxic effect of America’s post 9/11 wars, to the tenacity and determination of U.S. enemies in the Kremlin and Beijing, and, in sharp contrast to that determination, the complacency and arrogance of individual leaders who represent the collective “liberal” West.

I often wonder whether the decline of liberalism actually began right at the point of its greatest triumph, when after winning the Cold War, the United States encouraged Russia to embrace the wildest, most unregulated version of capitalism imaginable. 

The alternative could have been a “Marshall Plan” for the Soviet Union, a responsible, long term strategy to bring wounded, defeated Russia and its still frightened, traumatized colonies into the Western liberal world. Instead, the U.S. stood by and benefited from unrestrained privatization that bred corruption and  nepotism. 

How does this connect to what is happening in the United States today? It created the foundation not only for modern day Russia but also for  the new geopolitical alliances of oligarchs and autocrats that have now come into full bloom. 

At first glance, that first generation of Gucci-wearing Russian oligarchs has little in common with the fit, fleece-sporting super rich of the United States. And yet, just like the Russian tycoons of the 1990s who accumulated unseen amounts of wealth because no one regulated them, the Silicon Valley moguls celebrating Trump’s victory today have managed to acquire unprecedented riches by skillfully avoiding government regulation. 

The latest, seismic political change is an aftershock from a bigger change that’s shaking the entire world. Because unlike the Russian oligarchs, the Broligarchs of Silicon Valley have not just grabbed untold riches, they’ve created products that none of us can or want to live without. 

Just as electricity changed the way we ate, slept, and worked, artificial intelligence is transforming the very fabric of our society. It’s building on the foundation laid by social media, which has already fractured the very idea of truth, legitimizing and scaling the age-old human trait of believing what we want to believe despite all evidence to the contrary.

Now, as the power and the ubiquity of digital services grow, so does the power of the men behind the monopolies  that have built the digital architecture of our lives. American voters, as Axios pointed out “have just decided – among many other things – that artificial intelligence will grow up in a permissive, anything-goes household, rather than under the guidance of stricter parents.” 

It’s not Donald Trump,  it’s the Peter Thiels, Jeff Bezos and Elon Musks of the world who will be making up the new rules that will govern our lives. These men, who have accumulated unprecedented wealth will now be able to translate it into unprecedented political power.

And they got it democratically. The decisiveness of Trump’s victory is sobering and it shows that liberalism, or at least  its current political interpretation, is unable to offer people meaningful solutions to crises that they need resolved. 

“Holy smokes! Literally nothing? Literally not one county?” gasped CNN’s Jake Tapper in the early hours of Wednesday morning as CNN's election map showed that Kamala Harris did not outperform Joe Biden in a single county in Pennsylvania. 

But is this not also just a more dramatic, more globally consequential version of a movie we’ve all watched before?  In Brexit Britain or during countless recent elections around the world, where “liberal” and “progressive” forces  failed again and again to match the imagination deployed by their opponents. 

In 2012, I watched this very same scenario unfold in my own country, Georgia, when people, fed up with the government, voted in an oligarch who made his money in Russia in the 1990s.  It was the country’s first democratic transition of power since the collapse of the USSR and it was applauded by the West as a “step forward” for a young democracy. At the time, Georgian multimillionaire reformer and educator Kakha Bendukhidze, made an astute observation: “We did make a step forward,” he said “But we stepped into deep shit.” 

Very few at the time understood that what he meant was that the country was once again becoming part of an alliance built not on shared principles and values but on oligarchic alliances, criminal networks and the unregulated quest for money,  power and impunity.

Georgia never managed to reverse its course. The oligarch, Bidzina Ivanishvili,  is still there, still supported by Russia and currently celebrating Trump’s comeback in the United States. The Georgian  opposition says his party rigged the recent elections. Hundreds of thousands of people demonstrating in the streets agree, but they are impotent: the government has passed enough repressive laws to quell any dissent. The tools of democracy that this particular oligarch  used to come to power are no longer available for those who now want to get him out. 

The global authoritarian playbook is effective because it is so simple. One of its core rules is:  use the tools of democracy until you can make them obsolete. The formula works. Overwriting  it will require  bold new ideas and courage to re-imagine how we can collectively defend liberal values in the age of Broligarchy.

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The Oxfam report argues that the “global oligarchy” of the super-rich, make international cooperation on solving issues like climate change and poverty all but impossible. “The immense concentration of wealth, driven significantly by increased monopolistic corporate power, has allowed large corporations and the ultrarich who exercise control over them to use their vast resources to shape global rules in their favor, often at the expense of everyone else,” the report says. 

Bill Gates is a case in point. Compared to the corrupt, nepotistic, Russian-style oligarchs that we tend to imagine when we think of “oligarchs,” Gates is a good kind of rich guy. The billionaire software engineer has given away more money than anyone else. He runs one of the world’s largest charities and, for years, he has passionately pursued the noble cause of fixing Africa’s severe food security crisis. 

The Bill and Melinda Gates Foundation established itself as the most influential player in fixing Africa’s food inequality. It is also the largest media funder of journalism on the African continent. But there are concerns that the foundation’s support for both journalism in Africa and for “development journalism” in general have essentially given Bill Gates full monopoly over the narratives on development in Africa. 

“One of the most difficult subjects for African journalists to write about is the work of Bill Gates and the Bill & Melinda Gates Foundation in Africa,” writes Simon Allison, International Editor and co-founder of The Continent, an independent digital publication. “This is not to suggest that the foundation is deliberately seeking to influence coverage but given the lack of alternative sources of funding, it doesn’t have to,” Allison says. 

The Continent’s recent investigation into the Bill & Melinda Gates Foundation’s work in Africa is a rare example of accountability journalism on the Foundation’s work in Africa. Gates–the biggest owner of farmland in the US–centers his work in Africa on the belief that modern industrial agricultural practices can solve world hunger. If you describe it like this, the problem seems easy to fix: “to feed the people, you have to fix the farms.” 

But as The Continent investigation points out, the farms in this case refer to 33-million smallholder farms in Africa that currently grow 70% of the continent’s food with some of the lowest yields in the world. It’s not a small problem to fix, and multiple studies on the region have suggested that the American model of industrialized farming and genetically modified seeds is not working in Africa. There is a real consequential tension between philanthropic approaches and the urgent need for systemic policy reforms to establish equitable food systems and fight poverty

Reactions to The Continent’s investigation highlight the modern day axis of power: oligarchy, disinformation and digital technology. According to Allison, initially the investigation into the Gates Foundation was “widely popular online” among The Continent’s usual audience of policymakers, diplomats and businesspeople. But then “it got picked up and amplified by conspiracy theorists. These are not the people we want to be amplifying our work, and it has the effect of muddying the waters again between what is credible journalism and what is absolute nonsense.” 

One solution is taxation. A report by the French economist Gabriel Zucman, commissioned by Brazil, suggests that billionaires currently pay the equivalent of 0.3% of their wealth in taxes. This is a “phenomenal lost opportunity,” Nabil Ahmed, the director of economic and racial justice at Oxfam America, said in an interview with the Voice of America. “We know governments, rich and poor, across the world need to claw back these revenues to be able to invest in their people, to be able to meet their rights,” he said. 

Brazil–which currently holds the presidency of the G20–is leading a campaign to impose a 2% minimum tax on the world’s richest billionaires. According to their calculation, it would be possible to raise up to 250 billion dollars from about 3,000 billionaires. Enabling resources for healthcare, education and the needed funding to tackle climate change. South Africa, Spain and France all back the plan. The United States doesn’t. In the most recent G20 meeting in July, US Treasury secretary Janet Yellen told reporters: “The tax policy is very difficult to coordinate globally and we don’t see a need or really think it’s desirable to try to negotiate a global agreement on that.”

Correction: The earlier version of this article identified Simon Allison as the Editor in Chief of The Continent. His correct title is International Editor.

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It was a late spring evening in Devon, England, in May 2021. Even before we saw the satellites, the party had become surreal: it was one of the first gatherings in the region since the pandemic had begun. We were camping in tipis in a field overlooking the Jurassic Coast, the ocean thundering below. Inside the biggest tent, people were singing, smoking, shouting. The evening was unraveling. Someone—masked, costumed—stuck his face inside the flap and yelled, with great theater: “Starlink is visible! Starlink is visible!”

Half of the party knew what he meant, the other half just stared. Led by those who knew, we headed out into the dark field and peered up at the sky. Directly above our heads, above our field, our very tent—a moving train of what looked like stars, perfectly spaced, perhaps fifty of them, speeding across the sky, on and on and on. Some people in the crowd began screaming: the ones who knew nothing of the satellite network Starlink, who thought the world was ending. Their reaction of pure, primeval terror was echoed all over the world every time Starlink sent up a new batch of satellites, and people who had never heard of Elon Musk’s project looked up. 

Since the beginning of the Space Race, in 1955, fewer than 250 objects a year were sent into orbit. Then, in May 2019, came the launch of Starlink, which has since launched more than 6,000 satellites. Musk has ambitions to put 42,000 satellites into space, blanketing the whole planet in a kind of mesh. As the pandemic raged across the world, the night sky quietly began changing forever—and a few months after my trip to Devon, Elon Musk became the richest man on Earth.

Musk has repeatedly said that revenue from Starlink, which is forecasted to be about $6.6 billion in 2024, is in service of his ultimate dream for Starlink’s parent company SpaceX: making humans multiplanetary. Colonizing Mars.

“There’s really two main reasons, I think, to make life multiplanetary and to establish a self-sustaining civilization on Mars,” Musk said in 2015. “One is the defensive reason, to ensure that the light of consciousness as we know it is not extinguished—will last much longer—and the second is that it would be an amazing adventure that we could all enjoy, vicariously if not personally.”

The red planet, the fire star, the bringer of war. For millennia, humans have stared up at the rust-colored planet in the sky and wondered.

“Mars has been fascinating to people for as long as there have been human beings,” the science fiction author Kim Stanley Robinson told me over a Zoom call. “It’s weird. It’s red. It has that backward glitch in its motion, it wanes and grows in its brightness. Everyone always knew it was weird, and it’s attractive to people.”

Robinson lives in Davis, California, well within what he calls the “Blast Zone” of Silicon Valley’s influence. He wrote Red Mars, a cult sci-fi classic about colonizing the planet, in 1992, when Musk was a college student. Three decades on, Mars is on our minds more than ever, and Robinson’s fiction is morphing into reality.

An avid sci-fi fan, Musk says he will send the first ship to colonize the red planet by the end of this decade. His dream to colonize space is shared by many of the most powerful players in tech.

“They want to ensure the light of consciousness persists by reducing the probability of human extinction,” said Émile P. Torres, a philosopher who used to be part of what they call the emergent “cult” of Silicon Valley, which envisions a utopian future where humans conquer the universe and plunder the cosmos. They call themselves transhumanists, long-termists, effective altruists, cosmists: people who believe we should strive for immortality, bend nature’s laws to our own will, and transcend terrestrial limitations. “This grand vision of reengineering humanity, spreading to space, is about subjugating nature and maximizing economic productivity.” 

Many billionaires in Silicon Valley envision a future where we can transcend the limits of our bodies and Earth itself, becoming superhuman by enhancing our consciousness through artificial general intelligence and spreading human life out into space. These ideas are the stuff of science fiction; indeed, they are inspired by it. The richest men in Silicon Valley share a deep love of sci-fi. And, armed with billions of dollars, they’re bent on making the stories of their childhood a reality. For Amazon's Jeff Bezos, who founded his own rocket company, the influences are Star Trek and the books of sci-fi authors Isaac Asimov and Robert A. Heinlein, who wrote futuristic fantasies depicting humans as pioneers capable of colonizing other planets. Google founders Larry Page and Sergey Brin, who have invested heavily in space ventures, alongside Meta founder Mark Zuckerberg, are all aficionados of the 1992 Neal Stephenson novel Snow Crash, which depicts virtual worlds and coined the term “metaverse.”

Musk wants to name the first colonizer ship to Mars “Heart of Gold,” after a ship in Douglas Adams’s The Hitchhiker’s Guide to the Galaxy. And his ambition to terraform the planet could be straight out of Robinson’s Red Mars. The novel is set in 2026—Musk once said he was “highly confident” that SpaceX would land humans on Mars in that year; he now hints closer to 2029. Musk has talked about the “lessons” he has drawn from reading science fiction: “you should try to take the set of actions that are likely to prolong civilization, minimize the probability of a dark age.” The Harvard historian Jill Lepore calls this “extra-terrestrial capitalism,” a colonialist vision of expanding indefinitely, and extracting far beyond this world and into the next.

At the outset of Red Mars, the Ares, the first-ever colonial spaceship, is transporting 100 scientists to the red planet. Their mission: to terraform Mars, turning it from a dusty, inhospitable wasteland into Earth 2.0, a habitable place for humans, with a thicker, Earth-like atmosphere, as well as oceans, breathable air, and low radiation. This plotline is exactly Musk’s plan.

“We can warm it up,” Musk has said of Mars’ freezing, thin atmosphere. His plan is simple—to “nuke Mars,” detonating explosions at the poles and making mini-suns that would heat up the entire planet. The idea is straight science fiction, but he is serious. It’s a more extreme version of the plot of Robinson’s book, which has giant mirrors deployed to reflect more sunlight on the red planet.

Robinson said he is “trying to keep a nuanced portrait of Musk,” who probably read Red Mars as a college student. He sees Musk as someone “hampered by his right wing activities” who owns a “very good rocket company” but whose ambition to colonize the cosmos is pure “fantasyland”.

“This is a fantasy game — ‘let’s ignore gravity, let’s ignore or gut microbiome, let’s ignore cosmic radiation’. Well, you can ignore them if you want—but what a stupid thing to do,” Robinson said. “We are geocentric creatures. We are expressions of the earth and even Mars will screw us up."

Robinson did not mince his words when speaking of his work inspiring the philosophies of the world’s most powerful tech billionaires. “Transhumanism, effective altruism, long-termism, etc.—these are bad science fiction stories,” Robinson said. “And as a science fiction writer, I am offended because science fiction should not be fantasy.

For Robinson, the ambitions and philosophy of Silicon Valley are a warped version of science fiction, far removed from the novels he writes. He describes his work as realistic, but also out of reach of the present: “stuff we might really do with technology, that’s within our grasp, but far enough out that it’s quite utopian.” And yet, the world’s richest man is out there, right now, pouring billions of dollars into making the plot of Red Mars a reality.

Robinson talks about his readers as “co-creators” of the story. “They bring their own experiences. They are co-creating it. So Musk’s Mars, he’s co-creating it. He might have got some ideas from reading the Mars Trilogy.” Ultimately, though, he said: “I am not responsible for the ideas that people come to.”

Science fiction and storytelling have always had the power to inspire real events. The 19th century astronomer Percival Lowell was famous for his belief that Mars was covered in Martian-built canals—an idea that, even though it was pure fancy, changed the course of 20th century history. “We wouldn’t have gotten to the moon yet if it wasn’t for Percival Lowell writing his fantasies about Mars in the 1890s,” Robinson said, explaining how the German Rocket Society, an amateur rocket association, was founded on Lowell’s beliefs. Among its members was a young aerospace engineer who would go on to develop the V-2 rocket for Nazi Germany during World War II—and later, the Saturn V rocket that propelled NASA’s Apollo missions to the Moon. Wernher von Braun, too, believed that humans should one day colonize Mars.

Robinson’s novels can sometimes feel more like blueprints for the future than fiction, instruction manuals for how to change a planet’s climate. His storylines are full of drudgery; grinding practicalities that pull you down from fantasy into logistics. Red Mars, for all its grand vistas of the dusty planet, wretched storms and soaring volcanoes, is countered by inordinate periods when Robinson’s characters are building toilets and sewage systems or else caught up in petty practical disagreements and relationship problems. Perhaps, ironically, it’s the bureaucracy of his books that makes their ideas feel so within reach.

I first heard of Robinson at a dinner party in East London. The meal had been cleared away, and we were drinking wine. My host, a young climate activist, had just returned from Alaska, where he had been tagging along on a yacht trip with a select group of superrich investors all gathered to watch glaciers crumble into the sea and be told about dwindling blue whale numbers. Everyone on the boat was talking about the same book: Robinson’s latest novel, The Ministry for the Future. It had blown their minds.

Set in a near-future Earth where humanity is finally forced to deal with its broken climate or go extinct, it almost reads like a manual for how we might fix our burning world. Like Red Mars, the novel describes an extreme approach for fixing the climate: geoengineering. That’s the concept that we can redesign the very atmosphere of the Earth, tweak the elements to our own ends by shooting massive quantities of particles into the stratosphere, and thereby dim the sun. It is thanks to Robinson’s novel that most people have even heard of the practice. As environmentalist Bill McKibben has written, “a novel feature of the geoengineering debate is that many people first heard about it in a novel.”

“It’s so successful, I think it hardly counts as a cult novel now,” said David Keith, a professor of geophysical sciences at the University of Chicago who is one of the most prominent scientists working in the field of geoengineering. Keith said that Robinson had consulted with him ahead of writing The Ministry for the Future. “I don’t want to claim any inspiration, but we met,” he said with a smile, adding that he thought of Robinson as “an environmental guru.”

Geoengineering sci-fi like Robinson’s has ignited the imagination of Silicon Valley elites hoping to fix the planet’s problems. Luke Iseman and Andrew Song, a pair of San Francisco entrepreneurs who founded a startup called Make Sunsets, are already deploying solar geoengineering on a micro-scale, releasing balloons filled with sulfur dioxide over the deserts of Nevada. They call their project “sunscreen for the earth”—a term they got from ChatGPT, the AI chatbot. Iseman told me he founded the company after reading science fiction about geoengineering, both Robinson’s book and Termination Shock, the latest novel by Neal Stephenson. “The ideas are amazing,” said Iseman. “I think we’ll see Ministry for the Future-style actions sooner rather than later, for better and worse.” Iseman described how he read both books and immediately began envisioning how he could make them a reality.  

“The more I learned, the more excited I became,” he said, adding that he had grand ambitions for Make Sunsets to keep expanding, unfettered, and try to alter the Earth’s atmosphere. “We’ve got a couple of years of runway to work on this, and a laundry list of fun sci-fi-esque technologies that will let us do this better over time,” he said. Mexico banned solar geoengineering after Make Sunsets carried out a rogue balloon release in Baja California without government permission. By contrast, he said, Nevada is a “good launch site for experimental stuff.”

Make Sunsets and other geoengineering projects have faced criticism for a cowboy-style approach to the future of the planet. Indigenous groups have condemned them as taking a colonial attitude toward the skies. “Solar geoengineering is kind of the ultimate colonization,” said Asa Larsson-Blind, a Saami activist from northern Sweden who has been campaigning for a global moratorium on solar geoengineering. “Not only of nature and the Earth, but also the atmosphere. Treating the Earth as machinery and saying that we’re not just entitled to control the Earth itself, we will control the whole atmosphere, is to take it a step further.”

Robinson said the message of his books is being missed. “You don’t just burst in some Promethean way to the one techno-fix. The technology that matters is law, and justice, and therefore—politics. And this is what the techno crowd doesn’t want to admit.”

Musk, a private citizen, has already decided for us what the rule of law will be on Mars. “Most likely the form of government on Mars would be a direct democracy, not representative,” he said during his 2022 Time Person of the Year interview. “We shouldn’t be passing laws that are longer than The Lord of the Rings.”

The tech elite’s desire to spread out into space isn’t a new whim. “Expansion is everything,” said the imperialist diamond mining magnate Cecil Rhodes. He would stare up at the sky and regret that humanity couldn’t yet expand outwards into space, those “vast worlds which we could never reach.” Rhodes' words were recorded in his last will and testament, published in 1902. “I would annex the planets if I could.”

In Robinson’s Red Mars, a great fight is underway—a fight of ideologies between the Reds, who believe colonizing Mars will destroy a place that has remained unchanged for billions of years, and the Greens, who want to create an Earth-like biosphere. The Reds make an argument akin to those of Indigenous groups on Earth. Why, they say, can’t we let Mars be Mars? A place that has been unravaged by human exploitation. A place where the rocks, the ice, the sky, have their own value.

“Let the planet be, leave it to be wilderness,” one character, Anne, pleads to her fellow scientists. She’s heartbroken by the thought of extracting, altering, colonizing the planet, and wrecking its ancient landforms and its planetary history. “You want to do that because you think you can. You want to try it out and see—as if this were some playground sandbox for you to build castles in.”

I asked Robinson if he thought the same way Anne did—if he was, in fact, Anne. “Oh, no,” he said with a laugh. “My characters are much more interesting than I am.”

That night in Devon, when we saw the Starlink satellites going up, already feels like a relic from a bygone era, from a time when the night sky was uncluttered by human ambition. Now, whenever I look up, wherever I am in the world, I can spot one of Musk’s satellites within a matter of seconds.

Before long, satellites in the sky will outnumber the stars we can see. The universe will be blotted out by fast-moving pieces of metal reflecting back at us. And perhaps the Mars of our solar system will one day resemble the Mars of Kim Stanley Robinson’s science fiction, the Mars of the fever dreams of the richest people in the world. A Mars that has been transformed by humans to look more like our own Earth—no longer a red light in the sky, but one that looks like what we already know here on Earth. At that point, we’ll have nothing in the universe to look at but ourselves.

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