Steve Hiatt’s book, A Game as Old as Empire: The secret world of economic hit men and the web of global corruption opens with an introduction by John Perkins, who coined the term economic hit man when he told his story in 2004. In this book, Steve Hiatt takes us around the globe with the confessions of former economic hit men, who, like Perkins, helped to build a global empire that benefits the wealthy and powerful at the expense of ordinary citizens.
S.C. Gwynne, who managed international loan portfolios of the Middle East, North Africa and Asia, explains how he sold money. The money of Americans, who had deposited their money in medium sized Midwestern bank in Ohio. A twenty-five year old English major with one and half years banking experience finds himself in 1978, in the Philippines negotiating a ten million dollar loan with a construction company that is in bed with President Fernando Marcos. Despite the fact that company is heavily leveraged, with it debt far exceeding the companies assets, he was able to sell the loan to the Midwestern bank by securing a guarantee from a Philippine bank that had already guaranteed more loans than it could pay off. Two half years latter, a year after Gwynne had moved on to a new job with a larger bank, the loan went bad. The bank would never see most of the money it had loaned repaid. Gwynne said, “As a loan officer you are principally in the business of making loans. It is not your job to worry about large and unwieldy abstractions, such as whether what you are doing is threatening the stability of the world economy.”
In the mid 1980’s John Christensen returned to his homeland Jersey, the offshore tax haven in the English Channel. There he worked as a trust and company administrator and as an economic advisor to the islands government. Christensen shows us inside the secret world of offshore banking. He explains how capital market and trade liberalization programs promoted by the International Monetary Fund and the World Bank made it easier for wealthy people and corporations to evade taxes. Tax havens enabled them to transfer money to secret and offshore trust accounts. To compensate for this loss of tax revenues, the world’s poorest countries take on additional debt. Servicing this debt makes if difficult to maintain public service and infrastructure investment programs; thereby increasing poverty. He explains how Nigeria’s dictator Sani Abacha looted Nigeria’s assets with a standing order to transfer 15 million everyday to his Swiss bank account. The banks charge high fees for managing the accounts of politically exposed persons. After Abacha’s downfall international pressure forced the repatriation of the looted money. The bank of course did not return any of the fees for managing the looted funds, nor were any of the white collar banking officials indicted for aiding and abetting in the looting. Without the complicity of western banks, the third world leaders could not loot their countries assets. He watched as his homeland of jersey changed under the influence of offshore banking, loosing much of his culture. Eventually he left the island saying he did not want his children growing up thinking, “That we earned our money by helping to create poverty and perpetuate injustice elsewhere.”
Journalist Lucy Komisar, takes us through the money laundering operation of the Bank of Credit and Commerce International (BCCI). The CIA used BCCI to funnel money to the Osama bin Laden’s mujahadeen to fight the Soviets in Afghanistan. Kosimer states that, “The BCCI operation gave Osama bin Laden an education in offshore black finance that he would put to use when he organized the jihad against America.” The Bush family Saudi elites appear throughout her explanation of BCCI operations. She explains the Justice Departments efforts to thwart Senator Kerry’s investigation into BCCI. The investigation eventually led to the closing of BCCI operation and fines leveled against the bank. However, this was just a small amount of money that had passed through BCCI. Former major BCCI shareholder Khalid bin Mahfouz, and former financier of George W. Bush’s oil company Arbusto Energy Inc., became the financier of Osama bin Laden through his charity Muwafaq, an al-Queda front.
Kathleen Kern, of Christian Peacemakers Teams, reveals how western multinational corporations seeking cheap supplies of coltan and other minerals for the making of cell phones have funded and fueled the civil war in the Democratic Republic of Congo civil war. While Andrew Rowell and James Marriott illustrate how the oil and gas of Nigeria, core assets for Shell, Chevron and Exxon Mobile, make Nigeria and Shell’s fate are intertwined. They assert that, “To operate effectively in a county as corrupt as Nigeria, Shell, its subsidiaries, and its contractors have to maintain extremely close contacts with several layers of government and different branches of Nigeria’s military….Sometimes this closeness manifests itself as a revolving door between corporation and government….Nigerians often see no difference between the government and Shell or between Shell and the military.” The revolving door between company and state has allowed a tiny elite to benefit from oil exploration, leaving most Nigerians without anything.
Gregg Muttitt, with the NGO PLATFORM, tells the story of economic hit man Dan Witt, The International Tax and Investment Center (ITIC), and their attempt to hijack the oil reserves of Iraq. Within days of the fall of Saddam, the Iraqi oil workers formed a union to protect the oil industry from outsiders. They quickly ran afoul of the occupation forces as Halliburton attempted to assert control of the oil industry. The ITIC has recommended that Iraq’s oil be developed by foreign companies using production-sharing agreements (PSAs). While PSAs would be good for the foreign corporations, it would be disastrous for the Iraq economy. According to Muttitt this, “would rob Iraq of between $74 billion and 194 billion, compared to keeping the oil in the public sector.” This is story that is still playing out. Whether the Iraqis or the corporations win the battle has yet to be seen.
Steve Berkman, formerly with the World Bank, shows us examples of how the World Bank investment of more than 500 billion loaned to fund economic development and alleviate poverty, has lost more than 100 billion to projects that did more to advance the careers of the banks management and the government officials than alleviate poverty. Activist Ellen Augustine, explains how the World Bank game was played out in the Philippines. During Ferdinand Marcos’s reign, the US used World Bank loans to undermine soviet influence in the Philippines. While the World Bank was aware that most of funds from the loans were being transferred into the bank accounts of Marcos and his generals, the Bank considered these necessary bribes. As a condition for receiving these loans, the Philippines were required to embrace an economic policy of liberalization. Augutine quotes economist Doug Henwood’s explanation of liberalization. “Liberalization means removing any barriers to the efficient functioning of the market. That would mean eliminating trade barriers, eliminating barriers to foreign investment, reducing the size of government domestically, and reducing the regulation of the economy.” This had disastrous effect on the local economy unable to compete with foreign products and at the same time removing what little safety net, domestic programs could provide.
Bruce Rich, senior attorney for Environmental Defense in Washington D.C., explains how Export Credit Agencies are used throughout the world to fund environmentally and socially disruptive programs that the World Bank will not fund. According to Rich, the mandate of ECAs is solely to subsidize exports to promote economic welfare of their home country. This is why ECAs are described as “corporate welfare.” Rich states that. “What has really happened in the past two decades of ECA ascendancy has not been the triumph of open markets but rather a ‘new mercantilism’---the revival of alliances between the more powerful and richer governments and large corporations to secure new markets in the face of growing international competition, no matter what the consequences.”
Investigative journalist, James S. Henry, takes us through the mirage of debt relief. He explains that first world exporters, contractors, and engineering firms, who received significant business from projects funded by earlier loans, are eager for ECAs to forgive these loans at tax payer expense, to clear the way for new loans resulting in new business for themselves. Henry estimates that as of 2006, “developing countries foreign outstanding debt stood at $3.24 trillion. This debt now generates about $50 billion of debt service a year for foreign creditors---mainly First World banks, bondholders, and multilateral institutions. That 550 billion includes 41 billion a year paid by the world’s sixty poorest countries, whose per capita incomes are below $825 a year. Even after twenty-five years of debt relief, the annual debt service paid by these countries still almost entirely negates the $40 billion to $45 billion of annual foreign aid they receive.”
The book ends on a positive note with Antonia Juhasz, visiting scholar at the Washington D.C. Institute for Policy Studies, taking us through the efforts of the social justice movement to reform and find alternatives to the current programs. Hiatt’s book provides an excellent insight to the global institutions that are used to concentrate wealth at the expense of some of the poorest people on the planet.