Thursday, September 14, 2017

On Saturday, September 23rd, Harvard Law School, in collaboration with the University of Chicago’s Stigler Center, will host a one-day conference entitled “Populist Plutocrats: Lessons from Around the World.” The conference will focus on an important and dangerous phenomenon: political leaders who successfully exploit anti-elite sentiment in order to achieve power, but who, once in office, seem primarily interested in enriching themselves, along with a relatively small circle of family members and cronies. Many Americans might find that this description accurately captures President Trump, who campaigned as a populist, but who is governing as more as a “crony capitalist” plutocrat—or, some would allege, as a quasi-kleptocrat.
Americans seeking to understand the challenges our country is now facing might do well to look abroad. After all, while Trump’s leveraging of the power of the presidency for personal enrichment—enabled by anti-elite sentiment among his supporters—may well be unprecedented in modern U.S. history, it is not, alas, unprecedented in the modern world. Indeed, while every country’s experience is different, and we must always be careful not to overstate the parallels, many other democracies have had leaders who could be described as populist plutocrats, or even populist kleptocrats, in something like the Trump mold. While such resemblances have occasionally been noted (see, for example, hereherehere, and here), but there has not yet been much of a sustained attempt to understand populist plutocracy/kleptocracy and closely related phenomena in comparative perspective. The September 23 conference will seek to initiate more sustained exploration of these issues, and will also provide an opportunity for experts from other parts of the world–who have more experience with political leaders who combine populist rhetoric with self-interested profiteering and cronyism–to offer a distinct perspective on the challenges the United States is currently facing.
The conference will feature the following panels:
The conference is free and open to the public. More information, as well as a registration page, is available here. For more background on the motivation of the conference, Professor Zingales and I also have a short piece on the Stigler Center blog.) I hope to see many of you in a couple weeks here in Cambridge. For those who are interested but cannot make it, the conference will be live-streamed and video-recorded; more information on the live-stream will be available soon.

Sunday, August 6, 2017

After Sarawak Report's defamation campaign against Corruption Watchers and Rewcastle's total disregard to the allegations made in our previous article, we hereby present you the evidence of the dirty Pestalozzi-CRB connection, which worth to Rewcastle no less than Half a Million Euros.

As most of you must remember, on our recent entry of Corruption Watchers, we have revealed the dubious connection between British blogger and nature advocate, Clare Rewcastle Brown, the founder and Editor-in-Chief of Sarawak Report, and the anonymous Swiss billionaire Martin O. Pestalozzi. We showed you how Pestalozzi, who is deeply invested in the wood exporting business uses Brown, her public persona and mass media access in his plan to gain field dominance over the global teak industry. The main reason behind the decision we took to go heads deep with this story was the fact that we could not just stand on the sidelines and stomach the thought that someone who is wearing the shield of a corruption fighting knight, swings his "justice sword" for a whole different and rather shady agenda.

Soon after the release of the article, Corruption Watchers became the target of a non-stop, massive slur campaign. This crusade was led by Brown herself and backed up by her angry mob of a devoted yet blind supporter community. Their main dispute over our arguments was that the evidence and sources we have mentioned to have before do not exist. That was part of the reasons we decided to release a follow-up piece, this time with cold hard proofs to back us up.
On July 10th, Brown has uploaded her response to the facts we published to her blog, Sarawak Report. In her post, instead of responding to the allegations against her and her platform, she chose instead to attack our intentions and tried to smear Corruption Watchers' reputation as an impartial source of information. We couldn't even begin to explain how out of touch with reality and bizarre were her accusations against us, claiming we are a "pen to hire" working for Najib Razak, the Malaysian Prime-Minister.

Clare Rewcastle Brown has knowingly decided to avoid any real reference to the facts we initially published- namely Pestalozzi being a donor of hers as well as his financial interests to invest in her blog. Instead, she essentially "walked between the raindrops" in her response, evading any factual argument while trying to deceptively move the focus to our own alleged "hidden" motives.
We can reassure you, dear readers, that we have released our last article based on a long process of data gathering from various reliable sources, and that it was done for the sole purpose of revealing the misconduct of someone we once considered to share a common goal with. We do not hold anything against Ms. Brown and have no connection to her adversaries; on the contrary, a rapid glance over our older posts will demonstrate to any reasonable individual we take pride in our objectivity and our relentless battle with corruption. 
Here before you is a fragment of the evidence and documents that led us to publish our last entry, for your judgment and conclusions. We truly hope Ms. Brown would come to her senses and release a proper and sincere announcement regarding her relations with Pestalozzi, and her problematic funding sources.
Clarification: Some of the materials presented before you were edited out or partially redacted, that is in order to keep the privacy of individuals who were not directly involved with Pestalozzi's scam, as well as the discretion of our sources. Although we currently possess more of these incriminating files, we believe that the documents disclosed here are plenty enough to prove our arguments.

The two-facedness of Clare Rewcastle Brown –The evidence come to light

Mail correspondence showing Bruno Manser Fonds (BMF) and Clare Rewcastle Brown as main beneficiaries of the multi-million fund, the Pestalozzi Foundation. Brown's name is mentioned alongside Pestalozzi's most notable charity organizations.

We could not help ourselves but wonder, how exactly a British blogger that devoted her life to the sole purpose of uncovering corruption in Malaysia, fits in with the rest of these beneficiaries?

Pestalozzi Foundation Limited, the vehicle Martin Pestalozzi uses to transfer the money into Brown's bank account, is registered (conveniently enough) in a very "offshore-like" manner on the British Virgin Islands, the well-known tax heaven. We must say it was quite a surprise to discover Clare Rewcastle Brown is being paid via a BVI offshore. With the echoes of Panama Papers still resonate all over the globe, a corruption fighter with pure intentions of bringing justice across such as her, should definitely know better.

As you can see in the following scheme, for paying his beneficiaries Pestalozzi uses the combination of tax heaven registered entities and tax exemptions granted for his so called "donations":

Our source in the BVI has provided us with another example of a trust owned by Pestalozzi, registered on BVI lands - Round Enterprises Ltd.


According to our source, over the course of 3 years, more than half a million euros found their way into Brown's Lost World Productions bank account. The money was channeled directly from Pestalozzi's foundation fund.

It seems that sometime during the year of 2015, both sides realized the dangers of this relationship becoming public, and decided to move the transactions into a more secured channel. Our sources have provided us with findings regarding the transactions beyond 2015, we are currently cross-examining it, before releasing it in a detailed comprehensive report.
If you made it this far down you can tell it yourself by now, it does not take a genius or an imaginative mind full of conspiracies to see why Ms. Brown will keep avoiding Corruption Watchers' allegations. As her problematic financial connection to Pestalozzi runs deeper than what we thought at first. The symbiotic nature of Rewacstle-Pestalozzi's harmonization puts one big question mark above all of Clare's agenda and purpose.    
It is now for you alone to judge, should you blindly trust future publications of Sarawak Report or will you try to look harder and see the hidden "Pestalozzian" agenda being promoted between the lines.  

We are still waiting for a decent response out of Ms. Brown (or Pestalozzi), this time we hope it will come without trying to brand Corruption Watchers as cheap propaganda while falsely diverting the focus towards us.

Wednesday, July 19, 2017

Wednesday, July 5, 2017

Exclusive: British blogger and nature advocate, Clare Rewcastle Brown who dedicated her life work to battle corruption and saving the forests of Malaysia, is being sponsored by a wood exporting Swiss tycoon.  

According to new evidence, recently presented to Corruption Watchers by our sources, for the last few years, hundreds of thousands of euros were secretly channeled into Brown's business bank account, with the mysterious donor being Swiss billionaire Martin O. Pestalozzi.

What does this magnate from Switzerland have to do with a London based free-lance journalist who protects nature?   

Clare Rewcastle Brown is probably known best for her belligerent coverage of the deforestation phenomenon in Malaysia over the pages of her blog, Sarawak Report. Throughout the years she has revealed countless occurrences of corruption and misconduct, fighting for the environment and for justice. Another "quality" Brown is well-known for is her a total and utter vagueness surrounding her funding sources, the shocking revelations now clarify the reason behind this ambiguity.  
The perturbing new evidence reveals that Pestalozzi himself is the co-founder and owner of an international company exporting the tropical precious wood called Teak. Pestalozzi's company not so hidden goal is obtaining monopoly over the global Teak market or in their words: "become of the preferred suppliers of manufacturers around the world" (According to our source, the majority of the blog's revenue is constituted of Pestalozzi's hefty grants).  
But what role exactly does Brown play in Pestalozzi's "wood cartel"?

Ms. Brown and her noble (?) cause

Clare Rewcastle Brown, a well-known British investigative journalist and blogger was born in 1960, colonial Sarawak (nowadays federal state of Malaysia), to this day Brown holds a special place in her heart for the Southeast Asian country, as it clearly shows in her agenda and  her day to day "journalistic" work.

In 2010, Clare has founded the Sarawak Report, a highly acclaimed anti-corruption blog, that alongside its sister organization, Radio Free Sarawak, serves as a platform meant to bring corruption in Malaysia to light and to give a voice for those being denied the access to the media in their own country.

Since then, Sarawak Report and Brown as its Editor-In-Chief have been at the forefront of exposing the logging and timber related corruption in Malaysia . Brown used to write exclusively about the environment in Sarawak and what she sees as political connections and corruption related to the destruction of the land. For the last couple of years Brown's most covered topic on her blog was the 1Malaysia Development Berhad Scandal (1MDB), as alleged, the affair involving Malaysia's Prime Minister, Najib Tun Razak, who supposedly channeled over RM2.67 billion (approx. USD 700 million) from a government-run strategic development company fund to his personal bank accounts. Brown's fierce and uncompromising investigative efforts  won her in July 2015 the dubious honor of being the first news site to be officially blocked in Malaysia by the governmental censors.  

But where does the money come from?

As we Corruption Watchers know best, fighting corruption sometimes can be a "luxury" of sorts. Though spiritually and communally rewarding, extremely rare are the instances in which one is actually able make a living out of it. As the best majority of justice fighters do what they do voluntarily and willingly out of ideology, most of them (within the working age) also have full time jobs.

One of Sarawak Report's most noted qualities as a blog is its frequency of publication (4-7 pieces a week to be precise), this high rate combined with the fact Clare often partakes in non-profitable projects (the amazing "The Borneo Case" documentary for example) begs the inevitable question: how is Ms. Brown financially able to continue her devoted work with no other income? You may assume that the "make a donate" section in her site could solve this riddle but as you will find out shortly, there is a completely different opera here.      
Brown's source of revenue remained a mystery throughout the years, whenever she was asked about it by the media the answers provided were always short, vague and evasive.
Clear example of Brown's ambiguous and furtive behavior surrounding her funding can be showed during a trip abroad (September 2016) when Brown was asked about her funding by a Malaysian reporter she replied: "I have done some travels, and that is largely being funded by my radio project for which I did have a grant from a European based donor, who was donating on rainforest and human rights issues".

The Journalist, the Swiss Billionaire and the NGO

As stated by our source, the words Brown chose to describe her "one-time" donor resonate well with a certain Swiss NGO, one she have been publicly cooperating with for years - Bruno Manser Fonds. The aim of this Basel based organization, named after its long lost founder and the famous environmental activist Bruno Manser, is to "stand for fairness in the tropical rainforests" and "to respect all human rights". With BMF's projects and campaigns focusing mainly in Switzerland and Malaysia (Sarawak) it was only natural for a strong bond to be formed between Brown and Lukas Straumann, BMF's Executive Director. Over the years those two had some very successful collaborations, "The Borneo Case" movie and Strauman's book from 2014, "Money Logging: On the Trail of the Asian Timber Mafia" are just a drop in the sea of this fruitful duo.
But how exactly this heaven-made match occurred?, the answer seems to reside with the recent rather concerning materials provided to Corruption Watchers by our sources.
Other than sharing the same spirit and ideology, Brown and BMF happen to share another major element – the same generous and secretive sponsor, the Swiss billionaire, Martin Otto Pestalozzi.

Born in 1931 ,Zurich and with estimated net worth of  1.25 Billion Swiss Francs (USD 1.28 Billion), Mr. Pestalozzi has founded a financial entity named the "Pestalozzi Heritage Foundation" (PHF), which states the protection of rainforests and fighting corruption as its main goals.
Surprisingly enough, both Brown and the Bruno Manser Fonds organization are part of PHF's very exclusive (and rather short) beneficiary list. The one thing that drew our attention most when we began going over the documents was the fact that over the course of only 3 years (between 2012 and 2015) Pestalozzi via his foundation has donated Brown with over 500,000 euros (!!!). The transfers were made through Brown's company – "Lost World productions limited". We could not help ourselves from wondering why are the sums so ridiculously high and what does Pestalozzi get out of it except for a clear "ecological conscience"? – The answers are surprising.

Pestalozzi's interest/ Brown's Hypocrisy

You may think that long retired Pestalozzi's only sin is being a philanthropic old fella who shares his hard-earned wealth with those who try to save nature while fighting corruption, but then again, evidence recently presented to Corruption Watchers indicate otherwise.
The documents in our possession show that except from financially aiding Brown and BMF, Pestalozzi as an entrepreneur has another grand environmental project – the Novelteak company, started in 1989 with the goal of becoming an alternative Teak wood exporter and counterweight deforestation, this ambitious corporation desires to replace the existing traditional Teak exporters and to become the largest and most preferred traders of manufactures all around the world.

Let's take a step back and explain the shady connection between Novelteak Malaysia and Ms. Brown life work; Teak is a tropical tree indigenous to South East Asia, as of today most Teak comes from managed plantations in India, Indonesia and Malaysia. Malaysian Teak tree is considered of the highest quality in the world due to its texture, color and hardness. Another interesting and relevant fact about the Malaysian teak – most of its plantations are being owned by the government and semi-governmental agencies.

After putting the pieces of the puzzle together you can clearly see now why Brown investigative work is very beneficial for Martin Pestalozzi.  By non-stop targeting of Malaysian officials and the daily criticizing of the deforestation in the country Brown sabotages Malaysia's legitimacy as a traditional wood exporter, by that actually serving Novelteak main objective – eliminating competition in the Teak exporting field.

By doing she does that Brown has blatantly desecrated one of the core principles of journalism – Independence.
Journalists must be independent voices; we should not act, formally or informally, on behalf of special interests whether political, corporate or cultural. We should declare our editor – or the audience- any of our political affiliations, financial arrangements or other personal information that might constitute a conflict of interest.

Another major principle Ms. Brown violates regularly by promoting Pestalozzi's agenda is Impartiality, as most stories have at least two sides there is no obligation to present every side in every piece, stories should be balanced and add context. Objectivity is not always possible, and may not always be desirable, but impartial reporting is crucial to building trust serving the facts.    

Clare Rewcasle Brown is obviously no stranger to hypocrisy and two-facedness and as a justice advocate you would expect her to keep a safe distance from everything that even hints towards dishonesty, The towers of secrecy Brown used to cover  her funding and donors begs the following questions, what other hidden skeletons does she have in her closet? Are there other interests being served by her seemingly legitimate work?
We truly hope that Ms. Brown is fighting her battles unknowingly of Pestalozzi business, but as the evidence piled up on our desk we find that possibility to be quite far-fetched. We strongly demand that Brown will go out publicly and declare that she would not accept further donations/payments from Martin O. Pestalozzi. That is the least we expect from a veteran journalist such as her.
We have tried to contact Ms. Brown several times for her response prior to publishing the piece, unfortunately without success.  

Thursday, June 29, 2017

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Bipartisan Legislation Would Help Stamp out Anonymous Corporate Vehicles Used by a Rogue’s Gallery of Bad Actors Ranging from Human Traffickers to International Terror Networks
Yesterday, the US Senate and House of Representatives introduced bipartisan bills that would help stop the corrupt and other criminals from hiding behind anonymously-owned companies created in the US. Most major financial crimes and cases of grand corruption are facilitated through anonymous companies, with the US being one of the easiest places in the world to set one up.
“From multi-million dollar healthcare fraud to terrorist financing, anonymously-owned companies act as getaway cars for all sorts of criminals,” said Stefanie Ostfeld, Deputy Head of Global Witness’ US Office. “Swift passage of this legislation will make it harder to move, enjoy and hide dirty money and demonstrate that Congress is serious about making sure the US is not exploited by criminals and the corrupt who are a risk to national security.”
The True Incorporation Transparency for Law Enforcement (TITLE) Act, introduced by Senators Charles Grassley (R-IA), Dianne Feinstein (D-CA) and Sheldon Whitehouse (D-RI), and the Corporate Transparency Act, introduced by Representatives Peter King (R-NY-2), Carolyn Maloney (D-NY-12), Ed Royce (R-CA-39) and Maxine Waters (D-CA-43), would require companies formed in the US to disclose their ultimate owners when they are set up, and keep this information up to date. This would make it much harder for terrorists, money launderers, and other criminals to hide their identities behind webs of shadowy companies to stash their ill-gotten gains in banks.
The investigation into Russia’s interference in the 2016 US election and potential collusion between Russia and the Trump campaign has brought into the spotlight the role of anonymously-owned companies as vehicles for potentially suspicious financial activity. It has been reported that Paul Manafort, former manager of the Trump campaign, allegedly opened up a shell company which later received $13 million in loans from two businesses with links to Trump on the same day he resigned from his position. He has continually denied any wrongdoing.
Continuing this trend, USA Today reported that, since winning the Republican nomination, the majority of Donald Trump’s real estate sales have been to anonymous companies, with purchases by secretive buyers up by 66%, opening the door to the risk of corruption and undue influence. 
“As the majority of Trump real estate sales are to purchasers using anonymous companies, the public does not know who the Trump Organization is doing business with,” said Ostfeld. “As long as individuals, companies and foreign governments are able to hide behind secret companies, we cannot know which vested interests are trying to influence our political processes.”
It has been shown how anonymously-owned American companies allow a wide range of criminals to cheat justice and rip off ordinary people – from forcing vulnerable families into foreclosure to luring individuals from overseas into a human trafficking scheme that stretched across the US.
“Time and again we see how secret companies registered in the US or in offshore jurisdictions are used by the world’s criminal and corrupt to move suspect money through the international financial system,” said Ostfeld. “This makes it easy for unscrupulous people to steal state funds, launder money and cover up payments they don’t want the public to know about. It undermines democracy and poses a threat to US national interests. With this legislation, we can help put a stop to these practices.” 

Source: Press release, Global Witness Blog 

Monday, June 19, 2017

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The South African government recently announced its national anti-corruption strategy (NACS), that is aimed at tackling corruption in the public and private sectors, civil society, and citizen sector, as well as looking forward to other forms of corruption that could arise in the future – for example, cybercrime as a result of the evolution of technology.
The scope of the initiative is ambitious. But given the erratic track record of corruption busting in all sectors in the country, the question that is quite likely occupying South Africans’ minds is: can it work?
In a recent publication, the Organisation for Economic Co-operation and Development (OECD) discusses the effects of corruption around the world, and strategies for fighting it. The NACS is to a large degree aligned with the broader suggestions of the OECD, but drawing up strategies has never been the problem in South Africa – implementation has been the downfall of many a grand, well-intentioned plan. The NACS diagnostic report notes that a number of challenges for reducing corruption relate to “uneven or weak implementation of relevant legislation or policies, rather than the absence of appropriate laws. South Africa has a generally robust legislative framework for fighting corruption.”
The OECD says that despite great strides made globally in recent years, corruption remains a severe impediment to sustainable economic, political and social progress for countries at all levels of development. Recent scandals that have implicated national leaders and major corporations all over the world, as well as the ongoing investigations into various sporting disciplines, and the growing threat of terrorism and its links with corruption remind us that we have to do a great deal more.
Not only that, but corruption plays a role in the current refugee crisis by making people-smuggling easier for organised criminals and it undermines efforts to mitigate climate change by facilitating illegal logging. It has also contributed to the sharp rise in income and wealth inequality we have observed over the last decades.


Corruption decreases the profitability of the private sector by raising the cost of doing business, through bribes and drawn-out negotiations – the OECD Foreign Bribery Report, released in 2014, shows that, on average, bribes equal 10.9% of the value of a transaction and 34.5% of profits. Innovation, competitiveness and the emergence of new companies also suffers because it’s easier to just pay a bribe than to put in the hard work of winning business honestly.
In the public sector, corruption causes important decisions to be made on the basis of bias. It reduces the resources available to support economic productivity, and it negatively affects the skills and professionalism of public sector employees, especially where nepotism and favouritism have trumped merit and capability. It erodes trust in government and public institutions, making reform a more difficult task.
Customs-related corruption and tax evasion deprive the public sector of revenues that could otherwise be allocated to development, and it perpetuates inequality where programmes and projects are under-resourced or poorly managed.
Corruption undermines peace and democracy. When it is present in political processes such as elections or the financing of parties, corruption undermines the rule of the people and thus the very foundation of democracy, while a lack of public service delivery damages government credibility and legitimacy.
Corruption also increases states’ exposure to global threats arising from smuggling and illicit trade by organised crime and terrorist groups, and it contributes to the financing of terrorism.
Furthermore, illicit financial flows are increasingly associated with the illegal arms trade and drug trafficking, and as stated, these two crime sectors also play a significant role in the current refugee crisis by facilitating people smuggling.


The OECD recommends setting up strong governance frameworks, with input from all sectors of society, to prevent corruption. Building a culture of integrity will only succeed if not just the public sector is involved, but also the private sector and citizens as they are also responsible for the proliferation of corruption.
Such a framework will be bolstered by the inclusion of
  • A public integrity strategy;
  • Tackling the highest risk, which is public procurement;
  • Targeting high-cost, high-prestige and high-impact projects such as large-scale public infrastructure;
  • Curbing the risk of policy capture;
  • Making sure all companies, including SMEs, multinationals and state-owned enterprises, play by the rules.
It is the interplay of effective measures that are implemented, interest and commitment from all strata of government, business and the public, and sanctions for perpetrators, that will sustainably fight and reduce corruption in the long term.
But enforcement will also benefit from effective international co-operation, because strong integrity frameworks will only be of limited use, if they are not complemented by parallel efforts to detect and sanction corrupt behaviour. Crime and corruption often involves complex networks across borders and jurisdictions, and any effort to tackle it must involve the same scale and scope.
Countries will need to strengthen their enforcement of international standards such as the OECD Anti-Bribery Convention by giving higher priority to bribery investigations and prosecutions, providing enforcement institutions with adequate resources, and providing effective institutional frameworks that encourage reporting and protect whistleblowers. Additionally, the media has a role to play as a watchdog of both the public and private sector.
The fight against corruption will only succeed if both domestic and international frameworks are effectively put in place and if corrupt individuals and companies as well as those who help them are aggressively pursued across the globe.


Three pillars should be considered if corruption is to be tackled systemically, says the OECD report.
  • First, the highest political and management level needs to build a coherent and comprehensive integrity system by establishing clear institutional responsibilities and a risk-based integrity strategy that includes clear integrity values and standards.
  • Second, policy makers need to foster a culture of integrity through a whole-of-society approach and by investing in integrity leadership, a merit-based public sector, and an open organisational culture responsive to integrity concerns.
  • Third, they need to enable effective accountability through internal control and regulatory oversight to ensure compliance by the public sector, the private sector and citizens with standards of public integrity, and through transparency and active participation by civil society in the public decision-making process.
Comparing this strategy to the South African NACS, we see that the latter proposes nine pillars, but that on the whole it is aligned with the OECD’s suggestions.
  • Support citizen empowerment in the fight against corruption, including increased support for whistle-blowers.
  • Develop sustainable partnerships with stakeholders to reduce corruption and improve integrity management.
  • Improve transparency by government, business and civil society sectors.
  • Improve the integrity of the public procurement system to ensure fair, effective and efficient use of public resources.
  • Support the professionalisation of employees.
  • Improve adherence to integrity management and anti-corruption mechanisms and improve consequence management for non-compliance of these across government, business and civil society sectors.
  • Strengthen oversight and governance mechanisms in the government sector.
  • Strengthen the resourcing, cooperation and independence of dedicated anti-corruption agencies.
  • Build specific programmes to reduce corruption and improve integrity in sectors particularly vulnerable to corruption (vulnerable sector management), with an initial focus on the Justice, Crime Prevention and Security Cluster.
The NACS diagnostic report states that “At the heart of the fight against both public and private sector corruption should be a strategy to prevent corruption through building the autonomy and efficiency of state institutions in the country, and building the independence of the crime-fighting bodies.”
The national anti-corruption strategy should thus aim to support improved coordination between all role-players in the fight against corruption, and to tackle the systemic causes of corruption in the country.

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