Slush Funds
A True Story of Ambition, Savagery, and Betrayal.
According to David McClintick (“Swordfish: A True Story of Ambition, Savagery, and Betrayal”), in the late 1980’s, the FBI and DEA set up dummy corporations to deal in drugs. They funneled into these corporate fronts money from drug-related asset seizures.
The idea was to infiltrate global crime networks but a lot of the money in “Operation Swordfish” may have ended up in the wrong pockets. Government agents and sheriffs got mysteriously and filthily rich and the whole sorry affair was wound down. The GAO reported more than $3.6 billion missing. This bit of history gave rise to at least one blockbuster with Oscar-winner Halle Berry.
Alas, slush funds are much less glamorous in reality. They usually involve grubby politicians, pawky bankers, and philistine businessmen – rather than glamorous hackers and James Bondean secret agents.
The Kazakh prime minister, Imanghaliy Tasmaghambetov, freely admitted on April 4, 2002 to his country’s rubber-stamp parliament the existence of a $1 billion slush fund. The money was apparently skimmed off the proceeds of the opaque sale of the Tengiz oilfield. Remitting it to Kazakhstan – he expostulated with a poker face – would have fostered inflation. So, the country’s president, Nazarbaev, kept the funds abroad “for use in the event of either an economic crisis or a threat to Kazakhstan’s security”.
The money was used to pay off pension arrears in 1997 and to offset the pernicious effects of the 1998 devaluation of the Russian ruble. What was left was duly transferred to the $1.5 billion National Fund, the PM insisted. Alas, the original money in the Fund came entirely from another sale of oil assets to Chevron, thus casting in doubt the official version.
The National Fund was, indeed, augmented by a transfer or two from the slush fund – but at least one of these transfers occurred only 11 days after the damning revelations. Moreover, despite incontrovertible evidence to the contrary, the unfazed premier denied that his president possesses multi-million dollar bank accounts abroad.
He later rescinded this last bit of disinformation. The president, he said, has no bank accounts abroad but will promptly return all the money in these non-existent accounts to Kazakhstan. These vehemently denied accounts, he speculated, were set up by the president’s adversaries “for the purpose of compromising his name”.
On April 15, 2002 even the docile opposition had enough of this fuzzy logic. They established a People Oil’s Fund to monitor, henceforth, the regime’s financial shenanigans. By their calculations less than 7 percent of the income from the sale of hydrocarbon fuels (c. $4-5 billion annually) make it to the national budget.
Slush funds infect every corner of the globe, not only the more obscure and venal ones. Every secret service – from the Mossad to the CIA – operates outside the stated state budget. Slush funds are used to launder money, shower cronies with patronage, and bribe decision makers. In some countries, setting them up is a criminal offense, as per the 1990 Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime. Other jurisdictions are more forgiving.
The Catholic Bishops Conference of Papua New Guinea and the Solomon Islands issued a press release November 2001 in which it welcomed the government’s plans to abolish slush funds. They described the poisonous effect of this practice:
“With a few notable exceptions, the practice of directing funds through politicians to district projects has been disastrous. It has created an atmosphere in which corruption is thought to have flourished. It has reduced the responsibility of public servants, without reducing their numbers or costs. It has been used to confuse people into believing public funds are the ‘property’ of individual members rather than the property of the people, honestly and fairly administ
About the Creator
Shah Hussain
i am a physicist (Ms physics) and freelance writer, who have 5 years of experience in the field of freelance writing. I also offer paraphrasing/rewriting services to my clients.I love to work on subjects like Teaching & fitness, fashion...
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