“If there happens to break out a huge corruption scandal in Ukraine, the country would lose its ideological fight. And that, actually, makes for a half of the whole war conflict,” says Daniel Eriksson, Director General of the global Transparency International. He further states in the interview that implementing sanctions against Russia does make sense and that fighting corruption must come in the first place in the EU. The elimination of dirty money must start in Switzerland, he says.
Transparency International Slovakia is a branch of the biggest anti-corruption organisation in the world, with headquarters in Berlin. The Director General Daniel Eriksson has been leading the global TI since 2021. He has broad expertise and experience in fighting corruption and money laundering.
His past job experience includes working for the Swedish government, the UN, the European commission as well as holding leading posts in the private sector. He started his career with peace negotiations in the former Yugoslavia, which has motivated him to work in the humanitarian sector.
You have come to Slovakia to attend to the GLOBSEC conference where you have also had your presentation. How did you like this event?
This conference has a great significance, and I am glad I could take part in it. It has been very well organised too. Nowadays, the interconnection between corruption, global security and fight for democracy is more visible than ever. In this respect, GLOBSEC is a great opportunity for Transparency International to address leading public-sector figures from all around Europe and highlight the importance of fighting corruption. It is necessary politicians realise that this fight is essential for protecting democracy.
What are your impressions of Slovak representatives who made their speech in the conference? Besides the president Zuzana Čaputová, the event hosted several representatives of the Ministry of Defence, Ministry of Foreign Affairs and other current and former statesmen.
Slovakia as a whole is moving in the right direction but is very fragile at the same time. I believe the time is ripe for bringing a change of political culture and for leaving the past behind. It is necessary to start off on both feet towards a stronger democracy and take the fight against corruption really seriously.
I don’t mean to say the Slovak representatives whom I met at GLOBSEC are not interested in this issue. They may have their heart in the right place but there is still a large scope for improvement.
Undoubtedly, the biggest security threat of these days is the conflict in Ukraine. There are frequent references to dirty Russian capital in connection with this conflict. Is this issue really as crucial as the media show?
It is the core of the whole problem. It shows us where the global community has come to. The world is polarised and divided into a pro-democratic and an anti-democratic part. This is happening ever faster and faster and the gap between these two poles is constantly widening. Europe and North America, where we can find the greatest portion of the pro-democratic world, become targets for anti-democratic states such as Russia and China. The latter use the weak points of democracy to destroy democratic countries. It can be the freedom of speech, human rights protection or civic society. Their goal is to bring democratic states to the same level of disintegration as they themselves face. These efforts are going on for more than a decade, but the processes have incredibly accelerated over the last six months.
To reach their goals, the anti-democratic states use financial means that they pour into disinformation campaigns and they purchase corporations with obscure ownership structures. By slow steps and growing number of attacks they occupy space in democracies, often misusing legal means that enable them to proceed in this way.
Is most of problems affecting the part of the world you call pro-democratic imported from states that are, as you say, anti-democratic?
I definitely did not mean to say that. I avoid using the term “democratic country” because there is no state in the world meeting the conditions to qualify as “democratic”.
How does this lack of democracy show itself?
By a number of vulnerabilities that can be remedied. For instance anonymous or corporate financing of political parties, or the very need of third-party financing of political parties – just to name a few, the list is really long. Democracy as seen today simply needs a restart. We need some version 2.0 that would be more resilient to corruption and that would not function in the way we are used to. It is a long process, but it is essential for successful fight against anti-democratic tendencies.
From this point of view it seems as if corruption was the root of all problems in the world. Isn’t it exaggerated?
If you made an analysis of main causes you would find out that it is actually true. Corruption is a breeding ground for the majority of today’s problems. Let us take disinformation as an example. Entities used by Russia or China are mostly financed through corrupt practices. Without corruption, they would not have means to effectively perform their activities. Money gained by corruption makes it possible to finance non-transparent ownership structures. It works similarly with other problems too. One cannot say the war in Ukraine has started due to corruption, but it is a means that enables these countries to keep their modus operandi, i.e. to work as kleptocracies.
Ukraine itself is an example, too. Before the war, it used to be one of the most corrupt countries in Europe. However, it has shown efforts and capabilities to fight this problem. Ukraine wants to pull itself together and strengthen its democracy. This has been seen as a threat by Russia and Belarus. That is why Russia has decided to attack Ukraine. They did not want to neighbour a developing, functional democracy.
Daniel Eriksson interviewed by Ján Ivančík, lawyer of the Slovak branch of Transparency.
Daniel Eriksson interviewed by Ján Ivančík, lawyer of the Slovak branch of Transparency.
Is there currently less corruption in Ukraine than before the war?
I did not want to say that. We do not even have exact indicators for such conclusions. However, Ukraine is an example of a country that has been struggling with anti-corruption efforts but has gradually improved in this respect. Then the war has struck and the international community has spent huge amounts of money on investments in this state. War and a large capital are also two basic preconditions for corruption to thrive. Therefore it is important that both Ukraine and the international community take corruption in this country extremely serious.
Because there are brave soldiers fighting in Ukraine who shed their blood for their homeland and for democracy. At the same time, however, there is an ideological fight going on between autocracy and democracy. If there happens to break out a huge corruption scandal in Ukraine, the country would lose its ideological fight. And that, actually, makes for a half of the whole war conflict.
Let us turn back to the notion of dirty money that you see as a means for subverting democratic systems. This expression is nowadays often used in connection with the Russian capital that is being subject to numerous sanctions by the EU. What does this term really mean?
It encompasses a wide range of things. It can mean rich individuals used by the state to serve its intentions. It can be non-profit organisations or corporations used to cover other activities. It can also be direct government interventions by means of disinformation troll factories. Moreover, the money is usually first “laundered” through other non-transparent ownership structures and only then used for its real purposes. If Russian finances flow through such entities into other countries, it is much more difficult to trace them.
This is what we must fight. Increased transparency is often an efficient tool. If we were able to prove in a relevant way that certain companies are only puppets in the hands of the Russian regime, we would see their actions from a different angle than today when we perceive them as entities acting independently.
This is the way the fight against Russian oligarchs and their money in the European union was supposed to have worked. Freezing their assets was expected to motivate these persons to make press on the regime in order to achieve change and end the war. Do present days show this has been an effective strategy?
I must confess I feel a bit frustrated in this respect. But let us look at what these tools really do. We know that anyone in Russia who has earned more than 10 million US dollars over the past twenty years was only able to do so with the blessing from the regime. These people often owe something to persons who allowed them to become rich. Thus, together with their money they become tools for the regime for performing anti-democratic activities abroad. Even if the sanctions did not manage to stop the war, they help to prevent other countries from coming into danger. Moreover, in this process the international community gains knowledge about how to implement the concept of sanctions against individuals in a way that they really work. Obviously, it currently works more on paper than in reality.
Is it then actually possible to be talking about Russian oligarchs? By its nature, oligarchy should have some power. Do these rich individuals have power to change the regime?
Money creates power. They owe services to the regime because it has allowed them to earn money. Based on this simple logic, although it is not watertight, yes, they do have the power. Furthermore, they are mostly opportunists who are not stupid. You don’t become a billionaire if you are stupid. You have to have certain capabilities.
I am not that naive to believe these people can end the war just by pushing a button. On the other side, it might be beneficial to exert press on them. We also must not forget that these people have moral responsibility for what is happening. They have used the regime, got rich on it and supported it. It might have been perceived that it is justifiable to extort the corrupted state, but in fact it has never been ethical. From this point of view they are guilty and should bear responsibility.
These problems, however, do not concern just Russia. The war in Ukraine has been a sort of a sudden awaking but in fact we are talking about a long-term issue that the world has been facing from many sides. Will politicians always need a war or some other catastrophe to turn their attention to a new direction?
The impulse is already here and we have already turned to the right direction. The next step for European political figures is to fully awaken and realise that dirty money, corruption and sabotage activities of anti-democratic countries pose a great and immediate threat for democracy not only in Europe but also in North America. If they become fully aware of it, I am sure they will also adopt appropriate measures to solve the situation.
But the European Union and its member states implement a whole range of tools for fighting money laundering. Is it not enough?
No.
Then what should be the next steps?
Technically, we know the recipe. We need to uncover real owners and beneficial owners wherever possible. We must intensify the pressure, especially on Switzerland. They need to pay much more attention to this issue than they have so far. Bank secrecy is destroying democracy. The question is if we value it so much that we will put democracy at risk for it. Therefore, the European Union must achieve in the first place that all countries have functional registers of beneficial ownership. Access to these registers must be free of charge and they need to be interconnected with data in neighbouring countries such as Switzerland or Ukraine.
However, Switzerland is not an EU member state. How can the Union push it to meet conditions it has established?
Well, recently, the Union has been considerably pushing on Russia, too, and Russia is not its member either, so…
…and is the EU pressure bringing fruit?
Let us not look at sanctions against individual persons now. Let us look at the oil embargo, sanctions aimed at gas, technologies and other supplies. I do see a potential in this direction. It will take several months but the results will eventually become visible.
If we get back to the bank secrecy and non-transparent ownership structures, the EU must turn to Switzerland. If the Swiss want to be a partner of the EU, they must change their attitude towards bank secrecy and the way they make business operations. It is really possible to make pressure on them in this way.
But can the Union dare to lay down such conditions?
A few years ago the United States demanded similar conditions to be met in terms of tax evasions and they managed to get their way.
However, Switzerland is by far not the only problem here. There are countries within the very EU such as Luxembourg or Cyprus that are considered to be tax havens. It seems the Union is not able to cope with its own members.
Thus we are getting back to the need to start with the identification of real owners from within the Union. The member states must set a good example for others.
For instance, Slovakia has a very good Register of Public Sector Partners, but the corruption has, nevertheless, not disappeared. Is a register of beneficial owners really a key weapon in this fight?
It is essential as the first step towards success. Then the focus must turn to already mentioned bank secrecy that falls outside this register. If I pay taxes in Sweden, the state already knows all information on my accounts and turnovers in Sweden. So I actually could send my tax return by an SMS as well. I admit it is a bit complicated in terms of personal data protection but, anyway, as a citizen, I must share information on my income with the state. This should work at the European level too. If I, as a Swedish citizen, have an account in Germany and another one in Spain, the state administrations of all countries concerned should automatically share relevant data.
Of course, you can now object that in such case I can transfer my money to the Caribbean, Switzerland or Dubai. But we need to start somewhere. At the same time it would not go amiss if corrupted individuals found it more expensive and harder to keep their activities going.
When talking about dirty money, you have several times brought up the issue of financing disinformation. Is this really such a big problem or is it just being talked too often about? The situation has indeed become so confused due to the war conflict that it is difficult to find out what piece of information is true and what is false.
Disinformation campaign is a well-proven tool of Russia, China and other similar countries to eliminate democracy. They want to introduce a system that is similar to their own. This is evidently a problem we must take very seriously.
You are the director of the central office of Transparency International. Do you often encounter negative reactions to your work or is the phenomenon of higher level of pressure on this sector specific just for Central Europe?
It is a big problem all over the world. Never ever have so many of our branches faced existential risk, in particular due to the pressure from their local governments. This is closely connected with the polarisation of the world that we have already talked about. Anti-democratic countries refuse to respect the freedom of speech, freedom of assembly and the right to one’s own opinion. I think it is linked to the role Transparency International plays in this new cold war. We must wake up into this reality and prepare responsibly. Otherwise, we will lose all branches in anti-democratic parts of the world.
Your colleagues in Ukraine and Russia are probably no exception in this regard. Russia has passed a law to identify foreign agents, apparently covering the Russian Transparency as well. And in Ukraine, there is a war going on. How does their work look like in the current situation?
Our colleagues in Ukraine really do their best and they are doing a great job. They are still in Kiev and work flat out. Of course, what they need the most are finances and we try to help them with this as much as we can.
In Russia, our branch is under extreme pressure. The aforesaid new legislation substantially concerns them, but they nevertheless try to fulfil their mission and fight corruption in Russia. They still have their presence there, but we had to take precautionary security measures for quite a number of their employees.
The interview was led by: Ján Ivančík