Corruption can be forgiven, but not greed

It’s not corruption which gets people but greed:

It was a state investment fund set up by the now former Prime Minister Najib Razak ostensibly to develop parts of Kuala Lumpur into a financial centre and boost the economy.

But that didn’t happen.

Instead, the fund’s debt ballooned and there were massive allegations of fraud and misconduct, including by the US Department of Justice (DoJ) which alleges $3.5bn (£2.6bn) was misappropriated from 1MDB.

“The Malaysian people were defrauded on an enormous scale,” said the Federal Bureau of Investigation (FBI) at the time.

Mr Najib was accused of receiving $700m dollars of that money, but has strongly denied all wrongdoing, despite being all but named in the DOJ suit.

If Najib had skimmed off a few million nobody would have cared, but if sums in the order of $700m turn up in your personal bank account, the knives will come out. I noticed this in Nigeria: whenever some government minister was accused of corruption it wasn’t merely theft of a few million to keep his or her family in a London flat, but hundreds of millions or even billions. And my question was always: what the hell are you going to do with that?

If you’re living the lifestyle of a Malaysian Prime Minister, swiping $10m on top of the salary, kickbacks, and unofficial payments is probably sufficient to keep you rolling in gravy for life. Even if you’re caught, you’d probably find people will cover for you because they’re also on the make, and the public will likely shrug it off as an acceptable loss. So why go an order of magnitude higher and risk everything? Greed is an odd vice, and very much a part of human nature. For some, no amount of money is ever enough and you have to wonder whether it’s about the money at all.

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25 thoughts on “Corruption can be forgiven, but not greed

  1. I usually equate this with a practice developed at school: you would bend a plastic rule to see how far you could go before it snapped. Of course, you didn’t stop when it was likely to break, for human nature or kiddy ignorance ensured you always went that half-inch (12 millimetres?) further and the inevitable happened.

    So when you are on the make the temptation is to keep bending the system until absolutely everything snaps, otherwise where’s the fun in bending in the first place?

  2. So when you are on the make the temptation is to keep bending the system until absolutely everything snaps, otherwise where’s the fun in bending in the first place?

    Something like that, yes. It’s certainly not about pinching money for a specific purpose. Something akin to what gamblers feel, would be my guess.

  3. Did you ever see the story about $1 billion being stolen in Moldova? Surely someone would have noticed, right? Apparently that doesn’t matter. Definitely a psychosis going on.

  4. Theft on this scale requires the thief to be in power and stay there. Forcefully. Putin being a good example.

  5. Wow, that message in the Facebook link above was intense. Check it out.

  6. “It’s certainly not about pinching money for a specific purpose. Something akin to what gamblers feel, would be my guess.”

    Yes, and it seems that the feeling of “getting one over on someone” is deliciously addictive. There’s an old boy in our village who used to run a big electricity company’s customer services. He told me that they sometimes found those gadgets that extract free electricity and wind back the meter in the houses of mega-rich businessmen. You’d think that it was only underclass losers who would bother with them and knock a few quid off the electricity bill. But it appears that people with money to burn still get a thrill from making someone else pay.

  7. As Hans Gruber observed “If you steal $600 you can disappear. But if you steal $600 million they WILL find you. Unless they think you’re dead”.

    Happy Trails Mr Razak.

  8. $600M and he still couldn’t fix an election? For his cronies, his biggest crime was not sharing it out.
    MM has a bit of history too, anyone dealing with him is advised to count the spoons.

  9. I’ve always thought that if I were faced with an opportunity to graft, I’d need it to be enough for me to do it one time and check out safely.

    I don’t understand the thought process of those who take a little regularly or, like this story, a ridiculous amount either once or multiple times.

    Both of those tactics seem to be pathological rather than rational.

  10. You’d think that it was only underclass losers who would bother with them and knock a few quid off the electricity bill.

    J. Paul Getty famously had a payphone installed in his country mansion.

    I once worked at a hardware store. A bag of cement is like $4, and a tradie is probably passing the cost on anyway – and yet lots of these blokes would routinely nick a bag on their way out the store.

    Also there was this millionaire who used to shop there. Not only was he doing his own home improvements, but he was one of the few people who would bother trying to get us to knock 50 cents off a piece of dowel because it had a scratch on it.

    Point is, rich people are incredibly stringy. That’s probably how they stay rich.

    As for crooked politicians looting gajillions, I think it’s a status envy thing. I remember reading something about a survey on happiness, and apparently what makes people happy is not doing well per se, but doing well relative to the people they know. So if you can afford a Ferrari, you’re pretty pleased with yourself – unless everyone else on your street has one too, in which case you’re nothing special.

    Ordinary people invest a lot of money in keeping up with the Joneses – or perhaps we should call it “getting ahead of the Joneses” – so why not Malaysian prime ministers too? It’s just that his Joneses have a lot of money. (Ditto the Clintons, or Tony Blair.) You don’t wanna be the only one at Davos without a private jet, do you?

  11. When I used to work for the state road and bridge authority overseeing major contract works back in the good ole days we had a moral code which if embraced in your dealings with the contrcators no harm would befall you:

    “If you can eat it, drink it or root it, it ain’t graft and corruption.”

  12. “How much money is enough?”
    “All of it.”

    Greed is a terrible thing. I think it eats a person alive eventually. As I told a wealthy friend of mine, if you won’t spend some of it, it’s the same as if you didn’t have it. He just can’t wrap his head around that.

  13. @Allen
    There’s something in that. A useful and instructive exercise is to calculate what value of savings/assets you need now, to be reasonably confident it will pay for all future expected expenditure (perhaps under a range of different lifestyle scenarios, and taking care that asset returns are adjusted suitably for inflation). If you don’t have a particularly fancy lifestyle – and quite a few wealthy people choose not to, perhaps because of having financial discipline drummed into them early – then the figure required can be pleasingly low. If you’re still working hell for leather after achieving the required total, it is worth asking yourself why you’re bothering. There might well be a good reason for it – for the next generation of you’re family, for charitable donation upon or before death, because you get a buzz out of work, because you might want to expand the extravagance of your lifestyle later – but if it just for the sake of having some higher numbers in a spreadsheet that you’re never going to touch, it’s surely a waste of time, effort and life.

  14. @MBE

    I am nearing a retirement threshold similar to what you have outlined and am under no illusion as are my closest confidants that it will be a major fork in the road for me. I have always been a bread head and I make no apologies about it, I mentioned on here before that i have significant equity in my firm and that we had some problems with attracting investment due to our 49% Qatari shareholding post the Saudi Qatari embargo. This issue looks like it will be resolved in that we now have another equity offer from a Hong Kong financer that will provide immediate equity, plus provide funds to buy a Canadian company that we are looking at with an exit for them being a listing of our organisation on the Hong Kong stock exchange in say 18- 24 months. So it looks like I will be able to crystalize my equity and also go for another massive growth spurt on listing. I have done the sums on this valuation and even after tax it’s beyond my wildest dreams in terms of monetary value but here I am wondering if I am getting out too early!

    I have done this before this will be my third IPO, and yes I think it will be my last, career wise I have always seen my current role as being my swan song, I have a lot to offer here and do not have the motivation to bring it to another organisation.. If anything I think I might team up with my youngest son in a business sense, but who knows although I do think I will leave. I did set a target when i was younger to get out of the fast lane by 55 so there are lots of developments pointing to me getting out as being the right thing to do.

    But even with all of these things panning out and my earlier life plan coming due and the situation being good for it, it is interesting that the greed thing still applies in the decision making criteria. I know that I will do the right thing but I understand why many don’t.

  15. Very interesting. The wife’s uncle has just been made the Finance Minister in the new Malaysian administration. Wonder how long it will take for him to end up in choke.

  16. There’s an article by Theodore Dalrymple which gives a very good explanation for this behavior.
    https://www.city-journal.org/html/after-empire-12420.html

    Please forgive the long quote, The article is a gem.

    “The young black doctors who earned the same salary as we whites could not achieve the same standard of living for a very simple reason: they had an immense number of social obligations to fulfill. They were expected to provide for an ever expanding circle of family members (some of whom may have invested in their education) and people from their village, tribe, and province. An income that allowed a white to live like a lord because of a lack of such obligations scarcely raised a black above the level of his family. Mere equality of salary, therefore, was quite insufficient to procure for them the standard of living that they saw the whites had and that it was only human nature for them to desire—and believe themselves entitled to, on account of the superior talent that had allowed them to raise themselves above their fellows. In fact, a salary a thousand times as great would hardly have been sufficient to procure it: for their social obligations increased pari passu with their incomes.

    These obligations also explain the fact, often disdainfully remarked upon by former colonials, that when Africans moved into the beautiful and well-appointed villas of their former colonial masters, the houses swiftly degenerated into a species of superior, more spacious slum. Just as African doctors were perfectly equal to their medical tasks, technically speaking, so the degeneration of colonial villas had nothing to do with the intellectual inability of Africans to maintain them. Rather, the fortunate inheritor of such a villa was soon overwhelmed by relatives and others who had a social claim upon him. They brought even their goats with them; and one goat can undo in an afternoon what it has taken decades to establish.

    It is easy to see why a civil service, controlled and manned in its upper reaches by whites, could remain efficient and uncorrupt but could not long do so when manned by Africans who were supposed to follow the same rules and procedures. The same is true, of course, for every other administrative activity, public or private. The thick network of social obligations explains why, while it would have been out of the question to bribe most Rhodesian bureaucrats, yet in only a few years it would have been out of the question not to try to bribe most Zimbabwean ones, whose relatives would have condemned them for failing to obtain on their behalf all the advantages their official opportunities might provide. Thus do the very same tasks in the very same offices carried out by people of different cultural and social backgrounds result in very different outcomes.”

  17. “Corruption can be forgiven, but not greed”

    Maybe it’s just me, but ‘forgiven’ seems wrong. ‘Understood’, I can, um, understand.

    And yes, pathology, gambling, ‘winning’ looks to be a major part of it.

  18. Jonathan,

    The young black doctors who earned the same salary as we whites could not achieve the same standard of living for a very simple reason: they had an immense number of social obligations to fulfill.

    Exactly as I wrote about here.

  19. Totally unrelated, here is another specimen with Purple Hair Syndrome for your collection

    Yeah, she’s hardly undoing my theory, is she!

  20. “Point is, rich people are incredibly stringy. ”

    You need to braise them in red wine in low oven. Nice and tender after that.

    Or so I’m told.

  21. “Exactly as I wrote about here.”

    Indeed, another excellent piece.

    But then maybe it’s not greed per se which is driving these men to accumulate $600M+ bank accounts? Maybe it’s a combination of endless social obligations, combined with the fact that many third-world countries are nothing but a vast system of patronage? The $600M is just the buffer left in the checking account of the, say, $40B which passes through yearly. And besides, the main reason you don’t have six coup attempts by next Friday is the knowledge that the man has $600M in his bank account, and likely to have it for the forseeable future.

    It might simply be untrue that “If you’re living the lifestyle of a Malaysian Prime Minister, swiping $10m on top of the salary, kickbacks, and unofficial payments is probably sufficient to keep you rolling in gravy for life. Even if you’re caught, you’d probably find people will cover for you because they’re also on the make, and the public will likely shrug it off as an acceptable loss.”

    To keep that $10M lifestyle, you need to be swiping $100M, because the rest goes to your clan and security apparatus. And you’ve got to make sure all the state monopolies which you’ve farmed out to your cousins pay you their cut, just to make sure they know who’s the boss. He probably has no idea how he wound up with $600M in his account. Suppose he decides he’s taking too much. Which of the spigots should he shut off? To whom is it safe to appear soft and easygoing? And who knows if next year he might have to buy a hundred tanks to parade through his capital so his equally corrupt neighbors aren’t tempted to solve their problems by compounding his. Better to let things running as they are. It ain’t broke. Why fix it?

    When a third-world tyrant (at the top of this patronage system) gets taken down, it’s not because some law-abiding prosecutor finally gets his hands on iron-clad proof which an impartial judiciary is forced to accept – proof which might not have been available if the man had kept his bank balance at $60M instead of $600M. He gets taken down because someone inside his patronage system – someone who isn’t getting as much as he thinks he deserves – manages to accumulate enough power to supplant him, or someone outside it organizes a military revolt. When someone within the patronage system gets taken down, it’s because he got too powerful too quickly, and someone above him got suspicious.

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