Cities around the world – from Mogadishu to London – are under the spotlight for corruption, with heightened focus following the Panama Papers leak. But what does urban corruption look like – and how is it measured?
As a teenager, Michael Cassius McDonald worked the railroad cars. It was the 1850s, Chicago was rapidly growing into a major national transport hub, and for young runaways and street urchins the city’s bustling train carriages offered numerous opportunities for illicit enrichment. McDonald was a “candy butcher”, offering sweets and trinkets to tired passengers. It was only when they got home that most of his customers realised the box they’d bought was near-empty, or its contents fake.
With the money he saved, McDonald managed to establish himself in the Chicago underworld and eventually rose to become the most powerful gambling tycoon in town. Alongside wealth and influence came political control: at the height of his reign in the 1870s and 1880s, “King Mike” determined the destinies of virtually every elected representative in Chicago, from local ward committeemen to mayors, senators and governors. “He never held office,” noted writer Richard Henry Little, “but ruled the city with an iron hand.”
More than a century later, Chicago’s reputation for urban corruption – first established by McDonald, then bolstered by a succession of criminals over subsequent decades, from Al Capone to Rod Blagojevich – remains intact. Over the last 40 years there have been more than 1,500 public corruption convictions in Chicago’s judicial district, more than any other city in the US, and a report published last year by the University of Illinois concluded that the Windy City is still the “Capital of Corruption” in America.
But outside of the US, Chicago faces stiff competition. In Colombia, an estimated 1,380 local mayors have been charged with corruption over an eight-year period. In Ukraine, one-in-10 of all news reports address corruption issues in urban development. In Spain, the Gürtel scandal – involving the alleged bribery of leading politicians by businessmen seeking construction contracts in Madrid and Valencia – continues to engulf establishment circles, leading 95% of citizens to believe that corruption is institutionalised, although no one has yet been found guilty. In Rio de Janeiro city prosecutors and council members say they are scrutinising Olympic contracts for possible corruption as the investigation continues into the multibillion-dollar kickback scheme at Petrobras.
So where does Chicago’s malfeasance rank when set against its global counterparts, and to what extent are court rulings really a useful measure of a city’s corruption? The answer, of course, depends on how we choose to define urban corruption. There is no simple or universal way of doing this, because the question of what our cities look like when they are corrupted is really just another way of asking a much harder question: what do we want them to look like when they are clean?
Cities pre-date nation-states by millennia, and the process of urbanisation – particularly when it occurs quickly, and in places where natural and civic resources are limited – has always created opportunities for those willing and able to bend the rules. “A high-density and expanding population puts pressure on space, on water, on public services like health and education, and that causes shortages,” explains Dieter Zinnbauer, research manager at Transparency International – an international organisation which aims to combat corruption and is based in Berlin. “Whenever you have shortages, you have big corruption risks; one has to ask oneself ‘who are the gatekeepers of these resources, and how are they being allotted?’ Of course this can exist in the countryside too, but it plays out in the urban theatre in a more concentrated and drastic way.”
Those risks are increasing. Over the next 30 or so years, the number of people living in cities is set to grow by an extra 2.5 billion and the vast majority of that urbanisation will take place in parts of the world where the prevalence of dishonest practices – corruption of local politics, policing, resource allocation and delivery of services to citizens – already appears to be high. Transparency International’s Corruption Perceptions Index, which ranks nations according to expert perceptions of public-sector corruption, assigns each country a score between 100 (very clean) and 0 (very corrupt). India, China and Nigeria all currently score below 40, indicating a high level of public corruption; between them, these three states alone are set to absorb almost a billion new city-dwellers by 2050. Over the next decade, in terms of new residential and commercial space, India will build the equivalent of an entire Chicago every single year.
And yet despite the soaring relevance of cities to our lives, to date global anti-corruption efforts have largely been targeted at countries as a whole, rather than at the urban settlements within them. The recent Panama Papers exposé drove debates over corruption to the top of the news agenda, and also revealed the extent to which tax havens have a direct impact on cities; more than 31,000 companies based in tax havens own property in the UK, largely concentrated in London, and nearly one in 10 of them are linked to Mossack Fonseca, the law firm at the centre of the leaks. “The Panama Papers have once more driven home the point that shell companies associated with offshore secrecy providers play an outsized role in the real estate markets of some world cities,” argues Zinnbauer.
ut a major anti-corruption summit held by David Cameron in the aftermath of the leaks largely ignored the urban dimension. “Internationally, there’s a big focus on macro initiatives and people just hope this will filter down to the city level, but it doesn’t happen like that,” says Anga Timilsina, programme manager at the UNDP’s Global Anti-Corruption Initiative. “It’s an area that needs much more attention.” Part of the problem is that identifying which cities are most exposed to corruption is a daunting task; although there has been some piecemeal regional research, at the moment there is no standalone corruption index for urban areas that spans the globe.
“Every methodology you could possibly use to measure urban corruption has its limitations, and is likely to reveal a certain type of corruption that is pertinent to some corrupt cities but largely unimportant in others,” adds Timilsina. “How do you compare apples and pears?”
Based on the fragmented data that is available though, a few cities do stand out. If we assume a direct correlation between national and city-level corruption, and restrict ourselves to Transparency International’s metric of asking experts to assess the degree of corruption among public institutions and employees, then it is largely cities in war-torn states – where normal governance mechanisms have been suspended and delivery of education, healthcare and other municipal services highly disrupted – that fare worst: Mogadishu in Somalia, Kabul in Afghanistan, and Juba in South Sudan. In Libya and Iraq, which both sit in the bottom 10 of the Corruption Perceptions Index, military conflict is entwined with an abundance of oil reserves, which generates extra incentives for corrupt practices in cities like Tripoli and Baghdad.
But there are other ways of thinking about urban corruption, one of which is how robust legal protections for citizens are, and how common it is for them to have to bribe officials on a day-to-day basis to get things done. Here, it is cities in Africa and Asia which tend to stand out. The LSE’s New Urban Governance Project, a two-year research programme which attempts to chart different aspects of city management across the world, lists two Nigerian cities – Lagos and Port Harcourt – as places where the risk of corruption is a “highly relevant” governance challenge. According to Global Integrity, a Washington DC-based non-profit organisation which tracks international corruption trends and has produced an “African Integrity” map, capital cities like Asmara (Eritrea), Nouakchott (Mauritania) and Conakry (Guinea) score particularly poorly on indicators like the rule of law, accountability and civil service integrity.
Indian website ipaidabribe.com, which allows citizens to upload details of street-level extortion, suggests that Bangalore, Delhi and Hyderabad rank worst for corruption; Dhaka, capital of neighbouring Bangladesh, is listed by a number of surveys as one of the places where informal payments for public utilities or business licences are demanded most frequently.
Another measure of corruption in cities is the extent to which organised crime or more generalised violence is widespread. Latin American cities dominate the statistics in this area. Caracas recently overtook San Pedro Sula in Honduras to top a list of the world’s most dangerous cities; the Venezuelan capital also makes an appearance on the LSE’s list of cities where corruption risks are highest, and Venezuela itself – also a major oil-producing country – is listed near the bottom 10 of Transparency International’s Corruption Perceptions Index. Corrupted security agencies often help fuel urban violence; in Caracas, police officers have been accused of involvement in eight out of 10 kidnappings.
And yet all these figures ignore what is arguably the most important element of corruption in cities: where illicit money flows, and how it is hidden. From embezzlement in Ashgabat to bribery in Bogotá, virtually all forms of corruption can ultimately be traced back to the hijacking of urban public policy-making and civic institutions by vested interests, and the financial bounty reaped by elites has to end up somewhere. That somewhere, overwhelmingly, is the City of London.
Britain’s private bankers, largely headquartered in the UK capital’s square mile – an institution which is itself shielded from most forms of democratic accountability through an archaic web of legal exemptions and historical conventions (the City is one of the only urban settlements on earth where businesses help elect the area’s political representatives, and control votes which vastly outnumber those of local residents) – manage $1.65 trillion of client assets between them, covering wealth from all over the planet. That money is protected from meaningful oversight through extraordinarily generous laws on tax, trusts, secrecy and domicile status, and a consistently lax enforcement regime. Nicholas Shaxson, author of the book Treasure Islands, which explores tax havens, argues that “financial services companies have flocked to London because it lets them do what they cannot do at home”.
This has led Transparency International itself to label the City of London the world’s “number-one home for the fruits of corruption”; anti-mafia journalist Robert Saviano believes the practices of the City have transformed the UK into the most corrupt nation on earth. It is impossible to analyse urban corruption in any form without placing London and its financial industry at the heart of the problem. Via its deregulatory impulses and unparalleled influence on the global economic system, London’s financial core has exported the conditions necessary for wide-scale corruption to countless other cities around the planet, while at the same time offering a safe haven for corrupt money that makes the job of tackling urban corruption in all those other cities far more difficult.
As cities continue to expand and proliferate, demand for urban land, and thus its value, is set to increase sharply. Dieter Zinnbauer, of Transparency International, believes that we may be moving towards an urban land “resource curse” – a phrase normally associated with countries laden with so much mineral wealth that rulers have little need to establish a tax base and thus prove themselves accountable to citizens, but which Zinnbauer fears could soon apply to cities too and be responsible for driving further corruption in the years to come.
In Egypt, for example, the improper sale of desert land on Cairo’s fringes by government officials has not only lined the pockets of regime cronies but diverted scant public resources – drinking water, energy pipelines and transport infrastructure – to areas of the city where few people live. “The problem isn’t only that rapidly rising land prices allow specific groups to land windfall profits in the short-term,” Zinnbauer notes, “but also that in the longer run this locks in certain development patterns which potentially deprive large parts of the community of economic opportunities, so it hardwires injustices into the future of the city.”
It’s not all bad news. In many cities, concerted fightbacks against corruption have met with some success: the transformation of Colombia’s second city of Medellín from murder hotspot to apparent civic beacon made headlines around the world, and in Romania the tireless efforts of anti-corruption head Laura Codruţa Kövesi has claimed huge scalps, including the mayor of Bucharest, Sorin Oprescu, who was arrested and stood down last year. Among the global anti-corruption community, innovative forms of urban planning and design which aim to ensure cities are more responsive to the needs of citizens and make corrupt practices much harder are becoming more prominent. In New York, activists have used large-scale public murals and advertising billboards on the metro to inform residents of their rights in cases of housing eviction or police intimidation, and recently published research in India suggests that workers who display a visible symbol indicating their hostility to corruption are less likely to be asked by colleagues or bosses to engage in malpractice.
But such measures will never be enough in isolation. To really root out corruption in our cities, we will need to fight for a different kind of global economic infrastructure, one that does not allow vast quantities of illicit wealth to be siphoned off from public treasuries and vulnerable citizens, only to disappear into the shadows. And for that, those of us who live in London need to turn our attention closer to home.