Алистер Смит - The Dictator's Handbook - Why Bad Behavior is Almost Always Good Politics

Dymovsky became something of a folk hero in Russia. It seems his whistle-blowing was much appreciated among many ordinary Russians. The official response, however, was quite different. He was shunned, fired, persecuted, prosecuted, and imprisoned. The public uproar that followed led eventually to his release. No longer a police officer, he established a business guiding tours of the luxurious homes of some of his police colleagues. Most notable among these is the home of Chief Chernositov. The chief’s salary is about $25,000 a year—yet he owns a beachfront home on land estimated to be worth $800,000. The chief offers no account of how he could afford his home and, it should be noted, he remains in his position as chief. He certainly has not faced imprisonment for his apparent corruption, but then, unlike Mikhail Khodorkovsky or Aleksei Dymovsky, Novorossiysk’s police chief has remained loyal to the governing regime. As for Dymovsky’s whistle-blowing, it did prompt a response from the Kremlin. Russia’s central government passed a law imposing tough penalties on police officers who criticize their superiors. As the Times notes, the law has come to be known as “Dymovsky law.”

Corruption is a private good of choice for exactly the reasons captured by the Dymovsky Affair. It provides the means to ensure regime loyalty without having to pay good salaries, and it guarantees the prosecutorial means to ferret out any beneficiaries who fail to remain loyal. What could be better from a leader’s perspective?

Private Goods in Small Coalition Settings

Liberia’s Sergeant Doe, our by now all-too-familiar case in point of a “right-thinking” small-coalition ruler, understood the importance of private rewards to his cronies. As a US government report observed of his use of US aid funds, “The President’s primary concern is for political and physical survival. His priorities are very different from and inconsistent with economic recovery . . . President Doe has great allegiance to his tribes people and inner circle. His support of local groups on ill designed projects undercut larger social objectives.”9 That, in a nutshell, is what private rewards are all about—physical and political survival; not larger social objectives. What is most significant about Sergeant Doe’s “misuse” of government money is that it kept him in power for a decade. Doe’s story is not unique to him, nor is it unique to Africa; it is not even unique to governments. It applies to all organizations, especially when they rely on a small group of essentials. Before reporting on the world’s many dictators, let’s look at how private rewards work in a small-coalition regime that most of us think of as benign and even praiseworthy. We have in mind two sports organizations, the International Olympic Committee (IOC) and Fédération Internationale de Football Association (FIFA, the international governing body of football—or, to people in the United States, soccer). What, after all, could be more important to the IOC than advancing the quality (and maybe the quantity) of international sports competition, free from political and personal distortions? The answer: lavish entertainment and money.

The 2002 Salt Lake City winter games are perhaps remembered almost as much for scandal and bribery as they are for athletic excellence. The Salt Lake Organizing Committee (SLOC) spent millions of dollars on entertainment and bribes, which included cash, lavish entertainment and travel, scholarships and jobs for relatives of IOC members, real estate deals, and even plastic surgery. In the fallout, ten IOC members were removed or resigned, ten others were reprimanded, and Tom Welch and Dave Johnson, who headed the SLOC, were prosecuted for fraud and bribery.

Yet this was not an isolated incident. Indeed the Salt Lake bid committee felt they had been unfairly overlooked for the 1998 winter games. The Japanese city of Nagano, which won those games, spent over $4.4 million on entertainment for IOC officials. Improprieties of this sort abound behind virtually all bids. During its bid for the 1996 games, Melbourne, Australia, arranged a special concert for the Melbourne Symphony Orchestra to showcase the piano playing of the daughter of a South Korean IOC official. Clearly, any city that wants a serious chance at landing the games needs to lay on lavish travel and entertainment.

Corruption and private dealing is not limited just to big bribes; money to be converted into private gains for backers is sought at every level. Indeed, the 1996 summer games, held in Atlanta, demonstrate that no threat to the IOC’s chance to shift money to its cronies and essential backers is too small to capture their attention. As the British newspaper, The Independent , reported in its Business Section (March 26, 1995):

Even small entrepreneurs, from T-shirt vendors to Greek restaurants, need to beware. Under a 1978 US law—the Amateur Sports Act—the United States Olympic Committee (USOC) has a “super trademark” over any Olympic symbols or words....

The promise of strict action has been critical to attempts by the Atlanta Committee for the Olympic Games (ACOG) to attract official sponsors, some of which must pay up to $40 million for the privilege. Those already signed up include Coca-Cola, which is based in Atlanta, IBM, Kodak, Xerox and the car makers General Motors and BMW. . . .

Eyebrows have been raised, however, at steps taken to protect the Olympic trade mark. An Atlanta artist wanted the trade mark “USAtlanta” to market her works. ACOG objected, saying that it evoked the 1996 games.

“I think that’s stepping over the line a little bit. I find it hard to believe that anyone is going to misconstrue her logo as being designed to profit from the games,” said John Bevilaqua, a sports sponsorship consultant in Atlanta, who none the less sympathizes with the organizers.

Perhaps the oddest case is that of Theodorus Vatzakas, who opened a Greek restaurant in Atlanta in 1983—long before the city won the right to stage the 1996 games—and called it the “Olympic.” In 1991, he was advised by ACOG that he was infringing the 1978 Act and would have to change the name. Eventually he did, at a cost to himself of $1,000, calling it “Olympia Restaurant and Pizza.”

“I am very upset about this,” he complained, “but I changed the name because I don’t have any money to fight these kind of people. Really, I think it’s crazy.”10

Even one of the authors of this book—Bueno de Mesquita—experienced firsthand how eager Olympic committees are to control the flow of money and the opportunities for private gains. His wife, Arlene, together with two friends, founded a company called Cartwheels (which they eventually sold) to make fun products, like T-shirts, jewelry, stationery, and music CDs, all on a gymnastics theme, for competitive gymnasts. As Arlene recalled about Cartwheels’s experience with regulations from the IOC and the USOC leading up to the 1996 Atlanta Olympics,

Our company designed t-shirts and other products for gymnasts. Prior to the Atlanta Olympics we tried to design some with rings, torch or any other ‘Olympic’ related logo, but were told that no one would print them and we would wind up with big legal problems. It didn’t matter if we used completely different styles or colors from the official designs. We could not use any form of the word Olympic, nor any allusion to rings or torch. We even had to stay away from the official colors. In order to fulfill our clients’ demands for Olympic goods, we had to buy only official USOC products at greatly inflated prices. Some of the quality was awful, making us wonder about how some of these companies got their sponsorship.

The answer, according to our way of thinking, is straightforward. Cartwheels, like many others, was compelled to pay high prices and buy from vendors chosen by the IOC or AOC to fund the pot of money that the IOC and AOC used to enrich itself and pay for the lavish private rewards it doled out to others. And just as we should expect, quality was as low as prices were high.