Blurring the line between licit and illicit: transnational corruption networks in Central Asia and beyond

Abstract

The anti-corruption norm in both scholarship and the policy world has too narrowly focused on the domestic and institutional context of bribe-taking and public corruption. Instead, we argue that corruption in the contemporary global economy requires a multiple set of connected transactions, processes, and relationships that take place within informal transnational networks that blur the line between illegal and legal activities. These networks include multinational companies, elites in host countries, offshore financial vehicles and conduits, middlemen and brokers, and destination financial institutions. We examine how these actors operate in Central Asia, a region that is widely identified as corrupt, yet is rarely understood as embedded in the types of global processes, offshore connections and transnational links specified in our analysis. Examples of offshore centers in tax planning from Central Asia, and partial results from a field experiment based on impersonating high corruption risks from four Central Asian states, provide evidence for how the various actors in transnational financial networks structure their dealings. We then present two brief illustrative cases of how these transnational networks have operated in energy explorations services in Kazakhstan and telecommunications contracts in Uzbekistan. Our findings have theoretical, practical, and normative implications for scholars and practitioners of Central Asian international political economy and other ‘high risk' regions.

Keywords:

• corruption
• anti-corruption norm
• transnational networks
• offshore
• money laundering
• Kazakhstan
• Uzbekistan
• field experiments
• bribery
• kleptocracy

Notes

1 Section 779 of the 2006 UK Companies Act reads:

1. A company limited by shares may, if so authorised by its articles, issue with respect to any fully paid shares a warrant (a ‘share warrant') stating that the bearer of the warrant is entitled to the shares specified in it.

2. A share warrant issued under the company's common seal or (in the case of a company registered in Scotland) subscribed in accordance with the Requirements of Writing (Scotland) Act 1995 (c. 7) entitles the bearer to the shares specified in it and the shares may be transferred by delivery of the warrant.

3. A company that issues a share warrant may, if so authorised by its articles, provide (by coupons or otherwise) for the payment of the future dividends on the shares included in the warrant.