Financial Crime and Corruption by Samuel Vaknin
1995. But the phenomenon recurred in Kosovo.
2347 words | Chapter 70
All NGO's claim to be not for profit - yet, many of them
possess sizable equity portfolios and abuse their position
to increase the market share of firms they own. Conflicts
of interest and unethical behavior abound.
Cafedirect is a British firm committed to "fair trade"
coffee. Oxfam, an NGO, embarked, three years ago, on a
campaign targeted at Cafedirect's competitors, accusing
them of exploiting growers by paying them a tiny fraction
of the retail price of the coffee they sell. Yet, Oxfam owns
25% of Cafedirect.
Large NGO's resemble multinational corporations in
structure and operation. They are hierarchical, maintain
large media, government lobbying, and PR departments,
head-hunt, invest proceeds in professionally-managed
portfolios, compete in government tenders, and own a
variety of unrelated businesses. The Aga Khan Fund for
Economic Development owns the license for second
mobile phone operator in Afghanistan - among other
businesses. In this respect, NGO's are more like cults than
like civic organizations.
Many NGO's promote economic causes - anti-
globalization, the banning of child labor, the relaxing of
intellectual property rights, or fair payment for
agricultural products. Many of these causes are both
worthy and sound. Alas, most NGO's lack economic
expertise and inflict damage on the alleged recipients of
their beneficence. NGO's are at times manipulated by - or
collude with - industrial groups and political parties.
It is telling that the denizens of many developing countries
suspect the West and its NGO's of promoting an agenda of
trade protectionism. Stringent - and expensive - labor and
environmental provisions in international treaties may
well be a ploy to fend off imports based on cheap labor
and the competition they wreak on well-ensconced
domestic industries and their political stooges.
Take child labor - as distinct from the universally
condemnable phenomena of child prostitution, child
soldiering, or child slavery.
Child labor, in many destitute locales, is all that separates
the family from all-pervasive, life threatening, poverty. As
national income grows, child labor declines. Following
the outcry provoked, in 1995, by NGO's against soccer
balls stitched by children in Pakistan, both Nike and
Reebok relocated their workshops and sacked countless
women and 7000 children. The average family income -
anyhow meager - fell by 20 percent.
This affair elicited the following wry commentary from
economists Drusilla Brown, Alan Deardorif, and Robert
Stern:
"While Baden Sports can quite credibly claim that their
soccer balls are not sewn by children, the relocation of
their production facility undoubtedly did nothing for their
former child workers and their families".
This is far from being a unique case. Threatened with
legal reprisals and "reputation risks" (being named-and-
shamed by overzealous NGO's) - multinationals engage in
preemptive sacking. More than 50,000 children in
Bangladesh were let go in 1993 by German garment
factories in anticipation of the American never-legislated
Child Labor Deterrence Act.
Former Secretary of Labor, Robert Reich, observed:
"Stopping child labor without doing anything else could
leave children worse off. If they are working out of
necessity, as most are, stopping them could force them
into prostitution or other employment with greater
personal dangers. The most important thing is that they be
in school and receive the education to help them leave
poverty".
NGO-fostered hype notwithstanding, 70% of all children
work within their family unit, in agriculture. Less than 1
percent are employed in mining and another 2 percent in
construction. Again contrary to NGO-proffered panaceas,
education is not a solution. Millions graduate every year
in developing countries - 100,000 in Morocco alone. But
unemployment reaches more than one third of the
workforce in places such as Macedonia.
Children at work may be harshly treated by their
supervisors but at least they are kept off the far more
menacing streets. Some kids even end up with a skill and
are rendered employable.
"The Economist" sums up the shortsightedness,
inaptitude, ignorance, and self-centeredness of NGO's
neatly:
"Suppose that in the remorseless search for profit,
multinationals pay sweatshop wages to their workers in
developing countries. Regulation forcing them to pay
higher wages is demanded... The NGOs, the reformed
multinationals and enlightened rich-country governments
propose tough rules on third-world factory wages, backed
up by trade barriers to keep out imports from countries
that do not comply. Shoppers in the West pay more - but
willingly, because they know it is in a good cause. The
NGOs declare another victory. The companies, having
shafted their third-world competition and protected their
domestic markets, count their bigger profits (higher wage
costs notwithstanding). And the third-world workers
displaced from locally owned factories explain to their
children why the West's new deal for the victims of
capitalism requires them to starve".
NGO's in places like Sudan, Somalia, Myanmar,
Bangladesh, Pakistan, Albania, and Zimbabwe have
become the preferred venue for Western aid - both
humanitarian and financial - development financing, and
emergency relief. According to the Red Cross, more
money goes through NGO's than through the World Bank.
Their iron grip on food, medicine, and funds rendered
them an alternative government - sometimes as venal and
graft-stricken as the one they replace.
Local businessmen, politicians, academics, and even
journalists form NGO's to plug into the avalanche of
Western largesse. In the process, they award themselves
and their relatives with salaries, perks, and preferred
access to Western goods and credits. NGO's have evolved
into vast networks of patronage in Africa, Latin America,
and Asia.
NGO's chase disasters with a relish. More than 200 of
them opened shop in the aftermath of the Kosovo refugee
crisis in 1999-2000. Another 50 supplanted them during
the civil unrest in Macedonia a year later. Floods,
elections, earthquakes, wars - constitute the cornucopia
that feed the NGO's.
NGO's are proponents of Western values - women's lib,
human rights, civil rights, the protection of minorities,
freedom, equality. Not everyone finds this liberal menu
palatable. The arrival of NGO's often provokes social
polarization and cultural clashes. Traditionalists in
Bangladesh, nationalists in Macedonia, religious zealots
in Israel, security forces everywhere, and almost all
politicians find NGO's irritating and bothersome.
The British government ploughs well over $30 million a
year into "Proshika", a Bangladeshi NGO. It started as a
women's education outfit and ended up as a restive and
aggressive women empowerment political lobby group
with budgets to rival many ministries in this
impoverished, Moslem and patriarchal country.
Other NGO's - fuelled by $300 million of annual foreign
infusion - evolved from humble origins to become mighty
coalitions of full-time activists. NGO's like the
Bangladesh Rural Advancement Committee (BRAC) and
the Association for Social Advancement mushroomed
even as their agendas have been fully implemented and
their goals exceeded. It now owns and operates 30,000
schools.
This mission creep is not unique to developing countries.
As Parkinson discerned, organizations tend to self-
perpetuate regardless of their proclaimed charter.
Remember NATO? Human rights organizations, like
Amnesty, are now attempting to incorporate in their ever-
expanding remit "economic and social rights" - such as
the rights to food, housing, fair wages, potable water,
sanitation, and health provision. How insolvent countries
are supposed to provide such munificence is conveniently
overlooked.
"The Economist" reviewed a few of the more egregious
cases of NGO imperialism.
Human Rights Watch lately offered this tortured argument
in favor of expanding the role of human rights NGO's:
"The best way to prevent famine today is to secure the
right to free expression - so that misguided government
policies can be brought to public attention and corrected
before food shortages become acute." It blatantly ignored
the fact that respect for human and political rights does
not fend off natural disasters and disease. The two
countries with the highest incidence of AIDS are Africa's
only two true democracies - Botswana and South Africa.
The Centre for Economic and Social Rights, an American
outfit, "challenges economic injustice as a violation of
international human rights law". Oxfam pledges to
support the "rights to a sustainable livelihood, and the
rights and capacities to participate in societies and make
positive changes to people's lives". In a poor attempt at
emulation, the WHO published an inanely titled document
- "A Human Rights Approach to Tuberculosis".
NGO's are becoming not only all-pervasive but more
aggressive. In their capacity as "shareholder activists",
they disrupt shareholders meetings and act to actively
tarnish corporate and individual reputations. Friends of
the Earth worked hard four years ago to instigate a
consumer boycott against Exxon Mobil - for not investing
in renewable energy resources and for ignoring global
warming. No one - including other shareholders -
understood their demands. But it went down well with the
media, with a few celebrities, and with contributors.
As "think tanks", NGO's issue partisan and biased reports.
The International Crisis Group published a rabid attack on
the then incumbent government of Macedonia, days
before an election, relegating the rampant corruption of its
predecessors - whom it seemed to be tacitly supporting -
to a few footnotes. On at least two occasions - in its
reports regarding Bosnia and Zimbabwe - ICG has
recommended confrontation, the imposition of sanctions,
and, if all else fails, the use of force. Though the most
vocal and visible, it is far from being the only NGO that
advocates "just" wars.
The ICG is a repository of former heads of state and has-
been politicians and is renowned (and notorious) for its
prescriptive - some say meddlesome - philosophy and
tactics. "The Economist" remarked sardonically: "To say
(that ICG) is 'solving world crises' is to risk
underestimating its ambitions, if overestimating its
achievements".
NGO's have orchestrated the violent showdown during the
trade talks in Seattle in 1999 and its repeat performances
throughout the world. The World Bank was so intimidated
by the riotous invasion of its premises in the NGO-
choreographed "Fifty Years is Enough" campaign of
1994, that it now employs dozens of NGO activists and let
NGO's determine many of its policies.
NGO activists have joined the armed - though mostly
peaceful - rebels of the Chiapas region in Mexico.
Norwegian NGO's sent members to forcibly board
whaling ships. In the USA, anti-abortion activists have
murdered doctors. In Britain, animal rights zealots have
both assassinated experimental scientists and wrecked
property.
Birth control NGO's carry out mass sterilizations in poor
countries, financed by rich country governments in a bid
to stem immigration. NGO's buy slaves in Sudan thus
encouraging the practice of slave hunting throughout sub-
Saharan Africa. Other NGO's actively collaborate with
"rebel" armies - a euphemism for terrorists.
NGO's lack a synoptic view and their work often
undermines efforts by international organizations such as
the UNHCR and by governments. Poorly-paid local
officials have to contend with crumbling budgets as the
funds are diverted to rich expatriates doing the same job
for a multiple of the cost and with inexhaustible hubris.
This is not conducive to happy co-existence between
foreign do-gooders and indigenous governments.
Sometimes NGO's seem to be an ingenious ploy to solve
Western unemployment at the expense of down-trodden
natives. This is a misperception driven by envy and
avarice.
But it is still powerful enough to foster resentment and
worse. NGO's are on the verge of provoking a ruinous
backlash against them in their countries of destination.
That would be a pity. Some of them are doing
indispensable work. If only they were a wee more
sensitive and somewhat less ostentatious. But then they
wouldn't be NGO's, would they?
Interview granted to Revista Terra, Brazil, September
2005
Q. NGOs are growing quickly in Brazil due to the
discredit politicians and governmental institutions face
after decades of corruption, elitism etc. The young
people feel they can do something concrete working as
activists in a NGOs. Isn't that a good thing? What kind
of dangers someone should be aware before enlisting
himself as a supporter of a NGO?
A. One must clearly distinguish between NGOs in the
sated, wealthy, industrialized West - and (the far more
numerous) NGOs in the developing and less developed
countries.
Western NGOs are the heirs to the Victorian tradition of
"White Man's Burden". They are missionary and charity-
orientated. They are designed to spread both aid (food,
medicines, contraceptives, etc.) and Western values. They
closely collaborate with Western governments and
institutions against local governments and institutions.
They are powerful, rich, and care less about the welfare of
the indigenous population than about "universal"
principles of ethical conduct.
Their counterparts in less developed and in developing
countries serve as substitutes to failed or dysfunctional
state institutions and services. They are rarely concerned
with the furthering of any agenda and more preoccupied
with the well-being of their constituents, the people.
Q. Why do you think many NGO activists are narcissists
and not altruists? What are the symptoms you identify
on them?
A. In both types of organizations - Western NGOs and
NGOs elsewhere - there is a lot of waste and corruption,
double-dealing, self-interested promotion, and, sometimes
inevitably, collusion with unsavory elements of society.
Both organizations attract narcissistic opportunists who
regards NGOs as venues of upward social mobility and
self-enrichment. Many NGOs serve as sinecures,
"manpower sinks", or "employment agencies" - they
provide work to people who, otherwise, are
unemployable. Some NGOs are involved in political
networks of patronage, nepotism, and cronyism.
Narcissists are attracted to money, power, and glamour.
NGOs provide all three. The officers of many NGOs draw
exorbitant salaries (compared to the average salary where
the NGO operates) and enjoy a panoply of work-related
perks. Some NGOs exert a lot of political influence and
hold power over the lives of millions of aid recipients.
NGOs and their workers are, therefore, often in the
limelight and many NGO activists have become minor
celebrities and frequent guests in talk shows and such.
Even critics of NGOs are often interviewed by the media
(laughing).
Finally, a slim minority of NGO officers and workers are
simply corrupt. They collude with venal officials to enrich
themselves. For instance: during the Kosovo crisis in
1999, NGO employees sold in the open market food,
blankets, and medical supplies intended for the refugees.
Q. How can one choose between good and bad NGOs?
A. There are a few simple tests:
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