The Dictator's Handbook (25 page)

In a video he made and sent to Vladimir Putin before it became famous on YouTube, “Mr. Dymovsky also described a practice that is considered common in Russia: When officers end their shifts, they have to turn over a portion of their bribes to the so-called cashier, a senior member of the department. Typically, $25 to $100 a day. If officers do not pay up, they are disciplined.” According to his own account, Mr. Dymovsky eventually grew tired of being corrupt and feeling compelled to be corrupt. As the
New York Times
reported, he inquired of Vladimir Putin, “How can a police officer accept bribes? . . . Do you understand where our society is heading? . . . You talk about reducing corruption,” he said. “You say that it should not be just a crime, that it should be immoral. But it is not like that. I told my boss that the police are corrupt. And he told me that it cannot be done away with.”

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?

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 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,

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.

The scandalous corruption that seemed to accompany almost all business aspects of the Olympics appeared finally to come to a head with Salt Lake City. The negative publicity surrounding the corruption scandal did inspire the IOC to promise reforms and to place restrictions on gifts, luxury travel, and perks in bidding cities. But as the dictates of political survival leads us to expect, this was unlikely to last since the Olympic organizations are all small-coalition operations. In fact, an undercover investigation by the BBC's news program
Panorama
suggests bribery is still active. In the runup to the announcement of the location of the 2012 games, secretly taped meetings
suggest a price on the order of around $100,000–$200,000 per IOC vote.
¹¹
Distressing to sports lovers to be sure, but this is no surprise to anyone who thinks about political survival.

That the IOC is plagued by bribery and corruption allegations is exactly what we should expect when we explore its institutional structure. The IOC, created in 1894, runs all aspects of the modern Olympics. The IOC is composed of only up to 115 members drawn from current athletes (up to fifteen), members of international sporting federations (IFs) (up to fifteen), senior members of National Olympic Committees (NOCs) (up to fifteen), and up to seventy unaffiliated members. IOC members are selected and voted in by existing IOC members. The IOC is responsible for selecting the senior Olympic executives and executive committees, regulating IFs and NOCs, and selecting the site of future games.

Fifty-eight votes are all that are needed to guarantee someone's election to become IOC president or host the games. Not surprisingly, IOC presidents keep their jobs for a long time and maintain lavish expense accounts. Since 1896, the date of the first modern Olympic games, there have been only seven presidents. In practice, often even fewer than fifty-eight votes are required because not all 115 positions on the IOC are filled and representatives are ineligible to vote on motions involving their home nation. For instance, London's bid for the 2012 games beat out Paris by fifty-four votes to fifty. At the level of
Panorama
's estimates it costs less than $10 million to win. While this is a substantial sum of money, it is insignificant when compared to the IOC revenues (nearly $5.5 billion for 2005–2008, the period covering the Beijing games) and the estimated 9.3 billion (approximately $15 billion) Britain will spend on venues and infrastructure for the 2012 games.
¹²
Building better stadiums, which benefits the whole Olympic movement—athletes, officials, and audiences alike—is a much more expensive way to buy support than doling out $10 million in private gains to a select few.

The design of the IOC lies at the heart of the scandals it faces. When fifty-eight votes guarantee victory, and the IOC president can handpick IOC members, politics and control will always revolve around corruption and bribery. As long as the IOC's institutions remain as
they are, vote buying and graft will persist because it is the “right” strategy for any IOC president who wants to survive. Regulating “gifts” and travel cannot change the underlying incentives to compete on the basis of private rewards rather than better management and facilities for the games.

When billions of dollars are at stake and winning requires the support of a mere 58 people, any nation that relies solely on the quality of its sporting bid will be a loser. Salt Lake learned this lesson bidding for the 1998 winter games. It was an error they did not repeat for the 2002 games, although they got caught in the process. Many in Salt Lake may have feigned outrage, but many might also have been glad. After all, in spite of the subsequent allegations, the games were not reassigned.

The IOC is not alone in engendering corruption. FIFA, soccer's international governing body, is even worse. On December 1, 2010, FIFA announced that it had chosen Russia and Qatar as the sites for the 2018 and 2022 World Cup Finals. Russia beat out bids from other European rivals, including England, a joint bid by Belgium and the Netherlands, and a joint bid from the Iberian Peninsula. While there were many attractive features to Russia's bid, it is becoming increasingly difficult to understand Qatar being chosen over Australia, Japan, South Korea, and the United States.

Qatar, a tiny state in the Persian Gulf, has the world's third largest known gas reserves and possibly the highest per capita income in the world. However, as a site for a soccer tournament it is problematic. Sharia forms the basis of its legal code. Alcohol consumption is harshly punished, homosexuality is banned, and Sepp Blatter, FIFA president, has already been condemned for making insensitive remarks on this topic. Beyond these concerns, the weather remains the most serious impediment to Qatar's sponsorship. It is so hot and humid that many Qatar's residents even leave for the summer months. To make it possible for the players to compete, Qatar's bid entailed constructing specially built, fully air-conditioned stadiums. FIFA is now contemplating moving the tournament from its traditional June and July dates to the winter months, when the temperature is much cooler. This would severely disrupt domestic competition in the European
football leagues, where many of the world's top players ply their trade. Needless to say, it is hard to rationalize having this debate
after
the vote rather than before if the objective was to do what is best for soccer/football.