Crime and Corruption | Page 5

in
posh hotel suites. But this was no exception. According to Asahi
Shimbun, more than half of the 60 divisions of the ministry maintained

similar funds. The police and the ministry are investigating. One arrest
has been made. The ministry's accounting division has discovered these
corrupt practices twenty years ago but kept mum. Even low-level
prefectural bureaucrats and teachers in Japan build up slush funds by
faking business trips or padding invoices and receipts. Japanese
citizens' groups conservatively estimated that $20 million in travel and
entertainment expenses in the prefectures in 1994 were faked, a
practice known as "kara shutcho" (i.e., empty business trip). Officials
of the Hokkaido Board of Education admitted to the existence of a 100
million yen secret fund. In a resulting probe, 200 out of 286 schools
were found to maintain their own slush funds. Some of the money was
used to support friendly politicians. But slush funds are not a sovereign
prerogative. Multinationals, banks, corporation, religious organizations,
political parties, and even NGO's salt away some of their revenues and
profits in undisclosed accounts, usually in off-shore havens.

Secret election campaign slush funds are a fixture in American politics.
A 2-year old bill requires disclosure of donors to such funds but the
House is busy loosening its provisions. "The Economist" listed lately
the tsunami of scandals that engulfs Germany, both its major political
parties, many of the Lander and numerous highly placed and mid-level
bureaucrats. Secret, mainly party, funds seem to be involved in the
majority of these lurid affairs. Italian firms made donations to political
parties through slush funds, though corporate donations - providing
they are transparent - are perfectly legal in Italy. Both the right and, to a
lesser extent, the left in France are said to have managed enormous
political slush funds. President Chirac is accused of having abused for
his personal pleasure, one such municipal fund in Paris, when he was
its mayor. But the funds were mostly used to provide party activists
with mock jobs. Corporations paid kickbacks to obtain public works or
local building permits. Ostensibly, they were paying for sham
"consultancy services". The epidemic hasn't skipped even staid Ottawa.
Its Chief Electoral Officer told Sun Media last September that he is
"concerned" about millions stashed away by Liberal candidates. Sundry
ministers who coveted the prime minister's job, have raised funds
covertly and probably illegally.

On April 11, UPI reported that Spain's second-largest bank, Banco
Bilbao Vizcaya Argentaria (BBVA), held nearly $200 million hidden in
secret offshore accounts, "which were allegedly used to manipulate
politicians, pay off the 'revolutionary tax' to ETA - the Basque terrorist
organization - and open the door for business deals, according to news
reports." The money may have gone to luminaries such as Venezuela's
Hugo Chavez, Peru's Alberto Fujomori and Vladimiro Montesinos. The
bank's board members received fat, tax-free, "pensions" from the illegal
accounts opened in 1987 - a total of more than $20 million. Latin
American drug money launderers - from Puerto Rico to Colombia -
may have worked through these funds and the bank's clandestine
entities in the Cayman Islands and Jersey. The current Spanish
Secretary of State for the Treasury has been the bank's tax advisor
between 1992-7. The "Financial Times" reported in June 2000 that, in
anticipation of new international measures to curb corruption, "leading
European arms manufacturers" resorted to the creation of off-shore
slush funds. The money is intended to bribe foreign officials to win
tenders and contracts. Kim Woo-chung, Daewoo's former chairman, is
at the center of a massive scandal involving dozens of his company's
executive, some of whom ended up in prison. He stands accused of
diverting a whopping $20 billion to an overseas slush fund. A mind
boggling $10 billion were alleged to have been used to bribe Korean
government officials and politicians. But his conduct and even the scale
of the fraud he perpetrated may have been typical to Korea's post-war
incestuous relationship between politics and business. In his paper "The
Role of Slush Funds in the Preparation of Corruption Mechanisms",
reprinted by Transparency International, Gherardo Colombo defines
corporate slush funds thus: "Slush funds are obtained from a joint stock
company's finances, carefully managed so that the amounts involved do
not appear on the balance sheet. They do not necessarily have to consist
of money, but can also take the form of stocks and shares or other
economically valuable goods (works of art, jewels, yachts, etc.) It is
enough that they can be used without any particular difficulty or that
they can be transferred to a third party. If a fund is in the form of
money, it is not even necessary to refer to it outside the company
accounts, since it can appear in them in disguised form (the "accruals
and deferrals" heads are often resorted