The Russian invasion of Ukraine and the sanctions levied against members of the Russian elite have turned a certain amount of attention toward the origins of vast wealth, and by extension, its usage by politically toxic individuals as a tool of legitimization. Part of that process of legitimization involves funneling money into the nonprofit sector and reaping reputational rewards. Known as reputation laundering or virtue cleansing, it's a practice that has intermittently come under public scrutiny due to various news events, but been quickly forgotten. The recent conflict in Ukraine has brought a new—possibly higher—uptick in interest.
Where Do Kleptocrats Turn?
Many countries have opaque wealth protection laws that shield upper bracket incomes from prying eyes. This is true even in otherwise highly democratic nations. The mega-rich launder their money and reputations with the help of enablers or partners in these target locales, whether those partners be powerful individuals, public relations firms, foundations, universities, or other entities. The countries of choice for reputation laundering are the U.S. and the U.K., due not only to the laundering services available, but also due to the concentration of media, cultural institutions, and top ranked universities. France, Monaco, and Asian financial hubs increasingly are also go-to locations.
The list of Russian billionaires who have cleansed their reputations with philanthropy is too lengthy to detail in a single article, but a few examples are sufficient to demonstrate how valuable and desirable the service is. Dmitry Rybolovlev, who is considered to be close to Vladimir Putin, has donated an undisclosed amount of money to AmfAR, the Foundation for AIDS Research, and at least $1 million to the Mayo Clinic. Viktor Vekselberg, through his investment company Renova, has donated $13.5 million to arts and culture organizations, and has given to the Clinton Foundation. Petr Aven removed the middleman from the giving equation by co-founding Genesis Philanthropy Group, which has pledged $10 million in aid to Jewish citizens in Ukraine, though Aven himself was sanctioned as a result of the invasion.
On the whole, Russian billionaires suspected of kleptocracy—as well as several directly linked to political interference within the U.S.—have donated as much as $435 million to U.S. nonprofits over the past twenty years, according to an investigation by the Anti-Corruption Data Collective. The ACDC also notes that a certain percentage of donations are impossible to trace, which means the actual total of cash given is certainly higher. The recipients of the money, which number more than two hundred institutions, comprise a virtual constellation of the brightest education, research, health, and cultural brands in the U.S., among them Harvard University, the University of Southern California, the Brookings Institution, the Council on Foreign Relations, and the Kennedy Center.
How Money Erases the Past
Reputation laundering does not stop at Russian oligarchs. Autocrats and dictators the world over also avail themselves of the West's top notch virtue cleansing services. The knowledge that this occurs is so ingrained in the American consciousness that it's become banal. When you watch an action movie where does the hero first confront the supervillain? Often it's at some gala, or some fancy restaurant, or some private club, where the bad guy is hobnobbing with other wealthy people. For Hollywood screenwriters it's a trope, often referred to as the “villain with good publicity.” There's also a subset trope known as the “falsely reformed villain.” The bad guy can be one or the other, or occasionally both at the same time. While it's trite to compare movies to reality, the idea still exemplifies what kleptocrats seek—acceptance among the elite.
Some episodes of acceptance seeking have been more eyebrow raising than others. Teodoro Obiang Nguema Mbasogo, who has ruled the country of Equatorial Guinea since overthrowing his uncle in a 1979 coup, conceived the UNESCO-Obiang Nguema Mbasogo International Prize for Research in the Life Sciences back in 2008. Due to public outcry, implementation was frozen in 2010. Despite these protests, the prize launched in 2012, which makes the previous two-year wait by UNESCO seem suspiciously like a cooldown period, allowing public focus to turn elsewhere. Mbasongo's prize is alive and well today. It was most recently won by Regius Professor Christofer Toumazou of London's Imperial College, and in little to none of the reporting on the honor was Mbasogo's blood soaked past mentioned.
Mbasogo isn't the only ethically questionable person who has cleansed his reputation with a prize. Petr Aven's aforementioned Genesis Philanthropy Group issues the $1 million Genesis Prize, which last year went to Stephen Spielberg. Both the Mbasogo and Genesis Prizes highlight the difficulties of entanglement between good works and dubiously sourced cash. Christofer Toumazou is a brilliant biomedical engineer; Stephen Spielberg is deservedly considered an American moviemaking icon. Within the enclaves of the extremely wealthy the motives for charity aren't seriously doubted, and it's considered uncouth to criticize how wealth is derived. The attendees at galas and glitzy openings would no more interrogate Mbasogo about the coup that brought him to power than they would browbeat members of the Walton family about the less-than-subsistence wages paid at Walmart.
In practice the establishment of such prizes is little different from the museum wings named for the Sackler family, some of whom are owners of OxyContin maker Purdue Pharma. Purdue paid hundreds of millions of dollars in fines for misrepresenting the drug's risk of addiction and potential to be abused, even after learning about the dangers of its product. But also, the Sackler Family has made more philanthropic gifts than can be counted, mainly in the U.K., in areas of interest that include the arts, medicine, education, the environment, heritage preservation, and social services. In the Sacklers' case and a few others, as mentioned at top, news events sometimes expose the slippery practice of reputation laundering to the public, but pragmatic people tend to ask what, then, is the alternative? To have them give nothing?
It needs to be said that while foreign reputation laundering is a large and growing problem, America's nouveau billionaires and dynastic families—who on the whole expect to have far greater political influence than ordinary people—represent larger threats to American democracy than oligarchs or kleptocrats. According to the Institute for Policy Studies, the 50 wealthiest U.S. families have created approximately 250 foundations between them, which hold more than $51 billion in assets. Most of that money goes to fund actual charitable initiatives, but substantial amounts also go toward cutting taxes on the wealthy, reducing business regulations, rolling back environmental laws, and restricting voting rights.
Nonprofits are supposed to act in the best interest of the organization, which seems clear enough. But the best interest landscape can tilt quickly. Donations from Harvey Weinstein that had been accepted and already spent still brought intensely negative scrutiny to recipients who had no idea he was a sexual predator and rapist. His post-defrocking offer to fund female filmmakers to the tune of $5 million funneled into the University of Southern California's film school was immediately seen as an attempt to cleanse his reputation, and USC rejected the donation, which was universally agreed by outside observers to be the proper response.
Usually, though, a personal link to dubious activities is needed to trigger a strong backlash. If the responsibility is spread throughout a corporation or government, most people don't take notice. Over the course of many years the Clinton Foundation accepted between $10 and $25 million from the government of Saudi Arabia, $1 to $5 million each from the governments of Qatar, UAE, and Brunei, and $5 to $10 million from Kuwait. One of the Foundation's tentpole focus areas is LGBTQ rights, yet in Saudi Arabia homosexuality is a crime that can bring punishments ranging from fines to public whipping and execution. To the critical eye it looks as if the Saudi regime's giving is not for advancing the Clinton Foundation's mission, but for reputation cleansing within elite giving circles.
The entanglement of tainted money with prestigious Western institutions continues to grow, and the market opportunity has proved impossible for many to resist. Former French minister of the economy and former IMF managing director Dominique Strauss-Kahn now acts as managing partner of the Morocco-based consultancy Parnasse International. The company has worked with Denis Sassou Nguesso, autocratic ruler of the Republic of Congo for thirty-eight years spread across two long terms, who has funneled his nation's oil wealth into his own coffers but has received numerous IMF loans. Parnasse has also counted among its clients the dictatorship of Togo, and the Russian energy giant Rosfnet, called by Greenpeace the dirtiest oil company in the world.
Education in a Toxic Mix
Yet another way in which money and reputations are cleansed is by the attendance of children of wealth in top universities. For many politically toxic individuals this represents the ultimate in acceptance among the elite, and an immeasurably valuable gift from one generation to the next. Seeing these children as blameless is understandable, yet these university placements are a form of converting illicit money into a luxury good—elite education—and in that way are no different from buying yachts or mansions. The money often originates in desperately poor nations where substandard education is the only option for millions. And it's important to note that, due to the admissions practices of elite schools, particularly in the U.S., some children of wealth haven't academically earned their places.
In this case more than others perhaps, it's clear that any attempt by financial beneficiaries to behave with ethical purity—if indeed they have an interest in doing so—would be difficult. To punish children would itself create a backlash. And if not, one could be engineered to enable tuition fees to continue flowing. Rejecting $25 million dollars that could be used to advance LGBTQ causes would also create a backlash—a serious one—among pragmatists. The Clinton Foundation can do a tremendous amount of good with that much money. These are reasons why the general ethos with regard to the provenance of massive amounts of donated cash seems to be, ironically, don't ask, don't tell.
International capital, the demand for reputation cleansing, and pragmatic concerns all combine to create a nest of contradictions. Ukrainian steel, rail, and pipe magnate Victor Pinchuk, referred to by Forbes, Financial Times, Vanity Fair, The New York Times, and The Guardian as an oligarch with dubiously sourced money, has given to the Clinton Foundation and Tony Blair's Faith Foundation, but also donated to the Trump Foundation before the weight of numerous scandals brought about the latter organization's collapse. The fact that so many elites agree that business dealings and political affiliations exist on another plane and are to be forgotten or forgiven within their social circles is a major reason why reputation cleansing works. For an example of how cozy alleged ideological opposites can be with each other, consider that cable pundit Tucker Carlson, one of the fiercest public critics of President Joe Biden and his son Hunter, privately sought Hunter's help in 2014 getting his own son Buckley Carlson into Georgetown University. Hunter indeed tried, though it didn't work.
More Problems Than Solutions
Any potential remedies to the issue of reputation laundering are probably utopian, considering the fact that corruption is increasing globally. With more tainted money, more interest in reputational makeovers, and more deprivation in so many countries that has charities seeking more donations, what exists is a perpetual washing machine with its gears turning inside the philanthropic sector. Nevertheless, when politically toxic individuals are allowed to purify themselves via monetary gifts, it risks undermining the institutions upon which so many people depend. Former president Barack Obama popularized an idea originated by Voltaire that embodies pragmatism—loosely, it goes: “Don't let the perfect become the enemy of the good.” But there may also be a point at which the good risks becoming the ally of the bad.