Wicked Coin Podcast

Power and corruption … two sides of a wicked coin. In this podcast, hosts Tatiana Sainati and Diana Shaw tell the stories of the world’s largest, most salacious corruption scandals and explore the myriad ways in which corruption creeps into the hearts and minds of men, the consequences of corruption for perpetrators and victims alike, and the red flags that, had they been identified and acted on, might have set the world on a different path.

Backdating, Bar Mitzvahs, and the Namibian Getaway: The Comverse Scandal Unraveled

November 13, 2025

Collateral Consequences: The Iowa College Sports-Betting Scandal

October 9, 2025



For the first episode of Wicked Coin’s second season, hosts Tatiana Sainati and Diana Shaw are joined by special guest Colin Cloherty, a Wiley associate, former NFL player, and federal prosecutor, who helps them unravel the explosive details of the Iowa sports-betting scandal that rocked collegiate athletics. What began as a quiet investigation into suspicious betting activity quickly escalated into a sweeping probe implicating dozens of student-athletes across multiple universities. With allegations ranging from underage gambling to falsified identities and insider information, the scandal exposed deep vulnerabilities in the NCAA’s oversight and the growing influence of online sportsbooks. Tune in as the team explores the legal fallout, the ethical dilemmas facing college sports, and the broader implications for the future of amateur athletics in America.

Wicked Coin Turns One: Where Are They Now?

August 14, 2025



For this milestone episode, hosts Diana Shaw and Tatiana Sainati revisit the most notorious figures and scandals from the past year of Wicked Coin. From political power grabs and corporate corruption to banana barons and bribed admirals, the team checks in on some of the jaw-dropping developments behind your favorite stories. Tune in for a sobering yet insightful look at the progress made – and the setbacks faced – in the ongoing fight against corruption and wrongdoing.

Transcript

Diana Shaw: Power and corruption are two sides of a wicked coin. Welcome to the podcast that tells stories of the world's largest, most salacious corruption scandals, and explores the myriad ways corruption creeps into the hearts and minds of men and women, the consequences of corruption for perpetrators and victims, and the red flags that, had they been identified and addressed, might have changed the course of history. I'm Diana Shaw, and I'm joined today by my co-host...

Tatiana Sainati: Tatiana Sainati.

Diana Shaw: We are lawyers at the DC-based law firm, Wiley Rein. I'm a partner in our White Collar Crimes practice, and Tatiana is the head of our international arbitration and disputes group. Today, Wicked Coin turns one year old!

Tatiana Sainati: I know. It's so exciting.

Diana Shaw: We conceived of this show a year ago, and I just don't know where the time has gone.

Tatiana Sainati: Me either.

Diana Shaw: It's kind of crazy. Yeah, we've covered so much ground. I mean, compromised naval admirals, corrupt fruit companies, shady soccer officials, crooked oligarchs and politicians, an enigmatic strongman with a love for social media, a congressional conman with a flair for the dramatic, I mean, the list goes on.

Tatiana Sainati: Corruptions everywhere.

Diana Shaw: Yep. So what we thought we'd do today for our last episode of the year was kind of a “Where are they now?” look-back at some of our biggest baddies, and I know for at least some of the stories we've covered, there have been some big developments. And I'm kind of curious whether on whole the updates will add up to a win for justice or another check mark in the Wicked Coin column. What do you think?

Tatiana Sainati: I think it's going to be a mixed bag.

Diana Shaw: Yeah, I think that's probably right.

Tatiana Sainati: I think one of the themes for me is that combating corruption is sort of a two steps forward, one step back type of situation. But that's still progress.

Diana Shaw: That's still progress. And I think you have to seize those small victories and let that be what fuels the fight. Because if you focus on the losses, I think it's just too hard to keep going.

Tatiana Sainati: Exactly.

Diana Shaw: So, we're gonna focus on the positive, but where do we wanna start today?

Tatiana Sainati: Well, we can start with Victor Yanukovych.

Diana Shaw: Yeah, let's do it.

Tatiana Sainati: Let's do the Strongmen. All right. So, Victor Yakovich, who listeners may remember, was former president of the Ukraine, who was terribly upset at losing an election and ended up turning to Russia to assist him in trying to take back control of his country and wound up being sentenced to 13 years in prison in absentia after fleeing for Russia of high treason and waging a war of aggression against his own country.

Diana Shaw: Nice.

Tatiana Sainati: Well, in April 2025, he has been sentenced to another 15 years in prison again in absentia for inciting desertion and organizing illegal border crossings.

Diana Shaw: Oh.

Tatiana Sainati: The charges actually relate back to the whole debacle with his escape from the Ukraine. Prosecutors managed to prove that he orchestrated an unlawful escape for himself and 20 members of his inner circle on three Russian military helicopters. And he then induced state security administration service members to desert and facilitated their evacuation by the Russian Navy.

Diana Shaw: Oh my God.

Tatiana Sainati: So while it is, I think, heartening to see that he's being prosecuted, the sad truth is that he remains living his best life in a Russian village. The Kremlin continues to support him. They've had plans to reinstall him as president of the Ukraine, if they're ever successfully able to take Kiev. His family is still at large, too. And in what may have to be a future episode, it turns out that his son, Alexander, has made billions of dollars since the war in Ukraine started by selling coal from Russian occupied parts of the country to Turkey.

Diana Shaw: Oh my God. What's the thought behind bringing these charges and rendering these convictions, while clearly there's no opportunity to really enforce it, at least at present?

Tatiana Sainati: I think it's sending a message. They know they're not actually going to be able to get him out of his Russian village.

Diana Shaw: Likely his Russian mansion.

Tatiana Sainati: But they can make it impossible for him to come back to the Ukraine without, I guess, the Kremlin's backing.

Diana Shaw: Right. Well, let's hope there won't be Kremlin backing in Ukraine anytime soon. Interesting.

Tatiana Sainati: Yeah.

Diana Shaw: Alright, well, I can give an update on my strong man. If you'll remember, my strong man was a guy named Ramzan Kadyrov. He's the current head of the Chechen Republic or Chechnya, a small Russian republic. To sum him up, he is best known for his flamboyant lifestyle, which we chronicled a little bit on the episode, and his cult of personality, called “Ramzanism.” And if you remember, despite leading one of Russia's poorest regions, he displays extraordinary wealth. He maintains this strong man aesthetic on social media with all of his bros and biceps. That's sort of what characterizes what he posts. And his rule and public persona have been marked, as we said, by a blend of ostentation, violence, nationalism, and, very concerningly, allegations of severe human rights abuses.

At the tail end of the episode, I shared that rumors have been swirling, that his health has been in pretty serious decline. Well in May of this year, Al Jazeera reported that his health became so poor that he actually tendered his resignation to Russia's president Vladimir Putin. Ramzan confirmed his intention to resign, but it appears that Putin did not accept, word on the street is that Putin is not interested in letting Ramzan's 17-year-old son succeed him. So, things are a little dicey. As recently as July 3rd, The New York Times reported that Ramzan has been “noticeably absent from view in recent days, amid rampant speculation about his health.” So, it appears the situation may be coming to a head shortly, and time will tell.

Tatiana Sainati: Wow. Well, I can understand why a 17-year-old leader was a bridge too far, even for Vladimir Putin.

Diana Shaw: Right. Well, and according to, I think, the Constitution, 30 years old is the age at which one can take over.

Tatiana Sainati: Mm-hmm.

Diana Shaw: So it's unclear how, if one were to follow the rules, his son could succeed him in any event.

Tatiana Sainati: That’s a big “if.”

Diana Shaw: Yeah. It's a big “if.” In these cases, rules seem to be bent fairly easily.

Tatiana Sainati: Yeah.

Diana Shaw: But if Putin isn't behind it, it's not gonna happen. So it'll be interesting to see how that plays out.

Tatiana Sainati: Well, Sani Abacha. Listeners may remember he was a leader of Nigeria who blocked a legitimate election in order to seize control of the country, and then siphon billions out during his relatively short reign before he was…probably murdered. Probably murdered.

Diana Shaw: Maybe.

Tatiana Sainati: We know that roughly $700 million in funds was eventually returned to the country, largely by the United States. I know we discussed that, but that is just a fraction of what he actually stole. Some of the remainder was in France. In December of 2024, Africa intelligence reported that France and Nigeria were progressing towards an agreement to repatriate hundreds of millions more, but they were awaiting sign-off from the U.S. Department of Justice. I haven't been able to figure out why DOJ needed to sign off on everything, but unfortunately, it appears that DOJ's analysis is on ice as members of the Kleptocracy task force have been directed to other priorities under the new administration. So…

Diana Shaw: Yeah, that unit has essentially been disbanded. So those folks are now working on new priorities under the new administration's leadership. So yeah, that's a good question – whether they'll ever return to that initiative.

Tatiana Sainati: And whether France and Nigeria can get the sign-off they need from the United States and actually get these funds repatriated.

Diana Shaw: Oh, that would be such a shame, right? If it didn't happen for that reason.

Tatiana Sainati: Well, corruption remains deeply problematic in Nigeria. Transparency International gave the country a score of 26 out of a hundred, which puts it 140th out of 180 countries.

Diana Shaw: Yikes.

Tatiana Sainati: Scored around the world. The ranking is trending upwards. So that is a good sign, but there are still some significant reforms that would be needed in order to really root out corruption in the country.

Diana Shaw: Hmm.

Tatiana Sainati: So Teodorin Nguema, this case is a powerful reminder of the importance of a free media, 'cause listeners may remember that in Equatorial Guinea, there is no free media.

Diana Shaw: That's right.

Tatiana Sainati: There is a state radio station, and rampant illiteracy, and the state radio station has on several occasions equated their president to God himself, who can do no wrong. And as a result, the country is deeply impoverished despite being a petro-state and having billions and billions and billions of dollars in natural resources that are exploited. Well, Teodorin, the son of the President, Equatorial Guinea's “Playboy Prince.” Still at it, just a couple of weeks ago, Portugal's Attorney General launched a probe into possible corruption involving a Portuguese construction firm that was awarded nearly 1.2 billion in government contracts between 2009 and 2012. And then funneled about 86 million into a company owned by Teodorin. And this bribery scandal was exposed by the International Consortium of Investigative Journalists. So, sort of stepping into the breach where there is no journalism in Equatorial Guinea itself. In the meantime, and I think you'll love this, Equatorial Guinea is fighting the seizure of $178 million of Teodorin's French assets. So we discussed the fact that France had actually seized a lot of his assets in a pretty bold move that was initiated by French Civil Society. That includes a $100 million apartment block in Paris.

Diana Shaw: Okay.

Tatiana Sainati: Equatorial Guinea, after losing a battle to say that was a diplomatic property, is now calling on the International Court of Justice to intervene. Their lawyers argue that the property was purchased with embezzled funds and, under anti-corruption treaties, must be returned to the state.

Diana Shaw: What?

Tatiana Sainati: Yes.

Diana Shaw: And they're just leaving it vague as to who embezzled?

Tatiana Sainati: They're leaving it vague as to who embezzled. We don't know who embezzled. It was definitely embezzled. It's definitely embezzled.

Diana Shaw: Oh wow.

Tatiana Sainati: So, it has to be returned to the state.

Diana Shaw: Oh, wow.

Tatiana Sainati: And let's just ignore the fact that Teodorin embezzled it, and if it's returned to the state, it'll go right back to him.

Diana Shaw: It goes right back to him.

Tatiana Sainati: Yes. Wow.

Diana Shaw: Wow.

Tatiana Sainati: So that's pretty cute, right?

Diana Shaw: Pretty cute. Yeah. I hope that strategy does not have legs.

Tatiana Sainati: There's no way the ICJ is gonna go for that. I don't even know if they'll hear the case, but like –

Diana Shaw: Wow.

Tatiana Sainati: I do believe those anti-corruption treaties have provisions requiring the proper return of embezzled funds to prevent re-corruption.

Diana Shaw: Good. That's those structured repayments that we talked about on a former episode.

Tatiana Sainati: Exactly. So, I don't know that they can get away with just saying, you have to give it right back to the person who embezzled.

Diana Shaw: I mean, you kind of have to, I don't know…

Tatiana Sainati: Hats off, man.

Diana Shaw: Yeah. You gotta give them a little bit of credit for the novelty.

Tatiana Sainati: Hats off, that is creative and bold.

Diana Shaw: Yeah. For the creativity in that argument. Wow. Should we move on to some of our corporate scandals?

Tatiana Sainati: Let's do it.

Diana Shaw: Okay. So why don't we start with FIFA? I put FIFA in the corporate scandal category.

Tatiana Sainati: Even though it's not exactly a corporation.

Diana Shaw: It's not really a corporation, but it's one of the biggest organizations we talked about. So, FIFA is the World Soccer Football Association. It generates billions of dollars a year in revenue. So we might as well call it a corporate scandal, but it is a nonprofit. So that money is supposed to be reinvested in the organization and it's many initiatives. Many of which are fantastic, like youth soccer around the world. But you know, obviously if we covered it on Wicked Coin, you can guess that's not exactly what happened. Instead, a lot, I mean a lot, of money went into the pockets of senior officials running the organization.

So just a quick refresher. FIFA senior officials and others accepted kickbacks and bribes for granting marketing rights to World Cup and other important games. Soccer confederation presidents refused to play their star players unless they got bribes from broadcasters. And the FIFA voting members solicited and accepted bribes for votes on where the World Cup games were played, and that ended up being some of the biggest scandals. But at the end of the episode, we'd explained that after the FIFA scandal came to light in 2015, with a very salacious raid of the five Star Hotel in Zurich and the 3000 thread count sheets being used to walk people out of the building, FIFA undertook a period of reform. Among other things, we reported that the main man who was really seen as the root of the continuing corruption problems for FIFA, this guy named Sepp Blatter, had been banned from FIFA through 2027 and fined a million dollars by FIFA's Ethics Committee following that probe into the bonus payments that he'd made basically to himself and two other guys. But he's also been under investigation in Switzerland for fraud and forgery.

So things were looking like they had turned a corner and were moving in the right direction. Well, unfortunately...

Tatiana Sainati: No! I was like, please don't say “but”, please don't say “but.”

Diana Shaw: Yeah, I don't have much good to report, sadly. So first of all, back in March, Sep beat his corruption charges, convincing a Swiss appeals court that a nearly $2 million payment he made to another FIFA senior official in 2011 wasn't fraudulent. So keep this in mind…

Tatiana Sainati: What was it?

Diana Shaw: $2 million payment in 2011…

Tatiana Sainati: Uhhuh?

Diana Shaw: No, it was just a belated payment on a gentleman's agreement that the two had reached for some advisory work that the official had done for him a decade before. Because that's normal.

Tatiana Sainati: That’s very belated.

Diana Shaw: Yeah, that's totally reasonable.

Tatiana Sainati: I think that's past the statute of limitations, He couldn't have even claimed for it.

Diana Shaw: But you know what? He got a Swiss appeals court to buy it. And so look at that. He's gonna basically get off with a slap on the wrist compared with everything that he was able to make off of that organization.

Tatiana Sainati: It's awful.

Diana Shaw: Yeah. Meanwhile, academics and human rights groups just issued a joint statement in May accusing FIFA's current governing body of being “more poorly governed now than it was 10 years ago when FIFA's corruption scandal first came to light.”

Tatiana Sainati: Great.

Diana Shaw: Yeah. According to the joint statement, the sweeping changes to the organization's governance has "failed to usher in a new era of responsible government at FIFA". And it highlights several concerns, including the current president's, very cozy relationship with some very controversial world leaders, and the award of the 2034 World Cup to Saudi Arabia. Which you may remember, there was a similar controversy that swirled around the award of the World Cup to Qatar.

Tatiana Sainati: I don't know, the desert seems like a great place to host a soccer tournament.

Diana Shaw: Yeah. It makes so much sense. So looks like the sports-washing and the glad-handing continues, unfortunately.

Diana Shaw: Chiquita Banana.

Tatiana Sainati: Yes.

Diana Shaw: I have a bananas update for you on Chiquita Banana.

Tatiana Sainati: I'm so glad there was a pun.

Diana Shaw: I mean, we had to throw it in there somewhere. In that episode, if you remember, we explored the dark history of the banana trade, which started innocently enough in the 1800’s with the planting of banana plants along a railroad in Costa Rica, but ended with corruption, labor exploitation, political manipulation, terrorist funding, and even the massacre of hundreds, if not thousands, of people. So it took a very dark turn.

You may recall that one aspect of the story was this landmark case brought by the families of eight Colombians who were murdered by a Colombian paramilitary, or basically a terrorist organization, called AUC. And the case was brought against the Chiquita company. The case advanced this novel theory of liability that claimed that because Chiquita had made these security payments to AUC, which were essentially bribes paid to AUC to keep Chiquita employees safe, that the company had provided substantial assistance to a terrorist organization and therefore the company created this foreseeable risk that they should be responsible for any harms then done by AUC in other contexts. And this theory of liability actually succeeded in the case and the company had to pay out $30 million in damages to the victim's families.

Well, just this past month, in an even more historic decision, a Columbian court sentenced seven former Chiquita company executives to 11 years in prison for financing AUC in the 1990s and 2000s. And in addition, each was ordered to pay a $3.5 million fine. Which is almost unheard of.

Tatiana Sainati: So, there's a win for justice, finally.

Diana Shaw: I mean, huge win. I feel like this should count for double points in the “win for justice” column because executives almost never see jail time in corruption cases in general, but on such a novel theories as this, it's like, I can't think of a situation in which it's happened. So this is really unprecedented and a huge win for these families and for justice.

Tatiana Sainati: Shall we move on to government scandals?

Diana Shaw: Yeah, let's talk about some of our government scandals.

Tatiana Sainati: All right. Well, our inaugural episode on Fat Leonard.

Diana Shaw: I know that feels like so far ago!

Tatiana Sainati: I know! So when we last met Mr. Leonard, he had been awaiting sentencing after escaping house arrest in San Diego for Venezuela. And he was actually sentenced in November 2024 to 15 years in prison. He was credited with time served. So it looks like he'll end up serving about eight and a half years unless he's released early. He was ordered to pay a $150,000 fine, $20 million in restitution to the Navy, and to forfeit $35 million that he made in his bribery scheme. Although, remember he claimed to have potentially made billions off of the Navy.

So, query whether we're really getting our money back. He is appealing currently and he has argued that his sentence is too harsh and, in some ways, he is not wrong if you compare his sentence to the ramifications that befell the naval officers that he bribed. So remember, there were 91 admirals who were implicated in his scheme, and only 1 served any prison time whatsoever. The remainder were either quietly sent into retirement, retaining their full pension and benefits, or told that they would no longer be eligible for advancement. But really no one, of the thousands of naval personnel total, really no one has served any time at all. Several felony convictions were, as you might recall, overturned or lessened because of prosecutorial misconduct.

So, it does create the appearance that they were mostly worried about hushing this up and moving on than actually holding their top brass accountable for the decisions that they had made. And it is Fat Leonard who is serving far and away the harshest sentence. Now I am not personally saying that I think it's too harsh of a sentence for him...

Diana Shaw: Mm-hmm.

Tatiana Sainati: ...But it would've been nice to see commensurate punishments meted out to the American officials who allowed it to happen and welcomed it.

Diana Shaw: Yeah. I have no sympathy for Fat Leonard. But I agree it's a real missed opportunity not to have ensured full accountability for those involved. But also the opportunity that this presented to send a strong message throughout the Navy, that this sort of behavior is not going to be tolerated, that the Navy holds itself to a very high standard of conduct. I mean, think about the opposite message that this sends, that, as long as we can cover this up quickly and you can stay under the radar, this sort of thing will be swept under the rug. All that does is potentially incentivize people to take risks that you otherwise wouldn't want them to take. So, it does seem like an unfortunate way to have proceeded under the circumstances, and hopefully someone will use this as a case study in the future and think about how they might wanna handle a situation like this differently were it to arise again.

Tatiana Sainati: I hope so. Because you know, something that's been, I think a watch word of the current administration and on the minds of a lot of Americans is “government efficiency.”

Diana Shaw: Mm-hmm

Tatiana Sainati: And when you think about the, at minimum, hundreds of millions of dollars that were lost and wasted because of bribery, it really does elucidate the connection, I guess, between combating corruption and having the most efficient use of taxpayer resources and the most careful stewardship of those resources.

Diana Shaw: Precisely. And we want our taxpayer dollars to spread as far as possible and to reach our priorities. And if it's being siphoned off for this kind of wasteful spending, obviously, it's not going to its greatest purpose. So, so many missed opportunities here.

Tatiana Sainati: Exactly.

Diana Shaw: Sadly, the update for Operation Car Wash, our exploration into systemic corruption in Brazil, has me pretty depressed. This was actually one of my favorite episodes to research and one of my favorite stories, just because it was such a David and Goliath tale. The amount of work it took the Brazilian investigators and prosecutors over so many years, who, by the way, had to make and bring their case within a system that they knew was corrupted from top to bottom, is just completely inspiring. And the fact that they succeeded in bringing down wealthy executives, powerhouse corporations, senators, even a president – it’s kind of incredible.

Now, we already knew that it hadn't all stuck. I think we mentioned in the episode that President Lula's conviction had been overturned. That was a conviction for bribery and money laundering, and he was actually reelected as president in 2023. But on whole, I think we walked away from that episode feeling like in general justice had been done, although things were a little bit in flux.

Tatiana Sainati: Oh no, Diana.

Diana Shaw: Yeah. I'll share a quote from The New York Times in November that sort of gives you a sense of where things stand: “One of the largest corruption crackdowns in recent history is being quietly wiped away.”

Tatiana Sainati: No.

Diana Shaw: Yes. So apparently Brazil's Supreme Court is throwing out key evidence, overturning major convictions, and suspending billions of dollars in fines across a number of the Car Wash bribery cases. I mean, we're talking like 115 convictions being set aside. They're claiming that the investigators, prosecutors, and judges that work these cases were so driven to bring down the defendants that they were willing to break the law in some instances to secure the convictions. And there is some evidence to support this.

Apparently, leaked recordings and other evidence show that at least one judge and prosecutors had coordinated together against some defendants, employed aggressive tactics to force confessions, and ordered some illegal wiretaps. And as The Times put it, it's brought about "a dreary conclusion to an investigation that had once been viewed as a sea change in Latin America, promising to root out systemic corruption that had rotted the underpinnings of governments". It's so sad.

Tatiana Sainati: It's so sad.

Diana Shaw: It makes me so, so sad. And we talked about what happens when overly zealous investigators and prosecutors, who are so certain of wrongdoing, decide to cut corners in an effort to secure convictions. Or they're so worried that the bad guy's gonna get away that they feel justified in doing things, either in the gray or not even in the gray, and doing things that they know are wrong because they feel like the ends justify the means. I understand how tempting that can be, but you see how dangerous it is.

And what worries me and saddens me so much about Operation Car Wash and what's happening right now is the chilling effect that this potentially has on other investigators and prosecutors. I mean, who would undertake something of this size and scale again when they see how badly this fell apart?

Tatiana Sainati: Yeah.

Diana Shaw: People risk their careers, some of them, their families, their livelihoods for this, and now they have nothing to show for it. All of that work is now ruined and such a shame to see what happened here and to know that in some cases they probably didn't have to cut those corners. I think you have to trust the process. But then again, I feel for them, because they were operating in a system they knew was corrupted. So, you wonder what choice they had. If you're playing against those odds, I don't know what you do, I really don't.

Tatiana Sainati: I don't either. It does call to mind – I remember in Fat Leonard, that's why the felony convictions that the government did manage to get were overturned, because the prosecutors failed to turn over exculpatory evidence.

Diana Shaw: Right.

Tatiana Sainati: Because they were concerned that they wouldn't get their convictions. And if that can happen in that case, which is not nearly the scope of Operation Car Wash, in a judicial system that I think is historically robust and independent, how much easier must it be to fall into that trap in a place where the corruption was everywhere?

Diana Shaw: Anything positive for the UK postal scandal?

Tatiana Sainati: Yes and no. I mean, it remains a deeply tragic situation, right? The first findings from the public inquiry into the scandal were just published in July.

Diana Shaw: Okay.

Tatiana Sainati: And they're devastating. They reveal that more than 13 people killed themselves as a result of the wrongful prosecutions. At least 59 more contemplated suicide, at least 19 developed substance abuse problems.

Diana Shaw: Oh God.

Tatiana Sainati: They have more than 3,000 claims for compensation left to resolve. The government has set aside 1.8 billion pounds to pay out all of the claims for compensation.

Diana Shaw: Wow.

Tatiana Sainati: This report followed 225 days of inquiry hearings with 298 witnesses. And I think the one thing that we haven't seen yet, although I guess I wouldn't be surprised, maybe we'll see some individual convictions of some of the leaders of the post office or Fujitsu, who covered things up. The leader of the inquiry did say it was just absolutely shocking and abhorrent to him to see how the post office took this deeply adversarial approach to their own subcontractors and citizens, and refused to even consider or ever acknowledge the possibility that the data was wrong...

Diana Shaw: Right.

Tatiana Sainati: …that they were getting from the Horizon program. So maybe we end up seeing that, that would be separate from this inquiry, which has really focused on trying to drill down into the scope of the problem and the amount of compensation that these victims are owed. So we will see, but I think it is at a minimum, extremely important and salutatory that they have conducted this inquiry, that they're getting all the facts out into the public, that they're giving victims an opportunity to be heard, and that they're forcing the post office, the government, and the corporation to take some accountability for what happened.

Diana Shaw: What was the name of the woman that you despised so much in that story?

Tatiana Sainati: Oh my God, I forgot. I'd have to look it up.

Diana Shaw: You've already blocked her out of your mind.

Tatiana Sainati: I've already blocked her out of my mind.

Diana Shaw: I was wondering if she might be one of the ones they go after.

Tatiana Sainati: I think she would be.

Diana Shaw: I hope so. Well, we can end on a slightly lighter note. Last but not least, we can spend a minute on George Santos. We covered George in our most recent episode. So not that much time has passed since that episode aired, but there was one pretty big upcoming event that we teased during the episode, and that was that George was due to report to prison in July. On July 25th, George did report to a federal facility in Fairton, New Jersey. He traded his Hermes and Ferragamo for government-issued khakis.

Tatiana Sainati: Wow.

Diana Shaw: Yeah. Not very glamorous, but in true George fashion, he made a final social media post. And I have to read you part of it because it is literally like he listened to our episode. I died when I read this. He wrote, and I'm not making this up, “Well, darlings, the curtain falls, the spotlight dims and the rhinestones are packed. You made this political cabaret worth it. I may be leaving the stage for now, but trust me, legends never truly exit.”

Tatiana Sainati: Oh my God.

Diana Shaw: It was like he heard our episode and is speaking directly to us.

Tatiana Sainati: I mean, he probably does have some sort of alert for when his name is mentioned anywhere.

Diana Shaw: I mean, I feel like yes. And I also feel like I won the bet.

Tatiana Sainati: You did.

Diana Shaw: I'm right. Rob's wrong.

Tatiana Sainati: George. That's really important to Diana, so thank you.

Diana Shaw: Being right is deeply important to me.

Tatiana Sainati: Thank you for letting her know and for seeing us.

Diana Shaw: Yes, George. I feel very heard and seen. I knew you would be back. I had full faith. I can't wait to see how you reemerge and reinvent yourself in the next chapter.

Tatiana Sainati: Brighter rhinestones than ever.

Diana Shaw: Than ever. Yeah. So that's the latest with George. More to come on that. I'm sure we'll be doing another episode someday. Knowing George, he won't disappoint. Well, this has been fun. It's interesting to go back through the journey of the past year.

Tatiana Sainati: Yeah. And I'm starting to think it's more like one step forward, three quarters of a step back in terms of actually combating corruption.

Diana Shaw: I think it's more like one step forward, two steps back.

Tatiana Sainati: That's no longer progress.

Diana Shaw: No, I don't think it is, but I think that's fine as long as we keep trying to take a step forward.

Tatiana Sainati: As long as we keep trying. I think, reiterating the absolute importance of the free press, which I will admit, I mean, I've always obviously been a fan of the free press. But I had not quite wrapped my own head around just how critical the free press is and quality investigative journalist’s work is to combating corruption and keeping all levels of society, both public and private sector, honest. So that's been huge to see. And the other is just like corruption can seep into every facet of an organization, a culture or a society, and uprooting it. I think we talk a lot about the anti-corruption or the good governance ecosystem, and it really requires a holistic approach. Otherwise, it's just whack-a-mole.

Diana Shaw: A hundred percent. I think to the point about the free press, I probably took it a bit for granted as a nice to have and did not realize until we really started to see it play out in the episodes, how imperative it is, even in places that have a robust free press. Like when we did the George Santos episode and I realized that really, it's the press that does the vetting of political candidates and there's no other mechanism in our system. That's when I realized like, no, we actually rely heavily on it. It's not a nice-to-have. It's a must-have.

And you're right. I mean, every government, every country, regardless of wealth, regardless of geography, demographics, everybody's susceptible to corruption. I think what I'm realizing is how important it is to root it out quickly in any system. It could be a corporation, a government, a community. You gotta stamp it out quickly because it really, it is like a cancer. As soon as it gets any foothold, it's gonna find a way to metastasize, and it becomes so much harder to ferret it out and then to remove. So getting at it as soon as you see it, and trying to remove it as quickly as possible is critical. If you're building something from scratch, trying to put those internal controls in place and those safeguards to get out ahead of it as quickly as possible is so important. But we just see time and time again, if there's even a kernel of it in a system from the outset, the chances are that it's just going to grow and grow as that system becomes bigger and more sophisticated.

People keep fighting the good fight, and we will too. But man, it's tough stuff, which is why we always have so many good stories to tell. There'll never be a shortage, I don't think.

Tatiana Sainati: Well, we wanna thank our listeners for joining us and let you know that we'll be taking a one-month hiatus as we retool the show and prepare for the next year of Wicked Coin. But fear not, we have plenty more salacious scandals to share. And also, maybe a few surprises when we come back. Till then, ff you like this podcast, please let us know by liking us on whatever listening platform you use and maybe even sharing us with friends, family, or anyone you know who like us, loves a good story about people behaving badly. As always, be good, and we'll see you next time.

Diana Shaw: Bye

Tatiana Sainati: Bye.

Deceiving Your Way to the American Dream: The George Santos Story

July 17, 2025



In this jaw-dropping episode of Wicked Coin, hosts Diana Shaw and Tatiana Sainati are joined by their Wiley colleague Rob Walker – former Chief Counsel to both the House and Senate Ethics Committees – for an unflinching look at the rise and fall of George Santos. From fabricating his résumé and heritage to defrauding donors and misusing campaign funds, Santos’ story is a masterclass in audacity and deception. Tune in as the Wiley team unpacks how a man built on lies made it to Congress – and what ultimately brought him down. For more on the rise and fall of George Santos, check out "The Fabulist: The Lying, Hustling, Grifting, Stealing, and Very American Legend of George Santos" by Mark Chiusano.

Transcript

Diana Shaw: Power and corruption are two sides of a wicked coin. Welcome to the podcast that tells stories of the world's largest, most salacious corruption scandals and explores the myriad ways corruption creeps into the hearts and minds of men and women. The consequences of corruption for perpetrators and victims, and the red flags that had they been identified and addressed might have changed the course of history. I'm Diana Shaw and I'm joined today by my co-host

Tatiana Sainati: Tatiana Sainati.

Diana: We are lawyers at the DC based law firm, Wiley Rein. I'm a partner in our white-collar crimes practice, and Tatiana is the head of our international arbitration and disputes group and in a Wicked Coin first, we are joined today by a special guest. We've never had a guest on the show before, but we couldn't miss the opportunity to have our colleague, Rob Walker join us for today's story about the enigmatic and oh, so flamboyant conman, George Santos.

Rob Walker: Well, hello.

Diana: Hello —

Rob: I'm very honored to be your first guest.

Diana: The reason why we couldn't pass up the opportunity to have Rob join us is Rob is Of Council and Wiley's Election Law and Government Ethics Practice Group, and he is a former chief counsel and staff director for the House Ethics Committee and also the Senate Ethics Committee. So, he knows a thing or two about some of the bad deeds we'll be discussing today. But no spoilers. Let's get to some background first. So, I think we're all familiar with the American Dream story, right?

You can take various forms, but in its most basic sense, it's the story of a young kid who comes from nothing, who hustles scrapes by and on the back of his own hard work and initiative makes it big. It's rags to riches, setback to success. Well, George Anthony Devolder Santos, which is his full name, and he's used various iterations of it in the past. The man at the center of our scandal today, he knew that story and more importantly, he knew the story's power and he didn't just live it.

He polished it. He perfected it. He sold it. I mean, he basically turned the American dream into a pitch deck. So, let's talk about how he did that, George Santos introduced himself to voters in New York's third congressional district as the embodiment of hard work and perseverance. So, here's what he presented to voters.

He is openly gay, Latino, a child of immigrants. He claims to have gotten himself into a prestigious New York private school, became a Wall Street whiz, and pulled himself out of poverty. He is a brain tumor survivor. The grandchild of Holocaust survivors. The child of a mother claimed by 9/11 and he even ran a puppy charity and raised money for veterans and their service animals. I mean, talk about a package, right.

Tatiana: I'm trying to think if there's a special interest group he didn't hit right?

Diana: Like he checks every box. And the story worked. He won as a Republican candidate. He flipped a traditionally democratic seat and became a member of Congress in the U.S. House of Representatives until this story unraveled. This is why we're talking about it today. So honestly, I don't even know where to start with his lies. There are so many. He's one of those characters that's so shifty that for some of the things, even though they're almost certainly lies, people actually haven't been able to pin down and prove definitively that they were lies, but they're almost certainly lies.

But here's just a little sampler platter of what we think are lies, and then we'll get into some of the juicier parts of our story. So, gay? Yes, that's a yes. Although I'll note that he did at one point marry a woman. But it may have been an immigration scam, so that part is unclear. Okay. Latino? Yes. Child of immigrants, yes. Grew up very poor? Yes. That's sort of where the Yes’ end.

Tatiana: Then it honestly feels good enough, right?

Diana: I mean, it is an American dream story. It's got the fundamentals, but that wasn't good enough for George. George needed to take it to the next level and then to the next level beyond that.

George never attended the prestigious college prep school that he claimed to attend. He did not get a college education though he claimed to have an undergraduate degree from Baruch College and then also an MBA from NYU. He did not work at Goldman Sachs, contrary to his claims, but he does appear to have worked for a company in Florida that the SEC later accused of being a Ponzi scheme. So, I guess he worked in finance. And what you hear from a lot of the people who have come forward since all of this has come out is that he's one of those people who will take like a kernel of truth and then build a mountain of lies from it. So, worked in finance for a Ponzi scheme becomes, I worked at Goldman Sachs and was hugely successful in finance. No one's been able to actually confirm whether he had a brain tumor. So, I guess, to be fair, that's in the maybe category, not really sure.

Tatiana: Could explain a lot —

Diana: It could. We'll never know. We'll never know. But let's dig into his family and his charity work, Okay. So, Santos claims about his Jewish heritage and his grandparents being Holocaust survivors. That has been pretty aggressively examined cause that's a pretty big statement and it has been pretty thoroughly debunked. His grandparents were not Jews who fled Ukraine during the Holocaust, as he's claimed. They were actually Brazilian. I don't know why he felt the need to embellish upon that, but interestingly, he did once make a point of describing himself as Jew-ish. Yes. Which I feel like is the George Santos way of telling the truth. It's a lie, but it's not like a total lie, which is the equivalent of the truth.

Tatiana: Cause he feels like a certain kinship with the Jewish people or culture. So, in that sense, he's Jew-ish?

Diana: I guess? I mean, I think that's a very generous interpretation of his view of the world. In terms of his mother, George described his mother as a finance executive who worked in the South Tower of the World Trade Center. And then he also claimed that 9/11 “claimed his mother's life.” Let's unpack that.

A: She absolutely was not a finance executive and;

B: She was not in the World Trade Center on 9/11.

I mean, they've done a lot of digging, and as you can imagine, they're pretty extensive records now of who was there on the day. The best evidence available is that she was a housekeeper, a cleaning lady. Immigration records show that she was actually in Brazil on 9/11. She also didn't pass away until 15 years after 9/11. Though since then, George has sort of, engaged in a little bit of a revisionist history and claims that the cancer that she died from was caused by the dust from ground zero and so when he said that 9/11 claimed her life, that's what he meant —

Tatiana: Traveled to Brazil?

Diana: She somehow breathe it in, in Brazil. So yeah, sure. At the time of his mother's death George, who I should mention, despite his claims of Wall Street employment and financial success, basically has always struggled with money. And he has quite an eviction history for nonpayment of rent which is interesting because he's also claimed that he was a landlord. But anyway, he claimed not to be able to afford the cost of her funeral service. What did he do? He put out a collection at his mother's Catholic church, not her synagogue, at her Catholic church. And the kind people there donated what someone estimated to be about $6,000 to cover those expenses. So of course, George went right to the funeral home and gave the money to the funeral director so that his mother could have a very lovely service because by all accounts, he did actually have a pretty close relationship with his mother and wanted to honor her, memory properly. He didn't do any of that. From all accounts, the money never went to the funeral director. He got stiffed. The service was given, but it was never paid for and that money never turned up anywhere.

Tatiana: Wow.

Diana: Yeah. You think that's George's lowest moment?

Tatiana: No. I mean, I wanna say yes, but I can tell from your face it's a no.

Diana: Let's go lower Santos met a homeless Navy veteran named Richard Ossoff, whose service dog Sapphire developed a life-threatening tumor that required surgery. Santos offered to set up a GoFundMe campaign for Ossoff and Sapphire to help fundraise the amount needed for the surgery. And I will say at the time, Santos purported to run an animal charity called Friends of Pets United. That seemed pretty legit. The GoFundMe campaign raised $3,000, but I know you're going be shocked by this. When Ossoff contacted Santos about accessing the money, Santos gave him the runaround. He was kind of combative and evasive and then finally he told Ossoff that the funds were under the charities control and could only be given directly to the veterinarian that would be performing the surgery.

And that Santos was recommending a different vet than the local vet who had diagnosed the issue. That vet then declined to do the surgery for some unexplained reason. And the money was never given and the poor dog died.

Tatiana: No.

Diana: Yes.

Tatiana: Sapphire!

Diana: I know poor Sapphire died. And Ossoff its owner had to watch this happen.

Tatiana: Wow, that's low.

Diana: It's really low. George was involved in a number of other scams thankfully none of which resulted in the death of other animals that we know of. Thankfully. But we'd need a multi-part series to go through all of them. We will not do that. Let's jump to late 2023. At this point, most of George's lies have been pretty thoroughly exposed. All of the resume fabrications have made headlines. They're so absurd. The late-night hosts have all made plenty of hay of them. But if you can believe it, those are not what actually ends his time in Congress. Not his mom's fake 9/11 death. Not his made-up Wall Street past. It was money, but more specifically it was campaign money that brought George Santos down. Some of it was dirty. Apparently, some of it was misused and in some cases some of it was totally imaginary, and we'll get into all of that.

Tatiana: Would lying to voters about such fundamental things not be sufficient without further action from Congress to kick someone out?

Rob: Well, if there are lies that are tantamount to fraud, that they're lies used to obtain funds that are specifically used for some other purpose than is represented, that's one thing. But if there lies about policy promises or even personal background, they're not criminal unless there's some defrauding component to them.

Diana: Wow. It's crazy, right?

Tatiana: Yeah.

Diana: You would assume that's part of the legal framework, but it actually isn't.

Tatiana: Yeah.

Diana: And it isn't until you get a brazen case like this that you start to realize the limitations in the legal setup. The Department of Justice ultimately charge Santos with a 23-count indictment, including wire fraud, money laundering, and making materially false statements to the Federal Election Commission.

And I'll break that down. So, in one of the more brazen schemes Santos allegedly loaned his campaign $500,000, which in and of itself isn't a problem. I don't think it's a common occurrence, but candidates are allowed to loan their campaigns money. Except in Santo's case, the financial disclosures that he'd made in the prior year showed that he had an income level of only $55,000. So, my first question is —

Tatiana: Where did the money come from?

Diana: Where did the money come from? Exactly. My mind immediately races to inappropriate sources of money. Foreign financers, some of the oligarchs we've covered on the podcast,—

Tatiana:  Or did it not exist at all?

Diana: You're so clever. It didn't actually come from anyone. It was completely fake. But you might ask. Why would George Santos make a fake loan to his campaign?

Tatiana: So, that he gets repaid.

Diana: No.

Tatiana: To raise more funds then?

Diana: You're on the right track. I didn't know this until I dug into this story, but basically by making his campaign look flush with cash, he unlocked the Republican party war chest. If you can show that you've hit certain thresholds and that you've got all of this backing, the party will then come in and essentially supplement your efforts with a lot of support, including money to support advertising and things like that. It was a way for him to unlock these resources from the party through this false loan that he paid. At the time, it turns out that he only had like $8,000 in his checking account. He was nowhere near flush with cash.

Tatiana: Despite being a Wall Street wiz.

Diana: Right. Exactly. All right. Then there was also, he had so many different scams running at the same time. He's giving false loans to his campaign. He also had this alleged donor scam. Prosecutors allege that Santos would solicit money from supporters of his campaign and then siphon off thousands of dollars for personal expenses. It was supposed to go to advertising or something else and he would just take it and essentially send it right to his own personal checking account. What kinds of expenses, you might ask? Well, Botox. Essential for running a campaign.

Tatiana: I mean, you gotta look good.

Diana: Luxury goods, designer shoes, payments to OnlyFans. You heard that right. Campaign funds intended to support a bid for public office were allegedly used to access online adult content. Yeah. He's really something. He also had a nasty habit of taking his donor's credit card numbers after they had provided them for a legitimate donation. And then using them for multiple unauthorized additional charges, including for some of the mentioned personal expenses. Yeah —

Tatiana: Audacious.

Diana: That is exactly the word. It is audacious, but it is also really sloppy and it was his undoing.

Tatiana: I love how you seem personally offended at the sloppiness —

Diana: Oh my God, I'm so offended.

Tatiana: At least do it right.

Diana: At least be good at it. At least try to be good at it. Hone your craft. In March of 2023, the House Ethics Committee began investigating Santos. In November of that year, it released its report, which found that Santos conduct quote was not only egregious but criminal. The report detailed more than $50,000 in campaign funds used for quote, “personal benefit,” including travel, rent, and Botox. Then two weeks later, the house voted to expel him from Congress. And it was the first expulsion in over two decades, which is a fairly notorious honor, I guess, to have. And Santos became only the sixth member of Congress in history to be ousted in that way. Since then, he's pled guilty to wire fraud and aggravated identity theft, which honestly, I don't think he really had a choice because his campaign treasurer ended up flipping on him and pleading guilty.

He's been ordered to forfeit $200,000 and pay restitution in the amount of about $375,000 and then on April 25th of this year he was sentenced to 87 months. So more than seven years in prison. His sentence begins on July 25th. Wow. It is coming up this month. So I wanna go straight to Red Flag Roundup, because I wanna take full advantage of our special guest, Rob Walker. Rob, you were the Chief Counsel and Staff Director for the Senate Ethics Committee from 2003 to 2008, and prior to that for the House Ethics Committee from 1999 to 2003. And if I have this right, it was during your time on the House Ethics Committee that the fifth member of Congress was expelled. So, the one immediately proceeding George. I'm dying to know what was that like?

Rob: Well, that involved Jim Traficant, who at the time was a very unique member from Ohio. He had gone through a trial. He was convicted on 10 felony corruption related bribery type counts. It was after that the House Ethics Committee began its investigation of him. But it was pretty quick cause it relied on the transcripts of the trial. The procedures of the House Ethics Committee requires a trial of the member a public trial. There was one for Traficant. And he was convicted. Then the committee recommended the sanction of expulsion and in pretty short order, the house met, voted on that, and he was expelled. That was an interesting time.

Diana: Indeed. And was it from your perspective, did it seem like a pretty bipartisan process when something like this happens? Or do politics play some part in even that?

Rob: Well, if a member is expelled unless the opposite party controls two thirds of the house it's got to be a bipartisan process. I mean, an expulsion vote of the house under the constitution requires two thirds of the members to vote to expel. It's not like you can just do it with a bear majority. So that process is bipartisan and the ethics committee process, at least nominally, is supposed to be bipartisan. The committee is five members from each party. And the staff is hired on a nonpartisan basis by all the members.

Tatiana: Does it require a felony conviction? Is that a prerequisite to having one of these trials and having the sanction of expulsion imposed?

Rob: Not on paper, no. But in fact, and historically, the last three members to have been expelled in the moderate era had felony convictions. But of course, here, although George Santos was charged with felonies, he had not yet been convicted.

Diana: And he was denying them at the time. He initially pled not guilty to the charges. And part of the reason why I asked the question is because there were two prior votes on his expulsion that did not succeed, in part because there was this concern over his seat which was his historically a democratically held seat and it was such a close—

Rob: Right

Diana: A close divide in the house that there was real reluctance to risk that seat. But eventually, once I think the house ethics report came out it became too difficult to report—

Rob: It came out in mid-November—

Diana: Yeah.

Rob: And the expulsion vote that eventually succeeded was in December and it was introduced by the chairman of the ethics committee, which was quite damning—

Diana: And carries a lot of weight.

Rob: That carried a lot of weight in this process. So, members who were objecting that the due process was not followed. And there are a lot of arguments that it wasn't, were persuaded by the fact that the committee chair himself was sponsoring the resolution. And I say due process what the committee rules typically require were not followed.

Tatiana: In what way were they not followed?

Rob: Well, again, as I said, with Traficant, what usually happens is there's kind of a parallel to the criminal process. The charged member is given the opportunity to present his or her case. In including at a public hearing and the ethics committee has to vote on, to convict or not. Then there is a sanctions hearing where the various options are voted on - expulsion in the most serious cases, censure, reprimand, or just a public letter of approval or something like that.

Tatiana: So, is the concern with the rights of the member or with the rights of the people who voted for that member?

Rob: Well, it's a good question. I think it's really both. Obviously, there are cynical evaluations of this process and of the structure of the ethics committee. For example, there are critics who say that the 5/5 split is really a formula for stasis and in action. The more charitable view is that it promotes deliberateness and consensus. But to your question, it is true that members are elected by the voters. And it should take a lot to kind of undo what the voters have done. So, that is a real and legitimate concern.

Diana: I am curious with the 5/5 split. In your lived experience, did it result more in stasis or more in consensus building?

Rob: Well, when I was there, and it's almost 20 years ago that I left the Senate there really was such a thing as bipartisanship.

At least more than there appears to be today. I think the members on the committees themselves always tried, in my experience, did try to act in a bipartisan way and to communicate in a bipartisan way. But it's a political institution so, it's certainly inevitable that politics more than seeps into the process. It's the context and the medium in which it all happens.

Diana: I wanna ask you about the financial disclosure process a little bit, because I just don't know how it works. There was this obvious red flag between the financial disclosures and the loan which I'm sure had to be disclosed as well. It made me wonder who if anybody is looking at these documents to potentially audit for red flags like this that could identify issues or indicators of corruption and things like that. It sounds like in this case it was really investigative journalists and public interest type advocacy groups that did that work. But is there an agency like the FEC or anyone in the federal government that's doing that?

Rob: The FEC certainly reviews the campaign finance reports and the ethics committees review at least for compliance with the reporting requirements, but they do not otherwise kind of audit what's in those reports. I mean if his report had disclosed that he had made $500,000 loan to his campaign, the ethics committee reviewers would not have gone out to absent some reason to do so, would not go out and audit to make sure that happened.

Diana: What about unexplained wealth? Wouldn't that trigger some kind of review?

Rob: Well, that certainly is a trigger and that was one of the triggers here. I mean he was a candidate twice. In his earlier candidate reports for the 2020 election cycle. He reported the $55,000 in income which you mentioned. I don't think he reported any assets. He didn't report any bank accounts. He didn't report any other salary. Whereas two years later he reported two years of income in 2022 and 2021 two years, income of $750,000 each. He reported extensive bank accounts.

Diana: Wow, property in Brazil.

Rob: A condo or something in Brazil.

Tatiana: And was it all made up?

Diana: Who knows?

Rob: It most likely was but yeah, so that would be a red flag again and for the press. It was a red flag.

Diana: Yeah, Interesting aside. He also, between 2020 and 2022 collected pandemic relief unemployment insurance while he was allegedly making all of money.

Tatiana: Making $750,000 a year.

Diana: And the only legislative act that he was able to accomplish as a representative was to co-sponsor a bill that was supposed to crack down on pandemic fraud. I think specifically in the unemployment benefits arena.

Rob: That was one of the charges to which he pled guilty was fraud. In terms of receiving those benefits.

Tatiana: Yep. It's interesting. Rob that you mentioned it was a red flag for the press to see this difference, I guess. This has been a recurring theme in our episodes is the role of the press in uncovering and holding accountable for all of these multifaceted corruption. When we covered Equatorial Guinea, we noted that one of the problems is no press whatsoever, free or otherwise, just the state sponsored radio that believes the president is God. And then in our postal scandal, it was the press that actually figured out what was going on and drummed up public support to have the government take action, and here the government took action, it seems relatively expeditiously, but it sounds like maybe it was the press once again that flagged. Hey, something stinks.

Rob: I think it was the press. It was first a small local newspaper in Long Island. They came out with some stories before the 2022 election, and then it was taken up doggedly by the New York Times, and they ran a series of articles on it. When you're talking about reviewing member financial disclosure forms in the House and Senate, particularly there, because there are essentially no other conflict of interest restrictions in the House and Senate. It's up to the public, as informed by the press, to make their determinations of potential conflicts and potential financial issues based on reporting by the press.

Even though the forms are publicly available, the voters are not going to separately look them up online. It's through review and reporting by the press that these issues typically get caught. Certainly, that was what was behind the unraveling of the George Santos story.

Diana: Yeah, it was some really incredible investigative journalism, but at the same time, to the earlier point about sloppiness, it was also just like picking up the phone and calling Baruch College. So, not to minimize the amount of hard work that went into it, but some of it also was just really simple vetting that could have been done by anybody but just remarkably wasn't.

Tatiana: I'm curious. Do the parties do any vetting before they decide like okay, we're gonna start actually funding this particular candidate or did the parties not really play that role?

Diana: Well, I can say from the research that the head of the party in the region. Basically said we rely on candidates to be truthful with us. My sense was that if they see a red flag they will run it down, but they don't see themselves as having an affirmative duty to vet candidates on behalf of voters. I don't think that's the responsibility or obligation of the party or at least that's not the perception that they have based on the statements that I heard. And it may be that different people view it differently, but I was sort of shocked at this idea that there's no formal mechanism for vetting candidates.

There's no law against lying baldly to voters in order to gain their trust and their approval. I mean just the things that don't exist in our system around arguably the most important part of what makes us a democracy is just kind of staggering it. So, you can see how easily someone can exploit it. If they're willing to just shamelessly take advantage of those weaknesses in the process.

Rob: There are reasons of course, why just lying about who you are or what you're gonna do once in office or even about your opponent that's not regulated,  there's not a law against. It it's political speech —

Diana: Right.

Rob: And that is at the core of the First Amendment.

Diana: True.

Tatiana: Yeah.

Rob: There are, obviously, there are limits to that the limit, essentially in the political speech context is fraud. That's the limit past which George Santos went. And that was his undoing. Where he was raising funds claiming they were for one purpose, and they were converted to personal use or to other uses, that's outright fraud. That's not protected speech.

Diana: I just when someone completely lies about key aspects of their accomplishments and who they are as a person in order to gain the trust of the people and thereby obtain I guess employment, an elected position, that is a kind of fraud that to me is as important as a fraud that results in you getting your money taken from you but it's a non-monetary situation and our system doesn't account for that. And it says something about our system that one kind of fraud we deal with and the other one we're like, well.

Rob: The system viewed at large looking outside government institutions does account for it.

And that gets back to the role of the press here and maybe we shouldn't be as reliant on the role of the press in this area. But I think we are, and that's why a free and active press and investigative journalism is essential to the operation of our political system. To that extent it worked here. It did work here with the assistance of Santos who did not leave a trail of breadcrumbs. He put out loaves of bread.

Diana: I guess so.

Rob: That's the part of the system that has to stay alive and active and vital.

Diana: And independent

Rob: An independent, to capture what you're talking about.

Diana: The other thing that I found fascinating about this story is that many of these lies were known well before the New York Times article broke. And that is because George Santos’s own campaign did a vulnerability study. I can't remember if it was before or after his first run, but they paid something like $50,000 to have an outside vendor do a vulnerability study. They uncovered a lot of the stuff that ended up being reported in the New York Times article. He just buried the report. I think several of his staffers are believed to have quit after that came out. But nobody outed him following that assessment. He was able to live another day until the New York Times pieces came out. He's got nine lives. It's kind of incredible.

Rob: He did. He did —

Diana: He did.

Rob: I don't foresee a comeback here, but, oh,

Diana: I wouldn't count him out Rob —

Rob: Never say never —

Diana: I wouldn't count him out. I mean his ability to pivot and read the wind and attack is fascinating. One of the things that I thought was clever on his part is when all of this came out and he was being contrite one of the angles that he took was, isn't this a sad statement about our society? That someone like me who did live the American dream still had such a bar to entry that I had to lie about my credentials in order to be taken seriously? And for a minute when I heard that I was like you know what? He's kind of right. I don't feel good about that. I but I understand where he’s —

Tatiana: But did have such a bar to entry? Like if he had presented himself as the child of immigrants who didn't have a college education but had worked really hard and if he had legitimately worked to save the dying pets of homeless vets.

Diana: There are still a lot of people in this country who would say that without a college education and without a certain kind of work history, that you don't meet the criteria of an elected official. I'm not saying that's right. But I think that perception exists or at least there's a sense that it does for someone in his situation I can understand feeling that you have to somehow gain entry into that club in order to really have a chance. But then I started to really think about it, and I was like wait a minute though. But then why did he have to lie about being Jewish? And why did he have to lie about his mother dying in 9/11? None of that is about getting into the club that has traditionally kept people like him out and I realize no this is just about him telling whatever group it is that he's trying to persuade, the thing that they need to hear in order to win them over.

Tatiana: Right.

Diana: I am no longer sympathetic to his narrative. But for a minute he had me and I could see how so many people were taken in because I think he's masterful in reading, what will be most persuasive with the people that he's engaging with in the moment and giving them exactly what they want. But you can't be all things to all people. And I think that's where he ran into trouble.

Rob: That's right. He couldn't keep the different threads of his story from tangling up with each other.

Diana: Right. That's exactly right. Well, the curtain has fallen, and the lights have dimmed on Mr. Santos but somehow, I think we are gonna hear from him again. We'll see if you're right, Rob. I wanna thank our special guest Rob Walker for sharing his experience and expertise with us today. I also wanna thank our listeners for joining us and invite you back next month for our one-year anniversary episode!

Tatiana: Woo.

Diana: We'll be looking back at some of our favorite scandals from the past year and playing a bit of where are they now with some of our biggest baddies. Till then if you like this podcast, please let us know by liking us on whatever listening platform you use and maybe even sharing us with friends, family, or anyone who like us, loves a good story about people behaving badly. As always, be good and we'll see you next time. Bye

Signed, Sealed, Prosecuted: The UK Post Office Scandal

June 26, 2025



Join hosts Tatiana Sainati and Diana Shaw as they unravel one of the most shocking corruption scandals in modern British history – the UK Post Office Horizon debacle. From a centuries-old institution to a catastrophic IT failure that led to the wrongful prosecution of over 900 subpostmasters, this episode dives deep into how systemic failure, blind institutional loyalty, and a flawed sense of virtue devastated lives. Prepare to be outraged by a cover-up that shattered lives and public trust for decades.

Dictator Deluxe: Chechnya's Eccentric Strongman

May 8, 2025



Join hosts Diana Shaw and Tatiana Sainati as they explore the captivating and controversial life of the current head of the Chechen Republic. In this episode, they unpack one man's rise to power, including his opulent lifestyle and the dark underbelly of his regime. From lavish palaces and exotic pets to allegations of human rights abuses and corruption, this episode uncovers the many facets of a leader who is equal parts bling, violence, nationalism, and religion. Discover how this cult of personality has shaped Chechnya and the implications for its future.

Oil, Opulence, and One Crystal-Encrusted Michael Jackson Glove

April 16, 2025



Join hosts Tatiana Sainati and Diana Shaw as they delve into the harrowing history of corruption and violence in the Republic of Equatorial Guinea. Discover how a single political family managed to siphon off the nation's vast oil wealth and amass an astonishing portfolio of assets, including 11 luxury sports cars, lavish mansion estates, and a collection of Michael Jackson memorabilia. Tune in to learn about the international efforts to hold these kleptocrats accountable.

Transcript

Diana Shaw: Do I dare ask where all that wealth is going, if not to the people of the country?

Tatiana Sainati: Well, I'll give you three guesses.

Diana: I don't even think I need three.

Tatiana: Power and corruption are two sides of a wicked coin. Welcome to the podcast that tells stories of the world's largest, most salacious corruption scandals and explores the myriad ways corruption creeps into the hearts and minds of men and women. The consequences of corruption for perpetrators and victims, and the red flags that had they been identified and addressed might have changed the course of history.

I'm Tatiana Sainati and I'm joined today by my co-host—

Diana: Diana Shaw.

Tatiana: We are lawyers at the D.C.-based law firm, Wiley Rein. I'm the head of our International Arbitration and Disputes group.

Diana: Yes, you are. Yes, you are.

Tatiana: That is because our dear colleague Josh Simmons has left to do amazing things at State Department. But it's still pretty cool to say.

Diana: Yes, it is.

Tatiana: Diana is a partner in our White-Collar Crimes practice. All right. So, Diana, let's dive in. We've got a doozy today—

Diana: I'm so excited.

Tatiana: We're gonna be talking about a scandal involving the Republic of Equatorial Guinea—

Diana: And I know nothing about this, so I am really interested to hear. I know there are some very juicy facts involved in this, but I don't know anything about this one, so I can't wait.

Tatiana: It's a pretty amazing one, and I think a lot of people don't know anything about it because Equatorial Guinea is as described in a number of the books and articles I've read, it is “a tiny little speck in the armpit of Africa”—

Diana: Oh, that's a lovely description.

Tatiana: Quite the, right? Quite the description. And it's really only come to any prominence whatsoever because it has a lot of oil.

Diana: Yes, those natural resources do tend to put some of these places on the map—

Tatiana: Right. And it is the only, or it was, the only Spanish colony in Africa.

It's the only Spanish speaking country in Africa—

Diana: Interesting.

Tatiana: And it gained independence from Spain in 1968—

Diana: Oh. So, very recently.

Tatiana: Very recently. At which point, a gentleman named Francisco Macías Nguema became the first president, and I apologize in advance for any mispronunciations of names—

Diana: What type of government did they shift to?

Tatiana: Autocracy.

Diana: Autocracy, okay.

Tatiana: Or kleptocracy.

Diana: Okay, as is often the case—

Tatiana: Yes, this is often the case. It was not really well set up for independence as many of the African states were not. The Spanish put some effort into, you know, putting in place cocoa plantations, that was a major thing.

Cocoa plantations and timber were the other major export at that time. But it was a deeply poor country with little by way of actual governance. Spain did not invest much in the country even while it was in control. And there wasn't really a framework in place for any sort of transition to independence, which set the stage for Nguema to really become an absolute authoritarian ruler.

His father, according to many stories, was a well-known witch doctor which is a fact that he leveraged to instill fear into the hearts of his countrymen and women making them believe that if they ever did anything that crossed him he could take revenge, not just directly in this temporal world, but also by magic.

Diana: Wow. I mean, that's an interesting way to consolidate power.

Tatiana: Yes. And he is one of the most brutal dictators in history. A Swedish observer called Equatorial Guinea under his rule, “the Dachau of Africa.” It's a small country, there's about 800,000 people living there now. So not even a million residents. It was even smaller under Nguema but he imprisoned or killed you know, roughly one third of his countrymen—

Diana: Oh my God.

Tatiana: Yes.

Diana: Sounds like a genocide.

Tatiana: Yeah. He consolidated rule by establishing a cult of personality in a one-party state. He reigned with an iron fist until about 1979, so for about 11 years, and that's when his nephew, Teodoro Obiang Nguema Mbasogo, ceased control in a coup. At that point, pretty much everyone wanted Nguema out, and he's actually one of the only—well, I guess he was no longer a sitting head of state—but he's one of the only heads of state who's ever actually been tried in his own country for war crimes, crimes against humanity—

Diana: Oh, wow.  

Tatiana: And genocide. Yeah. And he was arrested and ultimately executed by his nephew. But his nephew was his number two—

Diana: Huh.

Tatiana: So, there was a bit of a delicate dance for now-president Obiang to both try and express that he was different from his uncle, while he was actually the perpetrator of a lot of the atrocities committed by his uncle.

Diana: Sure. I don't know how you exactly distance yourself from that or establish yourself as not complicit. But I'm assuming he positioned himself as some kind of reformer as part of this coup or no?

Tatiana: I think reformer would be a generous—

Diana: Okay. Just different.

Tatiana: Just different. He's actually ruled in much the same way that his uncle did—

Diana: Okay.

Tatiana: And just under the constitution, he has given himself broad authority to rule by decree. Which is a move that we've seen before. And he's placed his children one of whom we'll be talking about, and other family members in key government positions. And just to give a sense of the cult of personality that we're talking about here, a state radio announcement on a program called Bidze-Nduan, or “Bury the Fire,” announced that President Obiang is in permanent contact with the Almighty and like God in heaven, who has all power over men and things.

Diana: Oh wow. So, the nephew is also playing both the secular power and the spiritual power card?

Tatiana: Yes, just like God Almighty, he can decide to kill without anyone calling him to account and without going to hell because it is God himself.

Diana: Okay.

Tatiana: He has repeatedly said that he is unconcerned with how the West perceives him or how the rest of the world perceives him and really the only other country that he maintains real ties with is China. China invests heavily in a lot of African countries and desperate for a lot of African resources and appears willing to turn something of a blind eye, shall we say, to even some of the more brazen dictators in the area and so, China maintains a significant presence in Equatorial Guinea. Most other countries have distanced themselves from Obiang.

Diana: Yeah.

Tatiana: The message that he is a God has really permeated the population. Most of the country listens to that state radio because there is no other source of news. He has really cracked down on any sort of freedom of the press. There's no media, there's no television really. There's just the state radio. And Obiang has done a great job weaponizing poverty to keep his people in the dark and to consolidate power to himself. So, this is a country based purely on its oil revenues, where each individual could be receiving a minimum of like $6,000 a year, which would be life changing. That's more GDP, for example, than Chile would receive. But the people get none of these revenues. It's one of, if not the poorest country in the world in terms of the average wages, the average income of its citizens, despite having this incredible oil wealth and being relatively small.

Diana: Do I dare ask where all that wealth is going, if not to the people of the country?

Tatiana: Well, I'll give you three guesses.

Diana: I don't even think I need three.

Tatiana: So, Obiang has won every vote since he seized power in 1979 by more than 95 percent.

Diana: I love those numbers.

Tatiana: It’s very impressive. What is this 5 percent, right? Why not just go for 100 percent? Everyone wanted him.

Diana: I mean, let's just assume 5% didn't show up to vote, right?

Tatiana: There you go. And in fact, people will say that during votes, if you're not wearing, or expressing vocally and visibly your support for Obiang you are at risk.

So, it's not enough to know that no matter what your vote is going to be counted for Obiang. You have to be very vocal and obvious in your support for Obiang if you wanna avoid trouble.

Diana: Oh geez.

Tatiana: Yes. But who we're gonna be talking about today is his eldest son who shares the same name as his father. And we're gonna call him Teodorin, because that is what Teodorin refers to himself as. He serves currently as the vice president and he is set to take control when his father passes.

So in the event that, as Nietzche would tell us, “God dies,” Teodorin will be taking over control. So Teodorin is another interesting character. And one of the interesting articles that I read when I was learning about everything that's gone on in Equatorial Guinea, noted that you can't really make an excuse for Teodorin that he is sheltered, unaware of how the world works. He's educated in the West.

And in fact he spent a significant amount of time in the United States, in California, actually—

Diana: Really?

Tatiana: Yeah, Southern California. He was sent by an American oil company on a scholarship for an English language program at Pepperdine University—

Diana: My alma mater.

Tatiana: Your alma mater. I knew you'd appreciate that.

Diana: I don't know if I should be proud that my alma mater educated this individual, but yes, we do apparently have something in common.

Tatiana: Educated is generous. He was sent there on the scholarship to learn English as a second language. And I, understand that he actually does speak English quite well. He's divided his time between a very fancy hotel, the Wilshire Hotel, which you may be familiar with. And Villa, which was rented for him by the oil company as, as his hotel bills were also paid for by the oil company. They also gave him access to a sports car. He dropped out of the program, however—

Diana: Okay.

Tatiana: It was just too much. And that was in 1992 that he dropped out of the program—

Diana: Okay. Before my time.

Tatiana: Before your time, quite a bit before your time. Our Diana has accomplished quite a bit in a short life. In 1993, so shortly after dropping out of Pepperdine, at the age of 24 years old, Teodorin’s father awarded him a 20 year concession to harvest timber from about 61,000 acres of protected rainforest in Equatorial Guinea—

Diana: That's not a conflict of interest at all.

Tatiana: And you know it's an open question what experience or skills Teodorin brought to the table to be able to harvest this timber. Setting aside the fact that harvesting timber in that region was illegal under the law of Equatorial Guinea. From there he wound up being promoted, I guess you could say, to Minister of Forestry and Agriculture, which is the position that he held that evolved to become Minister of Agriculture and Infrastructure.

And of course, as I mentioned today, he's actually the vice president, the number two in line. Teodorin managed to, while receiving an official government salary of less than 100,000 dollars, amass a fortune of more than 300 million dollars—

Diana: 300 million? Okay.

Tatiana: Yes. At least.

Diana: Right – that’s what we know about.

Tatiana: 300 million, that’s what we know about. And he has been pursued, or his assets, at a minimum, have been pursued around the world. But one of the things that he liked to do as Minister of Agriculture and Forestry is require companies that wanted to harvest timber to pay him direct, like quite upfront, they would have to pay him between 10 and 20 percent of the value of their concessions just directly to him. He also acquired several companies including an Italian company, after they refused to provide him with the payments that he insisted upon. He would acquire their companies at quite a steep discount. Then he's basically just turned them into shell companies, and he siphons his bribes through them and reports them as revenues of those companies. But those companies don't do any actual work. They don't report any actual business. They just report income.

Diana: Interesting. So, he's not using them for self-dealing purposes, like he's not acquiring them and then giving contract to them—

Tatiana: —actually operating them, yes.

Diana: Interesting.

Tatiana: And through this fraud and embezzlement, he has acquired a number of assets. One of my favorites was revealed through a settlement with the United States, so the Department of Justice. And actually an FBI agent who I got to spend some time with last week in Sierra Leone, named Debra LaPrevotte led this investigation—

Diana: Oh, that's cool.

Tatiana: It was very cool. But led this investigation into some of his assets in the United States. And, the way it works, as she said, is, she's set about to prove that he could not possibly have acquired these assets through legitimate means, given again, his official salary of less than a hundred thousand dollars a year. So how did he acquire, for example, a 30 million dollar Malibu mansion, a Ferrari, and Michael Jackson memorabilia, including Jackson's crystal-encrusted Bad Tour glove, worth more than 275,000 dollars—

Diana: Oh wow. A Jackson fan. Wow.

Tatiana: He's a tremendous Michael Jackson fan. So those are just some of the assets that he managed to acquire in the United States. Now, he did enter into a settlement with the United States. Those assets were liquidated and the money is supposed to have been returned to the people of Equatorial Guinea.

Diana: How do they ensure that the money goes back to the people if his father's still in charge?

Tatiana: Well, so there's structured returns. So, it's returned to a fund that is then dispersed, very specifically to, for example, education initiatives or health care initiatives, and managed by nonprofits, for example that are operating over in Africa rather than going to the government's coffers.

Diana: I see. So, there's some kind of international monitoring that's happening to ensure…Well, that's good.

Tatiana: Exactly, and that's a requirement that the United States actually has before it will ever return assets to a kleptocrat. A few years later, so a few years after he settles with the United States, the Swiss seized 11 luxury cars, including a Bugatti, Lamborghinis, Ferraris, Bentleys, and a Rolls Royce, which were sold at an auction for about $27 million from Teodorin—

Diana: Oh my God. Not Bucatini?

Tatiana: Not Bucatini, but guess what he did?

Diana: What?

 Tatiana: Reacquired them.

Diana: What?

Tatiana: Yes.

Diana: How?

Tatiana: At a premium. He set up another shell company and purchased them back.

Diana: The same cars?

Tatiana: The same cars. It was an “eff you”.

Diana: Oh, wow. That's bold. Did the Swiss find out about it?

Tatiana: I am sure they know.

Diana: I mean, somehow we know, so they must know, but wow. That's a bold move.

Tatiana: Right. In 2017, he was convicted in absentia in France for embezzlement. His assets were seized, including a Paris property worth over 120 million dollars.

Diana: Is that like a palace? 120 million dollar property—

Tatiana: I know. Can you imagine? Yes.

Diana: 120 million. And he's still the Minister of Agriculture and Infrastructure?

Tatiana: No no, now he's the vice president.

Diana: Still though, I can't imagine his salary is that much higher as the VP.

Tatiana: And this was a case in France that was brought by civil society organizations and they actually altered the law in France so that they were able to pursue this case. It went all the way up to their highest court. And it was supposed to be a signal that France is no longer a haven for corrupt funds.

Diana: How did they have to—

Tatiana: Try him in absentia

Diana: Oh, I see. So, he didn't have to be there in person.

Tatiana: Yes.

Diana: And when you say “brought by civil society,” what do you mean?

Tatiana: So, actually I think it was Transparency International was the lead plaintiff in the case, but standing rules are different in France than they are here in the United States.

Diana: Okay.

Tatiana: So, they were able to bring this case against his assets in France, rather than  it being criminal.

Diana: That is so cool. Just to take us on a slight tangent, I was just attending the World Bank Group’s Partnerships for Anti-Corruption Global Forum this week. And obviously there was lots of attendance from all sorts of civil society organizations. Transparency International was there, but we were talking about collective action and how important it is for all of these stakeholders who are invested in anti-corruption, to be playing whatever part that they can play. And this is just another great example of the role that civil society can play, not only in identifying issues on the ground and bringing them to prosecutors but even bringing cases themselves as plaintiffs where the jurisdiction and standing rules allow for that. So that's so cool.

Tatiana: That's pretty awesome, right?

Most recently in 2023, South African officials seized his super yacht and two mansions.

Diana: I feel like this is like Mary Poppin's carpet bag.

Tatiana: I know.

Diana: Where you just keep reaching in and pulling out more luxury items.

Tatiana: Well, this is why I say he's worth at least 300 million. I feel like if you have 120 million dollar property, you probably have significantly more than 300 million in assets.

Diana: Yeah, that's gotta be right.

Tatiana: That case, the South Africa case, arose after a gentleman named Mr. Van Rensburg, who's a businessman, had traveled to Equatorial Guinea to set up an airline with a local politician. My takeaway from this story, by the way, is do not go to Equatorial Guinea.

Diana: Yeah.

Tatiana: He shows up, he gets into a dispute with the politician. The politician decides he doesn't wanna be in business anymore and demands a full financial refund. And he calls Teodorin to complain about Van Rensburg. 10 minutes later, an elite security force showed up and threw Mr. Van Rensburg in the country's infamous Black Beach Prison where he was detained for more than 500 days.

Diana: Oh, yikes! Yeah. I think that would have a chilling effect on foreign investors.

Tatiana: Yes.

Diana: At least their willingness to show up in person to negotiate deals wow.

Tatiana: And family is not off limits. He recently arrested his half-brother for selling his jet. Sorry, that is, Teodorin’s half-brother sold Teodorin’s jet and was subsequently arrested by Teodorin.

Diana: I mean, it must be nice to be able to pull the levers of government to resolve family squabbles. Like when one sells a family member's jet, as one does, from time to time.

Tatiana: So that is, the bizarre case of Equatorial Guinea. As I mentioned earlier in the episode, the president has said he really doesn't care what the West thinks about him. They do not see themselves as answerable to anyone else, which kind of makes me think that they have swallowed, they, the Obiang family has swallowed the Kool-Aid of really believing that they operate above the law.

Diana: Well, clearly they do in their own country, in any event, and clearly they've siphoned off enough to manage whatever pesky legal issues they run into. And if they can just buy back the things that have been confiscated, there's really very little downside it seems like for them. It's kind of wild that they're both continuing to govern even with all of this out in the public sphere and well known.

Tatiana: Well, again it's well known in the West. I don't know how well-known it is in Equatorial Guinea because of the really limited access to information that anyone in the public has and that's that two-fold problem of no freedom of the press, no media, just the state radio, and deep poverty that keeps people relatively illiterate and cut off from the rest of the world.

Diana: Do you know, has there ever been any sort of protest, any push by the public against this government? Or are people too afraid?

Tatiana: I think people are too afraid. There hasn't been much by way of push which is actually a really interesting point. When I was in Sierra Leone last week, I got into a discussion with Alfonzo, who you know well from our last trip to Sierra Leone, about a recent public campaign that they had done just to get the word out, at the most basic level, that corruption is bad and that natural resources, a government's natural resources belong to the people, not to the government.

And our discussion centered on how slowly, slowly things are changing in the sense that people are starting to understand that they can make demands for more services, that they should be getting some of the benefits of the resources that the country has. But without that campaign, without that sense of awareness or that sense of, hey, this is our money, not the government's money, that change doesn't happen.

There's no internal sense that, hey, wait a minute, what's happening here is wrong. And that gets me thinking about your question in Equatorial Guinea, if the people just really don't see this wealth as their wealth.

Diana: Well, if they've been led to believe that it's not and they have no counterpoint to compare to, I can understand why.

Tatiana: Exactly right.

Diana: And then you add to that, the incredible risk attendant to raising this issue, I can see why it wouldn't have been raised.

Tatiana: Now, some westerners did try, twice to have a coup to overthrow the government—

Diana: Who's that?

Tatiana: Both very odd. The first one was actually, it seems, largely prompted by—oh I'm gonna forget his name—but basically like a British spy novelist who wrote, for example, The Dogs of War—

Diana: Okay.

Tatiana: He was mostly inspired by the fact that Nguema is a really terrible president and actually wanted to do some good in the country. So, he tried to get a coup going. Hired a ship called The Albatross, hired mercenaries, and he was gonna send them down to overthrow the government. And this actually became the basis for The Dogs of War. It's actually based on a coup that he attempted to throw. But his plot was thwarted when British intelligence services in Gibraltar figured out what was going on. The Albatross was seized, the mercenaries were disbanded.

So that didn't really get too far off the ground. But then again, inspired by the Dogs of war. So, art imitating life, imitating art, I guess—

Diana: That's very meta.

Tatiana: Another Brit who also had South African citizenship, a gentleman who made his fortune as a mercenary in Africa, who had hired former soldiers from Nigeria and South Africa, and they fought all over the continent. But he wanted to get a piece of the oil wealth. So, he was less inspired by the fact that the president is profoundly terrible and more inspired by the fact that he wanted a piece of the pie for himself. He, again, tried to orchestrate a coup using mercenaries, bringing in a priest who was gonna be the new president, but his attempt was thwarted as well. So there have been a couple of attempts to overthrow, but neither have proved remotely successful.

Diana: Yeah. I wonder if that's only bolstered the strength of the sitting government and fed this narrative that they're protected by God. And have the aura of the heavens around them.

Tatiana: Exactly.

Diana: Oh my gosh. Well, should we shift to red flags?

Tatiana: Yeah, let's do it. I saw you taking notes, so what do you—

Diana: Yes, I have so many notes. One thing, I mean, we can take this in any order, but just the use of shell companies here brings up for me the issue of transparency around beneficial ownership. I think it's a particularly timely topic right now. Because what we're seeing is a push in countries around the world to adopt legislation and policies that push for greater transparency around beneficial ownership. Here in the United States, we pass legislation that would push for greater transparency, but that legislation is not being enforced for U.S. companies. So, we have this weird tension—

Tatiana: Yeah.

Diana: Whereby U.S. companies are not required to comply with the law, but foreign companies are. So, you know, that I think sort of takes some of the wind out the sails of legislation like that. But in general, I think the trend is moving in that direction and I think, to me, that's the right way for this to be going because it certainly makes it much more difficult for this shell game to continue when you're able to pierce that veil and understand who is actually behind all of these companies and actually benefiting from these transactions. So, he will have a much harder time going forward should any of these laws reach Equatorial Guinea. But certainly, in some of the places where they would be doing financial transactions I think he will, find a much less favorable environment for this kind of activity.  

I think certainly we already touched on this, but the fact that there's no free media is clearly hugely problematic and really one of, it sounds like, the core ways that they've allowed themselves to remain entrenched and also perpetuate so much corruption because it's kept the people in the dark about not only perhaps what they're doing, but also what is happening elsewhere in the world and what their expectations can and should be about their government and the services they should be receiving from their government and the sorts of returns they should be expecting from their government, and the resources that they have and how that's being used.

Tatiana: Yeah.

Diana: And not filtering down to the people. So, yeah, when you have basically one voice and it's controlled by one person you see how damaging that is for the people in terms of their ability to make informed decisions about what they want from government.

Tatiana: I think that's right. I think another one that stuck out at me was just the fact that nepotism obviously, or cronyism, but this idea that Teodorin as a 24-year-old Pepperdine dropout, was given—

Diana: Pepperdine dropout!

Tatiana: Was given a massive concession. And from there ended up getting a series of posts within the government, which he brazenly exploited for personal gain. And it's that, again, as we've seen before, when you're appointing people to positions of authority who have no real credentials, that's always a sign that something is amiss.

Diana: Yes. Amiss is putting it mildly. Yeah, but I mean, it's conflict of interest. It's nepotism, it's all sorts of things, but I mean, it's also just brazen corruption. It looks as though they're running the government as kind of their personal banking system, like their personal coffers. And so, there are zero checks and balances in place, and it looks like by design—

Tatiana: Yeah.

Diana: It's set up to operate that way. I do think this approach to structured payments is super interesting and I know that's something that one of the organizations that you and I work with, Restitution, based in the UK, that's work that they do with some of the claims work that they do.

When they get recoveries, they work to ensure that the payments go back as structured payments. And I think that's such a clever way to approach it. Because when you're successful in bringing back these national assets, the worst thing that could happen is for it to be recorrupted.

Tatiana: Exactly.

Diana: I do think it's important to ensure that the host countries, the nations, have control over their assets. And so, I do think there's a sensitivity there about making sure that it's not the West telling a country how it should spend it’s money but putting the right structures in place and internal controls to make sure that it's not recorrupted is, I think, the right balance to strike. And I hope that we'll see more of that as more of these claims are brought and more hopefully, of the sovereign wealth is brought back to some of these nations that have just been pillaged by frankly, just corrupt leaders over decades—

Tatiana: I think and hope the same.

I know that what Restitution does, for example, is work with the government to say, where do you want the money to go? What are your current priorities in terms of where you're trying to build capacity, infrastructure, whatever it may be. And then send the money there, in a way that makes sure that the money actually goes to those initiatives.

Diana: That's what I love about Restitution. I think they fully understand that, and they walk that sensitive line. And give due respect to those sovereign interests. So, I think they get it right and I think it's an example that others can take that are interested in promoting these sorts of opportunities for countries that have been taken advantage of, unfortunately by their leaders over time.

Tatiana: Absolutely. And I think, you know—this isn't necessarily, or at all, a red flag, but one of the things that I found heartening in this research was just the way that the international community has really taken a stand against Teodorin. And so even if President Obiang and Teodorin say, we don't care what the West thinks, when you look at Switzerland, South Africa, France, the United States, all these jurisdictions saying, we are not going to let you use the proceeds of corruption in our jurisdictions, these are not safe havens for you. That's really, reducing his footprint, his sphere of influence, making life harder for him. And even if it's slow and incremental, just the fact that we can keep fighting and that we have to come together to keep fighting on, and it is possible.

Diana: I think that's right. And I think it shifts the incentives for this kind of behavior. If you can't buy a Parisian estate and the best thing you can do is just buy a boatload of more property in Equatorial Guinea, like does that shift your thinking about what you're willing to do? So, I do think it's important and I think it matters. And it is, I totally agree with you, I think it's very heartening to see the kind of international cooperation and interest in this. And, you know, just referencing back to the conference, it was so inspiring to see so many folks from so many different nations represented at this conference who are so, frankly, like obsessed with thinking about these issues. And so committed to figuring out how to move the needle on corruption. And looking at it holistically, which is a point that you and I have made many times and think about all the time, looking at all of the entry points of corruption , and the system that has to be in place to keep it from just becoming a kind of whack-a-mole exercise. And so, it was just wonderful to see that international collaboration and people sharing best practices and coming together with a shared objective.

Tatiana: Well, any teasers for next month? Diana?

Diana: No teasers. I will have another good story for you, I promise, but you'll just have to wait.

Tatiana: Excellent. While we wait for our next episode, if you like the podcast, please let us know by liking us on whatever listening platform you use. And maybe even sharing us with friends, family, or anyone you know who, like us, loves a good story about people behaving badly. As always, be good and we'll see you next time. Bye.

Peeling Back the Bruising History of the Banana Trade

March 13, 2025



Join hosts Diana Shaw and Tatiana Sainati as they explore the fascinating and dark history of the banana trade in the latest episode of Wicked Coin. From the entrepreneurial spirit of Minor Cooper Keith in the late 1800s to the rise of the United Fruit Company and its impact on Central and South America, this episode uncovers the shocking tale of corruption, labor exploitation, and political manipulation that shaped the banana industry. Discover how a seemingly innocent fruit found itself at the center of power struggles, economic monopolies, and even terrorist funding. It's bananas!

Transcript

Diana Shaw: This story…

Tatiana Sainati: Is bananas?

Diana Shaw: It's bananas! For reals, though! I know we're such dweebs—

Tatiana: No, I mean, how could we not make that comment?

Diana: I know.

Tatiana: It would be offensive to our listeners.

Diana: It would. It really would.           

Power and corruption are two sides of a wicked coin. Welcome to the podcast that tells stories of the world's largest, most salacious corruption scandals and explores the myriad ways corruption creeps into the hearts and minds of men and women, the consequences of corruption for perpetrators and victims, and the red flags that, had they been identified and addressed, might have changed the course of history.

I'm Diana Shaw. And I'm joined today by my co-host.

Tatiana: Tatiana Sinati.

Diana: We are lawyers at the D.C.-based law firm Wiley Rein. I'm a partner in our White Collar Crimes practice, and Tatiana is the head of our International Arbitration and Disputes group. Our story today is about bananas, Tatiana. Let me pause there and just get your reflection on that. I'm telling a scandal about bananas. What do you think about that?

Tatiana: I think it's bananas.

Diana: Oh my god, there we go again. We're gonna have to really limit ourselves—

Tatiana: I mean. No promises.

Diana: All right. Our story begins in the late 1800s—I'm taking us way back.

Tatiana: We really are.

Diana: Yeah, but we're going to move through history quickly—

Tatiana: Okay.

Diana: It begins in the late 1800s with an American businessman with the old-timey name Minor Cooper Keith.

Tatiana: No, it wasn't.

Diana: Yes. Minor Cooper Keith. Now, just to set the stage, at this time in the Western world, bananas weren't really a thing. I know that's hard to imagine now because I think it's like the most common fruit—

Tatiana: We go through like 10 a week, minimum.

Diana: I bet you do. Yeah, I know. Especially with kiddos. But basically outside of Central America at this time, no one had even heard of a banana. That's where we're at. But in 1871, this guy Minor Cooper Keith and a group of investors secured a contract to build a 100-mile railroad through Costa Rica.

Tatiana: Okay.

Diana: The project, however, was plagued with issues and eventually the Costa Rican government defaulted on the loans that it had secured to finance the project. But Keith, who again is an American businessman, was able to raise separate financing to save the project. And as sort of like a thank you to him for salvaging the railroad, the Costa Rican government negotiated a deal with him whereby he received 800,000 acres of tax-free land along the railroad plus a 99-year lease on the operation of the train route. And this is going to be critical to our story because it really kind of sets the stage for the later private corporate monopolies that we will see kind of end up essentially taking over these small governments in ways that prove to be incredibly problematic. So put a pin in that. As Keith continued to build the railroad, he would have banana plants—and I need to point out, because I learned this in the research, bananas grow on plants, not trees—he planted banana plants along the route, on his free land I might add, to supplement his workers' food supply—

Tatiana: Interesting.

Diana: So that was the whole point of the bananas in the first instance. And then when the project was finished, it turned out that there wasn't really enough passenger or cargo demand to cover his debt. And it looked like the project was once again on the verge of failure. So really this whole thing is kind of a disaster.

But our friend Minor Cooper Keith was not to be deterred. In what would turn out to be really a pivotal moment in history, Keith decided that he would become the Western world's banana supplier. So having planted acres and acres of banana plants along the railroad, he realized that he had a ready supply of the fruit, but he just needed to find a way to rapidly transport it to America, which was kind of a problem because, as you know, it's highly perishable.

So, he already had the railroad piece of it figured out. But what he decided to do is he started a steamboat line that ran directly from Costa Rica to New Orleans. And this ensured the timely and reliable delivery of bananas to American customers. Who, by the way, didn't even want them at the time.

Tatiana: I feel, I'm like nervous about rooting for this guy because I feel like I see where it's headed, maybe.

But he's ingenious—

Diana: He really is. I mean, he's an entrepreneur. He's a visionary.

Tatiana: And he is not stopped. He is not deterred.

Diana: No, and he's basically doing this on spec. There is zero demand for bananas in America at this moment. But he's going for it. And so, basically, by dominating the trade route, he is able to take full control of the fruit trade in Central America, and then later in Colombia for the remainder of the century, until, in 1899, he experiences a financial setback, and he's forced to merge his operations with what was then the dominant fruit company in the West Indies, a company called the Boston Fruit Company.

And this merger resulted in a company called United Fruit Company, and this is where things really get interesting. The United Fruit Company is important because it is the precursor to Chiquita Banana.

Tatiana: We are Chiquita fans.

Diana: You are?

Tatiana: We are also a Dole family.

Diana: Okay.

Tatiana: Yeah, I would say we're just like a banana family.

Diana: Okay.

Tatiana: My boys can't get enough.

Diana: You don't discriminate?

Tatiana: We don't discriminate.

Diana: Alright, so now I need to ask you, are you familiar with the term “banana republic”?

Tatiana: Yes, I am.

Diana: Not just the clothing store?

Tatiana: Not just the clothing store.

Diana: Okay. Do you know what it means?

Tatiana: I believe the term “banana republic” refers to a government that has been co-opted by a private company.

Diana: That's basically right. So here is where we get to the part of the story where we learn why that term exists, okay? So as part of this merger, Keith is not out of the business. He actually becomes the vice president of the United Fruit Company. And in 1904, he signs a contract with the president of Guatemala.

And the president gives the company these crazy tax exemptions, land grants, control of basically all the railroads on the Atlantic side of the country. And you might ask why a country would give such favorable terms to a foreign corporation? At least I asked that question—seemed a little bit like a one-sided deal.

So basically, there were economic benefits, as you might expect, it resulted in a huge increase in exports, provided Guatemala with a major source of foreign currency—so that was a plus. It certainly provided a lot of jobs, but as we'll talk about later, I question whether they were high quality or even really fair. We'll come back to that. But also, the United Fruit Company invested a lot in the country, particularly in infrastructure. So, they built a ton of roads, railroads, ports, all of which facilitated transport and trade. So, you know, a win for the United Fruit Company, but also a win for the country.

Tatiana: This is the entire law and economics movement, right? Foreign direct investment is good. That's the thesis. I'm not saying that's 100 percent necessarily always the case.

Diana: Correct. As we will see. This did all come at a cost. It came at the cost of national sovereignty and control of their resources. So, here's the flip side of that coin. And I think we can also speculate that there was some fairly heavy-handed bribery of senior officials going on to ensure the kind of political, shall we say, “influence” that was necessary to maintain United Fruit Company’s dominance in the region. Eventually, the United Fruit Company repeated this model not only in Guatemala, but also in Costa Rica, Colombia and Honduras, eventually coming to own 3.5 million acres across those four countries and wielding such remarkable control over the country's governments that the term “banana republic” was coined, as you said, referring to a small, usually politically and economically unstable country, reliant on a single export of a natural resource and often under the exploitation of a foreign corporate influence.

And this is where things really get dark.

Tatiana: Oh no.

Diana: So, yeah, there's not going to be a whole lot of humor from this point forward. So, get ready. As we did say, Minor Cooper Keith was a visionary, okay? So, his speculation did turn out to be spot on. Demand for bananas in the U.S. in the early 20th century really started to grow. This was in part because of massive ad campaigns that were launched to teach people basically everything about the banana. When to know when a banana was ripe, how to eat bananas, how to prepare bananas I don't know if you've seen this, but they even created this kind of like sexy banana character called Miss Chiquita in 1944 to—

Tatiana: Miss Chiquita with a fruit basket on her head

Diana: Yes—

Tatiana: Of course I've seen her.

Diana: She had a little jingle, which I will not sing, but she was basically created to educate people on all things banana, and the ads worked. I pulled up some banana statistics, this is how I spent my Saturday. And apparently between 1913 and 1960, American’s consumption of bananas increased by more than 40 percent—

Tatiana: That's a lot.

Diana: That’s a huge increase but, as we will see, this came at a cost. Not a cost that Americans paid, sadly, but a cost paid in other parts of the world. So, the cost was paid in a couple of different places. First, let's talk about labor. So, the United Fruit Company was pretty notorious for its poor treatment of its workers. They paid low wages, but that really doesn't capture it. I mean, sometimes they didn't even pay in money. Part of the issue is they often paid in coupons that could only be recouped in the company store. So, if somebody quit the United Fruit Company, they didn't even have any money that they could use any place else.

They had seven-day work weeks. They had no health care coverage. This led to an infamous uprising in Colombia called the 1928 Santa Marta or “Banana Massacre”. There was a massacre called the Banana Massacre. I know it's so sad. Basically, workers had initiated a strike and were advocating for improved labor conditions like, I don't know, a six-day work week, that seems so reasonable. Payment and money rather than coupons. Compensation for work related accidents—

Tatiana: Also, reasonable.

Diana: Yeah, these don't seem like outrageous demands. But the Colombian government, likely at the instigation of the United Fruit Company, surrounded the workers gathered in the square and opened fire and reports conflict about the death toll. But the government says about 50 people died and Others claim that it was more like 2000 people who were killed all because of bananas and working conditions. So that's on the labor side of things. Let's talk economics—

Tatiana: Pretty bad.

Diana: Yeah. United Fruit Company's monopolistic practices, of course, really hurt local economies and competition, so basically they had total vertical integration and supply chain domination, and that meant that they could set prices without competition, often at the expense of local farmers and workers, and this contributed to widespread inequality in the regions in which the company operated.

Another way that they would protect their economic interests was by wielding enormous political influence. And this took varying forms, but I think it got probably most out of hand when United Fruit Company apparently played a role in the political overthrow of the Guatemalan government in 1954. So, following the Guatemalan Revolution of 1944, the democratically elected president of Guatemala introduced land reform policies, and these policies were perceived by the United Fruit Company as basically threatening their operations and their holdings in Guatemala.

And so, this is where things get kind of weird. Are you familiar with the last name Dulles?

Tatiana: Like Washington Dulles Airport?

Diana: Correct. Dulles Airport was named after the former Secretary of State John Foster Dulles, who is the brother of a guy named Allen Dulles. And Allen Dulles, at this time in history, was heading the CIA and had also, coincidentally, previously sat on the United Fruit Company Board of Directors.

Tatiana: What could go wrong?

Diana: And also, may have possibly still been on the United Fruit Company payroll at the time. Basically, using propaganda to suggest that the existing Guatemalan government was communist, the CIA helped orchestrate a coup to overthrow the democratically elected government. That president ended up resigning under pressure.

And this effectively safeguarded the United Fruit Company's interest but also ushered in a period of military dictatorship in Guatemala marked by decades of human rights abuses and civil war. So, it seems like a worthwhile exchange, right? Not problematic at all. Do you think we've hit rock bottom yet?

Tatiana: I'm afraid by your tone that we have not.

Diana: We have not, Tatiana. Here's where it gets really bad. How do we feel about drug trafficking and terrorist-funding?

Tatiana: Super-duper.

Diana: So, in 1990, the United Fruit Company officially became Chiquita Brands. And this is the ubiquitous name now most associated with bananas. In the early 2000s, it was revealed that between 1997 and 2004, Chiquita had paid millions of dollars to various Colombian military groups, including the United Self Defense Forces of Colombia, known as AUC, to protect Chiquita Banana's plantations in Colombia.

AUC was known to be a drug trafficking, terrorist organization responsible for numerous kidnappings, human rights atrocities, and extrajudicial killings. When this came to light, Chiquita admitted to the payments, but claimed they were necessary to protect the safety of their workers.

In 2007, they ended up paying a 25 million dollar fine to resolve criminal charges for funding a designated terrorist organization. So, okay, they admitted liability there. But then in June of last year, in what's considered a landmark case, Chiquita was found liable for the murder of eight Colombians and made to pay 38.3 million dollars in damages to the victim's families and in reaching its verdict, the jury found that Chiquita. knowingly provided substantial assistance to AUC through these bribery payments to a degree sufficient to create a foreseeable risk of harm and therefore that Chiquita was responsible for the harm that then resulted in these eight murders.

Tatiana: I would like to withdraw my previous comment that we're a Chiquita family. Exclusively Dole—

Diana: I know, right? It's so sad. So, yeah. A big bummer of a story with maybe a smidge of a silver lining at the end—

Tatiana: Oh, please get there.

Diana: There was a little sliver of justice. I mean they paid out in this landmark case. It's an interesting finding of liability. But obviously having gone through this entire story, the degree of harm, I think, far exceeds the finding of liability here, if we take it in its totality. But yes, a very, very dark story. And all over a banana, which I have to say is like arguably the world's most ridiculous fruit, right? I mean, it's the prop of pratfalls. I just, it's hard to imagine that all of this could have happened because of the banana—

Tatiana: It's wholesome and cheerful.

Diana: You would think so, but I don't think I'm ever going to look at a banana quite the same way after this scandal—

Tatiana: No

Diana: I will say having gone on the Chiquita website, obviously the public image they're putting forward is cheerful. It's a very well-branded product, so it's hard to kind of reconcile that with the long history, but presumably they're trying to move things in a different direction, but they're still operating in a fairly unstable part of the world.

Tatiana: Well, and there is, I mean, I think that is a crucial point, and I certainly, in saying this by no means do I intend to condone in any way providing substantial assistance to paramilitary terrorists or drug trafficking groups, but there is a question of what do you do if you have substantial business operations in a part of the world where there is no law and order?

And where instead, paramilitary groups, drug trafficking groups, cartels are in control. Because usually they do require some form of protection money. And so, I guess it becomes a choice of do you pay that protection money or do you shut up shop and suspend operations?

Diana: Well, I think that's maybe a nice segue to our red flag roundup, because this is definitely something I thought about when I was thinking about these red flags.

And I think, you know, bribery and support of cartels is really interesting, particularly right now, given some of the recent announcements that have come out of the new DOJ leadership. So just within the past few weeks, the new Attorney General, Pam Bondi, has announced new Foreign Corrupt Practices Act enforcement priorities.

And the big shift is that the DOJ will be primarily targeting foreign bribery in support of, or facilitating, cartels and transnational criminal organizations. And I think what this means is for companies that are operating in areas where cartels have infiltrated the supply chain, infrastructure, transport, where these sorts of security payments are very customary, there's going to be a ton of FCPA risk and exposure and the question is how are these companies going to manage that risk and operate in this environment with this now kind of heightened risk of scrutiny under the FCPA.

Tatiana: Yeah, and I think in some ways it's interesting because in deciding that this is the type of claim that can be pursued or this is the type of activity that can be pursued under the FCPA, there's almost an admission that these cartels and drug trafficking organizations, terrorist groups, are essentially quasi-government actors, that you are getting a benefit for your business by paying them. Because that's the type of behavior that the FCPA is really intended to target. And so, what do you make of that? What do you make of this idea that we're essentially conceding that these organizations have such quasi-governmental authority and control?

Diana: I mean, it's sort of fascinating. I have to imagine that some of these governments might take issue or umbrage with us essentially taking that position, but I think you're exactly right. It does sort of presume that these cartels are operating in a quasi-governmental capacity but when they have infiltrated things like customs and border crossings and things like that, it's hard to argue that they aren't performing those roles or at least have interceded themselves in a way that gives them that function.

Tatiana: I think companies will certainly want to be extremely thoughtful about the diligence that they do and the investigations internally that they do to wrap their heads around what may be going on and their operations in these parts of the world. But that got a little bit more, I think, into how do we deal with a pretty grim on-the-ground reality rather than a red flag. And I do know there are some pretty interesting red flags in this one. One I had was monopoly power—

Diana: You want to go there?

Tatiana: I mean, we've been there before.

Diana: We sure have.

Tatiana: But I do think it's maybe just a play on the old adage, “power corrupts and absolute power corrupts absolutely,” but when you have a monopoly, when there is no real competition and you're the only game in town, it is such a rife opportunity for this type of corruption. And here, it seems like the monopoly power of the corporations really enabled them to take over or to at least have substantial sway over legitimate governments.

And it's, I think, always a difficult exercise to see how history might have played out differently. But you are left wondering, or at least I am left wondering, how would this have played out if these companies had been working to try and support democratic and thriving government institutions? And to what extent did their monopoly and their interference in governments create the kind of structural weaknesses in some of these states that created the opportunities for paramilitary and terrorist organizations to take such dominance?

Diana: Well, I think that's right. And I think this is the history that has largely resulted in today's ESG principles and a different corporate mindset. I think this is part of an evolution because we've seen the problematic impact that it can have when you don't consider those issues.

And so, I think corporations are starting to be more sensitive to that. And I think governments are also becoming more aware of what's at stake. I mean, sort of relatedly, but to put it in a slightly different context, I think just thinking about the “devil's bargain,” because you can see how tempting it is when these economic benefits are being dangled in your face. And I don't think it's just in the, you know, government-to-corporation context. When I was thinking about this story, I thought about small businesses and private equity as well. You know, it's a, I think kind of a comparable context, but I think first of all, if it seems too good to be true, you know, you probably need to be a little suspect.

I think probably – if I was counseling someone in this situation – I would start by thinking about the worst case scenario, how this could backfire, and how your interests could be abused, and then kind of work backwards from there as you do your cost benefit analysis, but certainly in the context of a government and a corporation, I mean, you have to think about national security implications. So while it's wonderful for an outsider to come in and build roads and infrastructure and ports, if a foreign entity has control of your ports, that has national security implications, so you need to think about what that means and how you might want to structure that partnership to ensure that you're safeguarding those interests.

Tatiana: Well, and that, I think, from work that we've done in emerging markets and economies, the importance of a transfer of capacity, a transfer of knowledge to any of these partnerships, because what creates the perfect conditions for a monopoly is when there's only one game in town that has the know-how, really, to manage the ports, to manage the infrastructure, has that complete vertical integration and is not creating any up, down, or side stream economic opportunities for other businesses in the country, for citizens to be getting education, to have expanded economic opportunities.

And so, the importance of weaving those types of provisions into public-private partnerships, ensuring that there is a real transfer of capacity, and not just the creation of jobs in the sense of manual labor-type work, which is fine, and which is, when not exploitative, a totally reasonable benefit to be bringing to a country, but it should be more than that there should be opportunities for growth beyond just serving the company.

Diana: I want to just circle back to the knowledge transfer piece I know you have experience having looked at different companies who have experimented with this and done so successfully. What's the model for a successful knowledge transfer in a situation like this?

Tatiana: Norway did an amazing job with its public oil company, and it did that in partnership with private companies. And there was a real transfer of, okay, we want locals working at all levels of the company. We want locals—

Diana: Like embedded within the company?

Tatiana: Embedded in, well, at least within the public-private partnership that they were creating, right?

Diana: Right. Got it.

Tatiana: So they're not saying you have to make me CEO of your company. But this public private partnership that we're doing, this quasi-government interest that we're creating, yeah, we want board seats. We want you to be promoting at all levels within the company, our workers.

And so what does it take to get there? You need to have people; you need a pipeline. You need to be starting at different levels because you're not necessarily going to have people who can just come in and be on the Board.

You need an education plan. Where are we going to send people to get educated? What kinds of grants are we going to give for people to study this? So, it has to be holistic, I guess, is a big piece of it. And then putting in provisions that require the company to work with local companies. And that's the way you get those side stream, upstream and downstream benefits.

And Nigeria has actually had some success with this with Shell, with saying we're going to use a local company to come in and actually do some of the infrastructure that we're going to use for the oil extraction. So, teaching them how to do that and then eventually transferring everything over to local company.

I think the case for governments for why that's important is really pretty obvious. I think the case for businesses is there as well, but it's maybe slightly less obvious, and it does require a little bit of “long-termism” rather than the near-term incentives of absolutely maximizing immediate value. And actually, another flag I had written down is “economic interest without any other goal,” – this notion of maximizing shareholder value, and that should be the sole purpose and sole obligation of a corporation, really also creates these types of conditions. Well, if companies can make more money and can do more good and can have more certainty if they're operating in a secure environment, they're not having to bribe, for example, paramilitaries to protect their workers if they have a competent and talented pool of labor to draw from in the areas where they're operating. If there is not the social and political conditions, the geopolitical instability that creates the conditions for coups and overthrows.

And so, thinking that way as a company, like to protect my long-term investment here, to create an additional important market for my goods, how can I be promoting those types of outcomes through the work I'm doing while still, of course, earning a profit?

And I think you're right that we're seeing more companies are starting to understand that.

Diana: Well, so maybe our silver lining in this otherwise quite bleak story is that, because things went so terribly wrong here, governments have learned over time that they need to be more savvy, more careful, and more protective of their sovereign interests. And companies have learned, or at least decided, that they want to be better corporate partners and maybe pursue something more than just economic bottom lines. And so, we're seeing some of these more creative models emerge, and maybe that's a positive? I don't know that we can draw a direct straight line between this scandal and what we're seeing today, but maybe they're all interconnected in some way.

Tatiana: I think they are interconnected, and I think it is a helpful and positive note to land on. We don't have to look at business as a zero-sum game where there have to be winners and losers. The idea behind the law and economic movement is “a rising tide carries all boats.” So, let's make it a rising tide and not a tsunami.

Diana: I love that. Well, I want to thank our listeners for joining us for today's episode and invite you back next month for another scandal. This time told by you, Tatiana. Do we know what the scandal is going to be or is it a surprise?

Tatiana: It is a surprise.

Diana: Okay. Well, we'll have to wait for that. Until then, if you like this podcast, please let us know by liking us on whatever listening platform you use and maybe even sharing us with friends, family, or anyone you know who, like us, loves a good story about people behaving badly. As always, be good, and we'll see you next time. Bye!

The Iron Fist of General Sani Abacha, Nigeria's Ruthless Dictator

February 13, 2025



Join hosts Tatiana Sainati and Diana Shaw as they delve into the gripping story of General Sani Abacha, the Nigerian dictator who embezzled billions of dollars and ruled with an iron fist from 1993 to 1998. Known for his ruthless tactics, including a personal security force trained in North Korea and the violent suppression of opposition members, Abacha's relentless pursuit of wealth and power ultimately led to his downfall. Tune in to learn more about the international efforts to recover Nigeria's stolen wealth and the lasting impact of Abacha's regime on the country.

"Dumplings,” Diamonds, & Plea Deals: Brazil’s Operation Car Wash

December 12, 2024



Join hosts Diana Shaw and Tatiana Sainati as they delve into the gripping tale of Operation Car Wash, one of the largest corruption scandals in history. Discover how a small money laundering investigation into a car wash unraveled a web of institutionalized crime, reaching the highest levels of Brazil's political and commercial spheres.

For more information on Operation Car Wash, check out:
- Operation Car Wash: Brazil’s Institutionalized Crime and the Inside Story of the Biggest Corruption Scandal in History, by Jorge Pontes and Marcio Anselmo
- Operation Car Wash: Is this the biggest corruption scandal in history?, Jonathan Watts, The Guardian
- Brazil’s supreme court overturns ‘Car Wash’ corruption convictions, Michael Pooler, Financial Times

Ukraine’s Legacy of Corruption: From Kuchma to Yanukovych

November 14, 2024



In this episode of Wicked Coin, hosts Diana Shaw and Tatiana Sainati delve into the controversies surrounding Victor Yanukovych’s presidency in Ukraine from 2010 to 2014. During his tenure, Ukraine was heavily affected by corruption, with scandals and governance issues leaving a lasting impact on the country. Join Diana and Tatiana as they trace the history of corruption in Ukraine leading up to Yanukovych’s administration and explore how this era of corruption has impacted present-day Ukraine.

Transcript

Tatiana Sainati: Power and corruption. Two sides of a wicked coin. Welcome to the podcast that tells stories of the world's largest, most salacious corruption scandals, and explores the myriad ways corruption creeps into the hearts and minds of men and women, the consequences of corruption for perpetrators and victims, and the red flags that, had they been identified and addressed might have changed the course of history.

I'm Tatiana Sainati, and I'm joined by my co-host;

Diana Shaw: Diana Shaw.

Tatiana Sainati: We are lawyers at the D.C.-based law firm, Wiley Rein. I'm the Co-head of our International Arbitration and Disputes group, and Diana is a partner in our White Collar Crimes Practice. Our intrepid story developer, Vaib, couldn't be with us today.

Diana Shaw: We miss you, Vaib.

Tatiana Sainati: But she'll be with us for our next edition. Our listeners can probably tell I'm battling a cold, so a slightly different tone of voice than usual.

Diana Shaw: Still adorable.

Tatiana Sainati: Thank you. So, Diana, I am particularly excited to be discussing this month's corruption scandal with you because it involves a country where you have some pretty substantial and on point experience, the Ukraine.

So, for all of our listeners who may not know, Diana Shaw was the Acting Inspector General of the State Department and Diana, I believe part of that work entailed overseeing the transfer of funds from the United States to the Ukraine and making sure the funds got where they were supposed to go as part of the war effort.

Diana Shaw: That's right. So with the onset of Russian aggression in Ukraine in the 2022 timeframe, as many of you will know, the U.S. appropriated over $100 billion in funds to Ukraine, and it was a joint effort between the State Department, Department of Defense, and U.S. Aid, in large part to ensure that that money went where it was supposed to go and had the intended effect.

Tatiana Sainati: When we were first putting together our idea for this particular episode, we were going to focus on a particular corruption scandal involving Ukraine's president from roughly 2010 to 2014, President Yanukovych. During his tenure, Ukraine was plagued by endemic corruption, and we'll get into some of the details of the various scandals and issues in his presidency.

But in learning about that particular scandal, I became really intrigued by the history of corruption in modern Ukraine, which I'll define as post-Soviet Ukraine and independent Ukraine. And what we'll be doing in this episode is sort of tracing that history and exploring a little bit, in addition to our traditional red flags, how corruption became institutionalized in the country, and what can be done in circumstances where that happens to a state. How do you get out of institutionalized corruption if it's been woven into the very fabric of your state?

Diana Shaw: Wow, if we're going to accomplish that in this podcast, I'm going to be very impressed with us.

Tatiana Sainati: Maybe a little ambitious. We'll at least touch on that theme.

Diana Shaw: Love it, love it.

Tatiana Sainati: So, the history of corruption in modern day post-Soviet Ukraine really actually goes all the way back to Soviet era Ukraine. And what happened is a number of individuals who had ties to Soviet organized crime became part of the ruling elite in the Ukraine in the 1980s. So, in the era immediately before Ukraine achieved independence. And the corruption that they brought with them, I suppose, or that they institutionalized into the Ukraine in the 1980s, persisted even after independence.

Our story begins with the presidency of Leonid Kuchma, and I'm going to say right now at the outset, I will probably mispronounce some of these names, and I'm very sorry for that. Despite having the name Tatiana, I am not Slavic, and so I may mispronounce some things.

Leonid Kuchma was Ukraine's second president, and he served from 1994 to 2005. And he ran for president in 1994 on a platform of pro-market reforms. So, Ukraine had just achieved independence a few years prior and was still really a communist type economy. And Kuchma said, we can do better. We can liberalize our economy.

On the corruption front, and this is why I think our story starts with his presidency, Kuchma consciously implemented an oligarch system. He wanted what he called “financial industrial groups” to drive market reform. So, in his vision, he would privatize state run monopolies and give those monopolies basically to individuals, who wound up being handpicked either by him or other members of the then existing ruling elite.

So, here's how it worked. What he did is give out a mass voucher program. Every adult Ukrainian received a voucher, which they could then use to acquire a stake in one of the state monopolies that was being privatized. Technically, selling those vouchers to an intermediary was illegal, but as you can probably imagine where this is going, what happened is, people who didn't really understand a free market economy at all were desperate for money now and not willing or able to wait for dividend payoffs down the line, sold their vouchers for pennies on the dollar to a handful of private intermediaries.

Many of those private intermediaries who ended up acquiring majority shares in these privatized monopolies, then entered parliament. And as parliamentarians, they passed laws that benefited their own business interests. Here's one example: On April 9th, 2004, towards the end of his tenure in office, Kuchma signed a law privatizing something called Ukrrudprom, which was a conglomerate of several enterprises involved in raw material extraction. And the terms of the deal limited distribution of those state assets that had been held by those entities to just three prominent oligarchs, including President Kuchma's own son-in-law. And that was a law that of course had been drafted and approved by a parliament full of oligarchs who all stood to benefit from this and similar deals.

So that's the state of the Ukraine in 2004. It has gone from Soviet state monopolies to effective oligopoly. Is that the right word?

Diana Shaw: If not, I love it.

Tatiana Sainati: An oligarch system. In 2004, in the presidential election, another individual, who became President Yushchenko, rose to prominence. He was appointed prime minister in 1998. He was extremely popular because of the economic initiatives that he had overseen and what they had done for the country. And he was one of the very few figures in Ukraine who was untouched by corruption. He was called the beekeeper because he loved beekeeping. He also loved painting landscapes.

So really down to earth individual. And he was beloved in the country. But he was too popular for his own good, so the president, Kuchma, dismissed him. He became an opposition leader at that point, took a very firm anti-corruption stance, and ran for president in 2004. Again, his popularity proved problematic. He was poisoned by dioxin. It left him severely disfigured - almost killed him - and it's widely assumed, although never definitively proved, that it was his opponent, who we'll be talking about later, a man named Yanukovych, who masterminded the poisoning.

Yushchenko initially loses the race, the presidential race, in 2004, but the election results are dubious, and the Supreme Court of Ukraine wound up nullifying them. Yushchenko then wins in a rerun. He takes over the presidency in January 2005, and he is promising radical political change. He's inspired millions with a vision of a transformed and democratic Ukraine. And he was viewed as a messiah. I mean, the word messiah was used not infrequently by his acolytes, who were devoted to him.

Unfortunately, all did not go as planned. The first two years of his term, this is 2005 to 2007, are marked by what most observers called a kind of presidential paralysis. It appeared, in the words of one of his former chiefs of staff, as though he thought by attaining the presidency, he had done his part, and he really didn't seem to know where to go from there.

He was also, unfortunately, according to many in his inner circle, a terrible judge of character. This combination of a lack of drive, a lack of vision, and willingness to take charge, and an enthusiasm for people who he maybe shouldn't have liked as much as he did, really created the ideal situation for the old oligarchs and even new oligarchs to continue controlling both the government and the public coffers.

Yushchenko was known for turning a blind eye to corruption for those in his inner circle, and corruption and bribery became systemic under his watch, so none of the reforms that he had promised.

Diana Shaw: What do we make of that? Right? Like, here he is campaigning on an anti-corruption platform, and then as soon as he's in the seat, he suddenly has a blind spot for everybody in his inner circle who is taking advantage of their positions to push corruption. Do you buy this like he was just a bad judge of character?

Tatiana Sainati: I find that really hard to believe.

Diana Shaw: Right? Is that just a helpful narrative?

Tatiana Sainati: Because it would have to be not just that he was a really bad judge of character, but that the people in his inner circle who were advising him when he went in were also really bad judges of character. And it feels like a stretch to think that what was really going on here is just, “Oh, he just can't tell that these oligarchs are bad dudes and that they're doing bad things.”

Diana Shaw: I also feel like the types of people who would be attracted to supporting him on his rise to power are not going to be the corrupt actors who are playing a long game, assuming that he's going to end up in power and then empower them to be corrupt. So, some of these people must have come out of the woodworks and I would assume there would have to be a clash between those who had come along with him on the ride who, I would hope, actually have true commitment to anti-corruption principles, and then these guys who are pushing their way in.

Tatiana Sainati: Well, and it's interesting you say that. And I read nothing about any such clash, but a number of his chiefs of staff resigned. Which is usually indicative that there is, at least behind the scenes, some sort of clash taking place. It's interesting when Yushchenko left office, they discovered that this foundation, which his wife created in 2006 to build a children's hospital in Kyiv, had raised $18 million during his tenure as president. That hospital was never built. No one knows what happened to that $18 million. And it was largely given by a lot of these oligarchs who were in his inner circle. So was he really as innocent, was he really as committed to an anti-corruption program as he purported to be? Or was he just savvy enough, astute enough to realize that there was an appetite, for an anti-corruption narrative when he was running for president and that it was a good way to get into office?

Diana Shaw: Or like in so many of the stories we tell did the power ultimately corrupt him? Maybe he started out truly believing in these principles And then once you get into the system and you see how the machine works it's almost impossible, given what human nature is, not to be impacted by the power.

Tatiana Sainati: And that actually fits quite well with this this narrative of him being a paralyzed president, someone who just couldn't take action, despite all of the lofty promises he had made. Maybe he just couldn't summon the wherewithal to put in the hard fight that needed to be fought to root out the corruption.

Diana Shaw: I mean, it is hard. And as you and I know, when we think about the fight against corruption and the ecosystem and all of the different entry points for corruption, it's very intimidating to try to take on because it is like, it's a game of whack a mole. The other thing that this makes me think of, and I think we see this in politics everywhere, is sometimes you have very visionary political figures, and they are so inspiring because they are visionaries, but the messy, sort of unglamorous work of governing doesn't always translate.

From a visionary who can inspire you with their message and the picture that they can paint with their words of a beautiful future and like just what it takes to marshal the resources of a bureaucracy and actually translate that into getting things done and so maybe that's part of what we're dealing with here.

Tatiana Sainati: I could totally see that.

Well, unsurprisingly, Yushchenko lost his next bid for president in 2010.

Diana Shaw: Shocker.

Tatiana Sainati: To Viktor Yanukovych, who was his opponent in 2004. The man potentially responsible for poisoning him, causing his disfigurement.

Diana Shaw: So, they just swung straight the other way. Why not?

Tatiana Sainati: Yes, exactly. By 1997, he was the equivalent of governor of the Donetsk region. In 2002, he's appointed prime minister by President Kuchma. 2004, he runs for president against Yushchenko, wins the corrupt election, loses the more accurate rerun.

Yanukovych's presidency was not smooth. It was plagued by reports of massive corruption and cronyism. More than half of the ministers he appointed were from the Donbass region, which is the region where he was governor. He allotted more than 46 percent of the state budget to just that one region, so the rest of the country was left with about half of the state budget.

Diana Shaw: Oh wow, that's a bold move.

Tatiana Sainati: Yes. He consolidated economic power in the hands of a few, very deliberately, that included his son, and this group was known as “The Family.” Very mafioso.

Yanukovych himself amassed a vast personal fortune. It's estimated he's worth at least a couple of billion dollars, which, you know, that's not bad for a mid-level business executive turned civil servant. His downfall, however, was not related to his corrupt activities, at least not explicitly.

In November 2013, he was due to travel to Lithuania for an EU Summit, and he was expected to sign a framework agreement that would put the Ukraine on the path to eventual entry into the EU and would also facilitate free trade of goods between the EU and the Ukraine. It was an extremely popular agreement.

But Vladimir Putin and Russia did not like it. They did not like the Ukraine swinging towards the EU. And Putin allegedly threatened to drive the Ukraine into a default on its sovereign debt if the deal was signed.

So, Yanukovych does not sign the deal. And this sparks a wave of protests. They were initially centered on the Maidan Square. They become known as the Maidan protests. Yanukovych turns the most elite branches of his security forces on them, chased them all the way up a hill, beating them the whole way. Unsurprisingly, that does not cause the protesters to turn away. Instead, it redoubles the protest efforts.

Violence escalated when Yanukovych issued sweeping reforms to restrict freedom of speech and assembly. Ultimately, about a hundred people died in the Maidan protests. Hundreds more were injured.

In February 2014, Yakovich flees to Russia. He knows his time is coming. Then what he does is asks Putin for help. He asks Putin specifically to use the Russian military to restore order in the Ukraine.

Diana Shaw: Wow. Okay.

Tatiana Sainati: So, what does that do? It gives Putin cover to increase military presence in the Crimea, which is not where the protests or violence was centered, but you know. Ultimately that leads to Putin annexing the Crimea.

Diana Shaw: Which, as we know, ends up being sort of a precursor to more recent events.

Tatiana Sainati: Yes, Yanukovych has since been tried in absentia for high crimes, treason, accused of violating the Constitution to the detriment of sovereignty and economic security of Ukraine, as well as providing assistance to a foreign state. Pretty damning.

After he left the country, protesters stormed his mansion. You know what they found?

Diana Shaw: Tell me.

Tatiana Sainati: A zoo. A pure copper roof. A shooting range, a tennis court. a bowling alley, an 18-hole golf course, a floating restaurant shaped like a pirate ship, and, this is my favorite, a pure gold loaf of bread.

Diana Shaw: Tatiana, why might one have or need a pure gold loaf of bread?

Tatiana Sainati: I struggle to understand it. It doesn't really seem like art. It does seem reminiscent of Marie Antoinette's “let them eat cake”, but with even more, you know.

Diana Shaw: Wow.

Tatiana Sainati: Yes, Yanukovych had in his zoo, tigers, giraffes - this is not your typical backyard zoo. Think Emperor Nero, right?

Diana Shaw: Okay, not goats and cows and horses.

Tatiana Sainati: Not goats. This isn't a petting zoo. This is a full-on zoo. His shooting range was underground. I don't know why you need an underground shooting range, but that's where it was. But just really an extraordinary level of personal wealth. It's currently estimated that he and his associates, that group known as The Family, embezzled as much as $100 billion from the Ukraine. That's the figure that the chief prosecutor put on it.

And the EU and the U.S. both imposed sanctions on Yanukovych personally and a lot of members of The Family and their inner circle. He still seems to be living quite well in Russia. He's been tried in absentia for multiple crimes, sentenced to I think 13 years in jail, which seemed a little short to me.

Diana Shaw: That's all?

Tatiana Sainati: Mhm. But none of that has actually come to pass because he's been living his best life in Russia. So.

Diana Shaw: So, he's probably never going to feel the sting of all of his bad acts.

Tatiana Sainati: A lot of what happened with him has also been kept confidential and a lot of the focus has been on the annexation of Crimea and his assistance to Russia.

But I think that's interesting and kind of segues nicely to where we are today. We're not going to talk too much. about corruption in the Ukraine today. Current President Zelensky has really cracked down on it. He's been forced to, as I think you know better than most, but corruption today is really linked to the war effort and it's impeding Ukraine's ability to defend itself.

And I see that as tying back to the Maidan revolution and to the corrupt actor, that Ukraine had in Yanukovych, who is obviously someone who is willing to put himself before country, going so far as to enlist the aid of a foreign government to invade his own country in his own self-interest. And so, I think that really dramatically illustrates how corruption and state sovereignty, corruption and national security, are really tied together.

But I'd be curious your thoughts on what you saw in the Ukraine and on the nexus between corruption and national security.

Diana Shaw: It's so interesting. Well, I mean honestly, what was fascinating to me the first time I went to Ukraine, and I've been to Ukraine twice since the breakout of the war. You know, I expected when I went that the entire focus would be on winning the war and while, you know, obviously there was a big push to ensure that there wasn't corruption in the aid that was coming from the U.S., I fully expected that to be a secondary consideration because, of course, winning the kinetic war is going to be primary.

What I was surprised to find was a very strong message that the Ukrainians were fighting a two-front war. It was a war against Russia and a war against corruption because they saw them both as sort of inextricably intertwined as part of the fight for the future for Ukraine. And there was a recognition that if they couldn't get the fight against corruption right, there wasn't going to be a future worth winning.

The civil society organizations in Ukraine are very active on this front, very committed to ensuring that the corruption of the past doesn't become part of Ukraine's future, but it's a long road. And what they're trying to do in Ukraine is basically accomplish generational change in the matter of a few years.

It's sort of an experiment that I'm not aware has been undertaken in quite this way in many other places, so it will be very interesting to see what they're able to accomplish.

Tatiana Sainati: Well, we've really started down the path of talking about red flags, but I think we're at the point in our discussion where we're going to talk about the red flags that had they been identified and addressed, might have set the world on a different path. And boy, I mean, this is definitely a heavier episode than our previous have been, but when we talk about setting the world on a different path, it's cases like the Ukraine, where there's the annexation of Crimea and now the more recent Russian aggression that we're really seeing that the entire course of history maybe could have been changed had some of these issues been addressed earlier on.

I think what – and Diana, I know you can speak more eloquently and with more detail on this point – but I think as we get into these red flags, it is important to remember that the Ukraine has come a long way.

Diana Shaw: It really has. I mean, it has a long history with corruption, and I know Ukrainians really feel that. I think it's a hard thing for Ukrainians to have to own, but obviously there's a great amount of pride in the efforts that are underway. When I was there in January, there was a lot of excitement around the fact that Ukraine had increased in a positive way on Transparency International's Corruption Index. They had gone up three points in the right direction. And so, they had moved to I think it was 104 out of 180, which was really remarkable, a big step for them in a short amount of time.

And so it's momentum like that, that I think is really important in a moment like this, when they're trying to do transformational generational change in a very short period of time with quite a lot of other things going on at the same time and under resourced and everything else. So, it's very exciting to see, but to be able to sustain this and to ensure that it really takes root is, I think, key here.

And that's what I'll be looking for as we watch this experiment unfold. Will the inherent value of embracing an anti-corruption mindset, will that really settle into the culture and to the social mindset and become part of what Ukraine is in the future? And really, Ukraine's future is very much unsettled at the moment, so we have to see how that unfolds as well.

Tatiana Sainati: Yeah, again, pretty heavy, like, actual course-of-history stuff that we're dealing with. In terms of taking root, and I love that image of having an anti-corruption mindset really taking root in the society, in the apparatus of government.

You know, one of the red flags that we see here, I think, is conflicts of interest. not having a policy on conflicts of interest from the beginning of independence, from the moment when the country is starting to privatize and have fortunes and power from private enterprises amassed in the hands of the few. And then having those same individuals be passing laws and having really close ties with the uppermost echelons of government. So, I'm curious to get your take on conflicts of interest and what policies might have been more beneficial.

Diana Shaw: Yeah, I mean, it's unfortunate that at that critical kind of juncture in their evolution, they sort of baked that into the DNA. I think we often see that when cronyism and nepotism is part of the system, and in this case, it was, you know, out in the open, it was fully acceptable. You're going to see problems like this. It becomes very easy, especially when it's institutionalized to consolidate power very quickly in the hands of a few, and particularly when they're in control of the purse strings and then also have the ability to legislate. They can very quickly embed and then completely entrench themselves in power.

And it's then becomes incredibly difficult to dislodge them. Again, it becomes so important that people in that situation think about the greater good as opposed to their own self-interest and put safeguards in place. But of course, that's asking a lot of human beings to do that. And, you know, I think it's important to think about what was happening in history at that time.

I mean, this was a sea change, right? And so this was about, you know, kickstarting an economy that was moving from communist to something different, not quite capitalist. And so, they were trying something new and we saw how that worked out. But I think definitely one of the red flags here was, not at the very outset thinking about structuring a system that recognized the dangers of allowing kind of rampant cronyism and nepotism to run wild.

And then, again, not having strong policies against conflicts of interest and marrying that up with checks and balances that provide the kind of transparency that you get through financial disclosures and other things like that, that really give you the ability to kick the tires to ensure that your public officials don't have the ability to self-deal when they're exercising their official authority.

The risk that you have when you don't have systems in place that force financial disclosures, it then becomes really left to everybody's – it’s the honor system, right? And then people will interpret for themselves when they think that they, have a financial interest in a case. And as we see, as things come out, like some of the recent information around, The Supreme Court, like people will interpret that differently.

Some people will take the position that their interests weren't implicated. And, you know, to those on the outside, they're like, absolutely, they are. And so that's the problem is that when there's not a light shown on it, reasonable minds can differ. And so that's why you do want to have a process where someone objective is looking at that and trying to apply those factors in an objective way, because the truth is like it does influence your judgment. We can't be objective about ourselves. It's the whole reason why we have these rules. It's just true. And frankly, I will tell you, as a former government official I don't want to have to try to be objective about myself.

It's really hard. I was grateful that the rules existed because it took it out of my hands. I don't want to be put in that position and so the rules really do exist to help people because it's just not really realistic to expect that people can do that exercise objectively about themselves.

Tatiana Sainati: I've always been fascinated by the legal rule or the legal standard, which governs, I think, both the judiciary, but also attorneys is the appearance of bias. You have to avoid the appearance of bias, which in some ways, it removes any subjectivity from the calculus, right? It's not whether I, Tatiana, personally feel like I'm biased or not by an apparent conflict of interest. It's whether someone else looking at this would say that seems odd or not, right?

Diana Shaw: I think that's right, and it makes me think of another point here. It ties back to trust in institutions. And I think where there's the appearance of bias, the appearance of self-dealing, it erodes trust in those institutions. And why I find that particularly concerning - I mean, I think it should be concerning in any democracy if your public doesn't trust your institutions.

But I worry about the slippery slope, particularly in a in a place like Ukraine, because what tends to happen, and I don't have data on this, so this is anecdotal, but what tends to happen is that when people don't trust the institution, they believe that there's corruption and self-dealing, it tends to perpetuate the sense that if everybody else is taking advantage, then I'm the only person not, and then I'm disadvantaging myself and my family, and I mean, what's super interesting is that in a lot of places, the entire system is basically set up around the notion that there is a certain amount of corruption happening.

And so, salaries are basically set with the expectation that people are taking enough on the side to make a living. And so, the person who then doesn't is the person who's not making a living wage, right? And so, it just creates this cycle whereby, it’s almost like you can't get by without participating in the corrupt system.

So, I think, you know, you have to kind of erase not only the fact of corruption and self-interest and self-dealing, but also the appearance if you're going to have any credibility or any kind of trust in your institutions and your public officials.

Tatiana Sainati: Well, this red flag I think goes along with transparency and conflicts of interest, but accountability is one that came to my mind looking through this history of corruption.

One because for so long there was absolutely no accountability. And even now, as we touched on some of the prosecutions and investigations that have been going on into Yanukovych have been kept secret. I think that is another just really critical element. You can't root out corruption if you don't have accountability and an honest reckoning of what happened. And I personally think that people want that, and they respect that. They respect when someone can stand up and say, “Yes, this happened and here's what we're doing to fix it.” Curious to hear your thoughts on that one.

Diana Shaw: You know, I think Ukraine, and in particular Zelensky, is in a really tough spot right now because this is not the far off past, this is pretty recent past that we're talking about. And at the same time, you know, he's trying to demonstrate to the world that Ukraine is embracing this change and that it has made all of these strides in terms of getting on top of corruption.

So, it doesn't really surprise me, I guess, that now is not the time that he would like to be, you know, owning some of this stuff, even though he's not responsible for it.

I think if, if this were under different circumstances, if there were not a war, if he were not so dependent on support from the West, and everything that's tied to that. I think maybe we might see more willingness to embrace and own that history. But I do think he's maybe between a rock and a hard place on this. I totally agree with you that it is so important to be accountable and that people do want to see their leaders fully accept this and bring it out into the open and acknowledge where mistakes have been made and really talk about what they're going to do differently to avoid it in the future.

While I do think, sort of like in the abstract, it's a missed opportunity. I think these circumstances are sort of unique, and so I can understand maybe why in this case there's not that full reckoning happening, but maybe it's going to come down the road. I think we can wait and see.

Tatiana Sainati: I really hope so. Well, as always, the scandal has a lot more to it than we were able to cover today. So, we'll be posting some additional information in the show notes, and we might come back and explore another angle of the scandal on future episodes. I think the Ukraine is going to be a place to watch from our perspective, but until our next episode, I want to thank our listeners for joining us for today's episode and invite you back next month when Diana will be sharing another salacious story of corruption. Any teasers?

Diana Shaw: So, I actually will share some teasers. We're going to build off of this episode where we touched on institutionalized crime. We're going to take it to Brazil, where we will be exploring how institutionalized crime affected Brazil with Operation Car Wash.

Tatiana Sainati: Can't wait.

Diana Shaw: It's really good.

Tatiana Sainati: If you like this podcast, please let us know by liking us on whatever listening platform you use and maybe even sharing us with friends, family, or anyone you know who, like us, loves a good story about people behaving badly. In the meantime, be good, and we'll see you next month. Bye.

Diana Shaw: Bye.

FIFA: Soccer, Scandal, and Sportswashing

On this latest episode of Wicked Coin, join hosts Diana Shaw and Tatiana Sainati as they unravel the intricate web of deceit behind the world's largest sports scandal - the FIFA corruption case. From secret bribes and lavish lifestyles to the shocking involvement of global figures like Vladimir Putin, this episode exposes the dark side of the beautiful game. Discover how a seemingly noble mission to promote soccer turned into a tale of greed and betrayal that highlights the true cost of corruption.

For more on the FIFA scandal, check out the Netflix documentary "FIFA Uncovered", "Red Card: How the U.S. Blew the Whistle on the World's Biggest Sports Scandal" by Ken Bensinger, and "The Sicilian Mafia: The Business of Private Protection" by Diego Gambetta.

Transcript

Diana: Alright, should we do this?

Tatiana: Yeah.

Diana: Okay. First, I want to start with a riddle.

Tatiana: Okay.

Vaib: Cool.

Diana: You ready?

Tatiana: Yes.

Vaib: Uh-huh.

Diana: What do Nelson Mandela, a former MI6 spy, a Santa's lookalike, David Beckham, an IRS agent, Vladimir Putin, and a parrot have in common?

Tatiana: Are we supposed to guess?

Diana: Sure.

Tatiana: Is it the scandal?

Diana: Yes. [ding, ding, ding, ding, ding] They are all part of today's story.

Vaib: The Santa lookalike got me.

Diana: Get ready. Power and corruption are two sides of a wicked coin. Welcome to the podcast that tells stories of the world's largest and most salacious corruption scandals, and explores the myriad ways corruption creeps into the hearts and minds of men and women, the consequences of corruption for perpetrators and victims, and the red flags that, had they been identified and addressed, might have changed the course of history.  I'm Diana Shaw and I'm joined today by my cohost.

Tatiana:  Tatiana Sainati.

Diana:  And our story developer.

Vaib: Vaib Patria.

Diana: We are all lawyers at the D.C. based law firm, Wiley Rein. I'm a Partner in the White Collar Crimes practice, Tatiana is the Co-Head of our International Arbitration and Disputes group, and Vaib is an Associate in our Government Contracts group.

So today, our corruption scandal is a big one, as we teased last time. Honestly, it's so big, it would probably take multiple episodes, so we're going to have to just focus on a specific angle, and maybe we'll come back to it in a future episode. We'll have to see. I guess I should start by apologizing to any of our listeners who are legitimate soccer fans, because I know I'm going to say something that is totally wrong at some point, so I'm going to apologize in advance, but I have done a lot of research for this because it is such a good story. It is fascinating but to the extent that I get any of the sports part of it wrong, I apologize in advance.

So today, we are going to talk about the story of what is arguably the world's largest sports scandal, and this involves the Federation Internationale de Football Association, also known as FIFA. And we will be calling it FIFA, because I know I just mangled the name. All right so, FIFA started in the early 1900’s, and it really was just this loose organization to oversee amateur international soccer competitions. It was really that for like 75 years, until this guy named João Havelange came into the picture. And João was a Brazilian former Olympic swimmer, and in 1974, he comes onto the scene, and he challenges the FIFA president for the position. He campaigned on an anti-apartheid platform, and he promised to ban South Africa from participating in FIFA as long as apartheid continued, and he also promised a lot of direct development resources in African soccer federations. And, as a result, he was able get a lot of support. But it turns out, it wasn't all altruism. So João, a really smart guy, he realized that the countries that make up the confederation of African football, had a significant number of votes in the election, because each country has a vote. And so, this is actually the first instance of potential corruption in today's story. There were rumors that João at the Frankfurt Congress that proceeded the election, may or may not, have passed around a series of brown envelopes that may or may not, have contained cash, to help sweeten the deal when influencing the votes that resulted in his election. And I find this fascinating, Tatiana, because It seems to me that he probably could have succeeded without resorting to corruption, but he did it anyway. And it reminds me of Fat Leonard. The figure at the center of last month's scandal who, as we discussed, provided a very good and important service, and he did it really well, and yet he still felt the need to resort to corruption. So, what do you make of that?

Tatiana: It's a really fascinating question, and I think it goes to a heart of both scandals and a lot of the scandals that I assume will be discussing in the future. Because, I think it's very rare that we find someone who's either purely good or purely evil, and where motives are not somewhat mixed. What's fascinating to me about this, is that, it sounds like João had this fantastic idea, like we can use sport for a purpose. We can use it to advance social change. FIFA can actually be a platform to make the world a better place, and that's a powerful message. It's a beautiful message. And it's one that it sounds like would have resonated with a lot of the decision makers, who were going to be voting at this Frankfurt Congress, even if he had not bribed them. And yet he's so nervous or he's so worried that, it's not going to be enough, that he goes ahead and decides to bribe people anyway. And so right from the very start you have this paradox, you have something that's supposed to be for a social purpose, something that's supposed to advance what is good. And yet, you're doing it, from a place that's appealing not to people's better angels, but to their moral purer instincts.

Diana: Yeah, I totally agree. And as we'll see, I think in life, people are complex, right? Good people, do bad things and bad people, do good things. And honestly, it's just not always easy to tell which kind of person you're dealing with.

Alright, so this is really considered a critical inflection point in FIFA history, because Havelange was a businessman. His election really represented the introduction of capitalism into FIFA and the organization. Because he began to run FIFA like a business, for the first time in its history. It was no longer a club amongst friends, and he had a shrewd understanding of the ways in which sport could be a path to political power. A little bit where you were talking about Tatiana.

Tatiana: Well maybe he saw that there is within all of us, or collectively a desire to achieve something positive to affect positive change, and the cynic in me would say maybe he tapped into that instinct, and saw the business potential in that instinct, saw a way to transform that into power and dollars for himself.

Diana: I think that's right, and I think he realized that he couldn't do it alone. So, this is an important moment where he realizes that he needs to bring in a special skillset. So claiming to want to advance soccer development programs around the world, and remember he made this promise on the campaign trail to bring development programming to African nations, he brings in a guy named Sepp Blatter. And this is really the name that is associated with FIFA and this corruption scandal. So, Sepp is the first one to think about the commercial opportunities associated with soccer. He approached different companies and eventually found a very large corporation, and got them to sponsor, initially FIFA youth competitions and other development programs. And this is what started to bring the flow of money into FIFA, and it only grew from there. Sponsorships became increasingly lucrative to FIFA, bringing in millions and then hundreds of millions of dollars into the organization. And then from there came the marketing deals, and remember, this is 1974, it's right around the time the TV is becoming increasingly big, right? So, it's just like the perfect moment for this to be happening. So now we've got, you know, marketing deals for broadcasting the games, and this becomes huge business as well. So here we go guys, saddle up. Keep in mind now, okay, even though all of this money is flowing into FIFA, FIFA is supposed to be structured as a nonprofit, right? So, they're raking in all this money, but it's supposed to all be flowing back into the sport. Nevertheless, it's pretty clear that's not happening. So, the organization got very big, very quickly, but as you can imagine, this is often the case, its internal controls didn't grow at the same pace, as the money and the organization did. There were really no checks and balances. And no one knew exactly how much money was coming in or where it was going. And while no one was really supposed to be profiting off of their involvement, on the surface you could see that clearly, they were living very comfortable lives. They were driving the best cars, they're staying in the best hotels, their living very luxurious lives, and over time, it becomes clear that part of the way they're able to do this is through corruption. And I'll give you just some of the examples that come up over time. So, we have examples where FIFA senior officials and others would accept kickbacks and bribes for granting marketing rights, for world cups and other important games. You would have Confederation Presidents who, I think this is just fascinating, they would refuse to play their star players in certain games, unless they were given a bribe by the broadcaster. So of course, the broadcaster knows that the best way to get viewership is if stars are going to be playing in the game that they're broadcasting. While the Confederation President would say, well I'm going to bench my star player, unless you bride me. Okay.

Tatiana: Wow.

Diana: I'm going to make sure that star player plays, so there you go. And then of course, you know, where the World Cup gets played is big business, and so there are certain voting members. I think it's 24, or 22 that sit on the Ex-Co, the Executive Committee of FIFA, and they're the guys with the real juice. And over time it became apparent, that these are the guys who would solicit and accept bribes for votes on where the World Cup was played. And this was definitely supposed to be a no-no, but it's pretty clear that's what was happening. So, first in small degrees and then growing. This is what's starting to become rife within the organization. Now, you remember the guy Sepp Blatter? In a fascinating twist, Sepp Blatter who is, you know, basically making this a commercial entity, manages to dethrone Havelange in 1988, by discovering written evidence of a kickback, that Havelange was paid from marketing rights. So he finds this written evidence, and I don't know if this has been proven, but it's pretty well understood that this is what happened. He goes to Havelange and he says, I have proof.

Vaib: Oh man.

Diana: You're not going to run for President again, you're going to clear the way for me, and I'm not going to out you, and I'm going to take over from here. And that's the deal they struck.

Vaib: So how did he step down? Like was this known to the public or was this all hush, hush?

Diana: I think this was all hush at the time. So Havelange had been in place now let's see ‘74 to ‘88, you know, 14 years. Math is not my strength, but I think that's right. And so, he'd been in place for quite a while, he's an older gentleman. It didn't, I think raise too many eyebrows and Sepp had been his right hand man, for all this time. Havelange decides he's not going to run for reelection, Sepp goes forward, Havelange endorses him, and low and behold Sepp Blatter is now FIFA President. So, then for the next two decades, it is the era of Sepp Blatter. And ironically, he dethrones Havelange by ferreting out corruption, and yet this is the period of probably the greatest corruption in FIFA’s history.

Tatiana: Well, going back to mixed motives. Right.

Diana: Exactly. I mean it is a very kind of, there are so many interesting twists and ironies in this story, and we're about to get to one right here. So one of the major players in the corruption scandals, this guy named Jack Warner. He's the head of CONCACAF, which is the Confederation for, it's basically North America, Central America, all of the Caribbean countries. And part of the reason why he's got so much juice is because there are so many Caribbean countries, and every country gets a vote, so he has a lot of votes within his block. His sidekick is a guy named Chuck Blazer, he is our Santa lookalike. He's six foot three, 450 pounds, big, unruly white beard. At one point, is rolling around on a motorized scooter with a parrot on his shoulder, just a really eccentric guy. Chuck Blazer went from like, coaching his kids' soccer team, AYSO on the weekends, somehow to the top tier of the FIFA pyramid. Not really clear how he managed to do it, but he used his position and power to bank roll this incredibly luxurious life. It's clear he took bribes for votes. He managed to get on Ex-Co., so he had a position where he could leverage it to solicit bribes. But he also made these sweetheart marketing deals. So every time a marketing deal came up, he basically wrote in a 10% cut for himself that went into his own pocket instead of circling back into FIFA, and into programming. And he managed to evade detection in a couple of really clever ways. We see this, this is kind of common with these sorts of characters.  He created all of these shell companies, so he never got paid directly, everything went to a shell company, and then went to another shell company, and another shell company, it was very hard to track. And he would also use structured payments. So a big payment would come in, it would be broken down into little payments, those smaller payments would get shifted around, and eventually, he's getting paid in small amounts that aren't going to trigger any kind of red flags with financial institutions, and so he's managing to stay under the radar. Now, while he may be staying under the radar in terms of how financial institutions track things, he is not staying under the radar in terms of his lifestyle. This man has two apartments in Trump towers, one for himself and one for his cats.

Vaib: Oh my gosh.

Tatiana: No.

Diana: Just pause for a moment to process that.

Tatiana: Well, you can’t have a parrot living with the cats.

Diana: Correct.

Tatiana: That would just be ridiculous.

Diana: Right. I mean, he's got a blog where he's posting pictures of himself on private jets with Nelson Mandela. I mean, this man is living large. He liked the best of everything. He never seemed to be able to get enough, and clearly he considered himself untouchable. Right. He's putting his life out there for all the world to see. And he really ends up being the linchpin in our story. He's the person who ended up bringing the FIFA scandal to light. Now he isn't the person who put it on the FBI's radar, but he is the person who really broke the case wide open. And do you want to know how he got caught?

Vaib: How?

Diana: Okay. Here's where our IRS agent comes into the picture. So picture a little IRS agent sitting in probably a windowless office in California, who happens to be a huge soccer fan? He's toiling away at his desk, doing whatever IRS agents do, and he gets a random news alert, that says that the FBI may be investigating this guy name, Chuck Blazer. And he knows that Chuck Blazer is associated with FIFA. Whereas like most Americans don't really pay attention because soccer is not as huge in America as it is in other parts of the world. So he pays attention to this, and basically on a hunch, he runs Chuck Blazer's name through the system and pulls Blazer’s tax records. What do you think he found?

Tatiana: Lots of anomalies.

Diana: Nothing. He found nothing. Chuck Blazer had not filed tax returns for 17 years.

Vaib: 17 years, and they're just finding it now?

Diana: 17 years. He had not declared a single dollar of income in 17 years. Interesting side note, apparently, it's much easier to get caught for tax evasion by filing something for taxes, and then they figure out that you've like underreported. It seems like if you don't file for taxes multiple years in a row, and this is not meant to be a roadmap for committing tax evasion.

But the system, I guess like, starts to think you're dead, and then just doesn't really do anything.  I hope they've actually fixed this.

Tatiana: Wow, yeah.

Diana:  So he managed to evade detection and had not declared a single dollar of income in 17 years.

Tatiana: Wow.

Diana: Meanwhile he's like posting all this stuff on a blog. So the IRS agent knows he's got this guy debts to write. And basically goes to the FBI and begs to be part of their case. And says, I can make this happen for you, if you will let me be part of the case, lays it all out for them, and convinces them that they should work with him. So they agree. And they go to New York, confront Blazer outside of Trump Towers. He's walking to dinner one night with his girlfriend or wife, I can't remember. They sit down with him, they explained to him what they have on him, he like takes a beat, and he's like, all right, I'll work with you, what do you want to know? And so he becomes like the best witness they could ever hope for because he's American, he speaks their language, he can translate soccer to them, he can translate the entire organization to them, all the players, all the schemes. He agrees to wear a wire.

Tatiana: Wow.

Diana: He records phone calls for them. He goes to dinners, and they put a recording device in his keys, and he'll just throw them down on the table and record entire dinners where they're discussing schemes, and apparently he sat for like hundreds of hours of info sessions with them, just explaining everything about what was happening. And ultimately thanks to his help, they were able to develop what's called a RICO case. Its racketeering. And normally these are cases that the FBI brings against organized crime families, so Mafia. So they basically determined the FIFA was being run like an organized crime family, or at least that's the theory that the FBI and DOJ were putting forward. And after, you know, advancing this over many years, they brought a 236-page criminal indictment. They have indicted about four dozen individuals and corporations. This has resulted in 31 guilty pleas, and four trial convictions. Several corporations have entered into big settlements, and DOJ has recovered something like $500 million in restitution so far. DOJ was able to bring this case against all these players, and all these different countries by establishing jurisdiction in the U.S. And the way they were able to do this is kind of interesting. As it turns out, all of this money, even though much of it was originating in other countries, and its final destination was in other countries, it was all flowing through U.S. financial institutions at some point on its journey. And so that ended up being enough of a hook to create U.S. jurisdiction.

Vaib: Interesting.

Tatiana: Yeah, I assume New York would have some role in it because it's really hard not to touch the New York financial institutions if you've got any sort of international payments. So.

Diana: Although interestingly recently, there's been a lot of talk about whether there was overreach in these cases. We'll see how that pans out.

Tatiana: Have other countries kind of jumped on the bandwagon, because FIFA operates globally?

Diana: Yes, so some have. I know in Switzerland they have moved. So the big hoo-ha when everything went over, it was in 2015 there were arrests in Zurich of seven Ex-Co members. They were all arrested at a very “shi shi” hotel and walked out with like 3,000 count bedsheets. You know covering them as them as they were put into cars. I mean it was just, so over the top. Warner is still on the run. He's managed to evade extradition. Jack Warner, even though he's banned from FIFA, he's been indicted on 29 criminal charges, but he's still at large because he's managed to avoid extradition. Our Santa look alike, Chuck Blazer, who interestingly, talking about paradoxes, he initially went to the FBI before they confronted him and flipped him, he went to the FBI to complain about someone else taking kickbacks and was cast as a whistleblower.

Tatiana: That is bold.

Diana: Right. Yeah. Very interesting. Then, everybody realized he was not a whistleblower. But even with all his help, he did plead guilty, but before he was sentenced, he passed away. That's how things ended up for poor Chuck. Then for Sepp Blatter right, the kingpin you know, he's denied from the mountain tops, he's denied that he knew about this, had anything to do with it, ever accepted a bribe. He claims that he did not ever endorse, condone or know about this. No criminal charges have ever been brought against him in the DOJ case, but he was banned from FIFA through 2027, not a lifetime ban. He was fined a million dollars by a FIFA Ethics Committee, following a probe into some massive bonus payments. Do you want to know the circumstances around that?

Tatiana: Yes.

Diana: Love this. Basically, he paid himself a $27 million bonus from World Cup profits. Talk about no checks and balances. Basically, there were three guys at the top of the pyramid who could sign off on each other's salaries and bonus payments. The two guys decided that he deserved a $27 million bonus, and then he decided that each of them deserved like $11 million dollar bonuses or whatever it was, and they all just signed off on it. That's not corruption, that you know.

Tatiana: That's just –

Diana: You know, they just deserved it because they worked really hard.

Tatiana: I can see how a million dollar fine would really put you off of engaging in this type of behavior.

Diana: Exactly.

Tatiana: What is Putin's role in all of this? Because he was in our riddle.

Diana: Okay, so let's go to Putin. In the 2010 timeframe, Russia is bidding for the 2018 World Cup. And they are bidding against the frontrunner, the U.K. And the U.K. is the clear favorite. Their campaign is being led by David Beckham, he's a huge soccer star. He's also, you know, Posh Spice's husband. The U.K. has a storied history with soccer, so they are the clear favorite. Whereas Russia, has really no major soccer history to speak of, also no infrastructure to support a World Cup. They're deemed by the World Cup Committee as a “high risk country”. Apparently even during the presentation, their PowerPoint was super glitchy and didn't go very well. Really, it's not looking very good for Russia. But apparently, Putin, and listen none of us can be in Putin's head, so I think this is all rumor, but apparently Putin, who at this time is because of term limits, biding his time as Prime Minister of Russia, waiting to run for reelection as President in 2012. Putin realizes that this may be an opportunity for him to gain some popularity in advance of his campaign for the presidency in 2012, and also, you know the opportunity to host the World Cup in 2018, would be a real boon to his presidency. He throws the full weight of his support behind this, and he wants it to happen. Rumor has it that despite having made a terrible presentation, there may have been some back channel deals, including the exchange of some very valuable pieces of art, and low and behold, Russia is awarded the 2018 World Cup.

This introduces this interesting idea, I think Putin saw it, and we see this in other aspects of the FIFA story, that is the introduction of a concept called sportswashing. This opportunity to use sport to enhance the image of a country, and really potentially, to wipe away some of the negativity around the country. I know this is something you know a little something about Tatiana. Can you tell our listeners a little bit more about sportswashing?

Tatiana: Yeah. sportswashing you think of it as a kin to greenwashing or white washing. Basically, what a country is doing, or what an organization is doing if they're trying to sportswash, is to shift attention and change focus, change their entire narrative from one that is maybe negative, one that is maybe centered on, for example, human rights violations or in the case of South Africa, civil rights violations. Say, wait a minute, don't think of human rights violations when you think of us, think of sports. Think of us bringing communities of young people together and teams together, and embarking in this great human adventure. It just becomes a way to distract negative attention and turn it into positive publicity.

Diana: Yeah, it's basically a way to cleanse a country's image, bathing it in all of the good associations, that the world has with the sport. We actually have other examples of it in the FIFA story. In 2022, the World Cup was awarded to Qatar, which was also another shocking situation, much like Russia, where Qatar did not have any of the infrastructure to support a World Cup. By the way, it's 120 degrees in Qatar when the World Cup would typically be played. And it has a history of human rights violations, and yet, the whole idea around Qatar getting it is, that you know, this is an opportunity for them to reshape the narrative around their country and to benefit from sportswashing.

We have an earlier example as well. Earlier on in Havenlange’s tenure as President, the World Cup was awarded in 1978 to Argentina. At the time, Argentina was ruled by a fascist dictator. What we have is the World Cup being broadcast around the world. We have a dictator standing in the box next to Havenlange, right, and the image is one of unifying people around sports, all of the good positive feelings that people associate with soccer and with the World Cup is washing over right, this military dictatorship. We see this as really kind of the modern beginning of sportswashing.

Tatiana: Diana, so I know when this happened with Qatar, it was extremely controversial. I'm curious, back in 1974, was it controversial to host the World Cup in Argentina or was this not really as big of a deal back then?

Diana: No, it actually was even then. I remember when I was doing the research, that people were quite surprised, and in fact Havenlange was really put on his heels in having to defend himself, and the decision. He kept saying, “sports is not politics”, “sports is not politics”. Yet of course, we see that he sees sports as an avenue towards influencing politics and influencing, or at least being able to marshal some of the power that comes through political channels. It was sort of like he wanted to have it both ways, right? Talking out of both sides of his mouth. He wanted to be able to leverage the power of politics when it suited FIFA's needs, but then when the criticism sort of got shifted back on him, he wanted to say, well sports isn’t politics, it's separate. I think this is a good time for us to pivot to our Red Flag Roundup. We've got quite a few today.

Tatiana: There's so much, and I think one of the ones that I'm really grappling with, it's similar in a weird way, to Fat Leonard. For me, it's tone at the top, of course, because we have Ex-Co., and then we've got the President, we've got all of these leaders who are really just engaging in rampant open and incredible, like it's just an incredibly overt willingness to participate in scandal and corruption, and to take money under the guise of trying to do something good and promote soccer, and promote like world togetherness. But where do you go? This was a similar thing in Fat Leonard. Who do you report that to? If you're reviewing the contracts with Chuck Blazer and you're like, well that seems odd, but who do you report it to?

Diana: Yeah. I mean, unfortunately there was really nowhere to go. In this case, I mean, unlike in the Fat Leonard case, where there was just a total breakdown in tone at the top. In this case, we have a lip service issue here. So we had Sepp Blatter who was claiming that he was taking corruption seriously, that there would be no corruption. Interestingly so, when Qatar won the 2022 World Cup, and there was so much shock around it, and swirling allegations of corruption, Sepp, you know, tried to come forward and paint this picture that he was now going to be the face of the new FIFA, the no tolerance FIFA, the total reset FIFA, and he launched an Ethics investigation, this is in the 2011 timeframe. He brought in a FIFA governance advisor to establish what they call the governance program, that was worthy of this century. And he used this to try to shift the narrative, right? He put up this smokescreen, it was going to be the new era of FIFA transparency and zero tolerance. But even while this was going on, he's minimizing the seriousness of the situation and he refused to call it an ethics crisis. It's this mixed messaging. It's lip service over here, but to your point, there was no independent oversight. He's building this up within FIFA and in the end, all of the controls were still set up under and within FIFA, and under his control. And really it had no lasting impact. When they completed their work, they put forward a long list of recommendations. Things about like how salaries should be set, right? There should be some checks and balances. You shouldn't be able to sign off on his salary when he's the one signing off on your salary. Really basic, governance and compliance stuff that we see all the time and, not even the most sophisticated corporations, but because Blatter was the one in control, and he was the one benefiting from it, he just basically told the group to wrap up. He cut their resources, and the folks who were involved in that realize that it was just a PR stunt. I think again, not to be a broken record, but it's critical to have more independence in your oversight, but I think there's something unique about the way that FIFA, it's history and the way that it evolved, right, from a loose organization, really a club among friends. It grew very quickly. Tons of money flowing in. That of course introduces a ton of risks. What would typically happen is, if it's a corporation or a company, you're going to be updating your risk profiles. You're going to be developing updated risk mitigation plans and compliance programs that will scale with your organization, but FIFA, because of what it was, it was basically operating in a legal gray zone. It's essentially a members’ club. It's not a business, it's not a governmental organization, it's not even like a traditional NGO. An interesting example that I saw, is it's like basically creating a bowling club, right? Like if I create a bowling club with you Tatiana, and we run it like a dictatorship, right, does anybody care if we have like ethics guidelines or if we like misuse the dues? It's just nobody imagines that a bowling club is ever going to reach the scale of something like this. I think part of the problem is that there's no real framework for something like this, but it's so big that people feel like there should be rules, but it's basically self-governing.

Tatiana: It's interesting you say that. I know there’s a great book, “The Rise of the Sicilian Mafia”, and what it discusses is of course the rise of the Sicilian Mafia. The fact that in Sicily and Southern Italy at the time when the Mafia came to power, there was no other infrastructure in place to provide any sort of rules, regulations, enforcement for society, there was just a power vacuum.  If people got into a dispute with their neighbors over a contract for the sale of goods, they couldn't go to the police. They couldn't go to the courts. Those didn't exist. The Mafia steps up, and it's – I was thinking a little bit about it when you were talking about how FIFA came to life, because there is this massive opportunity for a sport that is growing in leaps and bounds, and that has so much potential to have so much power and influence in the world. It's not like the Olympics, which have been going on forever and have this like International Committee and standards behind that committee, and some sort of oversight outside the organization.  It's really just FIFA. They're the only ones there, so they stepped into a vacuum, and then they can do whatever they want in that vacuum.

Diana: Right. It's been very closely held, for a very long time, by a very few people. That's a dangerous recipe as we see, because human nature being what it is, power and corruption.

Tatiana: Go together.

Diana: Like a wicked coin.

Tatiana: That was two additional red flags. A lack of transparency, and when an organization grows too quickly without any external oversight, you have another real risk. It's interesting because you have to wonder about the incentive for a compliance mechanism in a situation like this. Like you really have to be forward-thinking and realize there are going to be again, real reputational harms, and we are going to risk losing this organization if we don't have some sort of compliance mechanism in place. But the short-term incentives, to just get as much as you can, while you're in power, must be kind of hard to overcome.

Diana: I think that's right. I mean, that was something that I was struck with the whole time I was thinking about this and doing the research, is that there was just so little impetus for anybody, in the machine, to ever push for any kind of oversight or any kind of ethics guidelines or transparency because everybody benefited. I mean, it's sort of the genius of the scheme. Everybody in the machine could benefit a little bit, and there was always the promise that if you could find yourself in a slightly higher elevation, that you could benefit more. You know, really there was no incentive for anybody to call it out or to introduce anything more appropriate into the situation.

Vaib: So that kind of brings up my next question. How, since all of this has come to light, how have things changed? Have there been any changes throughout the organization?

Diana: I mean, this is pretty recent, but Sepp Blatter stepped down. I cannot remember the name of the new person, but the new person of course, has made all sorts of vows to do things better, to do things differently. Now, I mean, FIFA does have a code of ethics. Like they have the rules, they have the policies and procedures, but as we know, there are maturity models for organizations. Having the policies and procedures is one thing, having them consistently implemented is another thing. Hopefully they are moving on the maturity scale to consistent implementation, but time will tell.

On an interesting final note, a lot of people have commented that really only the U.S. could have brought this case and brought FIFA down because every other country cares too much about soccer, to have really taken this on. Like only a country, like the U.S., that doesn't have this much history with the sport, would have had, less at stake really. The U.K. couldn't have done it. South American countries wouldn't have done it. It's just so important, and so many commentaries note that it's just kind of fascinating that only the U.S. would have been a country that could have taken this on.

Tatiana: That is amazing to me, because I almost have the exact opposite view. And maybe this just speaks to who I am, but I'm like, if you care so deeply about soccer, don't you want this well-run. Like, look at what these people are doing to the sport you love. Look at how they are manipulating the players. Look at how they are manipulating, like the funds that are being put in to help promote youth participation and promote development. And to me, it would be like, almost the opposite incentive, I care so much about this, I'm not going to let you get away with it.

Diana: That's why we love you, Tatiana.

Tatiana: Well to maybe tie it all together, it is fascinating to see how an organization that really came into its own on the promise of we are going to combat in apartheid. We are going to invest in development. We are going to hold governments accountable through sport, is now accused of allowing governments to kind of get away with some pretty egregious behavior, and wash it away through sport, and through the distraction of being able to host the World Cup, but a kind of sad journey, and here's hoping that in the future, it really does turn around.

Diana: Yeah, because it is such an important mission. And, you know, I guess to put a bit of a nicer twist on it, FIFA does so much. Especially I think the youth programming around the world. It would be nice to know that all of the money that it is able to generate, because there's so much love for the sport, is really going back into that programming and there's a need for it. There is that unifying element of it, that is special, and that's something that we see across sports. It would be nice to see them clean up their act, and be able to see all of those resources going to the programming that it's intended for. As I mentioned at the outset, the FIFA scandal actually has a lot more to it than we were able to cover today, so we'll be posting some additional information in the show notes. And may come back and explore another angle of the scandal in future episodes. Until then, I want to thank our listeners for joining us for today's episode and invite you back next month when Tatiana will be sharing another salacious story of corruption. Tatiana any teasers?

Tatiana: Well once again, our listeners are just going to have to wait and see and join us, but we have another doozy for all of you, and I think you'll start to see some really interesting patterns emerging in these very different fields of corruption.

Diana: Can't wait. If you liked this podcast, please let us know by liking us on whatever listening platform you use, and maybe even sharing us with your friends, family or anyone you know who, like us, loves a good story about people behaving badly. In the meantime, be good and we'll see you next month. Bye.

Tatiana: Bye.

Vaib: Bye.

The "Fat Leonard" Scandal

In their debut episode, Tatiana and Diana dive into the infamous "Fat Leonard" scandal that rocked the U.S. Navy. From bribery, to blackmail, to prosecutorial misconduct, they unpack how a massive corruption scheme unfolded due to critical failures in oversight. Join the conversation exploring how to promote transparency, improve accountability, and rebuild trust and credibility at our nation’s highest levels of defense.

For more on the Fat Leonard scandal, check out "Fat Leonard: How One Man Bribed, Bilked, and Seduced the U.S. Navy" by Craig Whitlock and the Fat Leonard podcast on Brazen+.

Transcript

Tatiana Sainati: Power and corruption: Two sides of a wicked coin.

Welcome everyone to our inaugural edition of Wicked Coin. Mom, I know you’re listening. I am Tatiana Sainati, cohost, and I’m joined by my cohost, Diana Shaw, and by our story developer, Vaib Patria. We are all attorneys here at Wiley Rein, a DC based law firm. I am the Co-Head of our International Arbitration and Disputes Group here.

My Co-Head of that practice, Josh Simmons, you may all know from his own podcast, Crypto Counsel.

Diana Shaw: Love the cross sell.

Tatiana Sainati: Diana is a partner in our White Collar Group and also the former Acting Inspector General of the United States State Department. So, she brings some really helpful insights into oversight, transparency, and accountability.

And Vaib is an associate in our Government Contracts Practice, which will be particularly interesting for this episode. Each month we will be telling the story of one of the largest, most salacious corruption scandals exploring the myriad ways corruption creeps into the hearts and minds of men and women, the consequences of corruption for perpetrators and victims, and the red flags that, had they been identified and addressed, might have changed the course of history.

Diana, can you share with our audience why we decided to use the title “Wicked Coin?”

Diana Shaw: Sure! We actually had a lot of fun coming up with the name for the podcast, but the one that we landed on was “Wicked Coin.” It comes from a quote that I found in a book called “Spectacle of Corruption” by an author called David Liss.

The quote is “power and corruption go hand in hand like two sides of a wicked coin.” And it just felt fitting for a podcast about, corruption and compliance. You and I are both fascinated by scandals and people behaving badly, and it just seemed like the perfect fit for what we wanted to talk about.

Tatiana Sainati: And why do you think it’s so important to be telling these stories?

Diana Shaw: Well, I think what’s particularly interesting about the podcast that we’re creating is, you know, a lot of these stories are out there. They’re well-known scandals, but why I think it’s important for us to be telling it is one, I think we’re good storytellers.

Tatiana Sainati: Very true.

Diana Shaw: I think we’re going to tell it differently. But the other thing that I think we bring to the table is the compliance piece, right? Everybody knows what went wrong, but not a lot of time has been spent thinking about why they went wrong and what could have been done differently to keep it from happening. And I think that’s where our expertise is really important and where we have something to add. So I think that’s why it’s incredibly important that we tell these stories and tell them from our lens.

Tatiana Sainati: I mean, obviously I agree with that since I am the cohost, but I do think you have an interesting perspective as the former Acting Inspector General for the State Department. And can you tell our listeners what an Inspector General is?

Diana Shaw: Sure. So in the federal government, most of the big departments and agencies have an independent oversight arm that are called the Inspectors General. And they do audits, some inspections, evaluations, and investigations, and basically they’re there to ensure that taxpayer dollars get spent in the way they’re supposed to, and they’re supposed to identify corruption and make sure not only that there’s no fraud and waste in programs, but also that programs are efficient and effective.

So, I’ve spent the last almost decade of my career looking at how we can make government better, but also helping to unravel some pretty gnarly corruption scandals myself. So I have a lot of real interest in this from a professional and a personal perspective.

Tatiana Sainati: And I think that’s a fantastic lead into this week’s episode, because we will be examining over the course of our sessions, hopefully many sessions, a number of different scandals, both in the public and private sectors.

But this week we’re going to be launching our podcast with the story of the Fat Leonard scandal. And this looks into how a businessman from Malaysia bribed dozens of high-ranking military officers and defrauded the United States Navy of tens of millions, possibly billions of dollars, and put our nation’s security at risk.

So it’s a story of booze, sex, and greed on a massive scale, but it’s also a story of how power leads to corruption, and corruption leads to power, and how things might have been different if there had been an independent Inspector General.

Diana Shaw: Love it.

Tatiana Sainati: Yeah, I think you’ll enjoy this. At the center of the story is one man, Leonard Francis, he is a six foot three tall Malaysian who grappled with his weight.

And I think that’s actually an important point because he would use the fact that he was obese and had all these weight struggles as one mechanism to create a false sense of intimacy with some of his targets within the Navy. So, he would tell these elaborate stories of like his lap band surgery gone wrong in order to get people to think, wow, like we’re really close. This guy is my friend. Look at these details he’s sharing with me. I think kind of speaks to his really high EQ and his ability to really target people who wanted a friend.

Diana Shaw: Yeah.

Tatiana Sainati: And become that friend.

Diana Shaw: Interesting.

Tatiana Sainati: He was born into a wealthy family that controlled a firm providing supplies and stevedores to cargo ships in Singapore.

That was not enough for Leonard Francis. I’m not going call him “Fat Leonard” because he never really liked that nickname. So out of respect, and you kind of have to respect his audacity, I’ll just refer to him as either “Leonard” or “Francis.”  But that was not enough for him, he always wanted more, and he had an obsession with American music, American TV, and the American military.

And he decided that the way his family could get more is by becoming the go to resource for the U.S. Navy in Southeast Asia. The ports in the Philippines were shutting down to the U.S. Navy. They were looking for alternative places and what they needed were what’s called husbandry services. So that’s providing like tugboats and water taxis and taking waste and sewage away from these massive naval ships.

And he was . . . one of the surprising things to me about this story is he was really good at providing these services. I don’t think he would have had to bribe his way into getting these contracts and establishing a good relationship with the military, but he did it anyway because he wanted more. So, he founded his company Glenn Marine Enterprise, in the 1990s.

And he saw this immense potential in developing a lasting relationship with the military. And the core of his business plan was really personal service. So, from his earliest days in the industry, he was really focused on making sure that when the U.S. ship came to port, he took out the highest ranking officers on that ship and showed them a really fantastic time.

So it was everything from little things like providing them with a Jaguar as their car to transport them around town, to things like treating admirals and captains to these like tens of thousands of dollars in dinners at the fanciest restaurants in the world, with the top, top shelf of booze. He would provide all this for free to the naval officers. They were supposed to report any gift over $20. They never reported these.

Diana Shaw: Yeah, my little alarm bells are dinging like crazy. Right off the bat, but interesting. Okay.

Tatiana Sainati: Yeah. Well, it’s really interesting, on a few occasions, he would send his invitations to admirals or the captains of the commanders, I believe they’re called, of the ship. And they would pass them on to their embedded JAG officers and say hey, is it okay if we go to these?

Diana Shaw: Those are the lawyers, yeah?

Tatiana Sainati: Yes, the lawyers. Debbie Downers. And in one circumstance, the JAG officer was like, “oh, I can tell the commander really wants to go to this.”

Diana Shaw: Yeah.

Tatiana Sainati: So, “I’m going tell him that if everyone’s going, it’s fine.” Or another one was like, “well, you need to pay for your own portion of the meal.”

And that sparked this trend of some of the officers paying like a token. Like, here’s a hundred bucks for me, or here’s a hundred bucks for each of the men when it was actually like $800 - $900 a person.

Diana Shaw: So basically they’re just clearing their consciences. But…

Tatiana Sainati: Exactly. Exactly. And this is just the start. And I mean, that quite literally was the start. He’d start off by giving you a great meal. Then he’d provide luxury travel, complimentary stays in the, you know, presidential suite at the finest hotels. He would provide those really nice car services. He would take admirals and captains’ wives on shopping trips.

Diana Shaw: Yep. I’m trying to think what the justification would be for that for any government employee.

Tatiana Sainati: Not sure.

Diana Shaw: Struggling.

Tatiana Sainati: Not sure. There’s one great anecdote where he presented the wives of two admirals with luxury handbags and one I think was like an Yves Saint Laurent bag. The other was a Gucci bag. One of the wives returned it because she noticed some like problems with the zipper or something like that. And she was like, this is just not up to my standard.

Vaib Patria: Not up to par.

Diana Shaw: Wow. I was about to say good for you, but I take it back.

Tatiana Sainati: No. No, she just wanted a better version of the same handbag, one that didn’t have those little defects. So, which she received.

Diana Shaw: Wow.

Tatiana Sainati: Yes, he did correct that mistake. When the wives were not around, he started bringing women to these parties, prostitutes. He would actually throw sex parties. Yes, and he like developed an understanding of the type of women that different naval officers liked. Yes, to make sure that he had those women available for them. And this is really, this was like his most effective tool. And I think it’s because of the bribery potential. He’d also take pictures at all of these parties and events, and he’d make sure to get pictures of himself with the admirals and commanders of these ships. And they knew, I mean, one officer even said, I knew that this was going to show up in a court of law someday.

Diana Shaw: It’s interesting to see how he hooks them with small bait and then finally got them to a place where he knew then that they couldn’t get out of it. And they were backed into a corner.

Tatiana Sainati: Yeah. Well, and it really was like kind of test balloons, right? Like who was going to be amenable?

Diana Shaw: It’s quite a long game he was playing, right? I mean, this is cultivating people over years, presumably.

Tatiana Sainati: Yes. Yes, and he would identify, you’re so right, because he would identify up and comers, and he would really start to go after these, like, young, but really highly regarded officers. And he had a way of identifying them. And he was like, you’re going places.

So a lot of these officers wound up becoming admirals down the line or becoming high ranking commanders down the line. They weren’t necessarily when he started his relationship with them, but they were by the conclusion. So he really was in this for the long run. He also would use his recruits within the Navy to get additional recruits within the Navy. So . . .

Diana Shaw: It’s like a pyramid scheme.

Tatiana Sainati: Yes. And he asked them like, who do you think when one was, for example, all of his interactions were really with the 7th Fleet, which is the fleet that patrols the Pacific Ocean. And if someone was going to be rotated on his payroll was going to be rotated off of the 7th Fleet, you would say, well, who are we going to find to replace you?

And they’d put their heads together and work to figure out who a good next target might be. He was extremely good at what he did. Like, I think we’re lucky that he was not a Russian or a Chinese spy, to our knowledge.

Diana Shaw: So, what was his end game?

Tatiana Sainati: Money. He really wanted money and power. And he would start once, well, once he had hooked his recruits, he would start asking for favors in return.

And there too, it could start pretty small, like, well, I want you to turn a blind eye. If I am overcharging for a big one that he would overcharge for was the removal of sewage from these ships. And he would do it pretty brazenly, like charge for more sewage than the ship actually could contain. It’s kind of obvious.

Diana Shaw: Yeah.

Tatiana Sainati: But he’d want them to turn a blind eye. And when someone more junior tried to report, for example, the officer actually reviewing the invoice was like, wait a minute, this is wrong. He had the senior officer in his pocket and they’d just be like, shut up.

Vaib Patria: So, when we’re talking about him turning a blind eye, how much profit is he making on this? Because all these bribes are tens of thousands for each officer. How is he turning a profit?

Tatiana Sainati: Well, he was overcharging by millions of dollars for every port visit. So these ships would come to port and they would dock and he would have a contract for certain services, the water taxis, the sewage removal.

He had this thing called the ring of steel, which was basically a bunch of, I don’t know, I got this sense from reading about it that they’re sort of defunct tugboats and cargo ships and stuff like that. But he would make a ring of them around visiting warships. And this was really a play on national security concerns.

What he would tell the ships officers is this ring of steel is going to prevent terrorists on a ship from driving up with a motorboat filled with explosives and doing harm to your ship. That was never tested. There’s no proof that it could have done that. It looks kind of hard to believe, apparently, from looking at it that it actually would have been effective at it. But he, time and again, got them to pay outrageous amounts for this ring of steel. Diana, you might know something about this. There’s no line item for something like that so there was no baseline price for what the military should be paying for it, so he kind of charged whatever he wanted.

Diana Shaw: Interesting

Tatiana Sainati: And another piece of this was after 9/11, the U.S. was paying a premium for security services, which makes a lot of sense. And he really capitalized on that by saying, well, do you really want to risk it with your ship? And these commanders are absolutely responsible for the safety of their men and their ship. And so oftentimes they would say, well, no I guess it’s worth it.

Diana Shaw: So how long did this go on?

Tatiana Sainati: Decades.

Diana Shaw: And nobody saw it coming? How did he get discovered?

Tatiana Sainati: Well, there were 27 investigations.

Diana Shaw: So what tipped the scales? What finally caused the whole scheme to unravel? Do we know?

Tatiana Sainati: Yes. Well so, first up with these original 27 investigations, what he did is recruit someone with the Naval Criminal Investigative Services (NCIS), of Mark Harmon fame. He had one of their stars, who he identified, and I think he bragged about this to some of his other moles, was a lonely alcoholic sex addict. And what he really did is make this, this agent, John Bellevue is his name, but he made him believe that he was his friend and that he was going to be his buddy for life.

He used his lap band surgery story as one of those ins to be like, look how close we are. And agent Bellevue shut down a lot of those investigations or just fed, actually fed, information about the investigations to Leonard so that he could shut them down. Yes.

Diana Shaw: Yeah, so that’s definitely not allowed just in case anybody was wondering. That’s not how it’s supposed to work.

Tatiana Sainati: Definitely, definitely not.

Diana Shaw: One of the, I mentioned at the outset, I think, but there were some national security implications to this, which is ironic because one of the reasons he was able to get away with so much, is that again, after 9/11, the U.S. really diverted a lot of their investigative resources away from financial crimes and towards counterterrorism issues.

And Leonard knew that. He knew that there wasn’t as much of a focus on financial crimes and he could get away with more of this. I believe it went from 140 or so agents, to eight agents. None of whom were in Asia, beginning in about 2002. So there weren’t a lot of resources, but what he would do is get military officers in the 7th Fleet to give him classified information about where ships were going to be docking in, like, over the course of a year.

That’s sensitive classified information that we don’t want our enemies to have. He wanted it so that he could position his operations more effectively, to be like the most attractive offer. Well I’m already there, I’ve already got the resources there, I can be a lot cheaper.

Diana Shaw: It’s a huge competitive advantage.

Tatiana Sainati: Yep.

Diana Shaw: But they don’t think he was using it to sell to adversaries?

Tatiana Sainati: He says he never sold it to adversaries, but he also said, but I don’t know if they tapped into my system and got it. It was on his, you know, and he …

Diana Shaw: Possible deniability.

Tatiana Sainati: His head of IT actually was really close friends with like a Chinese security attaché and like, yes, so who knows. But the question that you asked of how did this get discovered. Well one of his moles was a commander, who he lured in with his typical sex and alcohol and fancy travel, that didn’t have a great impact on this commander’s personal life. He ran into a lot of issues with his wife. And his wife just started to notice some anomalies in his behavior and said, I think something is really wrong. She identified that something was really wrong in connection with his relationship with Leonard Francis and she reported it to an NCIS agent. It was a female NCIS agent who was able to use her to try and start collecting more of this information.

Diana Shaw: Oh wow. So is he behind bars now?

Tatiana Sainati: Well, no.

Diana Shaw: Amazing.

Tatiana Sainati: So I will say, and I want to make sure I get these numbers right. When he was finally caught, there were 91 admirals who were investigated for taking gifts or having connections to him. The Department of Justice prosecuted 34 defendants in federal court, and 685 cases were referred to the military disciplinary authorities.

Diana Shaw: Wow

Tatiana Sainati: That is how wide ranging this was. The Navy adjudicated most of those cases in the dark. There had to be a number of FOIA requests put out to try and piece together what happened with those investigations.

As for Leonard Francis, he was sort of in custody. He was able to talk his way, kind of charm his way into house arrest. And he had a very luxurious house arrest set up for himself. He was at like a penthouse suite, living at his own personal security, and yeah, he escaped.

He was in San Diego, so it’s for anyone who knows San Diego, it’s really close to the Mexican border. He got an Uber.

Diana Shaw: No . . . Stop.

Tatiana Sainati: He got an Uber. He took it to the Mexican border. He crossed over. He flew to Cuba and then on to Venezuela. He was caught in Venezuela and held in prison there for a while until a prisoner exchange was negotiated and came back to the United States. But the case has unraveled in large part because of prosecutorial misconduct. Prosecutors admitted to not turning over some potentially exculpatory evidence and that led the judge in the case to, I think she sounded pretty appalled that she had to do it, but to vacate a lot of the convictions and even to vacate some of the plea deals with some of the, even with some of the defendants who had pleaded guilty to what they had done.

Diana Shaw: Is any of it going to be retried? Do we know?

Tatiana Sainati: As of right now, we don’t know. As of December 2023, the Department of Justice was looking into what they were going to do, whether they could do anything further. I will say this, not a single high ranking officer, not a single admiral, remember there were 91 investigated, oh, one went to jail but the remaining 90, some of them were asked to retire, but they all kept their benefits. I believe that the saying is different sphinx for different ranks. So they all kept their benefits. No one was dishonorably discharged. The Navy really tried to keep this as hush as they could.

Diana Shaw: Right. It looks bad on them, too. This is a lot of the problem when corruption embeds within a system, right? The people who should be incentivized to root it out and remedy it, because it has happened under their watch, have the perverse incentive to kind of sweep it under the rug or minimize it.

Tatiana Sainati: Yes

Diana Shaw: And so that’s to your earlier point where an independent OIG, Office of Inspector General, can be really helpful because they are objective and independent and don’t have the same incentives and so can really drive some transformative change that otherwise institutions are reluctant to undertake on their own. This is a good segway to a recurring piece of what we plan to have as part of our podcast. We’re calling it the Red Flag Roundup, where we come back through at the end of our storytelling and talk a little bit about some of the red flags that we see in this scandal and what might’ve been done differently. And I think we’ve just touched on a couple.

One is transparency. I think it’s so important to have transparency. And I think we see this throughout the process, but most recently something you said made me think of it when disciplinary process works in the shadows and people don’t know what’s happened, there’s no transparency around accountability, you lose the benefit of a potential deterrent effect. And so I think where you can have as transparent a process as possible while still, of course, respecting people’s privacy rights, the better. I also think something we have here, and I want to hear your perspective on this, is just tone at the top. This whole thing just seems completely off because the tone at the top was where this started, right? We had the highest level officials completely bought in on this misbehavior and it must have permeated all the way down the ranks.

Tatiana Sainati: It absolutely did. And one of the things that’s really striking, I think, is he tapped into this sense of entitlement that a lot of these officers, and particularly the highest ranking officers had. This, a lot of this was occurring when the U.S. was actively engaged in various conflicts around the world. You’ve got these officers who are stationed overseas and frequently on ships where life is pretty hard. They’re deprived of a lot of those, not just luxuries, but like basic amenities. And they get into ports and there’s this sort of expectation that well, I deserve a nice meal, I deserve a nice car, I deserve to stay at a nice hotel. And you and I talked a little bit about this before Diana, where I’m not entirely opposed to our military officers who are sacrificing and giving away a lot being able to live it up a little bit when they go into port, not, not saying I think they should have prostitutes.

Diana Shaw: Thank you for that clarification. I didn’t say having been a government employee, it’s not a luxurious life when you are on the road as a government employee and there are good reasons for that. We want to be very judicious with taxpayer dollars, but I get what you’re saying. Like there are sacrifices that people make to do public service. And so it does create the risk that folks will be tempted away by some of these luxuries because they’re not getting it on the other side.

Tatiana Sainati: Yeah. And I don’t know the solution for that exactly, but I think to your point, there was this tone at the top that the most senior officers felt comfortable accepting these gifts. And as I mentioned, Leonard would take pictures with them. So he would make sure that other officers and lower ranking officers would see these pictures and be like, well see, the admirals are doing it. Right. Why shouldn’t you?

Diana Shaw: I think the takeaway here is for people in leadership to keep in mind that everybody is watching. You are setting the example, not just with what you say, but with what you do. And it is so important if you’re trying to create a culture of anti-corruption, a culture of ethical behavior, that you live that promise every day in your actions and that you really do set that tone from the top. And then on the transparency point, I think making sure that your internal processes are as transparent as possible and having strong oversight that is transparent. OIG’s issue reports that are public, I think that’s really important.

Tatiana Sainati: Yeah.

Diana Shaw: They call oversight the disinfecting light of oversight. There’s something to be said for the scrutiny that comes with public recognition of wrongdoing, and I think that’s really important. Relatedly, you really have to think about reporting structures. I think in the military when, you know, chain of command is so important, the idea that lower level, lower ranked folks are going to be able to escalate issues. I mean you gave the example, right? They flagged the invoice that was obviously problematic and were told, you’re going to pass it through.

It takes a lot of gumption to then go over your superior’s head. It can be viewed as insubordination and so that puts someone at real risk, personally and professionally. And so it’s so important to have reporting mechanisms available outside of chain of command, whether that’s a hotline, some kind of anonymous way to file complaints and reports. And then beyond just having the mechanism in place, you need to have the back end infrastructure and resources to make sure that those complaints are properly reviewed, taken seriously, acted upon, and that’s then where the opportunity for real accountability comes in.

But without those reporting mechanisms or the belief of those who are in a position to see this stuff, that if they report, it will be taken seriously, and they will be protected and not retaliated against, this kind of stuff is always going to continue because the expectation that someone in that situation is going to always be willing to take on that risk is just, I think, very unrealistic.

Tatiana Sainati: Well to wrap up our discussion, I think it might make sense to return to that point of how might the world have been different? How might things have turned out differently if Diana, these red flags that you just identified for us had been seen and addressed earlier on in this story?

Diana Shaw: Well, I think there’s no question that Mr. Leonard’s reign would have been quite a bit shorter if some of these things had been addressed, certainly if the right tone at the top had been set. It would have been much harder for him to have made the inroads that he did and then to have been able to build out an empire that lasted as long as it did.

Tatiana Sainati: I would add one of the ways in which the worlds might have been different on the transparency point and especially that point of justice being conducted in the dark with those internal naval investigations. Yes, it might’ve been painful and exposed to the Navy to some external criticism and reputational damage that they didn’t want. On the other hand, the scandal’s out there. I mean some of these prosecutions were public. The reputational harm was largely done. And I think an open process could have both salvaged that reputation, really shown a commitment to righting these wrongs and fixing things moving forward, and also been a really tremendous example globally.

Diana Shaw: I totally agree. I think the best way that you can rehabilitate a damaged reputation is to be accountable, right? That’s how you rebuild credit. You own the mistake and you demonstrate what you plan to do to fix it. I honestly think that’s the only way you can do it, and so I think it was a real missed opportunity on the part of the Navy.

Tatiana Sainati: Much more could be said about Leonard Francis. Indeed, entire books have been written, and I highly encourage anyone in our audience who wants to learn more to check out the information that we will be providing in our notes so that you can get all of the salacious details that you want to read. In the meantime, I hope everyone will tune in for our next episode next month where Diana is going to be telling us yet another salacious scandal. Any teaser, Diana?

Diana Shaw: I’m going to make you wait for the details, but I will share that this is one of the world’s largest sports scandals of all time. And it is a doozy. You’re going to love it.

Tatiana Sainati: I can’t wait. Alright, so until next time everyone, we hope to see you next month.