The early March 2016 murder of celebrated Honduran environmental activist Berta Cáceres has sparked outrage, demands for an independent investigation, and the suspension of much of the financing for a hydroelectric project she was protesting. But the killing should also be raising alarms about the implications of the special brand of corruption that has metastasized in recent years—implications also laid bare in the recent Panama Papers revelations.

In a context of heightened international concern about corruption, it should not have taken the ostentatiously brutish assassination of a high-profile community leader to prompt the Agua Zarca project’s international funders to suspend support. From the dam’s very inception, there were enough signs of the dubious nature of the undertaking to have made any alert investor think twice.

Sarah Chayes
Sarah Chayes is internationally recognized for her innovative thinking on corruption and its implications. Her work explores how severe corruption can help prompt such crises as terrorism, revolutions and their violent aftermaths, and environmental degradation.
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Western officials as well as major lenders and private sector investors must make a practice of closely examining and limiting their moral and material support for governments as corrupt as Honduras’s, and their private sector cronies, well upstream of such tragedies.

For, in several dozen countries on almost every continent, corruption isn’t just venal behavior indulged in by some—or even many—government officials. Research I’ve been conducting for almost a decade reveals that the practices often constitute the deliberate operating procedures of governments that look more like sophisticated criminal organizations than public institutions. These coteries bend levers of political and economic power to one primary aim: maximizing revenues for members of what amounts to a ruling network.

Such kleptocratic networks are horizontally integrated to include officials of most key government agencies—who exercise their official duties to benefit the other members of the network, not the citizens. Private sector actors, especially construction companies and banks, do not stand outside the system, they are directly wired into it. So are outright criminals. These networks benefit from external facilitators, such as Panamanian law firm Mossack Fonseca or Washington lobbyists, and secrecy jurisdictions, such as the British overseas territories or the U.S. state of Delaware.

In the case of Honduras, some nodes in this network may include the hydroelectric power company and the builders that work for it, critical elements of the justice sector, security services, and outsourced thugs who can be called upon to commit acts of “plausibly deniable” violence.

As I’ve observed such systems operating in many countries, the networks seek to monopolize major revenue streams over which there is little accountability. The target may be the narcotics industry, as in Afghanistan; or natural resources, as in Nigeria or Angola or Kyrgyzstan; or a cash crop, as in Kenya or Uzbekistan.

One classic captured revenue stream, almost everywhere, is externally financed public construction. I’ve seen it repeatedly. In Nigeria, projects ranging from factories whose doors never opened to university buildings to futuristic government offices in the isolated capital of a dusty northern state are opportunities for padded contracts and sweetheart deals with businesses owned by friends or relatives of contracting authorities. Many of the construction companies that have led megaprojects in oil-rich Azerbaijan, including sports stadiums and the blade-shaped skyscrapers that dominate the capital, Baku, belong to the families of the ruling couple. In Afghanistan, one of then president Hamid Karzai’s brothers used illegally acquired bank loans to purchase a cement factory in 2006. Another had investments in a company that won millions of dollars in U.S.-funded reconstruction projects.

In many cases, the projects are not even meant to serve their ostensible purposes. They are white elephants, whose objective is purely to channel government money into the pockets of network members. As James Robinson and Ragnar Torvik argued in their 2005 study on the topic, sometimes “it is the very inefficiency of such projects that makes them . . . appealing,” because the money spent building them benefits a politician’s constituency or coterie. In an example focused on just one class of public structure, Oxford University research from 2013 examining the economic outcome of 245 large dams worldwide found at least half of them to be “stranded,” meaning that—quite apart from the environmental and cultural damage they do—the bare cost of construction will not even be recouped.

In Honduras, the infrastructure project of choice is precisely that: the hydroelectric dam. A year after the 2009 coup, the government effectively privatized much of the country’s water supply, signing more than three dozen dam concessions. It was against one of these projects that Cáceres had focused much of her recent campaigning.

Evidence of links between the lead company on the project, Desarrollos Energeticos S.A., and the Honduran government includes two board members’ pasts in security structures and at the state energy company. Such ties are even more patent in another Honduran case. The company seeking to build the Los Encinos dam in La Paz, where Lenca activists have also been assassinated, belongs to the husband of the vice president of the Honduran National Congress.

In Brazil, which like Honduras witnessed months of mass anticorruption protests last year, a major scandal has engulfed the former president Luiz Inácio Lula da Silva, and threatens his protégé, President Dilma Rousseff. Da Silva is accused of receiving benefits from construction companies, and a federal judge recently sentenced the former head of the country’s largest such firm, Odebrecht, to nineteen years in prison for a massive scheme of bribery and kickbacks to politicians. Along with Odebrecht and the national oil company, a hydroproject on the Amazon River is central to Brazil’s sprawling anticorruption investigations.

In both countries and elsewhere, another element comes to the fore in the fight over hydropower. It is indigenous peoples who are mounting the most significant defense of forests, rivers, and other natural endowments that represent humanity’s patrimony. Often their cultures are under deliberate and concerted attack as part of the corrupt government’s campaign to wrest monetary benefit from the land. Ironically, in this time of accelerating environmental crisis, it is the very people who have the most to teach about how to build a reciprocal relationship with nature who are being decimated. To all of our detriment.

“In our world-views,” Cáceres explained as she accepted the prestigious Goldman Environmental Prize last year, “we are beings who come from the Earth, from the Water, and from Corn. . . . Giving our lives . . . for the protection of the rivers is giving our lives for the well-being of humanity and of this planet.”

The United States, the UK, and others have begun recognizing corruption as a profound threat, not just to economic growth, poverty reduction, or environmental preservation, but also to security. They, like the Netherlands and Finland, whose development banks were funding Honduran hydropower projects, also champion sustainable development.

If they are serious about these principles, officials should subject kleptocratic governments, like that of Honduras, to a more rigorous standard for economic and military partnership and political support. Such a modified approach to these countries must start with active moral and material reinforcement for indigenous defenders of the natural environment. It should include conditions on military and civilian aid—and far more stringent scrutiny before financing large infrastructure projects, especially dams and others that will irreversibly alter major ecosystems. Further potential leverage includes holds on stature-enhancing state visits, and where appropriate, visa denials and procedures to seize assets linked to corruption or other crimes.