THE CORRUPTION GAMES

By on April 1, 2014 in Global

Cancun Insurance Scam

We had done our homework and were ready for the scam. When travelers fly into Cancun and rent a car they are almost always over charged by the rental agencies. They artificially quote low rental daily prices on the web and then backdoor you with exorbitant and unnecessary insurance charges when you get to the counter.

My wife Juliet took an aggressive approach to this street level form of corruption. Stand up to it and don’t be a sucker. It took us ten minutes to clear Mexican customs but it took an hour to rent a vehicle with no one in line ahead of us because we refused to get suckered.

When the rental agent told us we needed extra insurance that would double our month long rental, Juliet started asking questions and spouting Mexican insurance law. She had done her homework and we had bought an American Express insurance coverage for just $25 that we presented. We had planned for the insurance deception and were ready to spend time fighting it. Most travelers are too tired after flying in and are caught off guard.

“I’m sorry but you must have this additional mandatory liability coverage. It will cost $15 per day.” She called his bluff. “We’re not going to pay that and will go to your competitor and will write a nasty review on Trip Advisor about you and this company,” she calmly but firmly told the young agent. Liability coverage is bundled into the car rental contracts by Mexican law and every other form of insurance is optional including additional liability.

A surprised look and a momentary silence followed. We waited to see what he would do. “We can offer you this insurance at a greatly reduced rate.” Juliet knew she had him and turned up the screws. “How could it be one price one minute and less than half the next? No that is unacceptable. We won’t pay it.” She started to grab our papers and bags and he totally caved. We got the price that was quoted on the net. We paid $669 for a month rental. Fair price. A friend had paid $700 for a ten day rental a few weeks earlier and much of it was insurance he never needed. He flew in late, tired and uneducated and is now $400 poorer.

Sochi Squeeze Play

Getting squeezed by unscrupulous businesses, bureaucrats and dictators is a daily part of just getting by in many parts of the world. In Thailand and China it’s called “tea money” which means a bribe to smooth a business transaction. In a dozen countries it’s called “baksheesh” whose roots date to ancient Persia and is a form of tip or bribe. In places like India, baksheesh is demanded from beggars at train stations to bureaucrats at every level. In Nigeria it’s called “dash”, which Tusker’s Eddie Frank is very familiar with. In Mexico it’s called mordita which means “little bite” and anyone who has ever been stopped by a Mexican cop knows how it stings. Those little bites add up. In 2007, NGO Transparency Mexico found $2.58 billion in bribes were paid in nearly 200 million different bribery episodes. The average was just $13 and impacted everyone from the bus driver who bribes cops on his route to the contractor who needs a building permit.

Corruption goes back centuries to Adam’s first bite of the apple and is probably imprinted in people’s DNA by now. In many countries corruption is so common it has become the accepted way of how people deal with each other. Not all corrupt people are seen the same way. Many everyday Mexicans have supported the drug dealers because they see them as quasi-revolutionaries fighting the corrupt government and military that has preyed on the populace for centuries. Colombia’s deceased narco kingpin Pablo Escobar was seen as a good guy in the Medellin favelas because he was charitable, building soccer fields and giving to the church.

But corruption today seems to be getting worse, perhaps spiraling out of control. In an overpopulated world where resources are running out, the one percenters grab an ever bigger slice of the diminishing pie. To those at or near the top, Gordon Gekko was right: greed is very good. The rest of us on the lower rungs fight for scraps and use any leverage we have to get our crumbs.

Those who have the most power wield it mercilessly and with impunity until they are deposed by someone who has an even bigger appetite for power’s spoils.  A few decades ago Haiti’s Baby Doc Duvalier, Zaire dictator Mobuto Sese Seko, and the Philippine’s Marcos clan were seen as the corruption kings. More recently Malawi’s president Joyce Banda has been busy pillaging the treasury forcing the European Union to pull over $150 million in aid because of her “cashgate” scandal. But that looting is penny ante stuff compared to Vladimir Putin.

The recent Sochi Winter Olympic Games is a stark testament to how outrageous high-level corruption has become today. Russian dictator-for-life Putin spent $50 billion of the Russian people’s treasury for a two week event, which cost more than all the previous winter Olympics combined. Much of the money went to his oligarch cronies who built the roads and venues. Organized Russian crime took its kickbacks and bribes too. The highway connecting tropical Sochi to the mountains alone cost $12 billion. If that wasn’t bad enough, Putin had the balls to build his own private dacha (two chalets, two ski lifts and two helipads) in a UNESCO World Heritage site in Sochi National Park. He plundered the treasury and the environment.

So what should anyone with distaste for corruption do? Not participate. Marriott canceled three hotel projects in Sochi. The average sports fan tuned in, but anyone who did their homework and said no to corruption either boycotted the games by staying home or turning off NBC’s superficial coverage of it. TV ratings for the Sochi games in the U.S. were terrible, 17 percent behind the Vancouver winter games. Maybe Americans saw through the Putinesque corruption and found the Olympic ideal squandered.

Transparently Corrupt

Every year Transparency International announces its list of the world’s most corrupt countries. It is based on government corruption and Somalia scores the worst while Denmark and New Zealand are the cleanest. As a continent Africa’s corruption is off the charts. Mauritania is the least corrupt yet it ranks 119th on the list of 177 countries. Nigeria has long been synonymous with corruption globally and comes in at 144th. Disregard any unsolicited emails from Nigeria telling you you’ve won a prize but need to pay money first to collect it.

But Transparency International’s list is flawed. On my unofficial list, Honduras has got to be at or near the top. TI generously ranks Honduras No. 140. However, since drug traffickers gained control of the country through a 2009 military coup, Honduras has literally become a narco state. With half the cocaine headed for the U.S. offloaded in Honduras the country has been controlled by the drug gangs. Honduras has the world’s highest murder rate, a rate that is four times higher than Mexico’s. When Mexico cracked down on its narco kingpins several relocated to Honduras and that partially explains the escalating corruption that is seen at all levels of Honduran society.

Lands owned by indigenous Miskito people in the once environmentally rich Mosquito Coast region are now being seized by the government backed narcos who are stripping the forests for drug crops and lumber. The countries once beautiful coast line is now a cesspool of garbage. I found bottles of Honduran medical waste washing ashore along the southern Yucatan coast in Mexico this winter. The Mexicans blame the Honduran government for encouraging people to dump their garbage in the ocean. Whoever is to blame, it’s an environmental disaster that has its roots in poverty and corruption.

Fighting Corruption

Ending corruption is of course not a realistic goal. Man is inherently flawed so corruption will be with us a while longer. Corruption isn’t static; it’s like a virus that morphs with the times and quickly adapts to technology.  In the U.S., outright payments to Congressmen from big business is too obvious, so lobbyist funnel huge sums to political action committees and the same ends are achieved. Is it legal, yes. Is it morally corrupt and undemocratic? I think you know the answer.

Mexico is among the world’s most corrupt nations, and it ranks No. 107 on Transparency International list. Every Mexican knows how to survive and plays the game. Poorly paid cops continue to shake down nearly everyone they stop for a bribe and the trickle up theory has long been tethered to the government palace in the capital. Most ex-pats fall into the game and just pay mordita seeing it as a price of business. Wal-Mart’s Mexico-based execs paid $24 million in bribes to local officials from 2005 until the New York Times blew the whistle in 2012. The bribes went to get the best Mexican store locations and to cut through the bureaucracy. The fallout was a short term publicity nightmare for Wal-Mart, but no major heads rolled and Wal-Mart continues to be Mexico’s leading retailer and largest private employer.

But some don’t pay the prevailing price, they negotiate. Kim Bales is an ex-pat contractor building gringo vacation homes along the southern Yucatan coastline. He speaks paltry Spanish and has had numerous dealings with Mexican officialdom from the cop on the beat to the municipal authorities who issue building permits.

When the police stop him for traffic violations he refuses to pay the bribe. “I give them my driver’s license and I show up in court and contest the ticket. It’s often dropped or I pay a small fine,” he said. “Once when I had an accident that I caused I chose to spend a night in jail and contest the $8000 fines. I negotiated with the judge and it cost a lot less than if I just paid what they originally asked.”

Now whenever I travel to Mexico I carry two driver’s licenses. My current license is stashed around my waste in a money belt while a doctored expired license is in my wallet. If stopped by a cop, I take the ticket refuse to give him a bribe and hand him my expired driver’s license that he will take back to headquarters where it will sit until Mexico is corruption free.

Corruption is a game and I’m willing to play it, rather than to pay for it. Those pulling the strings assume you are powerless and stupid and prey on your timidity. Don’t be stupid. Learn the system and fight it. There is usually a way to beat it.

As long as they don’t put a gun to my head, I’m eager to say no to the corruption games.

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