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Why Do Third-World Rulers and Despots Store Money Abroad?

June 14, 2011 12 comments

Have you noticed a very odd and almost universal behavior of third-world rulers and despots from countries as diverse as India and Pakistan To Libya and Nigeria?

They store most of their stolen money and loot abroad, often in western countries and tax-free havens.

My question is- Why?

Superficially this question might seem stupid.. of course, it is their security clutch for living large after a coup or ‘forced retirement’ results in their exile. However the amount of money they steal and store along their subsequent behavior is what makes it truly bizarre.

It is easy to understand despots who stash away a few million, hundred million or even a billion dollars abroad. But what about those who stash tens of billions in foreign banks and tax havens?

Can you seriously consume stuff and services worth hundreds of millions in a human lifetime? The only way to burn through that sort of money is to give it away or have it stolen from you- one way or the other.

An even more bizarre aspect of this behavior is that these rulers and despots (or their progeny) rarely get to enjoy most of their ill-gotten gains. They are too busy scamming, plotting and bullshitting to actually enjoy even a fraction of the fruits of their labor. Indeed, the only people who truly enjoy that money are the bankers, investment managers and accountants who help “manage” it.

Another related question is- Why not spend your ill-gotten gains in the country you rule and thereby create jobs and increase your likability?

What use is tens of billions when you are a marked, stressed and busy man trying desperately to remain in power while living in a generally impoverished and unsafe country. The guys who manage their money live much better, safer, stress-free and fun-filled lives in countries where they can go almost anywhere without being kidnapped, killed or robbed.

So why do third-world rulers and despots prefer a much poorer quality of life, when they could easily make a few tens of millions and then disappear in some affluent western country? Why stay in power till the bitter end? Why not enjoy living life?

What do you guys think? Comments?