Race, Real Estate & Corruption
Most of the time, corruption tends to be associated with poor developing countries and authoritarian regimes. On the contrary, corruption is as endemic to such countries as it is rife in Western democracies such as Portugal.
Globally, evidence points to corruption being deeply seated in the political and economic systems of countries across the globe. While it is often very comforting to assume corruption can be easily alleviated or eradicated by institutionalising an independent judiciary, much of the success of this work anchors on political goodwill and the strength or weakness of other institutions involved in the fight against corruption. This article focuses on two key areas that have been endemic playgrounds for corruption in Portugal. On the one hand, it will focus on Portugal’s complacency towards corruption on the basis of race, and, on the other hand, it will also address corruption emanating from property ownership.
To begin with, Portugal has witnessed institutional racism and institutional corruption which have coalesced to enable the unethical impulses of Angolan elites. The former colonial power has become a centre for financial crimes due to the complacency that permeates the Portuguese system and its discrimination against persons of colour, crimes that are taking the money away from some of the world's poorest people. After leaving office, former Angolan prime minister Jose Socrates- who served in that capacity from 2005 to 2011- was detained on charges of tax evasion, money laundering, and corruption. It was discovered that he had €20 million in a Swiss bank account and had used the "Extraordinary procedure of reliant regularisation" regulation to bring the money back into the nation. This statute, which Socrates personally enacted in 2009, was essentially a pardon for tax evasion. This was regarded as a major scandal even by dreadful worldwide standards.
The golden visa scheme by Portugal has drawn kleptocrats from all over the world to the EU, where they can find refuge and launder their money. This programme enables residency permits to be fast-tracked at the expense of a one-off investment. Purchasing real estate has been the most popular route to residency. But, in order to provide wealthy foreigners easier access, the Portuguese authorities in charge artificially increased the value of real estate. From government ministers to municipal officials, they themselves shared austerity. Consequently, one may say that corruption in Portugal is systemic. This dichotomy was proceeded by the 2008 financial crisis which saw Portugal embark on a journey to attract foreign investment. It was not surprising when the period between 2010 and 2014 witnessed an upsurge in Angolan investments in Portugal to €1.53 billion from €645 million. On the other hand, Portuguese expats who were in Angola remitted close to more than €304 million to their families plagued by tough financial times in 2013.
During this period of time, sectors such as banking and real estate were the most hit by corruption activities which spiralled from the newfound relationship between Portugal and the Angolan elite and bolstered by the Portuguese media. Portuguese nationals moved to Angola in search of better wages, while Angolans migrated to Portugal in search of higher education and tourism. Portuguese politicians seized every opportunity to profit from the gold boom during this time. Thirteen former Portuguese ministers found themselves comfortably seated on the boards of Angolan or Angolan-dominated firms between 2007 and 2014. With the support of Angolan cash, more than a hundred others managed to secure lucrative roles in the Portuguese economy.
It was in the wake of these occurrences that the Organisation for Economic Co-operation and Development (OECD) issued a censorship in 2013 stating that Portugal has had very little success in enforcing its rules against foreign bribery. Out of fifteen accusations that Portuguese corporations bribed foreign authorities in high-risk countries, not a single prosecution has been brought. Premature closure of some investigations has occurred. A few claims received no investigation at all. This was a testament to Portugal's betrayal of its own institutions and its reputation abroad in order to shield the corrupt politicians of both its own nation and those of another.
International corruption
Africa is often considered richest continent in terms of mineral resources, but little of that wealth benefits the majority of its people.
In light of institutional racism and corruption, Portugal has no inkling of the suffering that black Africans endure both domestically and outside. Portugal has demonstrated by its actions that it could not give a damn that the funds undermining its international standing and internal institutions be used to support the growth of nations with whom it shares historical links. In 2019, a widely circulated video showed police officers brutally beating up citizens in Bairro da Jamaica, an Afro-Portuguese-majority district outside of central Lisbon. This, among many other incidents, depicts Lisbon as characterised by both instability and glaring racism. The same holds true for corruption and racism. According to Portuguese media and politicians, there is no institutional problem in Portugal.
The concept of aldeamento turístico has also been a breeding ground for corruption in Portugal. These developments are designed to provide a range of accommodations and amenities for tourists seeking a relaxing or adventurous vacation experience. Aldeamentos turísticos often feature a combination of villas, apartments, or bungalows, along with facilities such as swimming pools, restaurants, bars, sports courts, and entertainment venues. However, they have been an avenue for defrauding people to buy houses with official documents issued by the City Council which unambiguously state that such premises are purposely for habitation. On the contrary, the buyers discover, years later, that they had not purchased a house, at least not in the legal sense, but instead bought an accommodation unit that is solely meant for tourism. Thus, the buyers are involuntarily in an illegal situation and may potentially be barred from using or selling their property.
Legally, a house with a tourist license is worth less than one with a residential license and cannot be rented out for residential usage. The private company that manages the village must receive large taxes on a vacation rental and forfeit significant tax advantages. What this reveals is grand corruption in urban and rural planning. In this case, public officials abuse their power for personal gain or favour certain private interests at the expense of public welfare. The issuance of official documents by the City Council stating that properties are for "habitation" when they are actually intended for commercial tourism constitutes fraudulent activity. This deception misleads buyers into believing they are purchasing residential properties when, in fact, they are acquiring units intended for commercial purposes. This deception likely involves collusion between developers or property owners and corrupt officials within the City Council.
lies & deceit
By misrepresenting the nature of the properties, corrupt officials and private entities can exploit buyers financially.
Purchasers unwittingly invest in properties that are worth less than they anticipated due to their commercial tourism designation. Additionally, the requirement for properties with tourist licenses to pay higher taxes and the loss of tax benefits further burdens property owners financially. These financial impositions benefit private entities running the tourist villages and possibly corrupt officials who receive kickbacks or bribes in exchange for facilitating these arrangements. Corrupt officials within the City Council abuse their power and influence to manipulate the regulatory process for personal gain or to benefit specific private interests. They may overlook zoning regulations, issue fraudulent documents, or turn a blind eye to violations in exchange for bribes, favours, or other forms of illicit benefits from developers or property owners.
Corruption thrives in environments characterised by a lack of accountability and transparency. In this case, the fraudulent issuance of documents and misrepresentation of property designations indicate a failure in the regulatory system to enforce compliance and uphold transparency. Corrupt officials may exploit loopholes or weaknesses in the system to carry out their illicit activities with impunity. The abuse of the concept of aldeamento turístico in Portugal, as described, involves a network of corruption that undermines trust in public institutions, distorts the property market, and financially exploits unsuspecting buyers. It illustrates how corruption can pervade various sectors, including urban planning and real estate, to serve the interests of a few at the expense of the broader public. Addressing such corruption requires strengthening regulatory oversight, promoting transparency, and holding accountable those responsible for abusing their positions of power.
“Thirty years ago, some academics suggested that rising wealth and living standards across the world would bring people’s values into alignment. They would give greater weight to their own experience and less to religious books or the authority of leaders, becoming more liberal in the process. In fact, the gap in values between different countries has actually grown.”
The Economist Intelligence Unit’s Democracy Index 2023 ranks Portugal as a “Flawed democracy”
References
1. Government of Portugal Urged to Stop Withholding Public Information on Golden Visas. https://www.transparency.org/en/press/portuguese-government-must-stop-withholding-information-on-golden-visas
2. Is Portugal’s Golden Visa Scheme Worth It? https://foreignpolicy.com/2023/11/25/portugal-golden-visa-investment-european-union-immigration/
3. How Angolan Elites Built a Private Banking Network to Move Their Riches into the European Union. https://www.occrp.org/en/investigations/how-angolan-elites-built-a-private-banking-network-to-move-their-riches-Into-the-european-union
4. Transparency International EU, Beneficial ownership transparency Shady Business, February 2017. https://transparency.eu/wp-content/uploads/2017/07/TI-portugal-CASE-STUDIES-en-web.pdf