Shining the light on payola

Almost 50 years ago, an American president inspired good people everywhere and deeply depressed the professional diplomats by saying that, from now on, international treaties and the like would be open agreements openly arrived at.

Down the decades, I doubt there has been a more splendid recipe that has produced more messy and inedible dishes, for how can two nations engaged in vital or delicate negotiations publicise, as they go along, every stage of their mutual suspicions, fears and quarrels? They can't. And, ever since, the only lasting agreements have been open agreements, privately arrived at. 

Well, now, President-elect, Jimmy Carter, has out-Woodrow-ed Wilson. He says that he will bring to America a government that is open to the people all the time. He, too, has inspired the good and the thoughtless and, this time, deeply depressed big and little business, the Pentagon, the Department of Commerce and everybody who hopes to sell American goods abroad. 

Let's go back and sketch in the real background against which Mr Carter stands, with his eyes flashing and his pockets open to the world! 

I'm going to tell you a story which will be, I hope, vivid enough as to plot and colour but the identity of the characters will be purposely vague because, to put it discretely, I wish them no harm. It concerns an American businessman in the business of shipping uniforms, swords and other military paraphernalia to South and Central American governments. It was a thriving business because, in his time, most governments below the Rio Grande were run by Generalissimos and their lust for uniforms gleaming with gilt spaghetti and swords encrusted with jewelled grips was in indirect proportion to their experience on the battlefield. 

It's been my observation that the grizzled veteran of three wars, the real old warrior, usually ends up his life in a pair of slacks and a tweed coat and the only reminder of his long familiarity with Armageddon is a fading sepia photograph of his company, hung over his desk. But, by the same token, my businessman's clients were field marshals and generals of South American republics who could barely distinguish a whiff of grapeshot from a whiff of grapefruit. They ordered up medals and ribbons and insignia by the gross and were always sending him heraldic designs to signify the latest order they'd invested themselves in, such as the Grand Cross of San Isidro or the victory medal with palms in gold of the noble Order of the Knights of Ferdinand and Isabella. 

He also shipped small arms – under proper licence, of course – from the government of the United States. More routinely, and in his own country, he was a manufacturer and supplier of police uniforms. Well, one time, he had a very big deal brewing with the government of a South American country, so big that it was being conducted in person by the dictator himself. The contract had been prepared down to the last comma and the last specification of the dictator's personal commission, the ten per cent, or whatever, he would collect as a reward for his devotion to his country's security. The deal awaited only the signature of the big man, himself. And my friend was so sure of its consummation that he was already off on a celebration holiday in Europe. 

The dictator's pen was practically poised over the contract, when I woke up one morning and read on the front page of the New York Times that there had been an overnight coup from, you might say, the shadow military cabinet and the dictator had barely time to collect his medals and epaulettes, not to mention the entail of his considerable fortune that was lying around in ready cash, and beat it for Miami, or Madrid, or wherever. It became my painful duty to cable my friend that his European celebration was aborted. 

He came back quickly to the United States but he was, by no means, sunk in grief. He prepared a new contract, down to the names of the people who'd sign it and he explained to me, as you might instruct a ten-year-old in the elements of hopscotch, that in doing business down there, it was an elementary precaution, whenever you're making up to the current Fuhrer, to cultivate, also, the core of loyal generals who could be most trusted one day to arrest and succeed him. They, too, had their known price and their commission was figured according to the going rate of inflation, interest rates and so on. 

I thought of this old story when I read, this week, a little more about the sad, prolonged fate of Madame Peron who had the ill luck not to decamp in time and is now being charged with embezzlement of government funds for personal use – a charge that could have been brought against any or all and the score of former dictators who'd abdicated or been dethroned and who had not had the wit to have their own private jet at the ready. 

There are countries, of course, in Asia especially, where the amassing of a private fortune by the reigning president was done quite openly. I remember when I was in Thailand some years ago wondering aloud to a general who I must say, to my surprise, was running the only radio network, asking him why the cost of public transport was so high. And he explained briskly and with no hint of secrecy or shame that all the bus lines and the highway construction companies were owned by the prime minister's favourite wife. 

Well, we used to think that this was an incurable element of the mysterious morality of the East, and then in the, what, the 1950s, we had the great independence movements in Africa and out of them arose black rulers, most of whom had suffered much hardship, often long prison terms, in their campaigns to free their peoples from the colonial yoke of such as you and I. It was natural that we should come to think of them as so many George Washingtons and there was one I remember who, in this country, was thought of as a saint or guru on the order of Nehru or Albert Schweitzer, until the day he was overthrown. We wondered for a while what had happened to this great and good man. 

Well, the word came through eventually that he was feeling no pain. He'd skipped over the border and turned up incognito in St Moritz or some other ritzy spa, very well provided for by the fortune he'd stowed away in a Swiss bank account. He came and went before the present era of bustling arms deals and lively trade between the rich nations and the poor or, as the United Nations now requires us to say, between the developed nations and the developing. So, in his case, we had to wonder where the fortune had come from. 

But, a little later, the word 'payola' crept into our vocabulary to signify a personal commission paid to the head of state and then, later still, to the agents of governments who clinched deals with foreign corporations. 

I suppose the lowest form of payola, in our time, was what was known as a rake-off paid by restaurants, country clubs, nightclubs to the gangsters who, in the infamous Prohibition era, not only paid through the nose for bootlegged booze, but also paid an additional fee to the shrewd Al Capone as protection against the raiding of their premises by the police. And in places where the police were in on the deal, receiving, in fact, part of the protection money against the danger of their turning honest, Mr Capone could arrange for the threat of break-ins by burglars and gunmen and collect further protection fees to ensure that these gentlemen would not come calling. 

In time, Capone grew more sophisticated and found it more profitable to buy up the warehouses that stored his own illegal liquor and then own the nightclubs that served it, thereby eliminating such bothersome middle men as landlords, proprietors, stockholders and so on. He made thundering profits from delivering the stuff 'he'd' manufactured at no cost at all and charging the customers $20 a bottle for rot-gut whisky. It was true that he had to spend a little money to print his own labels, exact duplicates usually of the better brands of Scotch, Irish and Bourbon. 

And, during the war, the Capone heirs turned to a business which, one of them assured me, made Prohibition look like a rehearsal. This was the black market in beef. Since the feeding of 10 or 12 million American men in uniform ate heavily into the civilian supply of beef and the civilians were warned that they were going to have to do with less beef than they'd ever known, the civilian population was naturally anxious to eat more beef than it had ever done in peace time. This came out later as an actual Department of Commerce statistic. The gap between the threatened shortage and the actual amount consumed was bridged by Mr Capone's young men. 

Well, the history of payola from South American juntas to Capone's mobsters seems primitive today and very long ago. Today the enquiring American reporter, who, two generations ago would have gone after the Chicago underworld, now looks into the books of American and foreign corporations to see why this airplane or that arms shipment cost so much more than the price appropriated by Congress. The Lockheed and Prince Bernhard scandals have had the effect of strengthening what are called, in this country, the Sunshine laws which require full public scrutiny of all business done with foreign governments and corporations. 

Mr Jimmy Carter has given his blessing to the Sunshine code and promises to extend it so as to give the people, the country, a government which will be, as he puts it, 'open to all the people'. Now Mr Carter, contrary to his original stereotype, is no Georgia hick. He must surely know not only that it's impossible to sell anything to, say, Iran without adding the cost of the Shah's personal commission, but that what the economists call, and businessmen too, 'a political mark-up' on the cost of doing business in any country in Europe is absolutely standard procedure. 

If American businessmen are now going to be required to be known as the Sunshine Boys, their hearts may be purified but America is going to be very much the poorer, for the American export trade, like that of any other exporting nation, depends on the legal acceptance of a certain amount of payola. The problem, as one distinguished economist, here, puts it, is how to impose America's terms at the world bargaining table without exporting her morality. 

It's only one of the mysteries that must be solved by the mysterious president-elect.

This transcript was typed from a recording of the original BBC broadcast (© BBC) and not copied from an original script. Because of the risk of mishearing, the BBC cannot vouch for its complete accuracy.

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