Welcome back. This video is about how corruption works in practice. I want you to take a trip with me back in time, back to 1965. I'm not going to ask what you were doing in 1965 because I have an idea that the answer might make me feel very, very old. But I know what I was doing. I was working in Libya.
A young man fresh out of training school, who didn't yet know that the most important things that never been taught in training school. Libya was a different place then. It was still a monarchy. Gaddafi had not yet come to power King address was on the throne. The country was in the sterling area, the currency was the Libyan pound. Alcohol was not yet banned.
Libya made its own wine its own beer. And its own cigarettes and I was a smoker because we were still in denial at that time about smoking and cancer. And the cigarettes they made were called Sophia. And they were good. The company I worked for was building a university in Tripoli on behalf of the Ministry of Education. And every week, I would prepare an invoice for the amount of materials supplied and work done.
And take that invoice to the Ministry of Education and handed over to a young guy who stood behind the counter there, and he would smile, and thank me, and we'll exchange a few friendly words. And then I go back to the porter cabin on the construction site. And we never got paid. And I couldn't understand it. And one evening, I was in the Elizabethan club in Tripoli down A Heineken or to Heineken was the international beer in those days you go everywhere and smoking yourself here and complaining to anyone who listen about non payment. And an old Africa hand took me on one side and explain some of the things that had never been taught in training school.
As a result of that conversation, the next week when I presented an invoice to the Ministry of Education, I'd inflated it by 10%. To keep it simple, let's say the amount we needed was 100,000 million pounds. I'd invoice 110,000 million pounds, and I'd attached to the invoice a check for 10,000 pounds. I handed it over to the nice young guy behind the counter. He smiled. He thanked me we exchanged the usual friendly words, and I made my way back to the porter cabin on the construction site.
And three days later, a cheque arrived from the Ministry of Education for 110,000 pounds drop down. Now what happened here? It's really simple. And it hadn't cost my company a cent or a million because the Libyan pound was divided into 1000 millions. What we had done was to act as a conduit so that employees of the Libyan government could redistribute some of that country's oil wealth to themselves. And that's an essential thing to remember about corruption.
If you're the seller, it isn't your money. It's there's that young guy behind the counter would have known exactly how to distribute that 10,000 Libyan pounds. The minister, I imagine would have got about half of it. The little old guy who sat on his haunches beside the door, making Chai for visitors, he would have got perhaps 750 million pounds. But everybody would have got the amount that they already knew they should expect. And we got paid.
It isn't your money, it's theirs. I'll say that again. Because of this example, when a mobile phone company that I'm not going to name sold to an oil rich Middle Eastern country, that I'm not going to identify that country's first cell phone network. The amount the mobile phone company needed to recover was half a billion US dollars. The amount they invoiced was 1 billion US dollars. Why?
Because the king of that country had put one of his most senior sons, most senior princes in charge of the acquisition of the cell phone network, and the prince had seen an opportunity to divert into his own pocket 500 million US dollars. This is an extremely wealthy country with an extremely large amount of oil to sell. Most transactions aren't that size. They're more like the 10,000. I just mentioned in Libya or even quite a lot smaller. In the next video, I'm going to be talking about some other forms that corruption can take.
I'll see you there