Though most academic and policy discussion about anticorruption tends to focus on national or international level initiatives, there have been a number of interesting developments in recent years at the sub-national level, particularly in large urban areas. Fortunately, the fight against corruption at the municipal level is finally getting some more attention. Those who are interested in this topic, particularly those in the New York City area, may be particularly interested in a conference next month, organized by the Center for the Advancement of Public Integrity (CAPI) at Columbia Law School, on “Global Cities: Joining Forces Against Corruption.” The conference, which will feature a keynote address by Mexico City Mayor Miguel Angel Mancera and Athens Mayor Giorgos Kaminis, will (according to the official conference blurb) “bring together high-level integrity officials from cities worldwide to discuss the challenges of fighting municipal corruption, strategize, and share best practices.” The conference will be held from April 23-25 at Columbia Law School, and it is free and open to the public. You can find more information (and register online) here.
In a new report on U.S. foreign assistance, To Fight Corruption, Localize Aid, OxFam America urges radical changes in the way the United States helps developing nations combat corruption. Providing funds to strengthen anticorruption agencies, write new laws, and other traditional “top-down, donor-driven methods of fighting corruption” have had little impact on corruption the American member of the international Oxfam confederation asserts. U.S. aid should thus be redirected to “locally driven approaches” to fighting corruption. By this the report means U.S. assistance would go directly to “local change agents” so that they could “tackle institutional challenges, including corruption, in their towns, cities, and countries.”
The rhetoric of a community-based, “bottom up” approach to fighting corruption has an appealing ring, and the report showcases successful efforts to combat corruption at the local level in Guatemala, Liberia, and the Philippines to support its claims. But a closer reading of these stories, and of the report itself, shows that the rhetoric outstrips the reality.
A while back I posted a commentary on the proposal to add a so-called “compliance defense” to liability under the Foreign Corrupt Practices Act (FCPA). My basic take was that despite all the attention and controversy surrounding this proposal, in fact it would not make very much difference in practice. Without rehashing all the arguments in detail, my reasoning was basically as follows: First, corporate defendants (the only ones who would benefit from a compliance defense) are so reluctant even to be indicted—independent of the likely outcome if a case were actually to go to trial—that the addition of a formal compliance defense to liability would not significantly alter the bargaining game between the government and the corporate defendant. Second, the government already takes compliance efforts into account at several other stages in the process (and believes it is doing so appropriately), so the addition of the formal defense wouldn’t have much of an effect on the government’s position in settlement negotiations (which, as Jordan emphasized in a post from a few months ago, is really where all the action is).
I recently had an opportunity to discuss my hypothesis that the compliance defense wouldn’t actually matter much at a Duke Law School conference, where a bunch of white collar crime and FCPA experts who know much more about this subject than I do—including Duke Law Professor Sam Buell and Richmond Law Professor (and occasional GAB contributor) Andrew Spalding—pushed back against my argument. Among their many cogent criticisms, I wanted to address one in particular: If an FCPA compliance defense would make as little practical difference as I suggest, then why do the interested parties seem to care so much about it? Why (Professor Buell asks) have the Chamber of Commerce and the defense bar made this such a high priority on their FCPA reform agenda? And why (Professor Spalding asks) is the DOJ so dead set against it?
These are fair questions. I don’t have good answers, but in the interest of moving the conversation forward, let me suggest a few possibilities—and maybe folks out there in the blogosphere can react or offer their own explanations. Continue reading
Earlier this month Transparency International UK published a report entitled “Corruption on Your Doorstep: How Corrupt Capital Is Used to Buy Property in the UK.” The Britain-specific recommendations are part of TI’s broader “Unmask the Corrupt” campaign, a call by TI, and echoed by others, to establish public registries of beneficial ownership. A similar call to unveil the individuals behind the shell corporations used to buy luxury condos in Manhattan garnered a lot of attention stateside during last month’s New York Times “Towers of Secrecy” series on the city’s high-end property market (see here, here, here, here, here, and here). The anticorruption rationale for mandating disclosure of real property beneficial ownership seems straightforward: As both the TI-UK report and the NYT series argue, buying real property in New York and London is an appealing way to launder stolen funds, because high-end real estate purchases allow a corrupt actor to inject millions of dollars into the legitimate market without having to deal with pesky anti-money laundering regulations, completing the purchases through shell companies that disguise the true beneficial owner. Requiring public disclosure of the beneficial owners of real property would in theory have two related benefits: First, requiring purchasers to reveal beneficial ownership information up front would dissuade some from using real property as a means of laundering money, and second, if law enforcement authorities have ready access to this information, it will make it easier to instigate and conduct investigations, as well as to seize assets later on.
Indeed, transparency in real property beneficial ownership seems like the kind of thing all anticorruption advocates should support, which is why it may seem a little counterintuitive when I say TI and others are taking the wrong tack. Pushing for central public registries of beneficial ownership of real property will not likely achieve the two objectives, and may have serious drawbacks. Here’s why: Continue reading
In recent years, Indonesia has made substantial progress in fighting corruption. Many observers, both inside and outside the country, attribute much of this success to Indonesia’s anticorruption commission, the KPK. Since its establishment in 2002, the KPK has imprisoned hundreds of tainted businessmen, politicians, and government officials. Thus, it is not surprising that the KPK has made many enemies who are continually trying to weaken, and even dissolve, the KPK as an institution. Some of the fiercest resistance to the KPK has come from the Indonesian National Police Force. Unfortunately, for six years now there has been a simmering conflict between the police and the KPK, which has occasionally erupted into dramatic confrontations. Although the KPK has generally prevailed in these conflicts, the most recent confrontation may be the most challenging yet. The history of this conflict suggests some possible lessons for how to manage the tensions that an aggressive anticorruption agency can sometimes produce. Continue reading
Last month, the Columbia University Center for the Advancement of Public Integrity (CAPI)–a relatively new research and center headed by the superb Jennifer Rogers and Gabriel Kuris–organized a panel on “The Global Movement Against Transnational Corruption,” in collaboration with the Columbia Society of International Law. GAB was well-represented, as both Rick and I were able to appear, along with the distinguished attorney Steven Michaels of Debevoise & Plimpton, on a panel moderated by David Hawkes from the World Bank’s Integrity Vice Presidency. For those who are interested, a video of the event is here. A quick guide to the prepared remarks:
- Rick discusses the rarely-appreciated good news about the significant progress that has been made in the fight against transnational corruption (3:55-18:20 on the video).
- Mr. Michaels discusses the existing legal architecture for addressing transnational bribery, along with trends in enforcement and corporate compliance (19:00-34:15).
- I discuss legal tools that developed countries and international organizations can use for taking or encouraging more aggressive action against bribe-taking public officials (37:15-55:30).
I’m grateful to CAPI and the Columbia Society for International Law for organizing this event, and I hope some readers out there may find the video of the discussion interesting.
The United Kingdom’s Department for International Development released a new report February 25 summarizing the learning on corruption in developing nations and how to combat it. Why Corruption Matters: Understanding Causes, Effects and How to Address Them was commissioned to help donor agency staff who advise on anticorruption policies and to assist in the design of programs to control corruption. As its title advertises, the report examines three issues: the causes of corruption; its costs, both financial and non-financial; and what measures reduce it. Those searching for what developing nations can do to fight corruption will turn immediately to chapter 5, “Anticorruption Measures,” which evaluates a variety of different efforts to control corruption from ratifying UNCAC to reforming customs and tax agencies to conducting public expenditure tracking surveys.
Readers looking for new steps developing countries can take to control corruption or confirmation that the standard approaches are working will be disappointed. Few interventions have had any effect, and with one exception, the evidence showing these have had an impact is thin.