Some Successful Initiatives by Civil Society to Prompt Corruption-Related Litigation

In an earlier post I promoted a conference on corruption the Oxford Institute for Ethics, Law and Armed Conflict and the Open Society Foundations’ Justice Initiative had planned for June 2014 to discuss ways civil society could stimulate corruption-related litigation, be it criminal investigations or private actions for damages.  The conference was held June 28 with some 100 individuals from civil society, academia, law firms, and governments attending, and one of the highlights was presentations describing successful efforts by civil society groups in India, Nigeria, France, and Switzerland. Continue reading

TI Report on Verification of Corporate Anticorruption Compliance Programs

Last week Transparency International-USA released a new report entitled Verification of Anti-Corruption Compliance Programs. The report is available for download on TI-USA’s website (the link there opens the document as a pdf, so I can’t do a direct link). It’s a helpful document on an important but surprisingly neglected topic: although there’s a ton of material out there about how to design a corporate compliance program (for anti-bribery and related matters), there’s much less out there on how to go about assessing these programs to ensure they’re actually working as they’re supposed to.

I won’t bother summarizing the document here. Shruti Shah, the TI-USA Senior Policy Director who was one of the driving forces behind the report, has a nice succinct summary over at the FCPA Blog. I’ll try to do a more substantive post within the next week or two on my reactions to the report and the more general issues it raises, but for now I just wanted to bring this document to the attention of GAB readers.

How the Export-Import Bank Debate is Destroying Our Understanding of Crony Capitalism

The sleepy, little-known U.S. Export-Import Bank is having an uncomfortable moment in the spotlight. The bank, a federal agency that finances and insures foreign governments’ and corporations’ purchases of American exports, is due for congressional reauthorization this fall. For most of its history, Congress has reauthorized the Ex-Im bank without controversy. But it has become a political lightning rod amid accusations that it’s an instrument of crony capitalism — a way for well-connected domestic companies to receive federal subsidies at the expense of competitors and taxpayers. A chorus of libertarian and ultraconservative Tea Party Republicans are making reauthorization a litmus test, framing the bank as “corporate welfare” abetted by the Republican establishment. The fight over reauthorization has taken on greater urgency since House Majority Leader Eric Cantor, a key supporter of the bank, improbably lost his Republican Party primary in June in what was billed as a Tea Party-versus-establishment battle. Indeed, after his loss Boeing — a large beneficiary of Ex-Im funds — took a tumble in the stock market on fears that Ex-Im’s survival has been imperiled.

The accusation of crony capitalism is a powerful one. In the age of trillion-dollar corporate bailouts, it’s not hard to see why that accusation resonates with many U.S. voters. However, the debate over whether the bank represents “crony capitalism” illustrates a major point of confusion about what crony capitalism is, obscuring actual steps that could be taken to address the problem. The public debate about crony capitalism should focus not simply on where government and business intersect, but on when that intersection implicates the kinds of traditional corruption — such as bribery, bid-rigging, special treatment, and conflicts of interest — that distinguish crony capitalism from government’s legitimate if controversial engagement with the private sector. Without focusing on the actual corruption that gives rise to crony capitalism, those trying to fight it are aiming at the wrong target.

Continue reading

“Ghost Money”: Thinking About State Bribery in the National Interest

“It is difficult to overstate the profoundly negative impact that corruption has on society.  The abuse of entrusted power for private gain does violence to our values, our prosperity, and even our security.” — Secretary of State John Kerry

For a government so concerned with the fight against corruption, the United States sure does bribe a lot.  In fact, only months before Secretary Kerry delivered those remarks in December 2013, the New York Times revealed that the Central Intelligence Agency had been delivering millions of dollars in “ghost money” — packed in “suitcases, backpacks, and on occasion, plastic shopping bags” — to the office of Afghan President Hamid Karzai for more than a decade.  In a way, this story was old news; it’s been known for years that the CIA has done everything from slipping little blue pills to local Afghan chieftains to bankrolling members of the Afghan National Security Council.  As it turns out, bribing foreign officials in the name of national security has been a standard practice at the CIA for decades, one that the public seems to have tacitly accepted.

Standard practice or not, how can one reconcile this state-sponsored corruption with the U.S. government’s efforts to combat transnational bribery?  Is it hypocritical for the U.S. Department of Justice to punish private firms that bribe foreign officials, while the CIA is bribing those same officials at the same time?

Perhaps in some cases it might be, but there a couple of possible justifications for aggressively prosecuting private bribery while at the same time accepting the permissibility of state-sponsored bribery (at least under some circumstances):

Continue reading

Indonesia’s Election Results–Some Snap Reactions on Implications for Anticorruption

Two days ago, after about two weeks of wrangling, accusations, and general uncertainty, Indonesia’s General Election Commission declared Joko Widodo the winner of the July 9 presidential election. Mr. Joko, the populist governor of Jakarta and former mayor of Surakarta, defeated Probowo Subianto – a retired army general and son-in-law of former President/dictator Suharto — by about 8 million votes (out of almost 135 million total votes cast). Mr. Probowo is still contesting the election result, asserting widespread fraud, but most observers doubt that the Constitutional Court will overturn the result, particularly given the margin of victory and the fact that the outcome was consistent with a number of independent polls conducted by reputable organizations.

This result is a big deal for many reasons–including the implications for the struggle against corruption in Indonesia and elsewhere. I am certainly no expert on Indonesian politics, so there’s much about this development that I don’t understand. But, having followed the Indonesian election from a distance, let me toss out some off-the-cuff thoughts on how one might think about the result from an anticorruption perspective. I hope that people who know this stuff better than I do will weigh in with their own reactions. Here goes:

Continue reading

Quid Pro Quo: The Deus Ex Machina of Bribery Law?

In a recent post Phil spotted an apparent anomaly in U.S. anticorruption laws: these laws make it is easier to get away with bribing an American politician than a non-American one.  As Phil explains, the difference arises from what seems to be the higher burden the prosecution must meet to prove that what is ostensibly a campaign contribution is in reality a bribe when the recipient is an American politician rather than a non-U.S. officeholder.

When the payment is to an American politician, the prosecution must, in the words of McCutcheon v. FEC, the Supreme Court’s most recent decision interpreting the Federal Election Campaign Act, prove “quid pro quo corruption,” which the Court defines as “a direct exchange of an official act for money.” By contrast, when the challenged payment is to a non-American office holder, the Foreign Corrupt Practices Act merely requires that the prosecution establish that the money was “corruptly” given for the purpose of “influencing any act or decision [taken in an official capacity].” Phil takes the absence of an express requirement of a quid pro quo in the FCPA as easing the prosecutor’s burden. But is Phil’s reading of the two laws correct? Continue reading

The World Bank’s Office of Suspension and Debarment Is a Model of Transparency–But I Still Want More!

As many readers of this blog are likely aware, the World Bank (and the other multinational development banks) have their own procedures for identifying and sanctioning firms that engage in unethical behavior (corruption, but also fraud, collusion, etc.) in Bank projects.  At the World Bank, responsibility for addressing corruption and other unethical practices by Bank contractors and partners is handled by the Integrity Vice Presidency (INT), which has investigative and quasi-prosecutorial functions, and the Office of Suspension and Debarment (OSD), an independent adjudicative body, as well as the Sanctions Board, an appellate body.

A few weeks ago, the OSD released a comprehensive report on its office’s activities and performance over its first seven years in operation (fiscal years 2007-2013).  It’s a very useful report, and well worth reading.  It includes a clear, succinct summary of the World Bank’s sanctions and procedures (including both their history and current structure), and also–most notably–a great deal of descriptive quantitative data about the OSD’s activities.  In many ways, the report is a model of transparency, allowing observers both inside and outside the Bank to understand the activities of OSD (and, to a lesser extent, INT and the Sanctions Board), and perhaps to identify weaknesses and areas for improvement.

But because no good deed goes unpunished, my main initial reaction to the report is to wish there were even more data provided!  Here are a few open questions that the data in the OSD report does not address, but that OSD might consider providing in future reports:

Continue reading