The Netherlands’ Dutch Caribbean Problem

The Kingdom of the Netherlands has a corruption problem. Although the country of Netherlands maintains a squeaky-clean image, ranking eighth in the world on Transparency International’s Corruption Perceptions Index (CPI), the Kingdom of the Netherlands is comprised of not only the Netherlands itself, but also three semi-autonomous island countries in the Caribbean. These island countries, along with three territorial islands directly controlled by the Netherlands, collectively form the Dutch Caribbean. And the Dutch Caribbean, unlike the Western European country, has a serious corruption problem, the severity of which is being diluted by the positive perceptions of the Netherlands.

Before addressing corruption in the Dutch Caribbean specifically, it’s worth explaining the Kingdom’s somewhat unusual constituent-country structure. Technically speaking, the Kingdom is composed of four equal autonomous countries: The Netherlands, Aruba, Curacao, and Sint Maarten. The citizens of all four countries are Dutch nationals. Each country has its own constitution and parliament, but the Kingdom is sovereign, retaining responsibility for foreign policy, defense, and other “Kingdom issues,” including oversight of human rights and freedoms within all Kingdom territories. Of the four countries that comprise the Kingdom, the Netherlands is by far the largest, accounting for 98% of both the Kingdom’s land mass and population. And although Aruba, Curacao, and Sint Maarten each have a representative within the Kingdom’s council of ministers, the Netherlands in effect also directly controls the Kingdom, as well as the Caribbean islands of Bonaire, Saba, and Sint Eustatius, which are Dutch territories.

Most international corruption assessments lump the Dutch Caribbean in together with the Netherlands. The CPI, for example, does not include separate evaluations for Aruba, Curacao, or Sint Maarten, nor does the U.S. State Department. The tendency to consider the Dutch Caribbean as part of the Netherlands, and to provide a single report or score for “the Netherlands” as a whole, obscures the fact that the Dutch Caribbean does, in fact, have a very serious corruption problem on each of its constituent islands, as the following brief survey illustrates:

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Highway Robbery: Preventing Corruption in U.S. Infrastructure Investment

Last November, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), a $1.2 trillion package that earmarks $110 billion for repairing and rebuilding roads and bridges. This is the single largest investment in U.S. roads and bridges since the construction of the interstate highway system in the mid twentieth century. And though it is a federal project, much of the money will be distributed to state governments, which will determine how best to use the money to address their infrastructure needs. As state governments receive the IIJA money, we can expect the states to launch a public tender frenzy.

In all the extensive discussion and debate over the IIJA, there has been relatively little focus on the corruption risks inherent in this sort of spending program—even in an affluent, reasonably well-governed country like the United States. After all, corruption in large construction projects, and infrastructure projects like roadbuilding in particular, is all too common. Unfortunately, the IIJA’s design exacerbates rather than reduces these corruption risks. While it is too late to address those flaws in the statute, there are some measures that the federal government can and should adopt now to mitigate the inherent corruption risks. Continue reading

Anticorruption Bibliography–January 2022 Update

An updated version of my anticorruption bibliography is available from my faculty webpage. A direct link to the pdf of the full bibliography is here, and a list of the new sources added in this update is here. Additionally, the bibliography is available in more user-friendly, searchable from at Global Integrity’s Anti-Corruption Corpus website.

As always, I welcome suggestions for other sources that are not yet included, including any papers GAB readers have written.

Has Nigeria Found A Way to Make Release of the CPI Useful?

Transparency International releases its 2021 Corruption Perceptions Index this January 25, and while many will welcome the attention it puts on corruption, for others release will mean nothing but headaches. They will spend that day and the days and perhaps weeks after trying to explain why their country’s score on the CPI has little or nothing to do with how well the country is doing in the fight against corruption.  

For regulars in the corruption battle, this is common knowledge (distilled here, here, and here).  They know the value of the CPI lies in the pressure release puts on governments to take the fight against corruption seriously – not in measuring the progress a government is making in the fight. But presidents, prime ministers, parliamentarians, and assorted national kibitzers don’t. Sporadic followers of the corruption issue, on January 25 they will read that their nation ranks worse on the CPI than some neighboring county, a rival, or Denmark, Norway, or Singapore. They will demand to know why. Or at least why efforts over the past year have not paid off in a better ranking.

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Do Individual U.S. Senators Manipulate the Timing of FCPA Enforcement Actions? (Spoiler: No.)

Is enforcement of the U.S. Foreign Corrupt Practices Act (FCPA) improperly politicized? The notion that it is has gained traction in some circles, particularly in countries with multinational firms that have been sanctioned by U.S. authorities for FCPA violations, such as France and Brazil. The usual claim by those who assert that FCPA enforcement is politicized is that the US Department of Justice (DOJ) deploys the FCPA as a kind of protectionist weapon against foreign multinationals that compete with US firms. But a recent working paper by two business school professors (one American and one Chinese) claims to have found evidence for a different sort or FCPA politicization. According to this paper, individual U.S. Senators exert behind-the-scenes influence over the DOJ to manipulate the timing of FCPA enforcement actions against foreign corporations. More specifically, the paper argues that when a Senator is up for reelection, he or she will influence the DOJ to announce an enforcement action against a foreign company before, rather than after, the election. Doing so, the authors suggest, helps the Senator’s reelection chances by imposing a cost on a foreign company that competes with domestic firms in the Senator’s state.

I confess that when I first saw this paper a few weeks ago, I didn’t take it too seriously, because the central argument seemed so obviously detached from reality. (I also didn’t have time to dig into the details of the empirical methods, which are somewhat involved.) But the paper seems to generated a bit of buzz—including a Tweet from one of the best and most respected economists who works on corruption-related issues, which specifically asked me and a few others for our reactions to some of the “provocative” evidence presented in the paper. So I took a closer look. Continue reading

Is the United Kingdom a Corrupt Country? Confronting Parliament’s Conflict-of-Interest Problem

Prime Minister Boris Johnson recently declared that he does not believe the United Kingdom is “remotely a corrupt country.” And indeed, international indexes (such as Transparency International’s Corruption Perceptions Index) indicate that most observers perceive the UK as having high levels of public integrity. But while the British state may be free from the routine bribery and embezzlement that is common elsewhere, the UK Parliament is awash in conflicts of interest. Such self-dealing by the political class—what many in the UK press have dubbed “sleaze”—suggests that the country suffers more from corruption (albeit a different kind of corruption) than many observers realize.

The most recent “sleaze” scandal—and the one that prompted Prime Minister Johnson’s defense of the UK’s overall record on corruption—involved Conservative MP Owen Paterson, a former Environment Minister. Paterson received hundreds of thousands of pounds consulting for a clinical diagnostics firm and a meat processor, in violation of the UK’s longstanding ban on MPs acting as paid lobbyists. Even more damning, Paterson pressed the government to act against the meat processor’s competitor, and the government awarded the diagnostics testing company a £133 million pound contract despite the company lacking adequate equipment. While this scandal may have revealed especially egregious conflicts-of-interest, it is not an isolated incident. Consider just a handful of additional examples of instances in which MPs earned outside income from positions that would seem to create a serious conflict:

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How to Reform Brazil’s Freedom of Information Regime

Ten years ago, Brazil enacted its Access to Information Law, which implements the constitutional guarantee of the right to information. Under the law, certain government data must be proactively disclosed, and other information must be provided upon the request of a member of the public, without the requester needing to show any special reason or justification. This law was supplemented with the enactment, last March, of the Digital Government Law, which streamlines the procedures for information requests, clarifies the government’s obligations to provide information in an open format that fulfills completeness, quality, and integrity requirements, and includes a non-exhaustive list of data that must be disclosed.

These laws, like other freedom of information laws, are intended to make government more responsive and accountable and to help fight corruption by making it easier for citizens, journalists, advocacy groups, and prosecutors to scrutinize and analyze government information for evidence of suspicious activity. But while the laws are very detailed about the rules for disclosing information upon request, the law’s provisions on proactive disclosure are not sufficiently specific or effective. And proactive disclosure is quite important. After all, while the right to request information is helpful to those who want to investigate a specific event, the proactive disclosure of data—for example, with respect to public expenditure, public procurement processes, and public contracts—may raise “red flags” that can spur more in-depth investigations.

There are three deficiencies in particular that should be remedied, so that Brazil’s freedom of information laws can be effective in ensuring the sorts of proactive information disclosure that can foster transparency and detect or deter corruption:

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Chinese NPAs Target the Wrong Firms

Settlement agreements, such as non-prosecution agreements (NPAs) and deferred prosecution agreements (DPAs), have come to play a central role in resolving corporate criminal cases, including bribery cases. These settlement mechanisms are thought to improve overall enforcement by encouraging companies to voluntarily disclose wrongdoing and cooperate with investigators, in order to avoid the reputational and economic harm that would come with a criminal prosecution. The United States pioneered the use of NPAs and DPAs, but variants on these mechanisms have been adopted by many other countries as well (see here, here, and here).

The People’s Republic of China has also begun to explore a version of this mechanism. After some initial pilot programs at the local level, in June 2021 the Supreme People’s Procuratorate Office, together with eight other top authorities, promulgated Guiding Opinions on Establishing a Mechanism for Third-party Monitoring and Evaluation of Corporate Compliance Programs for Trial Implementation (or, more succinctly, the “Non-Prosecution for Compliance” mechanism). This mechanism, which can be used to resolve bribery cases as well as cases involving other types of corporate crime, resembles the NPA mechanism used in the United States: If a company accused of criminal violations admits wrongdoing, cooperates with the government’s investigation, agrees to pay certain fines, implements a compliance program that satisfies the requirements of the procuratorate office, and is overseen by a third-party monitor for up to one year, then prosecutors will agree not to prosecute the company, thus sparing the company not only the risk of criminal conviction but also the costs associated with defending against a criminal prosecution.

But there’s a big difference between the U.S. NPA system and the Chinese version: The U.S. (and other countries, like the U.K.) have used NPAs and DPAs to settle major cases against giant firms. In China so far, prosecutors (in the ten provinces and municipalities that piloted the NPA system) have only concluded NPAs with small and medium enterprises (SMEs), and have done so only when the offenses involved were minor crimes (those for which the responsible persons may be sentenced to less than three years in prison, the lowest permissible punishment for most crimes). This enforcement approach gets things exactly backwards: While the availability of NPAs can be very helpful in combating corruption and other crime in large companies—by giving those companies stronger incentives to disclose and cooperate, and by inducing them to enhance their compliance systems—offering NPAs to SMEs adds little value and is costly to the government. Rather than offering NPAs only to SMEs, as seems to have been the approach of Chinese prosecutors thus far, it would be better if SMEs were deemed ineligible for NPAs.

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Kais Saied Isn’t Fighting Corruption in Tunisia, He’s Fighting His Political Opponents

Kais Saied, a former constitutional law professor at the University of Tunis, has been president of Tunisia since 2019. In late June 2021, Saied invoked emergency powers under the 2014 Tunisian Constitution to oust Prime Minister Hicham Mechichi, assume control over the government, shutter Parliament, and begin his rule of the country by decree—a move that some have described as a coup. Saied’s recent announcement that he will call a constitutional referendum and parliamentary elections to take place next year bodes well for a potential return to the rule of law, although in October, when he appointed a new government, he curtailed the powers of the Prime Minister—so we shouldn’t get our hopes up just yet.  

One of Saied’s stated justifications for his extraordinary consolidation of power was the need to end rampant corruption. He has asserted that Tunisia is a country ruled “by two regimes, an apparent regime, that of the institutions, and a real regime, that of the mafia,” and he has vowed not to “engage in dialogue with ‘thieves.’” Saied defended his extraordinary invocation of emergency powers by highlighting the danger to the country posed by those who “lurk at home and abroad, and from those who see their office as booty or as a means to loot public funds.” This was not a new theme for Saied. Indeed, fighting the corruption of Tunisia’s elites has long been his rallying cry. When he ran for president in 2019 as a political outsider, he ran on an anticorruption platform that proved extraordinarily popular, especially with the younger generation. (Saied garnered an incredible 90% of the vote of young Tunisians in 2019.) And so far, his consolidation of power has also enjoyed widespread popular support—though it has started to wane recently.

Will Saied in fact follow through on his pledge to use his extraordinary powers to root out corruption in Tunisia? It’s hard to know for sure, but some prominent international commentary has defended Saied’s aggressive moves partly on the grounds that he is indeed taking actions that are necessary to counter the systemic corruption of the Tunisian elite. I am more skeptical. There are several factors that suggest Saied’s emphasis on fighting corruption is little more than a disingenuous and self-serving rationalization for an unjustified power grab. Continue reading

Anticorruption Bibliography–December 2021 Update

An updated version of my anticorruption bibliography is available from my faculty webpage. A direct link to the pdf of the full bibliography is here, and a list of the new sources added in this update is here. Additionally, the bibliography is available in more user-friendly, searchable from at Global Integrity’s Anti-Corruption Corpus website.

As always, I welcome suggestions for other sources that are not yet included, including any papers GAB readers have written.