Will the Swiss Government Condone Gross Human Violations in Returning Stolen Assets to Uzbekistan?

The Swiss take pride in their nation’s uncompromising defense of human rights. Its diplomats offer unwavering support for the rights of the oppressed in international fora; its NGOs provide generous support to human rights defenders around the world, and as home to the United Nations Human Rights Council and other UN human rights agencies, Geneva is the center of the global discourse on human rights. But if recent press reports are to be believed (here [German] and here [English]), the Swiss government may be ready to ignore gross human rights violations perpetrated by the government of Uzbekistan.

The issue is part of the struggle over how to return the several hundred million dollars that Gulnara Karimova, daughter of its recently deceased dictator, stashed in Switzerland with the help of lackeys Gayane Avakyan and Rustam Madumarov. The monies are allegedly bribes international telecommunications companies paid Karimova to operate in Uzbekistan.

The Uzbek government is seeking their return while Uzbek civil society argues that because the government is so corrupt, the Swiss government should follow the precedent established in a Kazakh case and return the monies directly to the Uzbek people.  If the Swiss government does not, and does return the money to the Uzbek government, it will be forced to condone grave human rights abuses Avakyan and Madumarov have suffered at the hands of the Uzbek government. Continue reading

Brazil: A Model for International Cooperation in Foreign Bribery Prosecutions

Much ink has been spilled celebrating the extraordinary crackdown on corruption in Brazil over the past few years (including on this blog). Headlined by the massive Operation Car Wash (Portuguese: Lava Jato)—in which officials received nearly $3 billion in bribes to overcharge Petrobras, Brazil’s state-controlled oil company, for construction and service work—high-profile corruption investigations have swept through Brazil, threatening to upend its reputation as a bastion for unchecked graft. Although corruption in Brazil remains a serious problem, the extensive investigations have worked to elevate the nation as an inspiration for countries looking to address their own corrupt political systems and hoping to become “the next Brazil.”

In addition to the headline-grabbing investigations targeting the upper echelons of the Brazilian government, Brazilian authorities have also worked closely with U.S. authorities investigating bribery activity in Brazil, leading to significant penalties both under Brazilian law and under the U.S. Foreign Corrupt Practices Act (FCPA). This is a significant development, because it demonstrates the possibility for close collaboration on cross-border bribery cases between a developed country (usually on the “supply side” of transnational bribery cases) and a developing country (on the “demand side”). Commentators have complained that too often supply-side enforcers like the United States take an outsized role in transnational bribery cases, with the countries where the bribery takes place doing too little. Other commentators have cautioned that an increase in prosecutions by other countries, in the absence of some sort of global coordination mechanism, may lead to races to prosecution or to over-enforcement. China’s nearly $500 million fine of British pharmaceutical giant GlaxoSmithKline in 2014 for bribing Chinese doctors and hospitals was emblematic of these fears, providing an example of an aggressive, unilateral approach to demand-side enforcement – while putting DOJ in the unfamiliar position of pursuing FCPA violations as a cop late to the scene.

Through its recent enforcement actions, Brazil has provided a different model. While there have been successful joint enforcement actions in the past—such as the Siemens case—the recent series of coordinated U.S.-Brazil actions exhibit how developed and developing countries can work together in anti-bribery enforcement, sharing in the investigative responsibilities, negotiations with companies, and even the financial returns.

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Guest Post: The Taxi Driver Paradox–or How Descriptive Social Norms Shape Corrupt Behavior

Nils Köbis, a post-doctoral researcher at the Center for Experimental Economics and Political Decision-Making (CREED), University of Amsterdam, contributes today’s guest post:

Whenever I am traveling and take a taxi, I try to strike up a conversation with the driver. The beauty of this situation is that both sides can be really candid. The length is typically short, and chances are you will never meet again. The chat usually kicks off with some small talk about sports, weather, and food. Once warmed up, I have often asked: “What do you think is the biggest problem in your society?” So far, the most common answer has been corruption. And my taxi-driver-based anecdotal evidence is consistent with large  international surveys. Notwithstanding the old canard that people who live in corrupt societies generally tolerate corruption as normal and natural, ample empirical evidence (and my taxi drivers) suggests that this is not true: People widely despise corruption, especially in countries riddled with it. Yet on several occasions the very same taxi driver who has been ranting to me about corruption has stopped by a traffic police officer—and willingly paid a bribe to avoid a ticket.

What explains this apparent paradox? The most frequent explanation for why a person outraged by corruption would nevertheless pay a bribe is that “everybody does it”—as the Nigerian novelist Chimamanda Adichie nicely puts it, “If we do something over and over again it becomes normal. If we see the same thing over and over again it becomes normal.” This notion of normality plays an important role in explaining why corruption is sometimes the exception and sometimes the rule. Scholars who research social norms differentiate between injunctive norms, which concern whether a given behavior is acceptable, and descriptive norms, which indicate whether the same behavior is common. This distinction might help to explain the taxi-driver-paradox: People might often bribe because everybody else is doing it, even though they think it’s wrong. Continue reading

Western Anticorruption Policy in Ukraine: Success or Failure?

A few weeks back, I came across an interesting point-counterpoint on the impact of Western-backed efforts to promote anticorruption reform in Ukraine. On one side we have an online piece in Foreign Affairs by Adrian Karatnycky (the Managing Partner of a consulting firm that “works with investors and corporations seeking entry into the complex but lucrative emerging markets of Ukraine and Eastern Europe”) and Alexander Motyl (Professor of Political Science at Rutgers University) entitled, “How Western Anticorruption Policy Is Failing Ukraine.” And then on the other side we have a response piece on the Atlantic Council blog from Daria Kaleniuk (Executive Director of the Anti-Corruption Action Centre in Kyiv) entitled “Actually, the West’s Anticorruption Policy Is Spot on.” I’m no Ukraine expert, and so I’m reluctant to take a strong position on which side has the better of the argument, but I found the debate interesting not only for its implications for Ukraine, but also because it raises a couple of more general issues that come up in many other contexts, issues that anticorruption advocates should pay attention to even if they have no particular interest in Ukraine. Those issues are, first, a question of messaging—what I’ll call the glass-half-full/glass-half-empty question—and, second, the relative importance of holding individual wrongdoers personally (and criminally) accountable for corrupt conduct.

Let me first try to give a flavor of the debate, and then say a bit about each of those two issues. Continue reading

A Border Patrol Surge Will Lead to a Border Corruption Surge

The United States Customs and Border Protection service (CBP) is the largest law enforcement agency in the United States—and one of the most corrupt. CBP employs 59,000 people, of whom almost 20,000 are Border Patrol agents. Every day, these agents process over a million incoming U.S. travelers, 300,000 vehicles, and 78,000 shipping containers. On any given day they might seize over 5,000 pounds of narcotics and apprehend nearly 900 people at or near U.S. borders. Yet according to “conservative [] estimate[s],” about 1,000 Border Patrol agents—5% of the total—violate their official duties in exchange for bribes. To take just a handful of some of the most egregious examples: One CBP agent permitted smugglers to bring over 612 kilograms of cocaine into the U.S. in exchange for $1,000 for each kilo he waved through his checkpoint. Another allowed 1,200 pounds of marijuana to enter into the U.S. in exchange for $60,000. Yet another CBP agent permitted vehicles containing undocumented immigrants to enter the U.S. at a price of $8,000-10,000 per vehicle.

In response to this widespread corruption, the Department of Homeland Security convened an independent Integrity Advisory Panel in 2015. But the Panel’s 2016 report fell on deaf ears, as almost none of its 39 recommendations were implemented. Instead, in line with his hardline stance on immigration, President Trump signed a 2017 executive order mandating hiring an additional 5,000 Border Patrol agents and “appropriate action to ensure that such agents enter on duty . . . as soon as practicable.”

Increasing the number of agents by 25% without devoting significant resources to combat the pervasive corruption in CBP is a terrible idea, and is likely to exacerbate current corruption problems, for three reasons: Continue reading

Rewarding Whistleblowing to Fight Kleptocracy

Last February, Massachusetts Congressman Stephen Lynch introduced the Kleptocracy Asset Recovery Rewards Act (KARRA), which seeks to improve detection of stolen assets housed in American financial institutions by paying whistleblowers for reports that lead to the identification and seizure of these assets. The logic of paying rewards to whistleblowers is straightforward, and nicely summarized in the draft KARRA itself:

The individuals who come forward to expose foreign governmental corruption and klep­toc­ra­cy often do so at great risk to their own safety and that of their immediate family members and face retaliation from persons who exercise foreign political or governmental power. Monetary rewards and the potential award of asylum can provide a necessary incentive to expose such corruption and provide a financial means to provide for their well-being and avoid retribution.

Paying whistleblowers for information is a sound economic idea.  But in light of the cogent explanation for these rewards, the original draft of the KARRA legislation doesn’t go nearly far enough. Indeed, this original proposal provides much weaker incentives and protections for whistleblowers than several other existing US whistleblower rewards programs. It is unlikely that this bill has a real chance of being enacted in the current Congress, but if its introduction this year is a harbinger of a more sustained effort to enact legislation of this kind—and I hope it is—then I also hope that the next time around KARRA supporters will introduce a more ambitious bill, one that provides much higher potential rewards, fewer limitations on which whistleblowers are eligible for rewards, and more robust anti-retaliation protections.

There are many ways to design a whistleblowing program, as demonstrated by the spectrum of existing programs that use whistleblowing to tackle fraud in other domains. We can examine the effectiveness of the proposed legislation through comparison to existing whistleblowing programs:

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Anticorruption Bibliography–June 2018 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. As always, I welcome suggestions for other sources that are not yet included, including any papers GAB readers have written.