Anticorruption Bibliography–September 2020 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.

FACTI: Launch of Interim Report// Background Paper on Global Anticorruption Efforts

The United Nations High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda Financing for Sustainable Development, or FACTI, presents its interim report tomorrow, September 24, 8:00 – 10:30 a.m. Eastern Time, 12:00 – 14:30 UTC (register for webinar here). The report will identify reforms to the laws governing international tax cooperation, anticorruption, and money laundering needed to staunch illicit financial flows and hasten the return of stolen assets. As explained last week, the FACTI panel was created by the UN General Assembly and the Economic and Social Council as part of the effort to ensure developing states will have sufficient resources to meet the 2030 Sustainable Development Goals.

Professors J.C. Sharman, Daniel L. Nielson, and Michael G. Findley of Cambridge, Texas, and Brigham Young Universities respectively, prepared a background paper for the panel assaying the progress made in curbing money laundering and other abuses of the financial system that facilitate corruption. A summary of their paper is below; the full text is here.

Progress in Global AntiCorruption Efforts? Not So Fast

In April of 1989, Laurence Greenwald, a partner in the NYC law firm Stroock & Stroock & Lavin had reached the end of his patience. His firm had spent thousands of hours and tallied $1.2 million in legal fees seeking to identify and seize hundreds of millions of dollars in assets stolen from Haiti’s treasury by its notorious dictator Jean-Claude “Baby Doc” Duvalier. The successor Haitian government had retained Stroock firm to investigate and launch recovery proceedings. Yet after years of legal work by Stroock and other firms around the globe, in 1988 the new government stopped cooperating and refused to pay its legal bills.

In a letter to the Haitian government, Greenwald fumed, “The behavior of your ministers leaves us no alternative except to conclude that your ministers apparently want our efforts on behalf of Haiti to fail, are not concerned that Haiti will lose the substantial investment it has made in pursuing the Duvaliers, and want the Duvaliers to keep the money they stole.” Such frustrations commonly afflicted those seeking an end to corrupt practices in the international financial system during the late 20th Century. What progress has the international community made in the intervening decades?

Continue reading

New Podcast Episode, Featuring James Wasserstrom

A new episode of KickBack: The Global Anticorruption Podcast is now available. In this week’s episode, I interview James Wasserstrom. Mr. Wasserstrom, currently a private consultant on corruption and transparency issues, began his career with the United Nations, and was posted to the UN Mission in Kosovo (UNMIK) in 2007. His UN career took an unexpected turn when he uncovered corruption by high-level UNMIK officials. He reported his findings to the UN, but this was leaked to the perpetrators, and he was subjected to an extensive campaign of retaliation. After extensive legal proceedings, it was eventually determined that he had been mistreated, but the UN denied him compensation on dubious procedural grounds. During and after his dispute with the UN, Mr. Wasserstrom has been a leading advocate for institutional reform at the UN and integrity reforms more generally, and from 2009-2014 served as a special advisor on anticorruption at the U.S. Embassy in Afghanistan. In our interview, Mr. Wasserstrom and I discuss his experience as a UN whistleblower, the flaws in the UN’s whistleblower protection system, and what if anything can be done. We also discuss Mr. Wasserstrom’s ideas for providing more international support for whistleblowers in hostile environment, including his new proposal for an “integrity sanctuary” program.

You can find this episode here. You can also find both this episode and an archive of prior episodes at the following locations:

KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.

 

Universal Asset Declarations Will Not Solve Kazakhstan’s Corruption Problem

In March 2019, Kassym-Jomart Tokayev replaced long-serving President Nursultan Nazarbayev to become independent Kazakhstan’s second head of state. Apparently recognizing the scope and scale of Kazakhstan’s corruption problem, President Tokayev made combatting corruption a central focus of his agenda from the get-go. And he has continued to emphasize that the fight against corruption is a top priority.

Although it’s not unusual for heads of state to deploy anticorruption rhetoric, often without action to back it up, there are indications that President Tokayev is serious. Over the past year and a half, the Kazakh government has implemented several concrete anticorruption measures—both large-scale and quotidian. Perhaps most prominently among the former category, in January 2020 Kazakhstan joined the Group of States against Corruption, a corruption-monitoring organization run by the Council of Europe. Additionally, a law enacted in December 2019 provides for the dismissal of public officials in managerial roles if their subordinates are convicted of corruption-related charges. Most recently, President Tokayev himself announced a new policy under which high-ranking officials and their family members will be barred from keeping bank accounts abroad. Among the more “everyday” measures, the government has created “anticorruption centers” where citizens can speak directly with employees of Kazakhstan’s anticorruption agency. And to prevent price-gouging during the COVID crisis, the government has required pharmacies to post QR codes that allow customers to easily check the legal prices of medicines.

It remains to be seen whether these measures will be effective in helping to address Kazakhstan’s corruption problem. One additional measure, however, appears unlikely to make much difference: a new system of “universal” property and income declarations that the Kazakh government is beginning to implement (see here, here, and here). Kazakhstan has required public officials to declare their assets and income since 1996, but the new initiative will extend this requirement to all citizens and foreign permanent residents of Kazakhstan in a phased rollout over the next several years. By 2025, all Kazakhstanis will be required to file, in addition to their standard income tax return, a declaration listing the value of their assets and liabilities, including real estate, cars, bank accounts, and jewelry. According to the government, this new system of universal asset declarations will help counteract the shadow economy, increase compliance with tax laws, and reduce corruption.

The new disclosure regime may well be justified as a matter of tax policy or as a measure to combat the shadow economy. However, evaluated purely as an anticorruption measure, the policy is misguided, for two main reasons: Continue reading

Guest Announcement: The World Bank Office of Suspension and Debarment’s Fifth International Debarment Colloquium

Today’s guest post is from Alexandra Manea, Legal Counsel at the World Bank’s Office of Suspension and Debarment.

The World Bank Group (WBG) sanctions system is a critical part of the institution’s multi-faceted anticorruption effort. Comprised of independent decision-makers, the sanctions system investigates allegations of misconduct in WBG-financed projects and, if those allegations are substantiated, can debar culpable companies and individuals from engaging in any WBG -financed activity for a period of time. The impact of a WBG-imposed debarment is amplified through a cross-debarment agreement with other Multilateral Development Banks (MDBs), including the African Development Bank Group, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank.

With the unprecedented amount of multilateral financing and public spending going toward crisis aid and recovery efforts, governments and aid agencies can use debarment to ensure that they work only with reliable and ethical business partners. In times of crisis, it is crucial to facilitate knowledge-sharing among stakeholders to increase the impact of connected efforts to fight fraud and corruption.

During a series of webinars over five consecutive weeks starting on September 22 (this coming Tuesday), the WBG’s Office of Suspension and Debarment (OSD) will host the fifth edition of its International Debarment Colloquium series, a flagship event that showcases developments in debarment systems worldwide and examines the various uses of debarment in the procurement and anticorruption contexts. Representatives from multilateral organizations, government, private sector, non-governmental organizations, and academia will discuss: Continue reading

Guest Post: Australia Considers New Approaches to Corporate Criminal Liability

Today’s guest post is from Matt Corrigan and Samuel Walpole, respectively General Counsel and Legal Officer at the Australian Law Reform Commission (ALRC).

The growth of multinational corporations in both size and number has raised concerns in many jurisdictions about the State’s capacity to hold corporations liable for crimes committed in the course of their business activities, including (but not limited to) bribery of foreign officials. One of the challenges of using the criminal law to address corporate misconduct is that the traditional criminal law evolved with “natural persons” (that is, real people) in mind. The law therefore typically focuses on the conduct and states of mind of individuals to determine whether a criminal offense has been committed. Corporations are comprised of, and act through, individuals, but corporations are greater than the sum of their parts. The law developed principles of attribution of responsibility—legal principles for ascribing conduct and states of mind of a particular person or persons to a corporation—in order to hold the corporation liable for ordinary criminal offenses. In practice, however, these do not produce a perfect fit, particularly in the case of large decentralized corporations.

The perceived inadequacy of traditional notions of criminal responsibility when applied to problems like corporate bribery has led some jurisdictions to introduce novel approaches to corporate criminal liability for such crimes. Perhaps most notably, in 2010, the United Kingdom enacted the Bribery Act, which introduced a novel criminal offense, specific to corporate defendants, of failing to prevent foreign bribery. Under this provision, corporations are liable if they fail to prevent their associates—including agents engaged to act on behalf of the corporation to win contracts and expand operations in foreign jurisdictions—from committing bribery, subject to an affirmative defense that the corporation had in place adequate procedures to prevent such bribery. The “failure to prevent bribery” offense, together with the deferred prosecution agreement (DPA) scheme introduced in 2014, have been important steps forward. As Professor Liz Campbell has explained, the “failure to prevent” model involves utilizing the criminal law “as leverage to effect change in corporate behaviour,” rather than an accountability framework that operates only after the fact. In reviewing the operation of the UK Bribery Act in 2019, the House of Lords Bribery Act Committee described the “failure to prevent” reforms as “remarkably successful” in promoting compliance.

Australia is now considering adopting a similar approach to the United Kingdom. In December 2019, the Australian government introduced the Crimes Legislation Amendment (Combating Corporate Crime) Bill. This Bill, which is currently before Australia’s federal Parliament, would introduce an offense of failure to prevent bribery of foreign public officials by a corporation into Australia’s federal Criminal Code, along with a DPA scheme for foreign bribery. More generally, Australia is considering more seriously the limitations of traditional notions of criminal responsibility when applied in the context of corporate crime. The Australian Law Reform Commission (ALRC), on which we serve, recently undertook an extensive inquiry into this issue and published a Final Report that made 20 recommendations for reform of Australia’s corporate criminal liability regime. Among these recommendations, a few seem especially pertinent to the debates over the Crimes Legislation Amendment, and the effective control of corporate bribery more generally: Continue reading

FACTI Background Paper: To Curb Grand Corruption, Subject Lawyers and Other Professionals to the AML Laws

Last March, the President of the United Nations General Assembly and the President of the United Nations Economic and Social Council formed a panel to review global rules on financial accountability, transparency and integrity (here).  The two presidents explained that the current regime countenances a massive outflow of resources from developed nations, depriving them of the resources required to meet the 2030 Agenda for Sustainable Development.  Formally known as the High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda Financing for Sustainable Development (FACTI), the panel will recommend how tax and anticorruption laws, asset recovery rules, beneficial ownership disclosure requirements, and other international norms can be changed to staunch illicit financial flows and hasten the return of corrupt monies held abroad.

The FACTI Panel’s interim report will be released for comment September 24. The report will draw on consultations with governments, civil society groups, interested organizations, and a series of background papers commissioned by the United Nations Department of Economic and Social Affairs, the panel’s Secretariat.  With Fatima Kanji of the International State Crime Initiative, this writer authored the paper on asset recovery. A post summarizing it is below.  Over the coming weeks GAB will publish posts draw drawn from the other papers. Readers who can’t wait can click here to access the full text of the papers now.  The page also includes links to FACTI’s extensive global consultations. FACTI members are listed here.

Accelerating and Streamlining

the Return of Assets Stolen by Corrupt Public Officials

Corruption is hardly a new problem. Three centuries before the Common Era the author of the Arthaśātra advised the Maurya Empire’s rulers on ways to prevent corruption, and the first statute the English Parliament enacted made bribery a crime.  What is new is the ease with which corrupt money flows out of the victim state.  For a hefty fee, corrupt officials can today readily find a lawyer, real estate agent or other professional willing to help hide the assets they have stolen offshore.

Continue reading

Guest Announcement: OECD Report and Webinar on Corporate Anticorruption Compliance

France Chain, Senior Legal Analyst at the OECD’s Anti-Corruption Division, provides the following announcement regarding next week’s OECD webinar on “What really motivates anti-corruption compliance?”, an event which coincides with the launch of the new OECD Study on Corporate Anti-Corruption Compliance Drivers, Mechanisms and Ideas for Change.

Since the OECD Anti-Bribery Convention came into force in 1999, managing the risk of bribery has been identified as one of the most challenging areas of compliance for multinational businesses. Major foreign bribery scandals have resulted in record-breaking fines, which has seen the field of compliance grow exponentially over the past ten years. The OECD Foreign Bribery Report revealed that over 40% of foreign bribery cases involved management-level employees either paying or authorizing bribes, with CEOs involved in 12% of cases. At the same time, companies have shown that they can play a key role in detecting and responding to corruption. The OECD’s 2017 report on the Detection of Foreign Bribery showed that 23% of foreign bribery cases that resulted in definitive sanctions over the last 20 years were detected via self-reporting by companies.

However, implementing an effective compliance program is no easy task, and the COVID-19 pandemic has further heightened the challenges. With companies under great financial pressure to recover, anticorruption compliance departments and systems are being put to the test as never before.

To help shed light on some of these challenges and show us the way forward, a forthcoming OECD study on Corporate Anti-Corruption Compliance Drivers, Mechanisms and Ideas for Change explores what motivates companies to adopt anticorruption compliance measures, and looks at how companies (including small and medium-sized enterprises) could further be incentivized to do so. The study also underlines some of the main challenges faced by companies looking to implement anticorruption programs and proposes potential solutions, including ways for governments, international organizations, and civil society to better support companies in their anticorruption efforts.

The official launch of this study will take place on September 23 (one week from tomorrow), with a webinar panel discussion on What really motivates anti-corruption compliance?” to take place on September 23 from 15:00 to 16:30 Central European Time (9:00 am to 10:30 am U.S. East Coast time). You can register for the webinar here. The panel will bring together:

  • Axel Threlfall, Editor-at-large, Thomson Reuters (moderator)
  • Anna Hallberg, Minister of Foreign Trade and Nordic Affairs of Sweden (opening remarks)
  • Jeffrey Schlagenhauf, OECD Deputy Secretary-General (opening remarks)
  • France Chain, Senior Legal Analyst, OECD Anti-Corruption Division (presentation of key findings from the Study)
  • Alma Balcázar, Co-founder and Principal of GR Compliance SAS and Member of the International Council of Transparency International
  • Andrew Gentin, Assistant Chief, Fraud Section, Criminal Division, United States Department of Justice
  • Corinne Lagache, Chair, Business at OECDAnti-Corruption Committee, and Senior Vice President, Group Compliance Officer, Safran
  • Caroline Lindgren, Head of Legal and Local Compliance Officer of Sweco Sverige AB

Those attending the webinar will be able to submit questions through the chat during the live discussion on Zoom. The session will be recorded and subsequently posted on the OECD Anti-corruption and Integrity website.

President Theodore Roosevelt on the Importance of Fighting Corruption

Last week, I posted some information about a new working paper that I jointly authored with Justice Mariano-Florentino Cuellar on anticorruption reform in the United States over the 1865-1941 period. Although one of our main arguments in that paper is that the process of anticorruption reform in the United States was long, slow, and involved many different actors at all levels (in contrast to the image of the “big bang” reform driven by a single powerful figure, like a Lee Kwan Yew or a Mikheil Saakashvili), there were indeed some periods, and some leaders, who were especially important to the anticorruption fight. One of those leaders was undoubtedly President Theodore Roosevelt. President Roosevelt was a complicated figure with complicated legacy, but with respect to anticorruption, he was a significant leader of the reform movement. Since today (September 14) is the 119th anniversary of President Roosevelt’s assumption of the presidency, I thought I’d use the occasion to share some of my favorite remarks of his on the subject of corruption The specific context of these remarks, which came in a December 1903 address to Congress, concerned his administration’s efforts to secure the extradition of bribe-taking officials who had fled the country, but President Roosevelt’s sweeping rhetoric sounds like it could have come from a modern anticorruption reformer in a particularly fiery mood:

There can be no crime more serious than bribery. Other offenses violate one law while corruption strikes at the foundation of all law. Under our form of Government all authority is vested in the people and by them delegated to those who represent them in official capacity. There can be no offense heavier than that of him in whom such a sacred trust has been reposed, who sells it for his own gain and enrichment; and no less heavy is the offense of the bribe giver. He is worse than the thief, for the thief robs the individual, while the corrupt official plunders an entire city or State. He is as wicked as the murderer, for the murderer may only take one life against the law, while the corrupt official and the man who corrupts the official alike aim at the assassination of the commonwealth itself. Government of the people, by the people, for the people will perish from the face of the earth if bribery is tolerated. The givers and takers of bribes stand on an evil pre-eminence of infamy. The exposure and punishment of public corruption is an honor to a nation, not a disgrace. The shame lies in toleration, not in correction…. If we fail to do all that in us lies to stamp out corruption we can not escape our share of responsibility for the guilt. The first requisite of successful self-government is unflinching enforcement of the law and the cutting out of corruption.

New Podcast, Featuring Michael Hershman

After a brief summer hiatus, I’m happy to announce that a new episode of KickBack: The Global Anticorruption Podcast is now available. In this week’s episode, my collaborators Nils Köbis and Christopher Starke interview Michael Hershman. Mr. Hershman, one of the co-founders of Transparency International (TI), has had a long and distinguished career on issues related to transparency and anticorruption, including work with the U.S. Senate Watergate Committee, the U.S. Agency for International Development, and, more recently, the Independent Governance Committee for FIFA. In the interview, Nils and Christopher talk with Mr. Hershman about his background, the founding of TI, the relationship between corruption and populism, and issues related to corruption and sports, among other topics.

You can find this episode here. You can also find both this episode and an archive of prior episodes at the following locations:

KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.