Updated Anticorruption Bibliography

An updated version of my anticorruption bibliography is available from my faculty webpage.  Now with over 3,000 sources!  A direct link to the pdf is here.  As always, I welcome suggestions for other sources that are not yet included, including any papers GAB readers have written.

The Prosecution of Bribery: What Lawmakers Can Learn from Bavaria and Virginia

Prosecutors thinking about whether to pursue a case against the recipient or payer of a bribe will surely think twice given events of the past weeks in the German state of Bavaria and the American state of Virginia.  In Bavaria the bribery prosecution against Formula One impresario Bernie Ecclestone collapsed mid-trial after the judge expressed strong doubts the case could be proved.  In Virginia prosecutors are slogging through the third of what is expected to be a six week trial as they try to show that Robert McDonnell, the state’s former governor, was paid to shill for a local business.  To prosecutors, the two cases remind that bribery is no easy crime to prove and that losing carries risks both personal and professional.  To lawmakers, the two cases should prompt a scrub of their nation’s bribery laws to see whether the bar they have set for proving a case is too high. Continue reading

More Confused & Confusing Commentary on Corruption, Earmarks, and Campaign Finance

When a prominent platform like the New York Times Op-Ed page features a piece on corruption, I feel like I should say something about it.  (Furthering the public dialogue and all that.)  But it’s hard for me to come up with something productive to say about Thomas Edsall’s rambling editorial on “The Value of Corruption,” published last week. So far as I can make out, Edsall makes three main points:

  1. The Congressional ban on legislative earmarks, intended as a means of fighting one form of perceived “corruption,” has in fact undermined one of the key tools legislators can use to build compromise and overcome gridlock.
  2. The Supreme Court’s campaign finance decisions in cases like Citizens United and McCutcheon have given wealthy interests more power to influence elections (which some characterize as “legalized corruption”).
  3. Sometimes corruption can be “good” — the “honest graft” praised and defended by George Washington Plunkitt — particularly when it helps certain excluded groups overcome barriers established by entrenched interests.

If your first reaction to this is that these points have little to do with one another — other than the fact that they all use the word “corruption” — then we’re on the same page. But instead of just trashing the Times Op-Ed page (much fun as that is), let me see if I can try to say something substantive.  Not sure if I’ll succeed — here goes: Continue reading

E-Government and Corruption: Evidence from India

From the Open Government Initiative for data sharing in the United States to the plurilateral Open Government Partnership abroad, online government or “e-government” is an important trend in global public administration.  In addition to improving government efficiency and citizen access, studies suggest that e-government can also facilitate accountability and reduce corruption.  Of course, there is reason to be skeptical as to whether successes of e-government champions such as Estonia and South Korea can translate to developing countries, where resources are more limited and corruption is often most severe.  But a 2009 study that excluded OECD countries found that a significant increase in the services supplied online could account for as much as a 13 percentile improvement in a country’s ranking in the World Bank’s Control of Corruption index, even after controlling for changes in gross domestic product and press freedom.

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The OECD Convention and Extraterritorial FCPA Jurisdiction

I suggested in an earlier post that a major reason for the increase in foreign anti-bribery prosecutions in other countries since the passage of the OECD Anti-Bribery Convention is increased enforcement of the FCPA against foreign companies by the US government. In this post, I will set out, in a little more depth, one factor that contributed to bringing this effect about, namely a broadened scope for enforcement jurisdiction under §78dd-3 of the FCPA.

An important effect of the entry into force of the OECD Convention was that it provided “cover” for expansive US enforcement of the FCPA. Equally important, though, was the contribution it made in providing the legal means by which the US Department of Justice was actually able to undertake this expansion. Broader enforcement has helped to push standards for anti-bribery enforcement into convergence around the world, and has encouraged other countries to start enforcing their own laws more seriously.

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More on Compliance Program Certification/Verification: The Proposed ISO Standard

My last post, inspired by Transparency International USA’s recent publication of a report on verifying the effectiveness of corporate anti-bribery programs, talked a bit about the emergence of a set of private firms that provide “certifications” for such programs. I expressed some skepticism about the value of these certification services. Some of my concerns — also expressed in the TI-USA report — had to do the opacity and apparent inconsistency in the methodology that certification firms employ. One possible response to this concern might be to develop an “official” international standard for anti-bribery compliance, and to provide certification that firms meet that standard.

Such an effort is already underway, through an organization called the International Organization for Standardization (ISO), a consortium of national (generally private) standard-setting bodies in 163 different countries. Traditionally, the ISO promulgates international standards with respect to quality control, safety, and technical compatibility. External auditing firms then provide certifications that a firm meets the ISO standard(s) in the relevant areas. The ISO is now already in the process of developing an ISO standard (ISO 37001) for anti-bribery programs — which would be the first ISO standard to deal with a topic like bribery. The draft standard is supposed to be available for public comment by 2015.

Before proceeding further, I should disclose that I’ve been involved — very marginally — in the U.S. Technical Assistance Group that’s supposed to provide commentary on this developing standard. (Basically, I’ve listened in on a few phone calls and seen a few documents circulated to the group.) So I need to be careful what I say on this subject, so as not to disclose anything confidential. I actually think there’s little risk of that, because what I really want to do in this post is not to focus on specific features of the proposed standard, but rather to raise questions about the whole enterprise. The more I think about it, the less justification I can imagine for promulgating an international standard like this. Indeed, it strikes me as entirely the wrong way to go about promoting the very worthy cause of improved corporate anti-bribery compliance programs.

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Don’t Give Back that Glove General Holder!

Although few readers likely can find Equatorial Guinea on a map (hint: it’s that small square wedged between Cameroon and Gabon), many have heard its name in connection with the annual contest to identify the “most corrupt country.” For despite the always stiff competition from the likes of such states as Iran, Afghanistan, Sudan, Somalia, year-in-year-out Equatorial Guinea always manages to place at or near the top.  Observers attribute its perennially strong showing to a combination of two factors: 1) the country’s vast mineral wealth and 2) its rulers’ skill and ruthlessness in keeping it all for themselves. Continue reading

Some Thoughts on Certification of Corporate Anticorruption Programs

Last week, I posted a brief announcement about an interesting new report from Transparency International USA about verification of corporate anticorruption compliance programs — that is, efforts to ensure that the measures companies put in place to ensure compliance with anti-bribery law (and other legal and ethical requirements) are actually working. One particularly interesting facet of the report, at least for me, was the discussion of the emerging “certification” industry: private firms that companies can hire to review their compliance programs, and that provide a public certification — basically, a statement saying “we’ve reviewed this company’s compliance program and we think it’s up to scratch.” These certification services are different from more familiar consulting services, where firms assist companies in designing or evaluating their compliance programs (though the firms that offer certification also often offer consulting services as well).

While I’m all for private sector initiative to improve corporate anti-bribery compliance, I’ll admit I’m a bit skeptical as to the value of these services. Indeed, I worry a bit about whether they might in some cases prove counterproductive. And while the TI-USA report uses careful language, I read the report as evincing a fair amount of skepticism as well. I also want to be appropriately circumspect, as I don’t really know enough to have strong views, but let me raise a few concerns about the private anticorruption certification industry.

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How the WTO’s Trade Facilitiation Agreement May Reduce Bribery

I argued in my last post that the WTO is not well-suited to directly addressing bribery and corruption; even though bribery impedes trade, it would be a mistake to recognize bribery (or failure to suppress bribery) as an actionable violation of international trade law. But that does not mean the WTO should not take action to deal — indirectly — with the problem of corruption. A good example of productive measures the WTO can implement to reduce the impact of bribery and corruption in trade is the Trade Facilitation Agreement (TFA), which was negotiated in December 2013 (but has not yet entered into force).  The TFA aims to reduce transactional obstacles to trade, focusing mainly on border transactions; in doing so, it may indirectly address some of the most significant contributors to bribery in international trade, even though the TFA is not about corruption as such. The agreement provides a nice example of how the WTO system can take positive steps to combat corruption, even though the system is not equipped to tackle corruption directly.

The TFA has the potential to contribute to reducing trade-related bribery in three main ways.

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Should FCPA Enforcers Focus on Corruption in the Poorest Countries?

A few months ago, the Wall Street Journal published an interview with Charles Duross, the current Morrison & Foerster partner who up until last February led the U.S. Justice Department’s Foreign Corrupt Practices Act Unit. Among the interview’s most interesting revelations was Duross’s description of how he set enforcement priorities. When asked about likely future priorities Duross provided this response:

To be clear we do prioritize cases, based on the significance of the case. For example how big are the bribes? Are we talking about $100 million or $100? But in terms of saying “I have decided what we’re going to do is look at X industry or everybody that’s going to be dealing with this country or this region, and we’re going to scrub those folks in particular,” I don’t think we do that.

Although Duross may well be correct that DOJ doesn’t target particular countries or regions, there is some evidence that FCPA enforcement does disproportionately involve particular kinds of countries–in particular, poorer countries and countries with poorer governance. A working paper by Stephen Choi and Kevin Davis (which Matthew also discussed in a recent post) found that “aggregate total monetary sanctions related to a particular violation country, controlling for the overall bribe level in that country, is greater for countries with a lower GNI [gross national income] per capita, as well as weaker government effectiveness and rule of law scores.” What to make of this? Is it true that companies are penalized more heavily (controlling for the size of the bribe) when they pay bribes in poorer countries with less effective legal systems? If so, is this desirable?

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