Pre-2012 CPI Scores CANNOT Be Compared Across Time–So Please Stop Doing It!

OK, I know (as Rick pointed out in a recent post) that a lot — maybe too much — of the content on this blog has focused on measurement issues, so I apologize for yet another post on that topic, but this has really been bugging me:

Transparency International has been publishing its well-known and widely-used Corruption Perceptions Index (CPI) since 1995.  The index has its pros and cons, several of which have been discussed on this blog (see here, here, here, here, and here).  But putting other debates about the CPI’s validity and utility to the side, one thing should be perfectly clear: At least prior to 2012 (when TI changed its method and scoring system for the CPI), a country’s CPI scores CANNOT be compared across years.  The fact that Country X scores, say, a 4.4 in 2002, and scores a 4.9 in 2005, does NOT mean that (perceived) corruption has declined in country X.  Maybe it did, but it might have stayed the same, or gotten worse.  At most, the pre-2012 CPI provides information about country’s ranking relative to other countries, within a single year, with respect to corruption perceptions.

TI itself could not be more explicit about this, stating bluntly “CPI scores before 2012 are not comparable over time.”  Yet I keep coming across sources — news articles, presentations by leading international organizations, academic papers — that use year-to-year CPI comparisons to make claims about how corruption in a particular country or region is improving or worsening, or about whether a particular policy intervention is working or not.  YOU CAN’T DO THIS!  PLEASE STOP!!

Continue reading

Corruption as Culture and Health Care Fraud in Brooklyn

The astonishing prevalence of health care fraud in the Russian-speaking communities of Brighton Beach and Coney Island in New York City presents an interesting case study on the causes of corruption. The Brighton Beach-Coney Island area is populated by people who immigrated from one of the most corrupt countries in the world to one of the least. You can take the person out of the corrupt system, but does this remove the propensity to engage in corrupt acts from the person?

In the wake of a recent spate of health care fraud scandals in Russian-speaking New York City communities (as well as a scheme to defraud Medicaid perpetuated by dozens of Russian diplomats), the facts and some commentators suggest no. Brighton Beach has the second highest rate of Medicaid and Medicare-related malfeasance in the United States. In February 2012, federal authorities uncovered the largest no-fault insurance fraud scheme in United States history, which was operated out of Brighton Beach-based clinics. A law-enforcement official drew a direct link between “the Russian mind-set” that “if you’re not scamming the government…you’re looked upon as a patsy” and this widespread fraud. Professor Mark Galeotti expanded on this point, suggesting that “from cradle to grave” Russians have been inculcated to “bureaucratic systems that are parasitic and hostile, almost designed to make you pay bribes.”

I think “old habits die hard” as an explanation is too simplistic and uncomfortably resembles notions (discussed elsewhere on this blog) that corruption is an inherent cultural touchstone in certain societies. Furthermore, emerging evidence shows that Russians within Russia are developing a moral aversion to bribery.

An alternative explanation for the puzzle of the Brighton Beach health care fraud phenomenon is below. Under this model, culture is not the only, and perhaps not the first, link in the chain of causation. Continue reading

Guest Post: The Impact of Foreign Anti-Bribery Laws on the Demand-Side Countries

Francesco De Simone, an Advisor at the U4 Anti-Corruption Resource Centre, contributes the following guest post:

What are the consequences of “supply side” foreign bribery laws, like the US Foreign Corrupt Practices Act (FCPA) and UK Bribery Act (UKBA), on the developing countries that are often the bribe receivers in foreign bribery cases (the “demand side”)? When can OECD country (say, the United States) prosecutes a company for paying a bribe in a developing country (say Nigeria), what are the implications for Nigeria – for its institutions and for its overall corruption environment and anti-corruption framework? How does the investigation or prosecution affect Nigeria’s ability to investigate prosecute the same case? What are the consequences if the U.S. case is settled? How can Nigeria obtain restitution of the proceeds of the bribe? And should it?

Although foreign anti-bribery laws like the FCPA have attracted a great deal of analysis and discussion (including on this blog: see here, hereherehere, and here), there is much less material on those sorts of questions. (An exception is the work by Professor Kevin Davis, see here and here, also discussed on this blog.) In a new U4 paper I co-wrote with Bruce Zagaris, we attempt to provide a more in-depth analysis of how supply-side enforcement of foreign anti-bribery laws by OECD countries affects parallel investigation and enforcement action in the demand-side country whose officials allegedly took the bribes. Unfortunately, reliable information on how many supply-side enforcement actions result in parallel investigations by the demand-side host countries is not currently available (so far as we know), but we were able to extract a great deal of useful information from FCPA and UKBA cases, as well as other recent studies like the Stolen Asset Recovery Initiative (StAR) Left Out of the Bargain report.

The main takeaways from our study can be summarized as follows: Continue reading

Who Cares How Madison and Hamilton Defined “Corruption”?

We’ve had a few posts in recent weeks on Fordham Law Professor Zephyr Teachout’s ultimately unsuccessful, but surprisingly effective, campaign for the New York governorship (see here and here). Teachout’s campaign has had the side effect of increasing the attention to her scholarly work, most notably her recent book Corruption in America.  Rick has already posted a more general discussion of Teachout’s major thesis regarding the allegedly corrupting effects of money on American democracy (and a follow-up yesterday). I want to touch on a somewhat narrower point, but one that has attracted a great deal of attention: Teachout’s claim that the people who framed and ratified the U.S. Constitution had a much broader understanding of the meaning of “corruption” than is reflected in contemporary U.S. Supreme Court decisions on campaign finance. (I should acknowledge up front that I have not yet had the opportunity to read Teachout’s book, though I have read her earlier article making substantially the same point, as well as an excerpt from the book posted online.)

The basic argument, which Teachout persuasively documents, is that for the founding generation — including leading members like James Madison, Benjamin Franklin, Alexander Hamilton, George Mason, and others — the term “corruption” had a much broader meaning than the exchange of money or other material benefits for official acts; the term instead included an institution’s “improper dependence” on some outside party. My colleague Larry Lessig made this argument the basis of an amicus brief he submitted to the Supreme Court in the McCutcheon case. In his post discussing the brief, Lessig asserts that the evidence of how the term corruption was used in the Founding generation “suggest that only a non-originalist could support the idea that ‘corruption’ refers to ‘quid pro quo’ corruption alone.”

I’m not sure I can improve on Jill Lapore‘s assessment of Teachout and Lessig’s evidence about the historical usage of corruption: “This isn’t uninteresting, but it’s not especially helpful, either.” I agree wholeheartedly. At the risk of belaboring the issue (about which I’ve written before, in the context of the McCutcheon case), let me say a bit more about why I think the evidence that Madison, Hamilton, and other members of the Founding generation used “corruption” in a broader sense is (mostly) irrelevant to contemporary discussions of campaign finance and other issues. Continue reading

Is Corruption Destroying American Democracy? Zephyr Teachout’s Corruption in America – The Discussion Continues

Last week I critiqued Fordham University Law Professor Zephyr Teachout’s new book, Corruption in American: From Benjamin Franklin to Citizens United.  Professor Teachout claims that campaign contributions and lobbying by private interests threatens American democracy and drastic reform is urgently needed.  I complained that she was ignoring the current scholarship on the effect of money on American democracy and that it tells a much different story than the one she recounts. Two commentators, Harvard Law Professor John Coates and Dutch Professor Maurits Breul, replied to my critique.  I thank both for prompting me to think harder about Professor Teachout’s book and its arguments.

Having done so, I am even more convinced that the book’s most glaring weakness is its failure to acknowledge, let alone engage with, the current learning on the effects of campaign spending and lobbying and that this omission is fatal to her call for reform. Continue reading

The Role of Academics in Anticorruption: Some Tensions

As I mentioned in a couple of previous posts (here and here), I was fortunate enough to attend a conference last month, hosted by the UN Office of Drugs and Crime, for academics who write and teach on anticorruption and related subjects. Virna di Palma of TRACE International, who also attended the conference, has posted a very nice overview and discussion of some of the conference themes on the B20 Collective Action Hub’s blog. Ms. di Palma accurately summarizes three main roles that academics can and do play in this field:

  1. Research: “[A]cademic research into the nature of corruption and measures to reduce it is needed … Academics [also] need to challenge existing information on anti-corruption and to filter out low-quality research.”
  2. Activism/advocacy: Professors can serve as “activists and play a firsthand role in shaping public opinion and policy issues.”
  3. Teaching: “Academics educate future policy makers and business executives, directly shaping social, economic and political structures and values…. Academics can influence behavior, promote international standards and norms, counter rationalizations before they become ingrained and mold future leaders.”

I agree with all of this (and I get a warm, fuzzy feeling when someone who is not a professor says something nice about my tribe). But I want to highlight a potential tension between goals 1 and 2 (research and activism/advocacy), and point out how that same tension may play out in the context of goal 3 (teaching). Continue reading

Guest Post: Countering Corruption in Nigeria with Results-Based Financing

Lauren Abel and Andrew Blackman, recent graduates of the Harvard Kennedy School’s Masters Program in International Development, contribute the following guest post:

The Ebola virus spreading through West Africa has reached Nigeria. While the number of Ebola cases in Nigeria is small, the highly contagious disease can spread quickly, especially in a country with chronically low-quality health services. One might think that the biggest economy in Africa should have the resources and infrastructure to battle the health threat, but despite billions of dollars in annual oil revenues, Nigeria’s poor health services are putting the country at risk of spreading the epidemic. Unfortunately, the problems with public service delivery in Nigeria do not stop with health. Authorities have recognized that Nigeria is unlikely to achieve any of the Millennium Development Goals (MDGs) by 2015 (see the Government’s full review here).

Why the dearth of public services in a booming economy? Corruption. Above all else, pervasive and endemic corruption remains the Achilles Heel of the Nigerian economy. As the Finance Minister recently noted, “Corruption is a serious issue for us because it is destroying our country, eating deep into the fabrics of the economy, we can’t have infrastructure and development with these level of corruption.” In an environment of such endemic corruption, what can be done to help translate huge natural resource revenues into tangible improvements in the lives of the 110 million Nigerians living on less than US$1.25 a day?

In a recent study conducted with the Centre for the Studies of the Economies of Africa – an Abuja-based economic think-tank – we put forward an approach designed to improve the provision of public goods and services that we believe could work within the current Nigerian system. That approach is known as Results-Based Financing (RBF). (For an example of the RBF approach, see this World Bank initiative; the approach is conceptually similar to other ideas such as Pay for Performance, Cash on Delivery Aid and Output-Based Aid.) Continue reading