Monthly Archives: July 2015

Too Much of a Good Thing? Moderation and Anticorruption Strategies in Greece

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This past month’s headlines have been dominated by the Greek debt crisis and how it has been handled (or mishandled) by the EU and IMF. The Syriza party, which rose to prominence due in large part to its opposition to the austerity measures imposed upon Greece by its creditors, first rejected a deal offered by its European creditors to procure additional funds and then, following the resignation of its finance minister and a hotly contested vote in Parliament, accepted the imposition of additional restrictions, including “consumer tax increases and pensions cuts” in anticipation of another round of negotiations to receive a bailout “worth about 85 billion euros.” It is impossible to predict what the final terms of any deal reached during the course of these negotiations may be; once the dust has finally settled and Greece has either acquiesced to the demands of its European creditors in order to secure needed funds or undertaken the “Grexit” from the Euro that many commentators fear, its government will be forced to once more take stock of its economic position and determine the best path forward to meet both the obligations imposed upon it by its creditors and its people’s desire for a brighter economic future.

Given this ongoing macroeconomic and political crisis, measures to address corruption in Greece–both domestically and abroad–may seem like a secondary concern at best. Yet there are those (especially those sympathetic to Greece’s international creditors) who believe that Greece’s troubles are due at least in part to its failure to adequately address corruption, and that Greece could bolster its faltering economy if it reined in the rampant corruption that has perennially placed Greece amongst the most corrupt nations in the European Union. And while Syriza and its creditors may agree on very little, Syriza in fact also made anticorruption a major part of its campaign platform, though its attempts to implement more robust anticorruption measures are at best in their nascent stages and have been overshadowed by the recent contentious negotiations over a new bailout.

So while this may seem premature, perhaps we should consider how the Greek government ought to approach its anticorruption struggle in the coming years. And here, strategic prioritization is likely to be essential: If we presume (reasonably) that Greece is unlikely to be able to commit considerably greater resources to its anticorruption efforts in the near term, the Greek government will have to make some difficult choices regarding how best to allocate its finite resources when deciding if and how to target different forms of corruption.

One such choice will be how much to prioritize the fight against foreign bribery (that is, bribes paid by Greek citizens and firms in other countries). Last March, the OECD released a report chiding Greece for not having “given the same priority to fighting foreign bribery as it has to domestic corruption,” a decision that, according to the OECD, “sends an unfortunate message that foreign bribery is an acceptable means to…improve Greece’s economy during an economic crisis.” This may well be true. Yet to the extent that Greece is able to renew its focus upon combating corruption in the aftermath of its current bailout negotiations, Greece would be better off if it (temporarily) ignores the OECD’s advice and instead focuses primarily on domestic rather than foreign corruption. There are several reasons for this:

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Corruption Is a Systems Failure, But Not All Systems Failures Are Corruption

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As regular readers of this blog are probably aware, I try to avoid extended discussions about the definition of corruption (see here, here, and here). Of course it’s important to have a sense of what one is talking about, if only to avoid misunderstandings, but I tend to find extended definitional debates arid and unproductive. (As I’ve remarked before, when academics run out of ideas, they start arguing about definitions.) In my view, there isn’t a single “true” or “correct” definition of corruption—only definitions that are more or less useful, depending on the context. I’m generally perfectly happy with the fairly standard “abuse of entrusted power for private gain” definition. There’s some inherent vagueness (and perhaps some normative/legal judgment) built into concepts like “abuse” and “private gain,” but so what? There are lots of other open-textured concepts that researchers are able to study even though their boundaries are not completely sharp and clear (and where we must sometimes make do with arbitrary cut-off points).

Still, I do think one of the hazards of a term like “corruption” is the occasional tendency to define it so capaciously that it loses any specific meaning. There is an associated tendency to confuse or conflate the somewhat distinct meanings that “corruption” can have in different contexts (for example, legal versus non-legal contexts). So I think, despite my usual aversion to definitional squabbling, it’s occasionally useful to push back against the attempt to define corruption so broadly as to swallow up every way that an institution or organization can go wrong.

I came across an illustration of this in an opinion piece in last week’s Boston Globe (based on an associated post on the MIT Sloan Management Review blog) by George Mason Professor Gregory Unruh. Professor Unruh frames his piece using the recent arrests of various FIFA officials, but suggests that the focus on the personal moral failures of these individuals “muddles executives’ understanding of what corruption is and how it can be managed.” Rather than defining corruption in terms of the “dishonest abuse of power or moral depravity,” Professor Unruh advocates what he calls “the engineer’s definition”:

Any organized, interdependent system in which part of the system is not performing duties as originally intended to, or performing them in an improper way, to the detriment of the system’s original purpose.

This definition, Professor Unruh claims, makes “[i]dentifying corruption in … social systems [like businesses] straightforward.” I don’t think it does. Or if it does, it does so only by defining corruption so expansively as to make the concept essentially useless. Continue reading →

Rooting Corruption out of the Courts: The Use of Undercover Sting Operations

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No anticorruption policy can succeed if the courts themselves are corrupt.  If those tempted to offer or accept a bribe or otherwise rob the public can buy their way out of trouble, laws against corruption are meaningless.  Ensuring judges decide cases honestly is thus the keystone of any broader effort to control corruption.  The best defense against judicial corruption is, as a recent U4 paper stressed, a rigorous process for selecting judges, one which screens out those willing to sell their integrity for a price.

Character tests are not foolproof, however, and so even with the most thorough screening a few crooked apples can slip through.  When they do, rooting them out is especially difficult, for proving a judge has taken a bribe to fix a case is extremely difficult.  A judge may acquit the defendant for any number of reasons, and even if the reason given seems obviously wrong, that alone is not enough to establish corruption.   Moreover, bribery is a consensual crime.  Neither the judge taking a bribe, nor the defendant paying it, nor a go-between facilitating the transaction will have any reason to reveal the crime and every reason to keep it secret.

Purging the judiciary of corrupt judges will thus almost always require an undercover operation, one where law enforcement personnel or informants pretend to be dishonest to elicit incriminating statements or conduct from the investigation’s target.  Such “stings” are often controversial and are fraught with risks, those targeting judges even more so.  Yet given the great harm judicial corruption causes, the risks will often be worth taking.  When they are, designers of a sting may find it useful to review how U.S. authorities minimize the risks of undercover operations in the judiciary. Continue reading →

A Victory for the Government, Justice, and Common Sense, in the Bob McDonnell Appeal

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Over the past year, we had a few posts (from Jordan, Rick, and myself) about former Virginia Governor Bob McDonnell’s appeal of his federal bribery convictions. All of us took the position that McDonnell’s main argument on appeal—that his actions on behalf of a local businessman were not “official acts” (and that the loans and lavish gifts this businessman provided were merely for “ingratiation and access”)—was inconsistent both with the governing law and with the facts as presented in the trial record. (Lots of people, though, including two distinguished criminal law experts on my faculty, took the contrary position.) The issue is important not just for U.S. political and legal junkies, but also because the McDonnell appeal raises more general issues about how we think about the line between illegal corruption and legal (though perhaps sleazy) political wheeling & dealing.

As many readers are no doubt aware, the Court of Appeals for the Fourth Circuit decided the case earlier this month. And while courts don’t always get it right, this time they did: The three-judge panel unanimously rejected all of McDonnell’s arguments, and cogently explained why in this case the evidence was more than sufficient to support a corruption conviction. Indeed, while there are indeed hard questions about the appropriate line between legal and illegal forms of private influence on public officials, the McDonnell case was not even particularly close to that line.

A few quick observations about the Court of Appeal’ opinion: Continue reading →

EU Anticorruption Policy and Due Process: An Inconsistent Approach?

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Advocates have been pushing for a European Union version of the Magnitsky Act for a number of years now (see, for example, here and here). Such legislation for targeted sanctions (including visa restrictions and asset freezes) against alleged human rights abusers in Russia would be much more powerful in Europe than it is in the U.S. Yet, despite support from some member states, proposals in the European Parliament have met with opposition. Much of the concern is, doubtless, geopolitical. Dependent upon Russia for oil, the EU is likely loath to instigate retaliation from its imposing neighbor (as the Magnitsky Act has). Yet, as a previous post on this blog has argued, the EU also objects to the US approach on more principled grounds: namely, the Magnitsky Act runs afoul of due process and presumption of innocence principles in the EU Charter on Fundamental Rights and the European Convention on Human Rights. However, while the EU is busy debating what the right hand should do with respect to targeted sanctions, it may have ignored the left hand’s effect on due process in anticorruption enforcement, as in reflected other areas of EU efforts against graft.

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Announcement: ASIL Anti-Corruption Conference–Call for Papers

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GAB friend and occasional contributor Professor Andrew Spalding contributes the following announcement:

The American Society of International Law (ASIL) has established an Anti-Corruption Interest Group (ACLIG)  designed to create a forum for mutual engagement among practitioners and scholars. The group will be holding its inaugural conference/workshop on October 2-3, 2015, at the University of Pennsylvania.

The ACLIG co-chairs (Professor Spalding and Professor Philip Nichols) are soliciting papers for this event, from both academics and practitioners. Those who are interested in giving a paper at the meeting should submit a one-page proposal to Ms. Lauretta Tomasco at tomascol@wharton.upenn.edu by August 7, 2015 (two weeks from today!). If accepted, a proposer must supply a paper of at least five pages by September 25, 2015. Copies of all papers will be distributed to all participants before the workshop, so that all workshop participants will be able to read the material in advance and come to the workshop prepared to thoroughly discuss the ideas contained in each paper. (The precise format of the conference/workshop will depend on the number of submissions received.)

Submissions on any topic related to corruption are welcome. Possible topics might include but are not limited to:

  • the nature, manifestations and forms of corruption
  • effects of corruption on business, economies, governments, or society
  • domestic control of corruption
  • comparative analysis of domestic corruption laws
  • corporate liability for corruption
  • codes of conduct to control corruption
  • contracting/controlling third party risk
  • corruption within nongovernmental organizations
  • collective anticorruption programs
  • anticorruption certification standards
  • control of transnational corruption
  • national and international anticorruption regimes
  • coordination of anticorruption regimes
  • soft law controls on corruption
  • legal recourse for victims of corruption
  • an anticorruption organization

Those who are interested but have further questions should please contact Professor Spalding at aspaldin@richmond.edu.

Guest Post: The UK Should Fight Corruption Using “Unexplained Wealth Orders”

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Nick Maxwell, Head of Advocacy and Research at Transparency International-United Kingdom, contributes the following guest post:

UK Prime Minister David Cameron has made the fight against global corruption a high priority for his government, declaring that corruption is the cancer that is at the root of many of the world’s problems. But as much as we should applaud the UK’s efforts to support anticorruption measures and good governance abroad, it is equally important that the UK ensure that it is not a safe haven for the proceeds of corruption stolen throughout the world. Yet here the UK has fallen short: We have only seen limited asset restraint and recovery against the proceeds of corruption, especially against those currently associated to power. While estimates of total extent of the problem vary, it is generally agreed that large amounts of unexplained suspicious wealth enter the UK each year and are invested in the British financial system, in property, in luxury goods or in other areas of the economy. And despite the fact that UK law enforcement has the necessary expertise on this issue, the rate of asset recovery by UK agencies of the proceeds of grand corruption is undeniably very low compared to the scale of the problem.

Given the scale of the problem and the inadequacy of the government’s response to date, Transparency International’s UK chapter (TI-UK) established a taskforce of experts to review the legislation in place to deter grand corruption and recover stolen assets that have made their way into or through the UK. The results of the taskforce’s deliberations were published last month as a discussion paper entitled Empowering the UK to recover corrupt assets: New approaches to illicit enrichment and asset recovery; the paper sets out a new proposal for UK law enforcement: the use of an Unexplained Wealth Order (UWO), which would allow UK law enforcement to start proactively questioning suspicious unexplained wealth associated with foreign public officials, and to start civil recovery proceedings against the relevant assets.

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Borrowing Integrity in the United States: Federal Prosecution of State and Local Corruption

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In recent posts I described how developing nations bedeviled by endemic corruption have “borrowed” integrity by contracting out the inspection of imports, the management of public finances, and even the investigation of grand corruption cases to private firms or international agencies.  But it is not just poorer countries where corruption is so ingrained that government must turn to outsiders for help.  The leaders of Mississippi, New York, Louisiana, the City of Chicago, and other state, county, and municipal governments have done so as well.  History and politics have created conditions in these jurisdictions where local officials have been unable to effectively control bribery, nepotism, bid rigging, and other corruption crimes.  Either the police won’t investigate or the prosecutors won’t charge or the courts won’t convict.

Beginning in the nineteen seventies, governors, mayors, and other local officials have either sought, or acquiesced in, help from the federal government.  Agents of the Federal Bureau of Investigation examine allegations of corruption by state and local public servants; the United States Attorney for the region, a Presidential appointee, prosecutes the cases developed by the FBI, and the cases are tried in a federal district court presided over by a judge named by a President.  Although the U.S. Attorney and the judge may have ties to the area where the case has arisen, neither they nor the FBI agents, nor the assistant prosecutors that actually handle the cases, are beholden to local interests.  Not only are they free to pursue cases whatever the local political implications, they often win kudos from their superiors in Washington for nailing a corrupt local official.

Federalizing the investigation and prosecution of state and local corruption has not been without its critics, however, though the criticism has died away for a quintessential American reason. Continue reading →

Anticorruption Bibliography–July 2015 Update

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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.