Monthly Archives: September 2015

Sustainable Development Goal 16: Am I the Only One Who Thinks It Is a Major Setback in the Fight Against Corruption?

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Last week Matthew asked if he were the only one who wasn’t excited about Sustainable Development Goal 16.   At first glance it is hard to understand why he would ask such a question.  One of 17 goals approved September 25 by the United Nations General Assembly to end poverty by 2030, SDG 16 establishes an ambitious agenda for improving the way the nations of the world govern their citizens by, among other measures, requiring concerted global action to “substantially reduce corruption and bribery in all their forms.”  How could anyone, particularly one who works on corruption issues, not be ecstatic that the 193 member-states of the United Nations unanimously endorsed this objective? And indeed numerous anticorruption advocates have already celebrated its approval (click here for Transparency International’s enthusiastic endorsement).

Although the opening of Matthew’s post was low-key (am I the only one not excited?), readers quickly learned that he was in fact severely critical of SDG 16’s corruption and bribery target because of the way progress towards realizing it is to be measured: by changes in a nation’s score on Transparency International’s Corruption Perceptions Index.  Matthew nicely summarized why this is insane on technical grounds.  Here I explain why using the CPI to measure progress is not only insane but represents a major setback in the fight against corruption. Continue reading →

Should FCPA Enforcers Focus on Bribe-Paying Employees or Their Corporate Employers?

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These days most (though not all) resolutions in Foreign Corrupt Practices Act cases involve corporate defendants paying fines or other penalties to the government. Usually (again, not always) the government does not bother prosecuting the employees who paid the bribes. (While the government has recently made individual liability in corporate criminal cases more of a point of emphasis — as exemplified by the DOJ’s Yates Memo, which Danielle discussed in yesterday’s post — the targets in those cases are typically senior executives who orchestrated bribe-paying schemes, not the lower-level executives or employees who actually paid the bribes.) The government also uses various legal tools to encourage lower-level employees blow the whistle on their employers.

Do we have this backwards? Right now, the government focuses its enforcement efforts on the corporate employers, rather than the lower-level employees who pay the bribes. Should the government instead emphasize enforcement actions against the employees? Right now, the government tries to give employees incentives to uncover and disclose evidence of FCPA violations committed by their employers. Should the government instead focus on encouraging the employers to uncover and disclose FCPA violations committed by their employees?

This past summer, I was fortunate enough to attend the Third Annual Conference on Evidence-Based Anti-Corruption Policies in Bangkok, and the keynote speaker at that event, New York University Law Professor Jennifer Arlen, made a case along those lines. (Professor Arlen’s address was actually a much more wide-ranging discussion of corporate criminal liability; I’ve extracted, and possibly oversimplified or distorted, one thread of her argument. But it’s an interesting enough argument that I think it’s worth engaging, and I’ll focus on the simple version, even though her position is more nuanced.) The argument goes something like this: The DOJ should adopt a policy that any corporation that discovers FCPA violations by its employees, and then promptly (a) discloses the violation to the government, (b) provides the government with information, and (c) assists the government in prosecuting the employee, should be exempt from corporate criminal liability for the violation; the DOJ should instead vigorously prosecute the individual employees in this situation (using the evidence that the corporate employer has itself provided). If the corporation fails to promptly disclose such a violation, however, and the government subsequently finds out about it, the corporation should be held criminally liable for the FCPA violation, and penalized accordingly.

I think this proposal is interesting enough to take seriously, though in the end I remain unconvinced that this shift in emphasis would be a good idea. Let me first lay out the argument in favor of this change, and then explain why I ultimately disagree. Continue reading →

No Longer a Cost of Doing Business: The Yates Memo Signals DOJ Is Serious About Going After Individuals

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As many observers have noted, penalties for Foreign Corrupt Practices Act (FCPA) violations tend to fall on corporations, rather than individual wrongdoers. The individual employees responsible for the unlawful conduct rarely pay fines or go to prison. The FCPA is not unique in this regard; many U.S. Department of Justice (DOJ) settlements with corporate defendants shield executives and employees from personal liability so long as the corporation accepts institutional responsibility. Yet this enforcement posture has been unsatisfying, and critics argue that many corporations simply treat the fines as an accepted cost of doing business. In response to this concern, and after much foreshadowing, the DOJ formally released a new policy on individual liability last week—a policy that applies to all corporate prosecutions and settlements, including those involving the FCPA. Known as the “Yates Memo” (it was announced by Deputy Attorney General Sally Quillian Yates in her remarks at NYU School of Law on September 9th), this new policy statement—the first major policy announcement from the DOJ under Attorney General Loretta Lynch—signals that the “cost of doing business” model of corporate compliance is coming to a definitive end.

Continue reading →

Long Walks to Where? The Limits of Popular Protest as an Anticorruption Tool in South Africa

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Anticorruption popular protests seem to be having a moment.  From Brazil to Guatemala to Malaysia, citizens have taken to the streets in response to allegations of bribery and graft. Now, a group of South Africans is hoping to add their home to the list of countries where direct action has taken hold.  A loosely knit coalition of groups calling itself Unite Against Corruption has scheduled marches in Cape Town and Pretoria next week, on September 30.

The group has good reason to believe that South Africa is ready for this kind of popular movement, given the country’s many recent corruption scandals: despite the Public Protector’s best efforts and significant initial public outcry, the “security upgrades” at President Zuma’s home in Nkandla have been brushed off (though the Constitutional Court has agreed to take up the issue); a 1990s arms deal continues to have spillover effects; the Public Protector recently released a report highlighting widespread corruption and improper conduct at the nation’s rail agency.  The list could go on and on.

Nevertheless, even if high-profile events like these may have primed the general South African public to be open to a popular anticorruption movement, there are reasons to be doubtful that these marches will have meaningful long-term effects. The obstacles that Unite Against Corruption and its marches are likely to face are not necessarily unique to South Africa, but worth noting in an attempt to analyze this particular situation:

Continue reading →

Guest Post: Pro-Transparency Organizations Fail To Practice What They Preach

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Till Bruckner, freelance journalist and Advocacy Manager for Transparify (an initiative that rates the financial transparency of think tanks and advocacy groups), contributes the following guest post in a private capacity:

“Transparency” is the watchword of the international anticorruption movement, a fact perhaps best illustrated by Transparency International’s choice of name. And partly due to the efforts of TI and many other groups, the world has changed for the better: transparency has become the new norm. Yet many of the anticorruption groups themselves need to wake up to this reality, and become more transparent themselves. Indeed, those of us in the anticorruption community would do a lot better if we started to walk our transparency talk.

This fact was driven home to me in a recent exchange I had with Professor Peter Eigen, the living legend who helped found Transparency International, about his newest venture, the Fisheries Transparency Initiative (FiTI). FiTI aims to curb corruption in international fisheries, and if it works as planned, it could have a positive impact on many issues, including overfishing, food security, and public revenue in developing countries. Somewhat unconventionally, FiTI is financed by the government of Mauritania, whose controversial president, Mohamed Ould Abdel Aziz, first announced the initiative. (see my recent article in Foreign Policy for more background.) I asked Professor Eigen about Mauritania’s financial support for the FiTI; he explained that Mauritania was only sponsoring the initial conceptual phase of FiTI, and he persuasively argued that its government would have no undue influence, let alone control, over outcomes. I then asked Professor Eigen how much Mauritania was paying his organization (the Humboldt-Viadrina Governance Platform) in connection with its work on the FiTI project, but he told me he didn’t want to disclose the figure. He explained:

“This is a normal consulting arrangement of our not-for-profit organization with the [Mauritanian] government. We do not feel it would be proper for us to disclose details of contracts. If media or taxpayers want to find out how [the] Government spends its budget, they can ask the Government. This is for FiTI an unimportant side issue.”

Professor Eigen added two more points. First, his organization would at some later point account for the money on its website. Second, he himself would be working “pro bono.”

Summary: There’s no influence peddling; the use of taxpayer funds is a domestic issue; all money will be accounted for; and nobody is lining their pockets. So, everything is okay, right?

No, it’s not okay at all. Here’s why: Continue reading →

Will the Canadian Courts Wreck International Law Enforcement Cooperation on Corruption Cases?

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The answer to the question posed in the title depends upon how the Canadian Supreme Court rules in World Bank Group v. Kevin Wallace.  If the court rules that, despite laws providing it is not subject to the orders of domestic courts, the World Bank must obey a directive of the Ontario Superior Court, cooperation between the Bank and national law enforcement agencies is likely to end – or be severely weakened at the least.  The pleadings filed in the case, and just made available on the Supreme Court’s web site, describe how the court is poised to weaken transnational efforts to curb corruption. In summary . . . Continue reading →

Am I the Only One Who’s Not So Excited About SDG 16?

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This Friday, over 190 world leaders are scheduled to gather at the UN headquarters in New York City for the UN Sustainable Development Summit to endorse a new set of “Sustainable Development Goals” (SDGs) to be achieved over the next 15 years. The SDGs are a follow-up to the Millennium Development Goals (MDGs), but the SDGs are much more expansive and cover a wider range of topics. Most relevant to the anticorruption community is Goal 16 (“Promote Peaceful and Inclusive Societies for Sustainable Development, Provide Access to Justice for All and Build Effective, Accountable and Inclusive Institutions at all Levels”), and in particular SDG “Target” 16.5 (“substantially reduce corruption and bribery in all their forms”).

There seems to be a lot of excitement among anticorruption activists and reformers about Goal 16 and Target 16.5 (see here, here, and here)—but to be honest, I’m not sure why. Indeed, I tend to think that the formal endorsement of anticorruption as part of the SDGs will do little good, and the inclusion of Target 16.5 might, if anything, be counterproductive. Continue reading →

Anticorruption Bibliography–September 2015 Update

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An updated version of my anticorruption bibliography (now with over 4,000 sources!) 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.

Ridding the Courts of Corrupt Judges: Ghana Takes the First Step

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Last week Ghanaians awoke to depressing news.  A team of investigative reporters revealed they had 500 plus hours of video tapes showing High Court judges and lower court magistrates accepting payoffs to acquit defendants in cases ranging from robbery and murder to bribery itself.  (Click here, here, and here for news accounts.) For Ghana, this is bad news, very bad news: dangerous criminals remain at large; some innocent individuals may have been jailed because they didn’t pay off a judge; and whatever confidence citizens may have had in the courts has been shattered.

But the initial reports contain some very good news as well.  The government is taking forceful and responsible action to cleanse a critical state institution of corruption. In accordance with article 146 of the Ghanaian Constitution, Chief Justice Georgina Theodora Wood has established a committee to examine the allegations against each judge and advise Ghanaian President Mahama whether he should remove any of them from office per the constitutional test of “stated misbehavior.”  At the same time, the Attorney General has announced his intention to prosecute judges, magistrates, and their accomplices for bribery and related crimes.

The scandal is similar in many ways to the one that engulfed Chicago’s courts in the 1980s, recounted in a Foreign Policy article flagged here last week.  As in Ghana, the Chicago cases arose from secret tape recordings showing judges fixing cases for money.  Like the Chicago judges caught on tape, some of those implicated in the Ghanaian scandal claim the taping violated the sanctity of the judicial chambers and evidence from them should therefore not be heard in any legal proceeding.  And, as in Chicago, many in Ghana are urging that those who bribed their way out of a criminal case be re-tried before an honest judge.

As the Ghanaian scandal unfolds difference between it and the one in Chicago will emerge, but some issues will be the same, and it may help Ghanaian authorities and citizens to know about Chicago’s experience. Probably most useful is the reasoning American courts relied upon to overcome the defense of double jeopardy when prosecutors sought to retry those defendant who had paid a judge to acquit them. Continue reading →

UN Guide for National Anticorruption Strategies

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The United Nations Office of Drugs and Crime recently published National Anti-Corruption Strategies: A Practical Guide for Development and Implementation, designed to assist countries considering the drafting (or revision) of a “National Anticorruption Strategy” document as part of an effort to comply with their obligations under the UN Convention Against Corruption (UNCAC). (Although the Guide will be formally presented/unveiled at the upcoming UNCAC Conference of States Parties meeting in St. Petersburg, the online version is already available.)

Full disclosure: Both Rick and I were heavily involved in the drafting of this Guide (indeed, at the early stages of the process Rick used this blog to solicit — quite successfully — input on the project). For that reason, I’ll refrain from praising (or criticizing) this Guide. I will merely note that it exists, and that it may be of interest to some of our readers, particularly those who are currently either considering or actively working on the development of this sort of national anticorruption strategy document. I’ll also invite readers to share their criticisms of the Guide, in the hopes that frank, unsparing criticism will be helpful both to those working on these issues at the front lines, and to those of us who work on preparing guidance documents like this in the future.