Monthly Archives: February 2016

You Can’t Go Home Again: A Surprising Concession from South Africa’s President

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“Nkandlagate” has been the gift that keeps on giving for South Africa’s satirists and social media quipsters. It started with the scandal itself: Jacob Zuma, the country’s president, spent at least 256 million rand (what was then more than US$30 million) in public funds to install a swimming pool, amphitheater, chicken run, and cattle corral at his private home, called Nkandla. When the expenditures were revealed, he claimed they were “security upgrades.” After all, the most natural way to ensure you have enough water on hand to put out a fire is to install a swimming pool, right? Political cartoonists and puppet-starring TV shows alike have weighed in on Zuma’s recalcitrance in the face of Public Protector Thuli Madonsela’s report demanding that Zuma pay back some of the misused funds.

The jokes are understandable: after years of living with the consequences of an infamous arms deal–the “original sin” that “infected [the country’s] politics” with corruption when the lack of consequences for its high-level participants fostered a sense of impunity–many South Africans have turned to dark comedy as a form of release.

The need for that type of gallows humor may have dipped slightly earlier this month.  President Zuma, after refusing for years to admit he’d done anything wrong and publicly mocking the outcry about Nkandla, finally conceded to the country’s highest court that he should have obeyed the findings of Madonsela’s report. Rather than insisting that President Zuma did nothing illegal, his defense team is now arguing that the president made a mere “mistake of law.”  What explains this stunning reversal? And what will the implications be?

Continue reading →

Judge Sullivan Calls Out the DOJ: What Corporate Settlements Reflect About The Broader Criminal Justice System

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After the DOJ released the Yates Memo last September, I suggested that the DOJ was probably very serious about focusing attention on prosecuting individuals involved in corporate misconduct (including FCPA violations). This would constitute a significant shift away from the DOJ’s recent practice of resolving most allegations of corporate wrongdoing through deferred or non-prosecution agreements (known as DPAs and NPAs). Some proponents of DPAs and NPAs claim that such settlements—which allow companies to avoid formal legal charges if they cooperate with a DOJ investigation, disclose desired information, improve compliance measures, and perhaps pay a fine—are actually a “a more powerful tool” than convictions in changing corporate behavior. But many critics—such as Judge Rakoff—have argued that settlements usually obscure who is actually responsible for the misconduct, and “ever more expensive” compliance programs may do little to prevent future misconduct. As Judge Rakoff suggested:

“[T]he impact of sending a few guilty executives to prison for orchestrating corporate crimes might have a far greater effect than any compliance program in discouraging misconduct, at far less expense and without the unwanted collateral consequences of punishing innocent employees and shareholders.”

Federal judges, including Judge Rakoff, are responsible for approving the DOJ’s settlements with corporations. The scope of their review is quite limited, and they are required to defer to the prosecution decisions of the DOJ. But even before the Yates Memo, judges had begun reviewing settlements more carefully when individuals were not charged. At least one federal judge is still dissatisfied with the DOJ’s enforcement strategy, and recently took the opportunity—in a corruption case—to urge the DOJ to adhere to the Yates Memo and deal directly with individual wrongdoers. Moreover, he suggested this could have broader significance for how we think about the rest of the criminal justice system.

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Guest Post: Is It Lawful Under UNCAC to Attach Conditions to Asset Returns?

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GAB is pleased to welcome back Robert Packer, from the University of Nanterre, who contributes the following guest post:

Article 57 of the United Nations Convention Against Corruption (UNCAC), which outlines provisions concerning the return of stolen assets, was the most contentious piece of the entire convention. A straightforward reading of Article 57 appears to require state parties to return assets “on the basis of a final judgement in the requesting State Party” (emphasis added). Often, however, a final judgement is not forthcoming. Article 57 addresses that contingency in its final paragraph, which provides for “agreements or mutually acceptable arrangements, on a case-by-case basis, for the final disposal of confiscated property.” That gives rise to another extremely contentious question, discussed previously on this blog (see here, here, and here): Is it legally permissible for states that confiscate the assets to attach conditions on their return? Continue reading →

Citizens Against Corruption: Report from the Front Line

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Pierre Landell Mills, a long-time and tireless advocate for putting governance at the center of development and a founder and board member of The Partnership for Transparency,  contributes the following guest post:

Everyone professes to hate corruption, but until recently few citizens believed they could stop it. Too often citizens accepted corruption, assuming it was a permanent societal disability to be borne with resignation. But people are increasingly intolerant of being squeezed for bribes and are ever more incensed at predatory officials growing fat on extortion and crooked deals. They want to do something about it.

And they are.  From the Philippines to Azerbaijan to Latvia to India to Mongolia and everywhere in between groups of courageous and dedicated citizens are taking direct action to root out corruption. Citizens Against Corruption: Report from the Front Line recounts the heroic struggle of local civil society organizations in more than 50 countries across four continents supported by The Partnership for Transparency Fund.  Among the examples the book details —   Continue reading →

Is the Kleptocracy Initiative Worth It?: A Tentative Yes

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The New York Times ran a very nice piece last week (with a GAB mention!) about the U.S. Department of Justice’s Kleptocracy Asset Recovery Initiative, and its ongoing efforts to seize foreign assets held by corrupt foreign leaders (and their cronies) in the United States. We’ve already had a lot of blog commentary on some of the issues associated with the Kleptocracy Initiative (see here, here, here, here, and here). But I wanted to pause for a moment to consider a question raised in the NYT piece: Is the effort worthwhile, given its resource costs and the relatively modest successes to date? The answer is not obvious; as Rick (quoted in the article) put it: “In terms of really helping the global anticorruption struggle, I wonder if this is the highest use of resources.” (Rick further suggests that the DOJ’s resources would be better spent on assisting countries pursuing their own anticorruption and asset recovery cases.)

Rick is right to raise these questions about the Kleptocracy Initiative—but my instincts are different from his. Even if it is the case, as the NYT reports, that the DOJ has so far only been able to recover around 8% of the assets it has gone after under the Kleptocracy Initiative, this still strikes me as a good use of DOJ resources. Here’s why: Continue reading →

NGOs, Like Ceasar’s Wife, Should Be Above Suspicion: Why Indian Nonprofits Need To Take Transparency More Seriously

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Soon after India’s new government assumed power in May 2014 under the leadership of Prime Minister Narendra Modi, the Central Bureau of Investigation (CBI) sought permission for arrest and custodial interrogation of journalist and human rights activist Teesta Setalvad for alleged mismanagement of $576,000 by her organization. In October 2014, the Ministry of Home Affairs (MHA) issued show-cause notices to 10,343 non-profits for not furnishing annual returns, and subsequently cancelled FCRA registrations for around 9,000 of these non-profits, citing “non-response within the stipulated time period.” India’s Foreign Contribution Regulation Act (FCRA) regulates the inflow of foreign contributions to charitable organizations and is expanding its tentacles and grip under each successive government (see here and here). In April 2015, Ford Foundation, the philanthropic organization whose work in India dates back to 1952, was put on a national security watch list and removed from the prior-permission list in January 2016, constraining its funding capacity. Ford is being targeted primarily for channeling funds to Ms. Setalvad’s NGO that was apparently ineligible to receive funds under FCRA.

As many in the Indian media have pointed out, the government’s aggressive actions against non-profits seems selective—more like a political vendetta than a principled stand against misappropriation of funds. It’s hard to ignore the fact that Ms. Setalvad had sought the conviction of Narendra Modi for alleged human rights abuses during his tenure as the Chief Minister of Gujarat, or that the case against Ford is linked to its funding for her non-profit. Moreover, in the same month that MHA canceled the FCRA licenses of 9,000 non-profits, an access-to-information query revealed that 401 of the 545 Members of the Parliament’s Upper House had not declared their assets and liabilities – including the Minister of Home Affairs himself. And the government’s tenacious pursuit of non-profits contrasts awkwardly with the practical impunity of those accused of perpetrating India’s three biggest scams (the $27.8 billion coal scam of 2012, the $26.3 billion 2G spectrum scam of 2013, and multi-million Vyapam scam of 2015).

So, when nonprofits, activists, and their supporters accuse the government of applying a double standard, they have a point. Yet, even as we rightly protest the government’s politically motivated vendetta against civil society, it is equally important for India’s non-profits to take a good hard look in the mirror. India has witnessed an unprecedented civil society mobilization against corruption in 2011 and non-profits have spearheaded numerous successful anticorruption initiatives, such as social audits, citizen report cards, and crowdsourcing platforms like I-Paid-a-Bribe.com. Yet the members of India’s vibrant non-profit sector must be sure that they are applying to themselves the same high standards of transparency and accountability that they advocate in the public sphere. Too often, they fall short. Indeed, the accountability practices within India’s non-profits are alarmingly sketchy. Continue reading →

Fighting Corruption With Art: Successfully Raising Public Awareness

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Art is “one of the best societal mediators of difficult messages — it has always created a bridge between the comprehension and the expression of critical problems in society.” So declares the 10th International Anti-Corruption Conference’s website, which organized an art program against corruption. In keeping with that sentiment, last September the Anti-Corruption Organization of Thailand (ACT) organized a “museum of corruption,” a temporary exhibition at the Bangkok Art and Culture Centre intended to raise public awareness about the extent and costs of corruption. Thailand is not the first country to undertake such an initiative. Museums of corruption (actual museums, not just temporary exhibitions) already exist in Paraguay, Ukraine and the United States, and many other enterprises that use art as a tool for anticorruption education and action are flourishing worldwide. For instance, the Open Society Initiative for West Africa has recently launched a hip hop video against corruption in Liberia, while the Inter-American Development Bank organized a cartoon contest to promote awareness and understanding of the corruption phenomenon and its harm to development. More recently, Pakistani President Mamnoon Hussain called upon poets and intellectuals to write against corruption. Other major players in the anticorruption field that have organized artistic projects include Transparency International (see here and here) and the United Nations Development Program (UNDP). In additions to these institutionalized artistic anti-corruption projects, several countries have witnessed spontaneous public art displays – in the physical public domain, usually outside and accessible to all – to promote awareness and solidarity in fighting corruption (see for example in Afghanistan and South Africa).

Understandably, some are skeptical of these initiatives, arguing that museums and temporary exhibitions are not the right forum to communicate on corruption (this was one of the criticisms of the Thai museum of corruption). One might worry that expressing anticorruption messages through cartoons and popular music won’t lead people to take the message seriously enough. (This would also be true when the artistic initiative takes a more humorous approach, as is the case for many of the anticorruption cartoons, as well as New York’s corruption museum.) And of course, nobody thinks that art initiatives on their own are enough. Yet while artistic initiatives will not by themselves solve the issue of corruption, these initiatives are not just a fad or a gimmick or a distraction. Indeed, there’s quite a bit of research indicating that these programs can be quite effective in raising public awareness on corruption. Continue reading →

Anticorruption Bibliography–February 2016 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.

Legal Strategies for Anticorruption Litigation by Civil Society

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GAB is pleased to welcome this guest post by Ken Hurwitz, Senior Legal Officer, Anticorruption, the Open Society Justice Initiative, announcing the publication of a series of papers on civil society and anticorruption litigation sponsored by the Initiative:

Those of us working with civil society groups that seek to combat transnational grand corruption have what might be called a love-hate relationship with the law. Yes, sometimes we can push magistrates and prosecutors to hold perpetrators to account, provided the right conditions are met. But at the same time we too often see existing law and law enforcement mechanisms protecting those responsible for high-level corruption:  bribing business actors, self-dealing kleptocrats, and the financial, legal and business intermediaries who often profit from and facilitate the crime.

This post introduces a series of papers the Open Society Justice Initiative  commissioned to explore how civil society can see that the law holds the corrupt to account rather than protects them from any sanction. Continue reading →

Is Sunlight Really a Good Disinfectant? The Equivocal Evidence on Freedom of Information Laws and Corruption

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Government transparency is widely considered to be one of the most important means for combating public corruption, a sentiment nicely captured by U.S. Supreme Court Justice Louis Brandeis’s famous observation (in a somewhat different context) that “sunlight is said to be the best of disinfectants.” For this reason, many anticorruption activists lobby for the adoption of strong freedom of information (FOI) laws—laws that not only obligate the government to regularly publish certain types of information, but also to respond promptly to citizen requests for a wide range of government records and documents. The thinking is that government corruption is easier to detect when citizens, civil society organizations, and the media can scrutinize information about government operations.

I count myself firmly in the camp of those who tend to believe that FOI laws are useful anticorruption tools, especially given the strong evidence that citizen and media access to government information can indeed help reduce corruption and hold officials accountable (see, for example, here, here, and here). And because of this, I would expect the evidence to indicate that when a country (or sub-national jurisdiction) adopts a stronger FOI law, corruption should decrease afterwards. But I’ve been looking into the research on this recently, and most of the results don’t fit well with my expectations. Long story short, the (admittedly limited) quantitative empirical evidence does not find a strong correlation between the adoption of a strong FOI law and a subsequent decrease in corruption; if anything, the evidence actually seems to suggest that the adoption of a strong FOI law may be followed by an increase in (perceived or detected) corruption.

Does this mean that FOI laws are ineffective or even counterproductive? I don’t think so, for reasons I’ll lay out in a moment. But I do think it’s worthwhile—especially for those of us who are inclined to support broad FOI laws—to consider the evidence carefully and reflect a bit on what it might mean. Continue reading →