Monthly Archives: July 2016

Building Booms and Bribes: The Corruption Risks of Urban Development

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Windfall gains often create opportunities for corruption. The big inflow of money increases the opportunities and incentives for kickbacks and bribery as a means to capture new funds. Well-known examples of this phenomenon include disaster relief efforts, resource booms, and humanitarian aid. Yet the concern is not limited to those contexts. Changes in the price and value of land in a given area can also create the opportunity for windfall, and associated corruption risks.

The corruption risks in the land sector and real estate industry have been discussed broadly as pervasive; routine land administration and land grabbing provide ample opportunities for corruption to flourish where land governance is weak. Yet these discussions sometimes overlook another sort of corruptogenic windfall in land markets, one that is often hiding in plain sight: the effects of gentrification of urban centers. Experiences from cities around the world exemplify three common ways in which these windfall gains from gentrification provide opportunity for corruption. Continue reading →

Guest Post: How Tendering Practices By Anticorruption Research Funders Undermine Research Quality and Credibility

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Cheyanne Scharbatke-Church and Diana Chigas, of the Fletcher School of Law & Diplomacy at Tufts University, contribute the following guest post:

Early last week, the Transparency International (TI) Secretariat in Berlin circulated an Invitation to Tender with a title that grabbed our attention. Framed as part of a commitment to “the highest standards of accountability, organizational effectiveness and learning,” this tender described a “Research Review and Evaluation of Anti-Corruption Work Assumptions: Grievance as a key determinant of people’s anti-corruption behavior.” The email that accompanied the tender suggested an exciting and needed inquiry into assumptions that drive anticorruption programs funded by the international community—on a topic that is closely related to some of our research team’s work on corruption in fragile states  (see here and here). That TI was interested in funding a project of this sort was encouraging: Testing core assumptions, after all, is central to learning and should be a fundamental element of effective programming. We were also heartened by the fact that TI sought comparative analysis, and would give preference to counterfactual analysis over experimental designs—suggesting an interest in the type of qualitative inquiry that is necessary to penetrate the dynamics of corruption as a complex system.

Our initial enthusiasm turned to dismay, however, by the time we finished reading the Tender. The reason may seem prosaic, even banal: The time-frame for submitting proposals and for the work itself. To our knowledge the Tender was circulated the first week of July, applications are due August 5th, work is to start August 29th and be finished by October 31—with a budget for 30-35 working days. At first, that may not seem like such a big deal—and we recognize that it might seem like we are merely griping about our team’s inability to meet the application and project deadlines for this tender. But this is not about any one tender or any one research team. Rather, the practices embodied in—but by no means limited to—this particular tender are in fact representative of larger problems in the world of anticorruption and development evaluation research, one that we suspect may be familiar to other researchers. In particular, two problems in particular stand out. Continue reading →

Fighting Environmental Corruption in the Mekong River Basin: More Firepower Needed

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The forests, wildlife, plants, and vegetation of the Mekong River Basin are under sustained assault.  Not from some virulent new fungus or mutant virus.  No, the attacker is a man-made pathogen: the inability of the region’s governments to curb the rampant corruption eating away at the legal structure that protects the basin’s ecosystem.  Officials of basin governments are being paid to condone logging in conservation zones, to issue export permits for protected flora and fauna, and to otherwise flaunt laws meant to prevent an environmental catastrophe.  No other ecosystem is under such deadly assault, and unless the trend is arrested, the World Wildlife Fund predicts that within 20 years the region, twice the size of California and rivaled only by the Amazon for biological diversity, could lose more than a third of its remaining forests along with the exotic plants and wildlife that inhabit them.

The six governments of the region – Cambodia, China, Lao PDR, Myanmar, Thailand, and Vietnam – have declared war on environmental corruption and have begun counterattacking.  Environmental protection laws are being tweaked, and investigators and prosecutors trained to detect and prosecute environmental crime.  But important though these steps are, in the face of impending ecological disaster more firepower is needed.  Here are four ways to step up the fight: Continue reading →

Brexit and Anticorruption

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So… Brexit. I don’t know nearly enough to weigh in on what this startling development means for European politics, British politics, macroeconomics, Donald Trump’s chances in the U.S. presidential election, or the price of tea in China. But since Brexit is such a major development, I felt like I should say something about the implications for anticorruption, even though that probably wouldn’t be on most people’s top-ten lists of important Brexit implications.

Fortunately, in coming up with something to say about Brexit and anticorruption, I don’t have to work too hard, because two excellent recent posts—one from Robert Barrington at Transparency International UK, another from Corruption Watch—have very nice, clear discussions of the issue. I don’t really have much to add, but let me highlight three of the key worries raised in both posts, and then throw in one more, somewhat more speculative and longer-term question: Continue reading →

New Case Studies on Specialized Anticorruption Courts in Indonesia, the Philippines, Slovakia, and Uganda

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As is well-known, many countries around the world–especially developing and transition countries–have established specialized anticorruption institutions with prosecutorial and/or investigative functions. These agencies have attracted a great deal of attention and analysis (including on the blog–see, for example, here, here, here, and here). Many countries have gone further, and established specialized courts (or special divisions of existing courts) to focus exclusively or substantially on corruption cases. These specialized anticorruption courts have gotten relatively less attention, but as proposals for such courts have become increasingly prominent in many countries, there is a growing need for close analysis of these institutions.

To meet this need, the U4 Anticorruption Resource Centre has a new project, under the direction of Senior Advisor Sofie Arjon Schutte, on specialized anticorruption courts (a project in which I have been fortunate enough to participate). The first set of publications to result from this project are a series of short case studies on four of the existing special courts, in a diverse set of countries: Indonesia, the Philippines, Slovakia and Uganda. Readers who are interested in this topic might want to click on the links. Also, in addition to these four country briefs, there’s a longer U4 paper in the pipeline (coauthored by Sofie and myself) that discusses and compares a larger set of special courts around the world. I’ll do a post announcing that as well, as soon as it’s ready. And if anyone out there has information and insights about any special courts in other countries, please feel free to send it!

Coming Along for the Ride: Regional Human Rights Courts Should Demand Government Measures to Affirmatively Address Corruption

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In an earlier post, I discussed an order by the Inter-American Court of Human Rights demanding that Brazil investigate and report on prison guards’ corruption. Mandating that a country review its own corruption seems to be a new step for an international judicial body. The approach suggests a way to more closely integrate corruption-related concerns into international human rights work: including corruption-specific mandates within broader holdings. Other international adjudicative bodies, particularly regional human rights courts, should follow this model.

The idea of directly adjudicating corruption through an international court has been floated but also strongly opposed. Some corruption commentators advocate making grand corruption a crime against humanity that could be prosecuted by the International Criminal Court (ICC). As discussed on this blog, Judge Mark Wolf has proposed an independent international anticorruption court, an idea that met with some tempered support and a good deal of opposition (see here, here, and Matthew’s concerns here). I agree that grand corruption does not belong in the ICC or an independent court. To reject grand corruption as a stand-alone offense to be prosecuted in international criminal tribunals is not, however, to reject that corruption should be addressed by international criminal tribunals where it is relevant. Existing bodies like regional human rights courts—the European Court of Human Rights (ECtHR), the Inter-American Court of Human Rights (IACtHR), and the much newer African Court on Human and Peoples’ Rights, as well as other, even younger human rights bodies in Southeast Asia and the Middle East—should explicitly address corruption-related issues within the context of the large volume of human rights adjudication already taking place. As other commentators have already discussed, these regional human rights courts can fold corruption into their respective mandates and generate meaningful corruption-related law (see here, here, and here). Indeed, regional human rights bodies are already well-placed to highlight corruption where it emerges and to respond appropriately to both the existing situation and future concerns:

Continue reading →

Compensating Corruption Victims: American Law on Bribery Damages

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Parties to the UN Convention Against Corruption pledge in article 53 to “pay compensation or damages to another State Party that has been harmed” by an act of corruption, but nowhere does the convention say who it is that is harmed by corruption or how compensation is to be calculated.  In a submission to the 2015 meeting of convention parties, the UNCAC Coalition, an global network of civil society organizations, argued that the absence of guidance is “one of the main obstacles to the award of damages to victim countries” and urged the publication of “best practice examples with respect to the identification, quantification and reparation of the damage caused by corruption” as step in developing the needed guidance.

This writer recently summarized how American courts deal with compensation issues when the corrupt act is the payment of a bribe.  Written for the Open Society Foundations’ Justice Initiative, the paper explains that under both federal and state law individuals, businesses, and even foreign governments can recover damages for injuries sustained as a result of bribery and that with passage of the Foreign Corrupt Practices Act the number of cases has exploded.  Not all claimants have been successful of course.  In some actions their damages were too remote (not proximately caused in legal language); in others claimants failed to show how the bribery injured them, and in some cases foreign governments were denied recovery because their officials were so deeply involved in the bribery scheme that the government did not qualify as a victim under U.S. law.  But other claimants have enjoyed significant success — realizing in some instances awards in the tens of millions of dollars.

Whether American law is a “best practice example” of the kind the UNCAC Coalition had in mind I don’t know.  But it is an example, and one, given the creativity of American lawyers (spurred by the chance for a lucrative fee), that provides those thinking about victim compensation for corruption a rich vein of case law to explore.

The paper is the fifth in a series of papers commissioned by the Open Society Justice Initiative on civil society and anticorruption litigation.  It follows earlier ones on standing by GAB editor-in-chief Matthew Stephenson, on civil society litigation in India by Vidhi Centre for Legal Policy Director Arghya Sengupta, on private suits for defrauding government by Houston Law School Professor David Kwok, and private prosecution by Tamlyn Edmonds and David Jugnarain.

 

The Correlation Between Economic Freedom Indexes and Corruption Indexes Tells Us Nothing

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Anticorruption advocates often argue that the fight against corruption is not just about strengthening systems for detecting and punishing corrupt behavior, but about implementing broader systemic reforms to policies and institutions that create the conditions in which systemic corruption is more likely to take hold. That advice is sound as far as it goes—but the challenge then becomes identifying those policies and institutions that have this “corruptogenic” character. One prominent hypothesis in this vein is that corruption thrives in environments where there is a lack of “economic freedom”—where the government plays an outsize role in the economy, imposes lots of burdensome regulations on private enterprise, does not provide effective protection for private property and contract rights, and generally restricts economic activity. This idea (which is perhaps especially attractive to those who favor a limited government role in the economy for other reasons) is certainly plausible. But is it true?

Proponents of the idea that a lack of economic freedom leads to more extensive corruption can point to a substantial body of cross-country research that purports to find a strong negative correlation between economic freedom and corruption. Most of this research measures (perceived) corruption using one of the familiar international indexes, most commonly Transparency Internationals’ Corruption Perceptions Index (CPI). The research in this vein also measures “economic freedom” using indexes produced by NGOs—the most widely-used of which is the Heritage Foundation’s Index of Economic Freedom (IEF), which aggregates a number of variables thought to be related to economic freedom, grouped into four different categories (rule of law, limited government, regulatory efficiency, and open markets). Numerous studies have found a strong and statistically significant correlation between the IEF and the CPI, and treated this as strong evidence that a lack of economic freedom is at the very least associated with, and most likely causes, more widespread corruption (see here, here, here, here, here, and here).

Unfortunately, these results tell us precisely nothing. Put aside the standard admonition that we can’t infer causation from correlation. Put aside the concern that “economic freedom” may not be a coherent concept, and that the Heritage IEF aggregates a large number of disparate factors. And put aside worries about whether these studies control for potential additional variables that might influence both corruption and economic freedom. The fatal flaw in drawing any inferences at all from the correlation between the IEF and the CPI is in fact much more straightforward: Continue reading →

Innovative or Ineffective?: Performance-Based Lending as an Anticorruption Tool

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The Sustainable Development Goals’ (SDGs) new focus on fighting corruption and building institutions has generated quite a stir (including on this blog – see here, here, here, and here). But the Millennium Challenge Corporation (MCC) – a U.S. agency responsible for disbursement of assistance geared toward international development targets – has long been acting against corruption through its effort to achieve the SDG precursors, the Millennium Development Goals (MDGs). Institution-building does not appear among the substantive aims of the eight MDGs. Rather, the MCC made anticorruption central to its work by introducing corruption indices into its process for competitive selection of aid recipients. In brief, the MCC Board of Directors chooses aid-eligible countries by evaluating and scoring candidates countries’ “policy performance” on a number of measures. Crucially, in order to qualify for aid, countries must score above average for their income group on the Worldwide Governance Indicators (WGI) “Control of Corruption” score. The indicator is therefore known as the “hard hurdle.” The Board also assesses corruption trends in its analysis of a country’s ability to reduce poverty and generate economic growth, which, with policy performance, comprises the overall evaluation.

This strategy is known as performance-based lending, and the MCC has employed it to award over $10 billion in grants to nearly 40 countries over the past 12 years. Is the MCC approach a good one? Many critics say no. I say yes. Although it is a strategy that is still evolving, performance-based lending—including the corruption control “hard hurdle”—is not only innovative and effective, but important.

Continue reading →