I know a lot of what I write on this blog is pessimistic, critiical, or both, but every once in a while it’s nice to call attention to some positive, encouraging developments. In this spirit, I was heartened to read that a bipartisan group of U.S. Senators last week introduced a new bill, the “Combating Global Corruption Act of 2017” (CGCA), that strikes me as quite a good idea overall. Yes, I realize that most bills like this never make it out of committee, let alone get enacted into law. And yes, the bill has a number of problems, some of which might be fixable through the amendment process but others of which are more inherent. But on the whole, it seems to me that this is the sort of bill that the U.S. anticorruption community ought to support.
Here’s a quick summary of what the bill would do, why I think it’s basically a sound idea, and (because I can’t help myself) a few of its problems and difficulties. (The full text of the bill can be found at the link above, and a press release about it from Senator Cardin’s office is here.)
The bill is clearly modeled on laws like the Trafficking Victims Protection Act (TVPA), which requires (among other things) that the U.S. State Department to issue a “Trafficking in Persons” report each year that classifies countries into tiers based on whether they satisfy the TVPA’s minimum standards for efforts to eliminate human trafficking (including appropriate laws, “vigorous” enforcement of those laws, protection of victims, preventative measures, and adequate international cooperation), and withholds non-humanitarian, non-trade-related foreign assistance from any country that falls into the bottom tier absent a special waiver from the president.
The proposed CGCA has a similar structure: It sets “minimum standards for the elimination of corruption” that include (1) adoption of laws, policies, and practices that prohibit both grand and petty corruption; (2) enforcement of those laws through a fair judicial process, with punishments that are commensurate with the seriousness of the offense; and (3) more general “serious and sustained efforts” to eliminate corruption. The CGCA requires the Secretary of State to issue an annual report to Congress classifying each country into one of three tiers based on their compliance with these minimum standards: Tier 1 includes countries that meet the minimum standards; Tier 2 countries are those that are making efforts to comply with the minimum standards but still fall short; and Tier 3 countreis ar those that are making “de minimis or no efforts” to meet the minimum standards. In making these determinations, which are to be included in an annual public report to Congress, the Secretary of State is instructed to consider a number of factors, including:
- the country’s track record of investigating, prosecuting, and convicting those who commit corruption offenses;
- whether the courts that handle these cases are independent and impartial, and not subject to any improper influences or pressures;
- whether the government has adopted preventative measures, including educational and informational programs;
- whether the country provides adequate access and support to civil society organizations that combat corruption through reporting, investigation, and monitoring;
- whether the country cooperates with international efforts to investigate and combat corruption, including extradition requests;
- whether the country ensures that victims of corruption have access to justice and are protected from re-victimization; and
- whether the country adequately protects whistleblowers who help expose corruption.
If a country is placed in Tier 3, the CGCA calls on the Secretary of State (in coordination, as necessary, with the USAID Administrator and the Secretary of Defense) to impose several conditions on the provision of foreign assistance to that country (other than humanitarian assistance, disaster relief, or anticorruption assistance), unless the Secretary of State certifies that granting a waiver from these conditions is important to U.S. national security interests. The conditions are as follows:
- Any foreign assistance must be preceded by a corruption risk assessment and include a corruption risk mitigation strategy;
- All foreign assistance agreements must include clauses that allow termination of the agreement without penalty if credible indicators of corruption in the project are discovered;
- All foreign assistance agreements must also include “clawback” provisions that allow the U.S. government to seek recovery of taxpayer funds that have been misappropriated through corruption;
- All organizations receiving funding from U.S. foreign assistance programs must disclose their beneficial owners;
- There must be a mechanism established for investigating allegations of misappropriated foreign assistance funds or equipment.
There’s other stuff in the statute too, but these are the big things. Why do I like it? A few main reasons:
- First, independent of the foreign assistance conditions, a statute like this will help in the anticorruption fight by raising the profile of the issue, both inside and outside the U.S. government, and requiring the regular compilation and presentation of information on what different countries are doing with respect to corruption. Those with the requisite knowledge and interest within the U.S. government will see their value rise, and the issuance of the annual reports will attract attention from Congress, the media, and the general public.
- Second, for all their problems and limitations (on which more in a moment), my impression is that the TVPA, on which the CGCA is so clearly and closely modeled, has had a meaningful impact, not only because of the foreign aid conditionality, but simply because of the prestige costs of being labeled a delinquent on the fight against human trafficking. I freely admit that I’m not terribly knowledgeable about this, and if I’m wrong in my conjecture that the TVPA has had an overall positive effect, I hope someone out there in reader-land will correct me. But in general, I think that “naming and shaming” strategies in this area can be helpful, though it probably goes without saying that they’re nowhere near enough.
- Third, I like the fact that the proposed evaluation system focuses less on the extent of the problem, and more on how much various governments are doing about it. I certainly hope that an assessment of how effectively the country is taking action to combat corruption is construed broadly to include, say, effective enforcement of anti-money laundering and know-your-customer laws, so that financial centers that turn a blind eye to the corrupt source of dirty money are scrutinized as well.
So, there’s much to like about the CGCA. But there are some difficulties and concerns as well. Let me flag a few here (though since I’m trying to maintain a positive, enthusiastic tone in this post, so I’ll defer more searching scrutiny and criticism for later):
- First, though as I noted above my general impression of the TVPA is that it’s had a positive effect, it can’t be denied that the ranking system has proved controversial, and has opened up the U.S to accusations that it “plays politics” with at least some of the classifications. That risk is perhaps even more severe for something like corruption.
- Second, and closely related, the U.S. needs to be acutely sensitive to accusations of hypocrisy when it accuses other countries of not meeting “minimum standards” on some of these anticorruption issues. Many countries complain, for example, that the U.S. government does not respond quickly enough, or cooperate fully enough, with requests for assistance from foreign governments on corruption investigations. The lack of corporate beneficial ownership transparency in the U.S. is already a sore point, and a statute that insisted on beneficial ownership transparency for the U.S. government’s partners, while still not insisting on such transparency for U.S. firms, might seem like the most flagrant sort of double-standard. And given all the controversies and accusations (well-founded or not) swirling around the Trump family’s global business interests, it might be a bit awkward right now for the U.S. to be lecturing and rating others with regard to the problem of “grand corruption” (which the CGCA defines in part as “the exercise of public power for private gain [by an actor] at a high level of government that distorts policies or … enables leaders to benefit at the expense of the public good”). That said, from a broader anticorruption advocacy perspective, that a statute like the CCGA might open the U.S. up to accusations of hypocrisy might be a feature, not a bug, as it could in turn ratchet up the pressure on the U.S. to get its own house in order.
- Third, it seems to me there’s a bit of a mismatch between the classification criteria and the special conditions for tier-3 countries. First of all, most of the conditions specified in the statute don’t really seem to me like penalties so much as totally reasonable conditions to place on foreign assistance projects in high-corruption-risk countries. Suppose, for example, there’s a country with very high corruption risk (as measured, say, by an abysmal CPI score), but the government is at least trying to get it under control, such that the country would fall at worst into tier-2, not tier-3. (Nigeria and India might fall into this category, for example.) Why wouldn’t we still want U.S. foreign assistance projects in those countries to include anticorruption clauses in the contracts, requirements of beneficial ownership transparency for contractors and other private-sector partners receiving U.S. foreign aid money, and so forth? On the flip side, the statute does essentially nothing (other than the public shaming noted above) to pressure tier-3 countries that don’t receive substantial amounts of U.S. foreign assistance, or don’t care much about added conditions on such assistance. I’m not sure if I’d necessarily call for more severe sanctions or not. But here I think it’s worth pointing out that the CGCA, as proposed, seems to conflate two separate issues: (1) what measures should the U.S. adopt to prevent corruption in U.S. foreign assistance project, and (2) what sanctions, if any, should the U.S. use to encourage countries to make serious and sustained efforts to combat corruption? I think the statute would be more effective if these two questions were considered separately, rather than using the threat of corruption-prevention conditions as a kind of “stick.”
Those qualms aside, this proposal strikes me as the kind of thing the U.S. anticorruption community might want to champion. But it doesn’t seem to be on the radar screen yet. (For example, as of the end of last week, there was no reference to this proposal on the websites for the Coalition for Integrity (what used to be the U.S. chapter of Transparency International), the Transparency International Secretariat, or Global Witness. Maybe those organizations have made a considered decision that this legislation is not a good idea, or not important enough to waste time on given its low odds of passage and their other priorities. But for what it’s worth, since I know we’ve got readers out there who work at these and other advocacy organizations, perhaps this is something that the anticorruption community ought to champion?