The Promise and Perils of Cleaning House: Lessons from Italy

In countries beset by endemic corruption, efforts to expose and root out corrupt networks, and to punish the participants, can and should be celebrated. There are, of course, always legitimate concerns about the role that political power struggles may play in anticorruption crackdowns (think China and Saudi Arabia), an issue we’ve discussed on this blog before (see here and here), and that I may turn to again at some point. But in today’s post, I want to put those issues to one side to focus on something different. Suppose that some combination of government investigation, citizen reports, and media scrutiny exposes a major corruption network. Suppose that even though people always suspected that corruption was all too common, the investigation reveals that the rot runs much deeper, and goes much higher, than most people had imagined. Suppose further that, as a result of these revelations, law enforcement agencies take aggressive action, putting many people in jail and causing many others to lose their government positions. Again putting aside for the moment concerns about political bias, this is all to the good. But, what happens “the morning after,” as it were?

The hope, of course, is that by “cleaning house,” the state will be able to turn over a new leaf; the “vicious cycle” of self-perpetuating corruption may be broken, and those corrupt officials disgraced and removed from power will be replaced by a new generation of cleaner (though of course not perfect) leaders. Unfortunately, while that’s one possible scenario, it’s not the only one. In his presentation at last September’s Populist Plutocrats conference, the Italian political scientist Giovanni Orsina used the Italian “Clean Hands” (Mani Pulite) investigation into widespread political corruption, and the subsequent rise of Silvio Berlusconi, to illustrate how, under the wrong set of circumstances, a well-intentioned and widely-celebrated corruption cleanup could contribute to the rise of a populist—and deeply corrupt—demagogue.

I don’t know enough to have a firm opinion on the validity of Professor Orsina’s analysis, and I gather that other analysts have a different view of the long-term impact of Clean Hands, but his arguments strike me as plausible and sufficiently important that they’re worth considering, not only as potential explanations for developments in Italian politics, but perhaps more importantly for their potential applicability (mutatis mutandis) to other cases. In particular, Professor Orsina identifies two related but distinct mechanisms through which an aggressive and seemingly-effective anticorruption crackdown can contribute to the rise of a populist demagogue like Berlusconi. Continue reading

A Ukrainian Anticorruption Court Is an Essential Step Toward the Rule of Law

Since the Maidan movement that overthrew the last Ukrainian government, Ukrainian anticorruption activists have demanded, among other reforms, the creation of a specialized anticorruption court. Many of Ukraine’s Western backers likewise consider the creation of such a court to be an essential step in addressing the country’s systemic corruption problem, and in recent months, protests have broken out on the street in support of the court. In what appears to be a major victory for the domestic and international advocates of a special anticorruption court, President Poroshenko agreed in principle to create such a court this past October—although the details will need to be worked out.

Not everyone is convinced that the creation of a specialized anticorruption court is as important as its backers think. In a thoughtful post last month, Helen articulated the skeptical view, arguing that the specialized anticorruption court will likely not live up to expectations, and that domestic and international actors are placing too much emphasis on the creation of this particular institution. But Helen both underestimates the importance of a specialized anticorruption court in the Ukrainian context, and is overly pessimistic about its prospects for effectiveness. That said, she is right to highlight how things could go awry if the creation of the specialized anticorruption court is not done right.

Continue reading

The U.S. Is Making a Mistake by Withdrawing from the EITI

Last month, the Trump Administration announced that the United States would be withdrawing from the Extractive Industries Transparency Initiative (EITI). The decision was not wholly unexpected, especially since the Department of the Interior announced last spring that it would no longer host regular talks among a group of U.S. stakeholders that included representatives from the industry as well as activists and government representatives — one of the requirements of membership in the EITI. Nonetheless, the U.S. decision to withdraw from the EITI is a significant setback to the fight against corruption and misgovernance in the resource sector.

To understand the likely impact of the U.S withdrawal from the EITI, it’s useful first to review what the EITI is—both its mechanics and its objectives. Continue reading

Is It Time to Amend U.S. Domestic Anti-Bribery Statutes?

Last month’s hung jury in the trial of New Jersey Senator Robert Menendez, coming hard on the heels of appellate court decisions to vacate the convictions of former U.S. Congressman William Jefferson and New York state legislators Dean Skelos and Sheldon Silver, has increased public attention to domestic U.S. anti-bribery laws—and the Supreme Court’s interpretation of those laws. As Professor Zephyr Teachout puts it, the Court, beginning in the 1999 case Sun-Diamond Growers and continuing up through last year’s decision in McDonnell, has steadily “hollowed out” U.S. anti-bribery laws, making it much more difficult to convict “anyone but the most inept criminals.”

Now, some of the recent commentary, particularly on the impact of the McDonnell case, may overstate things a bit. As Maddie pointed out in a recent post, the fact that the Skelos and Silver convictions (and, she might have added, the Jefferson conviction) were vacated in light of McDonnell doesn’t necessarily imply that the conduct alleged in those cases is now legal. Rather, the appellate decisions held that the jury instructions were improperly phrased, and left the door open for a retrial (which will occur in these other cases, even though the government declined to retry McDonnell). And we don’t really know how much of an effect the Supreme Court’s decision in McDonnell or other cases affected the jury’s inability to reach a verdict in Menendez; it’s possible that even with a jury instruction identical to the one found deficient in McDonnell, some of the Menendez jurors would have voted to acquit. All that said, there are certainly good reasons for concern about the seemingly narrow scope of U.S. anti-bribery law.

Some of this blame, as Professor Teachout persuasively argues, can be laid at the feet of the Supreme Court. Indeed, I argued that McDonnell’s conviction should have been affirmed, and criticized the Court’s unanimous decision to vacate it. That said, I do think there’s an argument in favor of the Supreme Court’s ruling in McDonnell, at least if the holding is read narrowly as concerning the phrasing of the jury instructions. Likewise, in Sun-Diamond Growers, the Court’s holding is actually quite plausible as a reading of the unlawful gratuities statute. (The Court held that a conviction under this statute, which prohibits corruptly giving anything of value to a public official “because of any official act” performed by that official, requires the government to show a connection between the gift and a specific official act, rather than relying on the more general claim that the recipient is in a position to make decisions that affect the giver’s welfare. The Court’s interpretation of the statutory language, while contestable, is certainly reasonable.)

Moreover, if we’re looking for an institution to blame for the current state of U.S. anti-bribery law—or to lobby for improvements in that law—the Supreme Court is perhaps not the only target. There’s also the U.S. Congress, which could, and arguably should, amend the hodge-podge of anti-bribery laws to fill some of the gaps that we find in current law, as interpreted by the Supreme Court. After all, though the Court has dropped occasional troubling hints about possible constitutional concerns with a broad reading of the anti-bribery statutes, most of the Court’s rulings in this area, in contrast to the related but distinct campaign finance context, are statutory rather than constitutional. And that means that Congress could conceivably step in to fix the problem. Continue reading

Analyzing Settlements in Corruption Cases: A Primer

As prosecutions for bribery and other corruption crimes have ramped up around the world, so too has a practice common in the United States that is now spreading: resolving criminal cases short of full trials.  A prosecution can be cut short three ways.  The first is through a plea bargain.  The defendant admits guilt at some point between the investigation and the rendering of a final verdict.  As the term implies, the admission is the result of a bargain, the defendant receiving something in return, most often a lesser sentence.

The second and third ways are through non-prosecution and deferred prosecution agreements.  With the former, the prosecution does not charge the accused with a crime even though it has sufficient evidence to do so; in the latter, a charge is filed but immediately set aside.  Like a plea bargain, non-prosecution and deferred prosecution agreements are the result of an agreement between the accused and prosecutors.

The American practice of settling a criminal case short of a trial has always had its critics.  With an increasing number of countries adopting similar practices, several for the explicit purpose of resolving corruption prosecutions, the concerns about settlement heard in America, along with ones peculiar to corruption cases, are now circulating in a larger international community (examples here, here, and here).  For a paper on developing countries and settlements, I summarize the literature on how to analyze settlements.  It appears below.  I believe it robust enough to apply to any country, but would like to hear readers’ comments. Continue reading

Tracking Corruption and Conflicts of Interest in the Trump Administration–December 2017 Update

Last May, we launched our project to track credible allegations that President Trump, as well as his family members and close associates, are seeking to use the presidency to advance their personal financial interests.Just as President Trump’s son Eric will be providing President Trump with “quarterly” updates on the Trump Organization’s business affairs, we will do our best to provide readers with regular updates on credible allegations of presidential profiteering. Our December update is now available here.

There were relatively few major new developments, though there are some changes and modifications throughout to reflect more recent coverage of some of the topics and controversies included. One major story involving possible links between the Trump Organization’s Panama hotel and money laundering, drug trafficking, and other criminal activity (dubbed “Narco-a-Lago” and a recent Global Witness report) is not included in our tracking document because the Panama allegations so far appear to concern conduct that took place before Trump became president. While we do not intend to minimize the seriousness of these or similar allegations, our project here is to focus on ways that President Trump and his close associates may be exploiting the power of the presidency for personal gain.

As always, we note that while we try to include only those allegations that appear credible, we acknowledge that many of the allegations that we discuss are speculative and/or contested. We also do not attempt a full analysis of the laws and regulations that may or may not have been broken if the allegations are true. For an overview of some of the relevant federal laws and regulations that might apply to some of the alleged problematic conduct, see here.

Saudi Arabia’s Anticorruption Purge: A Sham to Consolidate Power and Lure Investors

Saudi Arabia’s crown prince, Prince Mohammad bin Salman (MBS, for short), has been cleaning house. In the last month, he has arrested 11 princes, four ministers, and dozens of ex-ministers, all of whom are being held in five star hotels across Riyadh. He has also detained more than 200 others for questioning. Scores of commentators and media personalities have praised MBS’s anticorruption purge (see here and here), while others have condemned it (see here and here), which goes to show just how difficult it is to understand what the recent anticorruption purge means in the context of a country like Saudi Arabia. On the one hand, in Saudi Arabia, any measure to address corruption seems to be cause for optimism. Taken against the backdrop of the many social reforms advanced by MBS, ranging from permitting women to drive, diversifying the economy, and moderating the religious establishment’s brand of Islam, the anticorruption measures appear to be part of a genuine effort to reform Saudi Arabian society. Yet this optimistic assessment naively conflates a progressive social agenda that taps into our hopes for Saudi Arabia’s future (and the Middle East’s writ large) with what Saudi Arabia’s anticorruption purge really is: an attempt to consolidate MBS’s power and reassure foreign investors. Continue reading