The United Nations Convention Against Corruption (UNCAC) calls on States Parties to adopt asset declaration and financial disclosure regimes for their public officials (see Article 8, paragraph 5 and Article 52, paragraph 5), and most states have complied with this commitment in one form or another. Indeed, according to a report by the Stolen Asset Recovery Initiative, there is a continuous upward trend in the number of states that have enacted financial disclosure laws (see Figure 1.1 at page 8). Yet the near-universal popularity of mandatory asset declarations does not mean that this tool is actually effective. True, there have been a few high-profile cases where asset declarations played an important role in anticorruption efforts, such as the impeachment of the Chief Justices of the Philippines and Sri Lanka, as well as the resignation of the Vice Rectors of a prestigious university in Thailand and the top brass of a state bank in Portugal. But such high-profile cases are rare and may not be representative of the larger picture. In a previous post on this blog, Rick Messick expressed some skepticism about the extent to which asset declarations and other forms of mandatory financial disclosures actually contribute to anticorruption efforts, and criticized what he saw as extravagant and unrealistic claims about the effectiveness of such disclosures as anticorruption tools.
So what does the existing research actually say about the effectiveness of asset declarations on anticorruption efforts? While there are only a few studies on this topic, the evidence they supply nevertheless offers valuable insights.
- First, a 2010 paper by Simeon Djankov, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer finds a significant positive correlation between public disclosure and government quality – which includes lower levels of perceived corruption (as measured, in this study, by International Country Risk Guide’s corruption index). There is, however, an important caveat: This correlation holds only (1) when disclosure statements are made accessible to the public, and (2) when the scope of the disclosures is comprehensive, i.e., includes statements of assets, gifts, and activities. In jurisdictions where these conditions are not satisfied, the relationship between asset disclosure requirements and perceived corruption is inconsistent and unsystematic.
- Second, a 2006 study by Omer Gokcekus and Ranjana Mukherjee also finds a negative correlation between the strength of asset declaration laws and perceived corruption. But, similar to Djankov et al., this correlation was found only when several factors coincide. It appears, for example, that laws requiring asset declarations only have a measurable association with lower perceived corruption after a considerable period of time has elapsed after the passage of those laws. Furthermore, if the law does not attach criminal sanctions to false declarations (in the paper’s terms, if there is no credible “threat of prosecution”), then there is no apparent correlation between adoption of the disclosure law and lower perceived corruption. Moreover, when asset declarations are verified by the receiving office, they are more likely to result in positive anticorruption outcomes, as compared to when they are merely “stored untouched, to be retrieved only if corruption allegations were received against the official.”
The findings of these studies, of course, are only correlational; they do not clearly establish causation. Nevertheless, these results suggest possible lessons on the role of asset declarations in anticorruption efforts. For one, asset declarations by themselves do not appear to have much of an impact; they can be effective anticorruption tools only if the law mandating them contains certain additional features. In addition, the anticorruption impact of asset declarations appears to be inextricably intertwined with underlying forces in the larger legal and political system. This is unsurprising, as the effectiveness of even the best-crafted disclosure law will be compromised if it unnecessarily impedes the participation and access of crucial democratic actors (like mass media and civil society), if it cannot be enforced vigorously, or if those who violate it can do so without any significant consequence. Without teasing out variables related to the robustness of the legal systems and democratic institutions in which disclosure laws operate, our assessment of the effectiveness of asset declarations is bound to be inaccurate and incomplete.
In the future, additional empirical and quantitative studies should be conducted, in order to more accurately measure the anticorruption impact of asset declarations, and to identify other variables that may affect their effectiveness. In addition, we should supplement quantitative studies with qualitative (perhaps micro-level) research, in order to identify variables that cannot be easily measured or captured by numerical indices.
For example, one core aspiration of advocates is for asset declarations to foster “good governance” norms that create an environment hostile to corruption. Indeed, while we cannot realistically expect to uncover corrupt activities the moment we require public officials to file asset declarations, we can fairly hope that, over time, when the practice has become embedded in bureaucratic behavior, public officials’ acts will be constrained by the norms of transparency. Asset declarations may also help affirm the norm of public accountability, and reinforce public officials’ commitment to not use their public office for private enrichment. These declarations may also affirm the people’s power to monitor their public servants and hold them accountable. If we can assess not only the direct impact of asset declarations on corruption but also their role in forming norms that foster honest behavior among public officials, then we can have a clearer and more complete account of the effectiveness of asset declarations.
That is a very relevant discussion. Indeed, many times assets declarations are presented as magical solutions to the problem of corruption, without much empirical evidence of its effectiveness on curbing corrupt activities. It’s important to remember, however, that these declaration – if accompanied by criminal or at least administrative sanctions – can have a positive side effect not on the prevention of corruption, but on its investigation: in some cases where prosecutors are not able to prove the corruption act itself, the false declarations are enough to apply sanctions, even if not as harsh. It’s the equivalent of prosecuting Al Capone for tax evasion.
Thank you for your comment. I completely agree. In my line of work, asset declarations are invaluable to corruption prosecution primarily because it can provide proof of the accumulation of ill-gotten wealth. Secondarily, though, non-declarations or misdeclarations in asset disclosure statements can provide an almost incontestable predicate for lesser sanctions or punishments, independent of the major corruption charges (which are admittedly, in some cases, harder to prove beyond reasonable doubt). That is why it is fairly common to see charges related to asset declarations accompanying charges for corruption or fraud.