Anticorruption Bibliography–September 2018 Update

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.

Why Won’t Indian PM Modi Extradite KVP to Answer Corruption Charges?

Four plus years ago the U.S. Department of Justice unsealed an indictment alleging a plot stretching from India to Chicago to pay senior Indian officials some $18.5 million for mining licenses in the state of Andhra Pradesh.  Central to the scheme was K.V.P. Ramachandra Rao, then senior advisor to the state’s Chief Minister.  He allegedly solicited and agreed to accept bribes for himself and other Indian officials in return for approving the licenses.

As soon as the sealed indictment issued, the U.S. requested KVP’s extradition from India.  In accordance with the U.S.-Indian extradition treaty, the Indian government is required to surrender anyone located in India accused of the crimes in the United States of the kind KVP allegedly committed.  Article nine provides that all the U.S. need do is provide Indian authorities with “information describing the facts of the offense and the procedural history of the case, a statement of the provisions of the law describing the essential elements of the offense. . . [and] a statement of the provisions of the law describing the punishment for the offense.”

The 43-page indictment (described here) easily meets these requirements.  It details the plot KVP, Ukrainian magnate and alleged Russian mobster Dmytro Firtash, and a U.S. resident, and others concocted to rob the citizens of Andhra Pradesh of hundreds of millions of dollars through a web of bribes and kickbacks. The charges against defendants — racketeering, money laundering, and related crimes arising from the scheme – are precisely and carefully specified.

So why is KVP still not in U.S. hands? Continue reading

Was U.S. v. Hoskins Correctly Decided? (Probably Not.)

My post last week discussed the recent U.S. Court of Appeals decision in United States v. Hoskins, which held that a foreign national cannot be charged with aiding and abetting a violation of the Foreign Corrupt Practices Act (FCPA), or with conspiracy to violate the FCPA, unless that foreign national either took some action connected to the violation within US territory, or else acted as an agent of a US domestic concern or an issuer of securities in the US. That’s a bit of a mouthful. To put this another way: The FCPA itself says that it applies extraterritorially to US nationals (including US firms), to non-US firms that issue securities on US markets, and to the officers, employees, directors, and to agents of firms in either of the preceding categories. The FCPA also applies to foreign individuals or firms (other than issuers) if but only if they engage in some part of the wrongful conduct while in US territory. The question is whether such foreign individuals (including non-issuer firms), who act outside of US territory, and so cannot be charged directly with violating the FCPA’s anti-bribery provisions, can nevertheless be charged with aiding and abetting, and/or conspiring with, some other actor’s FCPA violation. In Hoskins, the U.S. Court of Appeals for the Second Circuit said no: Not only can a foreign national (other than an issuer or an agent of a US domestic concern or issuer) not be charged with FCPA violations based on conduct abroad, but such a defendant’s conduct abroad also cannot support a charge of aiding, abetting, or conspiring in an FCPA violation.

Perhaps because appellate court decisions on legal issues related to the FCPA are so rare, Hoskins has attracted considerable commentary. Most of this discussion, including my post last week, focuses on summarizing the court’s holding, considering its implications for future cases, and assessing whether Hoskins’ limitation of complicity and conspiracy liability is likely to improve or worsen FCPA enforcement overall. However, I haven’t seen very much commentary on the question whether, as a matter of legal doctrine and legal interpretation, Hoskins was decided correctly—that is, whether it is consistent with precedent, statutory text, and generally-accepted jurisprudential principals. That’s entirely understandable—most of the initial wave of commentary is coming either from law firms that want to explain to their clients what this decision means for them, or from those interested more in the policy issues than in parsing the doctrine. Nevertheless, I do think it’s worth getting a conversation going about whether Hoskins’ reasoning is (legally and doctrinally) sound. I may not be the best person to do this, as I’m not a criminal law specialist, but I figured I might as well take a crack at it, if only in the hopes that doing so might prompt some of the real experts to weigh in.

After reading the case a few times, and delving into some of the earlier case law and other materials, it seems to me that Hoskins is a hard case. Really really hard. And I tentatively think that is was probably decided incorrectly. Or maybe “incorrectly” is too strong—instead, perhaps I should say that the Hoskins result is in tension with existing doctrine, and the result the court reaches, though defensible, requires an aggressive expansion of traditional doctrinal principles, one that the court doesn’t really acknowledge. For those readers out there who care more about the policy bottom-line than about the intricacies of legal doctrine, you may want to stop here. Law nerds, read on! Continue reading

The New Frontier: Using Artificial Intelligence To Help Fight Corruption

In January 2018, scientists from Valladolid, Spain brought a piece of inspiring news to anticorruption advocates: they created an artificial intelligence (AI) system that can predict in which Spanish provinces are at higher risk for corruption, and also identifies the variables that are associated with greater corruption (including the real estate tax, inflated housing prices, the opening of bank branches, and the establishment of new companies, among others). This is hardly the first example of computer technology being used in the fight against corruption. Governments, international organizations, and civil society organizations have already been mining “big data” (see, for example, here and here) and using mobile apps to encourage reporting (see, for example, here and here). What makes the recent Spanish innovation notable is its use of AI.

AI is a cluster of technologies that are distinct in their ability to “learn,” rather than relying solely on the instructions specified in advance by human programmers. AI systems come in several types, including “machine learning” (in which a computer analyzes large quantities of data to identify patterns, which in turn enables the machine to perform tasks and make predictions when confronted with new information) and more advanced “deep learning” systems that can find patterns in unstructured data – in hundreds of thousands of dimensions – and can obtain something resembling human cognitive capabilities, though capable of making predictions beyond normal human capacity.

AI is a potentially transformative technology in many fields, including anticorruption. Consider three examples of the anticorruption potential of AI systems:

Continue reading

Integrity Pacts: A Contractual Approach to Facilitate Civic Monitoring of Public Procurement

Public procurement is one of the highest risk areas for corruption. A public project contaminated with corruption is a recipe for disaster: ordinary citizens suffer from substandard facilities and services; competitive companies lose out when the bidding is rigged; and government money vanishes without making a difference. To rein in procurement corruption in, improving transparency and civic monitoring is vital. That’s why an “integrity pact” (IP)—a legally-binding contractual provision that commits all parties to comply with anticorruption best practices from the time the tender is designed to the completion of the project—can be such a useful tool.

An IP is more than a demonstration of commitment to avoid corruption practices on the part of its signatories. An IP contains obligations for bidders and government authorities, among other things, to refrain from offering or accepting bribes and to disclose all contract expenses and commissions; the IP also sets out sanctions for non-compliance, such as termination of the contract, liability for damages, or debarment from future public contracts. Perhaps most importantly, an IP creates a monitoring process where an Independent External Monitor—which can be an individual, a civil society organization, or a group with combined expertise and technical support—independently scrutinizes the deal for any anomaly or violation of the IP, and ensures proper implementation of the contract and the satisfaction of all stakeholders’ obligations. To execute these functions, the monitor is entrusted to examine government tender documents, bidders’ proposals, and evaluator’ assessment reports of the bids, to visit construction sites and contractor offices, and to facilitate exchange with the local communities and public hearings.

IPs have previously been used in public procurement projects in many countries, including Romania, Bulgaria, the Czech Republic, Slovenia, Portugal, Hungary, Latvia, Poland, Greece, Italy, India, and many others. It’s notable that many of the states that have embraced IPs are countries where governments have a long track record of corruption and abuse of power. IPs have at least three roles to play to help facilitate transparency and civic monitoring so as to safeguard the competitiveness and fairness of the procurement process:

Continue reading

Guest Post: What To Make of Latin America’s Wave of Anticorruption Prosecutions?

Today’s guest post is from Professor Manuel Balan of the McGill University Political Science Department:

There seems to be a surge in corruption prosecutions of current or former presidents throughout in Latin America (see, for example, here, here, and here). In the last year we have seen sitting or former presidents prosecuted for corruption in Brazil, Guatemala, El Salvador, Honduras, Colombia, Costa Rica, Ecuador, and Panama. In Peru, Pedro Pablo Kuczynski resigned from the presidency amid corruption probes, and the last three former presidents are either facing trial or serving time for corruption. Argentina may soon join this list as a result of the so-called “Notebook Scandal,” which has triggered a fast-moving investigation that has already snared 11 businessmen and one public official, and is getting closer to former President, Cristina Fernández de Kirchner. (Argentina’s former vice-president Amado Boudou was also sentenced to almost six years in prison for corruption in a separate case.) Indeed, it now seems that Latin American presidents are almost certain to be prosecuted for corruption at some point after leaving office, if not before. My colleagues and I have documented the growing trend of prosecution of former chief executives in the region since democratization in the 1980s: Out of all presidents who started their terms in the 1980s, 30% were prosecuted for corruption. Of those that entered office in the 1990s, 52% were or are being currently prosecuted for corruption. In the group of presidents that began their terms in the 2000s, 61% underwent prosecution for corruption. And, remarkably, 10 out of the 11 presidents elected since 2010 who have finished their mandates either have been or are currently being prosecuted for corruption.

The explanation for this trend is not entirely clear. It’s probably not that Latin American presidents have become more corrupt. Some have suggested that the uptick in corruption prosecutions is a reaction, by the more conservative legal establishment, against Latin America’s “Left Turn.” But the trend towards increased prosecution is hardly limited to the region’s self-identified leftist leaders; in fact, left and non-left leaders are nearly equally likely to be prosecuted for corruption. Part of the explanation might have something to do with changes in prosecutorial and judicial institutions, media, or public expectations—the reasons are still unclear, and likely vary from country to country. Whatever the explanation, is this trend something to celebrate? Some observers say yes, arguing that the anticorruption wave sweeping Latin America is the result of Latin American citizens, fed up with corruption and taking to the streets in protest, putting pressure on institutions to investigate and punish corrupt politicians.

While I wish I could share this optimism, I think it’s likely misplaced. Continue reading

Brazil’s “Clean Slate” Law Keeps Lula Off Ballot — Now Let’s Smear His Prosecutors

Brazil’s top electoral court ruled Friday, August 5 (here), that former President Luiz Inacio Lula da Silva, now serving a 12-year sentence for accepting a bribe, cannot stand as a candidate in Brazil’s upcoming presidential elections.  “Lula,” as he is universally known, was to be the candidate of one of Brazil’s major parties, and if pre-election polls are to be believed, he stood a very good chance of winning, setting up the unusual (to say the least) situation of a head of state governing from a jail cell.  Absent a last-minute reversal by Brazil’s Supreme Court, Lula will now sit out the election in jail and the threat Brazil’s government will be run by a convict is over.

Lula’s supporters claim he is a political prisoner and is being unfairly denied the right to run for president.   In doing so, they have glossed over the extraordinary protections the Brazilian legal system has afforded him, both in his effort to overturn his conviction and to run for office.  Having failed in the courts of law, they are now trying to smear the prosecution in the court of public opinion.  A report from a well-placed source in Brazil — Continue reading

Some Preliminary Thoughts on US v. Hoskins and its Implications for FCPA Enforcement

The US Foreign Corrupt Practices Act (FCPA) is aggressively enforced but rarely litigated—most actions are brought against corporate entities that settle with the government. For that reason, any judicial opinion on the FCPA’s meaning, especially one from an appellate court, will attract a great deal of attention.

A couple weeks back, a US federal appeals court based in New York decided such a case, US v. Hoskins. The case addressed the question of whether a foreign national whose relevant conduct took place entirely outside the United States could be charged, not with violating the FCPA, but with conspiracy to violate the FCPA and/or aiding and abetting an FCPA violation. I’m a bit late to the discussion of Hoskins, which has already produced a great deal of commentary in the FCPA blogosphere (see here, here, here, here, and here). But for what it’s worth, here’s my quick summary of what the case is about, followed by some knee-jerk thoughts and observations about its significance. Continue reading