Anticorruption Bibliography–May 2019 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.

Mozambique’s Hidden Debt Scandal: Noose Tightening Around Credit Suisse and Privinvest?

Mozambique has sustained enormous damage thanks to the “hidden debt” scandal.  The 2016 revelation the government had guaranteed $2.2 billion in loans for projects of little or no value led donors to freeze disbursements, slamming the brakes on the economy and leaving many stuck in poverty.

Press accounts and indictments issued in Mozambique and the United States blame the scandal on Jean Boustani, an executive with Privinest, a Middle Eastern shipbuilding firm; three now ex-employees of Swiss banking giant Credit Suisse; and Mozambican officials Boustani and the bankers allegedly bribed. Privinvest has denied involvement in the scheme as has Boustani. Credit Suisse claims the employees evaded its elaborate controls meant to keep it from becoming enmeshed in such schemes.

Thanks to a surprise development Monday, Privinvest and Credit Suisse may find it harder to continue ducking responsibility for the corrupt, fraudulent scheme and the massive harm it inflicted on Mozambique.  Continue reading

Guest Post: France’s New Asset Recovery Bill Is an Important Step Toward Achieving Victim Compensation

GAB is delighted to welcome back Mat Tromme, Director of the Sustainable Development & Rule of Law Programme at the Bingham Centre for the Rule of Law, who contributes the following guest post:

Where asset recovery is concerned, France is probably best known for the conviction of Teodorin Obiang—the Vice President of Equatorial Guinea and son of the President—for money laundering (the first time that a French court has convicted a serving senior official of a foreign government), which resulted in the court ordering the forfeiture of some of Obiang’s assets, worth around USD 150 million. The decision is still under appeal, and the next hearing is scheduled for December 2019. But even if the conviction and associated forfeiture order are upheld, under existing French law those assets will go to the French state. (It is unclear whether other plaintiffs who can also establish a valid claim on the assets could also benefit from them in any way.) The forfeited funds will not go to the true victims of Obiang’s corruption—the people of Equatorial Guinea.

There are obviously a number of moral and practical questions coming out of this, not least the fact that the French state keeps the looted assets, as French courts remarked. Some countries and commentators argue that in cases of grand corruption like this, the forfeited assets should go back to the country from which the funds were stolen. But in the Obiang case, it would seem nonsensical to suggest that the forfeited assets be transferred to the government of Equatorial Guinea, as that would be tantamount to returning those assets to the Obiang family itself. The challenge, which many have struggled with, is how to return assets to a country in a way that benefits the victim populations when the country’s government is controlled by a kleptocratic political elite and where there is no rule of law. Related to this, it also raises questions about who ought to be considered the victim (the state, or the population?), and, if the latter, how to go about making appropriate compensation.

Earlier this month, the French Senate agreed on a new asset forfeiture bill that would address this problem by amending existing law so that when a French court orders the forfeiture of the illicit assets of a foreign public official or other politically exposed person (PEP), those assets, rather than being forfeited to the State, would instead go into a special fund that seeks to improve living standards of victim populations, improve the rule of law, and fight against corruption in the country where the offenses took place. (The state would, however, be able to retain a portion of the assets, up to a specified limit, to cover the costs of bringing the case in the first place.) Under the proposed bill, assets would be forfeited to the French state only in those cases where it is “absolutely impossible” to return the assets to the victim populations. The bill also calls for greater “transparency, accountability, efficiency, solidarity, and integrity” in the asset return process, principles that civil society had actively pushed for.

Of course, a great many details would still need to be worked out as the bill makes its way through the lower house of the French parliament (the Assemblée Nationale), especially as it’s not altogether straightforward to figure out how best to ensure that the seized funds will benefit the victim populations. The discussions at the Committee level in the Senate evince a preference for channeling forfeited funds through Overseas Development Assistance (ODA) on a case by case basis. But many of the practicalities still need attention, and French legislators have instructed the Conseil d’Etat (a body that provides legal advice to the government and doubles as a supreme court for administrative matters) to advise on the practical implementation of orders to return assets to victim populations. (When the Conseil d’Etat does so, this will itself be an important decision, one that the anticorruption should pay close attention to.)

And there are some other difficulties too, which Senators and their officials have openly acknowledged. As it currently stands, the French Criminal Procedure Code says that the return of assets requires the agreement of the requesting state (which, as discussed above, may not happen where a country is very corrupt), and so the Code will likely need amendments.Moreover, the offenses that would trigger asset forfeitures under the proposed bill are limited to concealment and laundering the proceeds of all crimes, though the Committee report also recognizes there may be difficulties with including any crime within the scope of offenses that can lead to forfeiture. Finally, though the bill focuses on assets seized from PEPs, that term is not actually fully defined in French law.

Despite these concerns, the bill is a significant step in the right direction, and a good illustration of how civil society organizations can inform and influence the asset return process (Transparency International France played a key role in encouraging the Senate to table the Bill, and CSOs and governments are also coming together to address the difficult questions that cases like these raise with respect to victim compensation.) Indeed, civil society involvement will be crucial to ensuring that the law is adopted by the Assemblée Nationale and implemented in a transparent way.

To Advance its Anticorruption Agenda, Brazil Must Reform its Conflict of Interest Laws

In the past five years, Brazil made significant advances in its anticorruption agenda, including both an aggressive effort to prosecute high-level politicians and business executives, and also a series of legislative reforms. But Brazil has not yet done enough to regulate conflicts of interest within the public administration.

One good example of the weakness of current regulation is the controversy involving the appointment of Leticia Catelani—a businesswoman who supported President Bolsonaro’s election campaign—to the Executive Board of Apex, the Brazilian Trade and Investment Promotion Agency. Apex is a state-owned entity in charge of promoting Brazilian exports. Ms. Catelani owns a company with a significant export business, raising concerns that she might use her Apex position to improperly favor her own business. (A group of Apex employees have filed a lawsuit challenging her nomination, and a formal complaint has also been filed with the Ethics Commission of the Presidential Office (CEP) asking for her removal.) Though this is but one recent illustration; the issue is much more general, and indeed it is likely that under the Bolsonaro administration concerns about conflicts of interest will increase.

Unfortunately, the existing mechanisms for controlling conflicts of interests in the federal administration—principally the 2013 Conflicts of Interest Act (COI Act) are inadequate and must be reformed. The COI Act applies to senior officials and ministers of state within the federal government. The Act lists a number of situations that trigger conflict-of-interest concerns, and it also requires public officials to file annual reports about their private assets and activities. The Act empowers the CEP to investigate cases, issue guidelines, clarify doubts, and grant waivers. But the current system is inadequate in several respects, and the overall system for dealing with conflicts of interest is in urgent need of reform. Three points in particular should receive special attention:

Continue reading

Corruption in Mexico under AMLO: Lessons from an Interview With Dr. Jose Ivan Rodriguez-Sanchez

In July 2018, Andres Manuel López Obrador (AMLO) won the Mexican presidential election in a landslide. AMLO campaigned on the promise to transform Mexican society, and his pledge to curb corruption was among the most prominent planks of his platform. Yet although AMLO remains very popular with the Mexican public (his approval rating at his 100-day mark in March 2019 was above 80% in some polls), many Mexican anticorruption experts are less enthusiastic.

I’ve offered my own reasons for skepticism about AMLO’s approach to fighting corruption in prior posts (see here and here), but to try to better understand some of the reasons why Mexican anticorruption specialists are critical of the AMLO administration, I interviewed one of those specialists, Dr. Jose Ivan Rodriguez-Sanchez, a Mexican scholar currently based at the Mexico Center at Rice University’s Baker Institute for Public Policy. Dr. Rodriguez-Sanchez, whose recent publications include Measuring Mexico’s Corruption and Corruption in Mexico, shared his view of the biggest concerns regarding the AMLO administration’s approach to corruption. What follows is my translation from our conversation (which took place in Spanish), with some paraphrasing and condensation for clarity.

Dr. Rodriguez-Sanchez highlighted five criticisms of the AMLO administration’s anticorruption policies: Continue reading

Guest Post: It’s Time for Plan B on Disbursing the Obiang Settlement Money to the People of Equatorial Guinea

Today’s guest post is from the civil society group EG Justice, a civil society organization that promotes the rule of law, transparency, and the protection of human rights in Equatorial Guinea. (For a longer discussion of the issues raised in this blog post, please visit the EG Justice website: www.egjustice.org.)

Last month, Professor Stephenson asked: “Whatever Happened with that Charity the Obiang Settlement Was Supposed to Fund?”  Not coincidentally, thousands of people in Equatorial Guinea have been asking themselves that same question for the last five years, and they have yet to receive a satisfactory answer. We are not entirely surprised by the impasse. When one drives into a cul-de-sac, with clear road signs warning ahead of time that there is no exit, one should only expect to return to the entry point. Likewise, when negotiating with authoritarian kleptocrats who consider themselves above the law and who are accustomed to acting with absolute impunity, it would be naïve to expect them to negotiate fairly.

The settlement between Equatorial Guinea and the U.S. appears to anticipate this impasse, laying out several options. The settlement first lays out what we might call “Plan A”:  Within 180 days, the U.S. authorities and the defendant (Teodorin Nguema Obiang) are to jointly select a charity to receive the funds realized from the sale of Nguema’s seized assets, with that charity to use the funds for the benefit of the citizens of Equatorial Guinea. But in apparent anticipation of the difficulties in reaching such an agreement, the settlement goes on to lay out a “Plan B,” according to which, if the U.S. and Nguema can’t mutually agree on a charity within 180 days of the sale of the assets, a three-member panel is to be convened to receive and disburse the funds—with one member of the panel chosen by the U.S., one by Nguema, and one, the Chair, by mutual agreement. Again anticipating the possibility that the parties will be unable to agree, the settlement has a “Plan C” (or a “Plan B-2”): If the parties can’t agree on a panel Chair, within 220 days after the sale of the property, the court retains the discretion to order the parties to participate in mediation, or the court may simply select a panel Chair directly. Continue reading

In Memoriam: Dimitri Vlassis (1959 – 2019)

The international fight against corruption lost one of its most steadfast and determined warriors with the passing in early April of Dimitri Vlassis, Chief of the Corruption and Economic Crime Branch of UNODC’s Division of Treaty Affairs.  Many in governments, international organizations, and civil society who, over the last two decades, enlisted in the fight against corruption will immediately recognize the loss. They will have fought in the trenches with Dimitri at some point during these years in the long-struggle to draft, ratify, and implement the UN Convention Against Corruption.  For recent recruits, who had yet to meet or hear of him, it is sufficient to say that he served as Secretary of the Ad Hoc Committee on the Negotiation of a Convention Against Corruption during the last, critical phase of the negotiations and was, at his passing, Secretary of the Conference of the States Parties to the Convention.

UNCAC represents the collective efforts of many of the world’s citizens, and a monument to their efforts would credit hundreds if not thousands.  But surely at or near the top Dimitri’s name would feature prominently. The true measure of his contribution to global welfare, however, is the continuing difference UNCAC is making to the lives of people everywhere.  For this we can all say, as UNODC Yuri Fedotov did in his note of condolence, “Thank you, Dimitri.”

I know all those in the global anticorruption community will join in expressing their condolences to Dimitri’s widow and two children.  With permission, Director Fedotov’s condolence note is below. Continue reading