Making Political Parties Liable for Corruption

When corrupt politicians are caught and convicted, they may suffer a variety of penalties, including fines and incarceration, and the government might also seize assets that were the proceeds of the wrongdoing. But punishing the individual politicians is not enough to deter wrongdoing or to compensate for the harm that the corruption causes. Moreover, even when an individual politician was the only actor who deliberately and intentionally engaged in corrupt criminal activity, that individual politician is not the only one at fault. Politicians’ decisions are affected by norms within a political party— for example, by expectations (sometimes unstated) that politicians will bring in a certain amount of money for campaign funds through graft.

For these reasons, political parties— in addition to the individual politicians— should be held liable for corrupt acts committed by their members in the course of their political activities or official duties. And such liability should attach even if the political parties’ leaders did not specifically know about or overtly endorse the corrupt acts in question.

This may seem like a radical suggestion, but in fact there are many contexts in which the law imposes so-called “vicarious liability” on organizations for acts committed by the organization’s members or agents. For example, the legal doctrine of respondeat superior (Latin for “let the master answer”) says that an employer (or other principal) can be held accountable for the wrongful actions of an employee (or agent), if the wrongful actions were within the normal “scope of employment.” Common examples include suing a hospital for the malpractice of one of its physicians or holding the government financially liable for wrongful conduct by law enforcement officers. (Although respondeat superior derives from English common law, other legal systems, such as those of Brazil and France have broadly similar concepts of vicarious liability.) Similarly, under the law of many jurisdictions, a corporation may be held liable (not only civilly, but also criminally) for acts committed by corporate employees—even if corporate management did not condone or even know about the criminal acts. These vicarious liability doctrines are important because a single employee frequently does not have the resources to redress the wrongs committed, and also because the employer often bears some responsibility for whatever the employee did, due to company culture, training, and incentive schemes. Because of this, economists point out that vicarious liability can be more socially efficient: The organization may be in a better position to detect and prevent wrongful conduct, so placing the liability on the organization can give it the appropriate incentives to take cost-justified measures to prevent the wrongful activity from occurring in the first place.

Although vicarious liability is a well-established legal principle, often used to hold employers responsible for the conduct of their employees, that concept has not yet been extended to hold political parties, as organizations, legally responsible for the corrupt acts of their members. Such an extension may seem radical, and in a sense it is, but it would be justified.

To make this case, I’ll apply the three-pronged standard that Black’s Law Dictionary lays out for respondeat superior liability to be appropriate in the employment context: (1) The individual was an employee when the occurred; (2) The employee was acting within the scope of his or her employment; and (3) The activities of the employee were a benefit to the employer.

  • First, though politicians are not “employees” of their political party in the conventional legal sense, they are undoubtedly “agents” of the party in the relevant sense. This is most clearly the case in closed-list proportional representation systems (used, for example, in Argentina, Italy, Spain, Russia, and South Africa), where voters cast their ballots for a party rather than for an individual candidate, and the parties fill the seats they win according to a predetermined list that the party has created. Effectively, voters hire a party, and the party hires the legislators. Even in countries that use winner-take-all or open-list proportional representation systems, the politicians are still agents of the parties in most relevant respects, at least where parties exert considerable control over their members.
  • Second, although not all criminal acts committed by politicians could be said to be in their capacity as politicians or party members (as opposed to their individual private capacity), many acts of corruption are committed in the context of political or official governmental activity, not substantially different in kind from torts or criminal acts committed by company employees in the scope of their employment. For example, making public expenditures and overseeing procurement are well within the normal scope of a politician’s employment, and this is often when corruption occurs,
  • Third, traditionally for vicarious liability to attach, the individual agent’s unlawful conduct must have been for the benefit of her principal (that his, her employer or organization). In the context of politicians and political parties, while many acts of corruption are solely for personal enrichment, many are for the benefit of the party. Indeed, in many countries, it is implicitly or explicitly understood that politicians will divert some share of public funds or bribe proceeds to finance campaigns to stay in power.

Thus, in common law jurisdictions, precedents already exist that may make it possible for prosecutors to bring such cases to court. In civil law jurisdictions and common law jurisdictions that have less precedent on vicarious liability, additional laws could be passed to clarify a political party’s liability for corruption by its members. Ideally, parties would be found at fault if they acted negligently—that is, if the party failed to establish appropriate norms and controls to prevent corruption. If a party could show that it had adequate norms and controls in place, the party should not be held liable. Parties found at fault would be required to compensate the public for the stolen funds if the guilty politician is unable to do so, and to compensate the public for the inefficiencies introduced into the economy as a result of the distorted incentives corruption causes. Those damages, while more abstract, are just as real and just as harmful.

While making political parties liable for corruption will not work in every jurisdiction and in every situation, holding political parties liable is important because a single politician frequently does not have the resources to redress the wrongs committed, and also because the political party often bears some responsibility for whatever the politician did, due to party culture, incentives, and expectations. Vicarious liability for corruption could help parties to change their often-toxic corruption norms, as well as provide reparations for the great harm corruption causes.

11 thoughts on “Making Political Parties Liable for Corruption

  1. Thank you, Alex, for your post. Your suggestion is very much on point and I have no doubt that it is economically rational. However, I think your legal arguments are a bit off-track, especially the difference between common- and civil-law jurisdictions.

    Tardive Roman law had a principle inherited in civil law (and not, as such, in German-Saxon law) called “societas delinquere non potest”. Although it has been modified to a significant extent (mainly due to anticorruption laws and international agreements), it meant that a society (in the widest sense) could not commit a crime, only individuals can. This would support your argument.

    However, this never applied to civil liability, which in most continental jurisdictions is attached to criminal responsibility. Several countries in Latin America, following Spanish influence, have analogous provisions in their criminal procedure codes. This is, I believe, the vicarious liability you suggest.

    A company or a political party cannot go to prison, but it could be legally dismantled and held responsible for compensation if the agents or persons criminally liable acted on its behalf or for its benefit. It may sound strange in the US, but you do not even need a separate case for this as the criminal judge can impose those penalties in its ruling. Generally, it is a very efficient system if it were not for the big delays that mega-prosecutions take in France, Spain or Italy. The price for having a mixed civil-criminal system is that the standard of criminal responsibility needs to be met for the agents and its actions, hence, civil liability (or penalty fines) can only be determined at the end of the process.

    Probably the most famous case in recent years has been the Spanish Gürtel case. You can find a (very long) summary here: https://www.theguardian.com/news/2019/mar/01/spain-watergate-corruption-scandal-politics-gurtel-case If you read Spanish the judgment can be found here http://www.documentcloud.org/documents/4501074-Sentencia-G%C3%BCrtel.html

    In the widest and simplest terms, the Audiencia Nacional, the Spain-wide tribunal where the big corruption cases are prosecuted, following the criterion of the anticorruption prosecutor held that the Spanish Conservative Party (Popular Party or PP) was one of the beneficiaries of the corrupt plot, and that if the managers of the party did not know (the court believe they did) they should have known. Hence, it considered the PP “partícipe a título lucrativo” (vaguely translated as “a participant which made money out of it”) and imposed a penalty of 245,000 euros on the party, which, as The Guardian put it “The reputational damage was far worse than the actual punishment.

    As a side note here, recent legal reforms in several continental countries, including Spain, have made illegal party financing a crime, irrespectively of the origin of the funds. In that sense, if the case was tried today, the sentencing would have been harsher and the tools for the judges to act specifically against the party more incisive.

    As you may be aware, that judgment triggered a motion to dismiss the government. All the opposition, including parties that a week before had supported the government’s budget, so it also fed into the anticorruption movement in Spain already discussed in this blog: https://globalanticorruptionblog.com/2019/06/06/guest-post-how-a-social-movement-changed-spanish-attitudes-toward-corruption/

    • José-Miguel, thanks very much for your response. Though I must say I don’t follow your reasoning for why my legal argument goes off track. From what it sounds like from your post, there has already been a case of the nature I am suggesting. The PP in Spain was found liable for damages involving corruption. Am I understanding this incorrectly?

      • Thank you for replying Alex. I wanted to clarify to readers that the difference that you suggest exists between common law and civil law jurisdictions in terms of liability of companies / political parties for actions performed by their agents – something which other authors have done before – is not real. If anything, it is easier to punish political parties in systems where the criminal judge can impose civil liability penalties (often civil law jurisdictions). It would be different if we were discussing criminal responsibility. In that case – until recently – the principle of “societas delinquere non potest” prevailed in civil law jurisdictions.

        I also wanted to illustrate with the Spanish example that the proposal is not radical, but something which is already happening in civil law jurisdictions. Again, if anything, it would be an extension of the concept of vicarious liability in (some) common law jurisdictions, akin to the process witnessed with unjust enrichment, but not in civil law jurisdictions, which already have the legal tools to impose those penalties.

  2. Pingback: Can Political Parties Be Liable for Corruption? – Matthews' Blog

  3. Thank you Alexander, I think this is a great suggestion. Two minor additional points for the policy analysis:

    1. I would perhaps go further and suggest that parties should be strictly liable, and not only when they are at fault. Holding the party strictly liable for corruption acts done by its members is not expected over-deter (as in the standard economic analysis of tort liability rules); but on the other hand, it will save costly litigation and possible attempts to disguise the party’s fault in various ways.

    2. I certainly agree that the suggested liability will create desirable incentives for political parties to use its inherent informational and structural advantage to detect and prevent corruption in the first place. However, seeing as efforts to detect and prevent are not binary, when determining the extent of the legal duty imposed on political parties it is also important to weigh in the opposite effect: that ex-post, after the fact, parties will have a lesser incentive to expose the corrupt official, since they may also be held liable. This may somewhat offset pre-existing nonlegal incentives (that exist in some cases, though not in all of them) to condemn the act once it is exposed, break ties with the corrupt official etc. This, in turn, may also weaken the ex-ante deterring effect on the public official himself, as he will now be more likely to receive support from his party after the fact.

    • Haggai, thanks for your reply. Great point about political parties having an ex-post incentive to not expose their officials if they will be penalized for it. I think that a reasonable handling of such situations would give parties credit for helping expose corrupt politicians, and then not hold the parties liable in such situations (though this needs to be balanced of course).

  4. Thank you so much for this post, it is a really interesting idea. I think it gets to the reality that problems of corruption often are entrenched in institutions rather than the product of individual misdeeds. I also think there is a lot of truth to the argument that party culture can drive the individual, often in informal ways that may be very difficult to detect, let alone prove in a court of law. Vicarious liability offers a relatively neat way of tackling that problem without having to demonstrate the party’s active involvement.
    With that said, I am concerned about some of the negative ramifications this approach could have. A natural consequence of this rule seems to be that parties will work to exert greater control over their members/candidates. After all, not all corruption is derived from party norms, so parties are likely to want to screen their candidates very closely to prevent liabilities. This might be good for corruption, but could undermine other goals in a democratic society. If parties are going to be held liable for the corrupt behavior of their candidates, they are likely to want to have the final say in who represents them (to a greater degree than they currently do). This runs the risk of introducing greater status quo bias into the system, as party elites are likely to turn to candidates from within their own established networks to recruit. This may present viable grassroots leaders who best represent their localities from even emerging in the political system.Perhaps this is a reasonable check. However, if we want to ensure that new, less traditionally connected voices are represented, I fear we may find our goals inhibited.
    I also worry that more insular parties may actually be highly susceptible to corruption—drawing from the same pool of well-known individuals creates networks of trust and may establish the same sort of cultural atmosphere that is most conducive to corruption. Indeed, the closed-list proportional representation countries listed in the piece as the clearest examples of parties treating politicians as agents (Argentina, Italy, Spain, Russia, and South Africa) all score relatively highly on the Corruption Perceptions Index. In fact, there is some literature suggesting closed-list proportional representation systems are the electoral systems most conducive to corruption.
    See here: https://pdfs.semanticscholar.org/c4b7/568fde8a7b5bc274ba963b90ca4e6a965fb6.pdf and here:
    https://onlinelibrary.wiley.com/doi/10.1162/154247603322493203
    This is certainly not conclusive evidence, but it does lead me to think that this article’s proposal may have the unintended consequence of increasing rather than decreasing corruption.

    • Thank you for your comment. Certainly this idea would be balanced with concerns for how well democracy works. Corruption isn’t everything. In the end, we want politicians to do what the public wants them to do, and corruption is only part of that.
      That said, I would be quite surprised if such a prosecutorial strategy ended up increasing corruption, because in the end if parties are liable for corruption, they will have a strong incentive to keep corruption low.

  5. Thank you for your post and for all those interesting insights! In Brazil, country that you mentioned in your text, a similar proposal was actually introduced to Congress as part of a legislative package called “Ten Measures Against Corruption”, originally presented by Federal Prosecutors. The legislative proposal intended to modify the statue governing political parties to impose strict liability on political parties that benefited from certain types of misconducts, in the same way that corporations are considered liable for acts of corruption under the Brazilian Clean Company Act.

    Still considering Brazil as an example, in that country law enforcement authorities already could use the administrative improbity act to hold a political party accountable for acts of “corruption” when the party was favored by the misconduct. For example, Rio de Janeiro State Prosecutor’s Office has recently filed a lawsuit against politicians and political parties considering tax credits that were allegedly improperly granted due to political campaigns donations (see here in Portuguese: https://www.mprj.mp.br/home/-/detalhe-noticia/visualizar/68504?p_p_state=maximized). However, apparently the already existent risk of civil liability has never been sufficient to effectively deter criminal conducts committed by political party members. Therefore, it seems to me that as long as the probability of detection of a criminal conduct by the law enforcement authorities remains so low, the kind of liability that political parties would face in a hypothetical trial unfortunately may not be capable of altering behavior in the desired manner.

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