Monthly Archives: January 2020

Will an IMF Loan End Equatorial Guinea’s Grand Corruption? Part I

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Long scorned as a nearly perfect kleptocracy where corruption is unparalleled in its brazenness, Equatorial Guinea announced last November it would end the rampant corruption that has earned it such contempt, issuing a policy note saying it is “firmly committed” to measures to “enhance governance and transparency, [and] reduce corruption.” The note issued not from a newly-installed, reformist government but from the same one that has bled the country dry for three decades. The commitment to honest government is the price the International Monetary Fund is demanding in return for a loan to pull the economy out of a deep, prolonged recession largely caused by the ruling elite’s wholesale looting of the nation’s patrimony.

The Equatorial Guinea loan is not the first time the IMF has conditioned a bailout on anticorruption reforms. In 2015, in return for a four-year $17.5 billion loan, Ukraine was required to overhaul the institutions that investigate, prosecute, and adjudicate corruption cases, prohibit government employees from receiving large gifts, and compel senior officials to disclose their assets. The European Union, other international organizations and governments, and Ukrainian civil society all helped formulate these conditions, and all pressed the government to comply with them. Thanks to this concerted pressure, it is; and while Ukraine today is hardly corruption free, it is making steady progress in bringing corruption to heel.

Equatorial Guinea’s promises to the IMF appear in a policy paper titled “Good Governance and Anticorruption Action Plan” (Spanish version; English version). It there pledges not only to enact a slew of new anticorruption laws but to enforce them as well. But unlike Ukraine, Equatorial Guinea has no powerful neighbors demanding it comply with these promises, no strong, independent civil society organizations lobbying for them, and no vibrant, free press following its progress in realizing them.  Like most corrupt countries, it is run by a thuggish, repressive regime that locks up its opponents, or worse, and cares nothing for its standing in the international community or its citizen’s well-being.  The chances the government will honor the IMF loan covenants are thus much lower than they were in Ukraine. Close observers of the country expect the government will enact measures that look good on paper but are never enforced.  And then claim it has done what it promised. Continue reading →

New Podcast, Featuring Charles Davidson

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In this episode, I interview Charles Davidson, currently the publisher of the American Interest magazine, and previously the co-founder of Global Financial Integrity and the Hudson Institute’s Kleptocracy Initiative. We discuss a variety of topics, including financial integrity, beneficial ownership transparency, and kleptocracy–including the threat that kleptocratic wealth from authoritarian states poses to liberal democracies, the use of targeted sanctions against individual corrupt actors, and concerns about how kleptocrats use Western institutions not only to launder their money, but also to launder their reputations.

You can find this episode, along with links to previous podcast episodes, at the following locations:

[NOTE: This episode begins with some introductory housekeeping material about future directions for the KickBack podcast. If you want to jump straight to the interview, it begins at 3:07.]

KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.

The Mafia Capitale Trials Show Italian Municipalities’ Continued Vulnerability to Corruption by Organized Criminal Groups

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Over five years ago, in November of 2014, Rome’s mayor, Ignazio Marino, blew the whistle on a massive corruption scheme in the city’s administration. Marino had become particularly suspicious of Salvatore Buzzi, the leftwing leader of a cooperative that controlled, among other things, the city’s recycling, trash disposal, and street cleaning services. Buzzi had been imprisoned in the 1980s for homicide, but was supposedly a thoroughly reformed champion of progressive causes. In fact, he was the right-hand man of Massimo Carminati, a former member of a neofascist terrorist group. Using collusion, exchange of favors, extortion, and intimidation, Carminati and Buzzi diverted hundreds of millions of euros intended for the improvement of Rome’s infrastructure to private bank accounts. And if this wasn’t enough, the group even skimmed resources from housing projects designed to shelter refugees, with Buzzi famously caught on a telephone intercept saying “Do you have any idea how much I earn on these immigrants? They’re more profitable than drugs.”

In sum, these Roman criminal groups, which are popularly known as Mondo di Mezzo (the World Between) or Mafia Capitale (Capital Mafia), had thoroughly infiltrated Rome’s municipal government. Indeed, their connections reached the upper echelons of Roman government, including former mayor Gianni Alemanno, who was ultimately convicted of corruption and illicit funding. Buzzi and Carminati, along with more than 40 other individuals, were ultimately brought to trial over these crimes. Prosecutors under magistrate Giuseppe Pignatone pushed for this organization to be recognized as a mafia—which is important, because under Italian law, there is a special, and especially severe, set of criminal laws reserved for mafia members and mafia-type associations. This past October, however, the Italian Court of Cassation ruled that the Mondo di Mezzo did not qualify, legally, as a mafia-type association (associazione di tipo mafioso).

This ruling has been controversial, and indeed much of the attention that Mondo di Mezzo has received has been based on the “mafia” element of this case. But whether or not Mondo di Mezzo is a mafia, this case has revealed the Italian capital’s vulnerability to corruption by organized criminal networks. In the words of Pignatone, the mafia is not Rome’s first problem. Instead, the most serious issues “are the crimes against the public administration and the economy. It is corruption, auction disruptions, bankruptcies, multimillion-dollar frauds. Mafia Capitale is just a piece of a much larger and more complicated mosaic.” And Mondo di Mezzo demonstrates that Italy must take concrete action to reduce the vulnerability of municipal governments to infiltration by criminal groups. Continue reading →

Tracking Corruption and Conflicts of Interest in the Trump Administration–January 2020 Update

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As many regular readers of this blog are aware, since May 2017 we’ve been tracking and cataloguing credible allegations that President Trump, and his family members and close associates, have been corruptly, and possibly illegally, leveraging the power of the presidency to enrich themselves. The newest update is now available here.

A previously noted, while we try to include only those allegations that appear credible, 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.)

Possible Reforms to Australia’s Approach to Corporate Criminal Liability: “Failure to Prevent”, Strict Liability, or Something Else?

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Many of the most significant bribery offenses, both domestically and internationally, involve corporations. When, and under what conditions, should the corporation itself—as opposed to, or in addition to, the individual employees involved in the wrongdoing—be held criminally liable? The attribution of criminal liability is sometimes thought to be conceptually or philosophically problematic: As Baron Thurlow LC once observed, a corporation has “no soul to be damned and no body to be kicked.” Yet it is clear that corporations can do wrong, and the prospect, and extent, of corporate criminal liability can have significant impacts on corporate behavior. Various legal systems have developed different approaches, but in some jurisdictions there has been considerable dissatisfaction with the status quo, and agitation for reform.

Australia is one such jurisdiction. In response to concerns about the Australian legal system’s approach to corporate criminal liability (an issue that is important in, but not limited to, the corruption context), last April the Commonwealth Attorney General of Australia, Christian Porter, announced that the Australian Law Reform Commission (ALRC)—the Australian Federal Government’s highly influential law reform agency—would conduct an inquiry into this issue. The Terms of Reference required the ALRC to review, among other things, the policy rationale behind Australia’s current framework for imposing criminal liability on corporations, as well as the availability of alternate mechanisms for attributing corporate criminal liability. This past November, the ALRC released a 279-page Discussion Paper that thoroughly canvasses potential approaches to reforming Australia’s corporate criminal liability regime; the ALRC is currently receiving comments on that paper, which are due at the end of this month (January 31, 2020), and after considering these submissions, the ALRC will release its final report by April 30, 2020.

The ALRC paper covers many issues, but perhaps the most fundamental concerns the basic rules for attributing criminal responsibility to the corporation. The ALRC, and the Australian government, faces a choice among several plausible alternatives: Continue reading →

New Podcast–An End-of-Year Review Featuring Nils Köbis and Christopher Starke

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Happy (slightly belated) New Year! As our regular readers may have noticed, GAB has been on vacation for the past couple of weeks (partly because of the holidays, partly because your editor-in-chief has been away), but we’re back, and new content will be appearing imminently.

Partly because of our long hiatus, I neglected to post that a couple of weeks ago my ICRN collaborators Nils Köbis and Christopher Starke released a special year-end episode of KickBack: The Global Anticorruption Podcast; in this podcast, Nils and Christopher which recap some of the highlights of our 2019 podcast episodes, highlighting interesting insights, lessons, and thoughts regarding the future of anticorruption research and practice (as well as some reflections on our experiences with our foray into podcasting).

You can find this episode, along with links to previous podcast episodes, at the following locations:

KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.