For today’s guest post, GAB is pleased to welcome back Robert Barrington, professor of practice at the University of Sussex’s Centre for the Study of Corruption.
Earlier this week, in the run-up to the Summit for Democracy, the US government launched its first-ever national anticorruption strategy, a move that was widely praised by advocacy groups such as Transparency International and the FACT Coalition. Indeed, the promulgation of this US “countering corruption” strategy document may turn out to be one of the most significant outcomes of the Summit, even though it preceded the Summit itself.
Only time will tell how much of an impact this new strategy document will make, but here are five initial observations:
- First, the document contains little that is new – but that doesn’t matter. You might think that the fight against corruption needs an injection of new ideas and radical thinking. Indeed, the debate taking place on the Global Anticorruption Blog (see, for example, here, here, and here) about success and failure suggests there is a group of eminent scholars who think previous anticorruption efforts have failed and there does need to be some substantial “rethinking.” Yet campaigners and practitioners are still keen to try ideas that have been around for a bit, such as beneficial ownership transparency (BOT) and regulation of “professional enablers.” The truth is that neither scholars nor campaigners know what will work, but until some good ideas have been tried and tested thoroughly, with associated regulation and enforcement, it seems premature to write them off. A strength of the US strategy is precisely that it groups together so many good ideas from around the world, and does not strive for novelty. For example, getting things like BOT to work, with the might of the US behind it, would be a big step forward. Though it will not eliminate corruption, the world will be a better place with such transparency than without it.
- Second, the strategy must survive a change of administration. One of the biggest problems that I have seen with regards to ambitious new government anticorruption strategies launched in my home country, the United Kingdom, is how to ensure continuity of commitment and action when there is a change of administration. Consider the 2016 London anticorruption summit, where then-Prime Minister David Cameron’s government announced its own national anticorruption strategy. Cameron resigned after the Brexit vote, and since then many of his commitments have been watered down or dropped by his successors—though the strong momentum from 2016 managed to keep a few alive despite the strong headwinds against them. So a challenge for the US strategy is how to ensure that its key components can survive a change of administration.
- Third, the strategy rightly recognizes that kleptocracy threatens national security. It’s one thing to worry about overseas corruption because of the suffering it causes in far-off countries. It’s quite another thing to realize that kleptocracy and grand corruption threaten your own national security– and even worse, that your own financial system has been complicit in welcoming the enemy into your back yard. The narrative linking overseas corruption to national security is not new in the US or elsewhere, but the US strategy places it front and center, firmly locating anticorruption efforts within a national security framework, thereby giving the subject prominence, priority, and access to budgets.
- Fourth, the strategy properly recognizes and emphasizes the problem of “professional enablers,” and labels them as such (rather than using the more euphemistic term “gatekeepers”). While law firms, accounting firms, corporate formation agents, and other such professional groups have long argued that self-regulation is sufficient to deal with the few “bad apples” who facilitate corruption and money laundering, advocates and scholars have cogently argued that mainstream law and accounting firms are often part of the problem—not only due to insufficiently effective screening and compliance systems, but all too often with active complicity in criminal activity. The US strategy firmly acknowledges the enablers problem, setting up an interesting confrontation with professions that are not only among the most articulate, wealthy, and influential in Washington, but which had previously been seen as firm allies in the fight against corruption.
- Fifth, US leadership is essential – but so are international alliances. Although the US has long been active in the issue of foreign bribery, with strong FCPA enforcement, it has been a sleeping giant in many other anticorruption areas. During the Trump Administration the US seemed at best inactive, and sometimes complicit, with respect to grand corruption abroad. This left an uncomfortable vacuum in the global anticorruption architecture, into which hostile powers, notably Russia and China, were starting to seep. The giant has now awoken. But, powerful though it is, the US cannot do this alone. The Summit for Democracy may forge new alliances – but where from? Historically, the natural ally on this agenda would have been the UK. That can no longer be taken for granted in a post-Brexit world, in which Britain is seen by much of the world as having its very own mini-Trump in charge. So where will the US find allies? It’s not clear, but France may be the dark horse in this field, with its internationalist leader and a new anticorruption agency making some waves beyond its own borders.
In sum: it’s a good strategy, which over time should resonate around the globe, building on previous actions, campaigns and events, not least the advances of the London Anti-Corruption Summit of 2016. It is a platitude to state that political will and effective enforcement will make the difference between success and nothing really changing. But political will and effective enforcement are indeed two key ingredients. Good luck, America.
A big point under Pillar two:
I understand and agree with the support to the Corporate Transparency Act and the elements that will support investigations with regard to beneficial ownership. But there are a couple of points that I think need to be considered as the strategy as the Strategy “Finaliz(es) effective beneficial ownership regulations, and build(s) a database of the beneficial owners of certain companies, in order to help domestic and international partners identify bad actors;”
First, access to the beneficial ownership database that is intended to help the fight. The Strategy states, “…improve information sharing domestically and internationally (Strategic Objective 1.2), coordinating efforts across federal, state, tribal, and local governments, as well as with international allies and partners.” Access to the database, under current plans, requires state and local to go the extra step of obtaining a court order to gain access. Why the added requirement and how does this improve “coordinating efforts”?
My second concern is also one from a practical perspective. With respect to the Strategy where does the United States expect to see better law enforcement engagement with respect to corruption? In the United States where can most instances of public and other corruption be seen? At the federal level? Or is it more at the state or local government level? And who would more likely investigate at these levels? Federal? State? Local?
I have just completed a series of in person and online financial crime investigation training over the year to many different places, in the northern, western and southern regions, mostly attended by state and local law enforcement officers and analysts. I was impressed with the lack of knowledge and understanding of financial crime investigative processes, including money laundering issues. The bottom line is that unless these cases were worked federally or in a task force they would not have been investigated. One analyst at a training in a northern state told me that any money laundering case is either charged federally or not at all.
So, I am happy to see the concerns raised in the Strategy; they are not necessarily new, but they are important to understand. I will look forward to seeing how the “rubber meets the road” because right now I don’t see any tires on the car. In my opinion there needs to be a lot more action at the state and local level to deal with corruption issues.
Michael Loughnane, CFE, CAMS Loughnane Associates, LLC,Manassas, Virginia, US firstname.lastname@example.org http://www.valuetoucheseverything.com
Sure the drafters will take heart from this nice endorsement of their labors (or or should I write labours given the writer’s nationality?). Implicit in his analysis is the import of terming the document the “U.S. strategy” not “the Biden Administration’s strategy.” A point I suspect the drafters will agree with.