Monthly Archives: July 2022

That Corruption Infects the Italian Judiciary Is Now Undeniable

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In March 2021, a Milan trial court acquitted Italian oil giant ENI, its partner Royal Dutch Shell, and numerous individuals of bribing Nigerian President Goodluck Jonathan and pals to secure the rights to the lucrative offshore oil field denominated OPL-245. The evidence of bribery was overwhelming, including internal Shell e-mails describing the scheme and the testimony of an ENI official confirming his bosses were fully aware of it. Suspicions that someone had “gotten” to the judges immediately arose stoked by revelations of close ties between the presiding judge and ENI’s senior counsel.

Any doubt that the verdict was tainted was put to rest when the court published its opinion justifying it. As the attached analysis by the British, Italian, and Nigerian NGOs that have pushed the case shows, the court’s “reasoning” was laughable. Two examples of many. The court wrote off the then oil minister’s sale of OPL-245 rights to a company he secretly owned as a trifle because neither he nor the government officials bribed to approve the sale objected. Equally ridiculous, the court found that a Shell briefing note reporting that part of the bribe would be in the form of political contributions simply recounted a rumor then circulating.

Between the strength of the evidence the prosecution presented and the court’s flimsy if not bizarre reasoning dismissing it, the expectation was that the acquittal would easily and quickly be overturned on appeal. That hope is not to be however.  Last week the Italian prosecutors assigned to handle the appeal announced they were withdrawing it. 

Thus ENI, Shell, and the 13 individuals named as accomplices in the payment of a $1.1 billion bribe stand exonerated. And it now clear that the rot in the Italian judiciary reaches into its once revered prosecution service.

Nor is the damage from the rot limited to Italy. Thanks to the doctrine of ne bis in idem (double jeopardy in American law), a Dutch investigation of Shell’s role had to be dropped (here).  

The last hope for justice now lies with the Nigerian judiciary. Ne bid in idem only bars EU countries from pursuing a case. A Nigerian investigation of the companies and their accomplices is underway. It is critical it continue and that the international anticorruption community do all it can to support it given what has happened in Italy.

Moreover, as this blog has urged, it is critical too that the OECD hold Italy to account for its failure to live up to its obligations to sanction Italian companies that bribe foreign officials. The ENI-Shell case must be an outlier not a precedent.

New Podcast Episode, Featuring Andrii Borovyk and Gretta Fenner

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A new episode of KickBack: The Global Anticorruption Podcast is now available.I know that I said in the post announcing the episode from a couple weeks back that that one would be the last post before our summer vacation, but I spoke too soon–last week I had the opportunity to speak with Andrii Borovyk, the Executive Director of Transparency International’s Ukraine chapter, and Gretta Fenner, the Managing Director of the Basel Institute on Governance, about addressing corruption risks inherent in emergency aid to Ukraine during the current conflict and the anticipated future infusion of funds to assist with post-war reconstruction. (Full disclosure: I am on the Board of Directors for Transparency International Ukraine, an unpaid position, and in that capacity I have worked with Andrii, though not directly on this issue.) After sharing their respective backgrounds in the field, Andrii and Gretta discuss how Russia’s aggression affected anticorruption advocacy work within Ukraine, and emphasize the importance for both domestic and international actors to strengthen institutions and mechanisms to prevent corruption in aid and reconstruction efforts. The conversation touches on, among other things, the challenges of pushing an anticorruption agenda in a time of national emergency, the role that aid conditionalities can play in promoting effective reform, and the importance of open, accessible, and centralized public information repositories. You can also find both this episode and an archive of prior episodes at the following locations: This really will be the last podcast episode before we go on summer break, but we will be releasing new episodes in September. The Global Anticorruption Blog is also going to go on summer hiatus during August, though I may post occasionally if something particularly important and time-sensitive comes up. As always, I’ll remind you that KickBack is a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (ICRN), encourage you to subscribe, and invite you to suggest for people or topics you’d like to hear on the podcast by sending me a message.

Money for Something: Do Remittances Have an Anticorruption Effect?

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Remittances—the money or goods that migrants send home to support their families and friends—have become increasingly important in developing countries. In nations like Haiti, Honduras, and Tajikistan, remittances account for more than 20% of their respective GDPs. Interestingly, many of these top recipient countries also rank among the most corrupt in the world, at least according to Transparency International’s Corruption Perceptions Index. While that correlation does not by itself establish causation, it does invite the question of whether large flows of remittances have any meaningful impact on corruption within the recipient country.

Surprisingly, this question has been “virtually ignored” in academic literature. Only a few studies investigate the connection between remittances and corruption, and the handful of papers on this topic come to quite different conclusions.

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Anticorruption Bibliography–July 2022 Update

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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. Additionally, the bibliography is available in more user-friendly, searchable form at Global Integrity’s Anti-Corruption Corpus website. As always, I welcome suggestions for other sources that are not yet included, including any papers GAB readers have written.

Corrupt State Officials and Companies Are Razing Malaysia’s Ancient Forests. Here’s How to Stop Them.

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Malaysia is home to two of the world’s oldest rainforests. Dating back 130 million years, the Taman Negara and Borneo Lowland forests are older than even the Amazon and the Congo Basin. As of 2016, Malaysia had 19.3 mega-hectares of forested land, which is close to 60% of the country’s total land area. But these forests are under the constant threat of their destruction by private commercial exploiters that engage in logging and development. Already in various parts of Peninsular Malaysia and Borneo Island, forests have been transferred to private ownership and used to develop palm oil and rubber plantations, durian farms, and mines. Once-serene forests are now plagued by mudslides and logjams, their biodiversity has suffered, and the indigenous communities that used to cultivate the forests have been displaced.

The reckless exploitation of Malaysia’s forests has many causes, including poorly-designed conservation regulations. But corruption is one of the most important root causes of unchecked and unsustainable deforestation. Such corruption comes in two main forms:

  • The first is the corrupt award of land titles and logging concessions to cronies, or in exchange for bribes. This sort of corruption is epitomized by the sale of the Sarawak State’s land and forests bordering the Mulu UNESCO World Heritage site.  by to cronies and family. In 2013, several NGOs reported that the powerful Chief Minister Abdul Taib Mahmud had arranged for the state to sell these lands to his cronies and family members at cut-rate prices, after a non-transparent process with no formal tendering. The new (crony) owners planned to raze the forests to develop palm oil plantations. To the frustration of anticorruption activists and lawyers, the Malaysian Anti-Corruption Commission (MACC) found no grounds to charge Taib Mahmud for abuse of power, due to insufficient evidence of his specific personal involvement in the sale decision.
  • Second, when commercial exploiters want to log in areas where they do not have a concession, they have been known to bribe local officials to overlook these illegal logging activities. To take just one example, in 2017 the authorities prosecuted corrupt forestry officials for taking kickbacks of RM340,000 (about US$76,800) from a logging company over several months. The only thing unusual about this case is that it was uncovered and prosecuted. Bribery of local government officials and law enforcement officers is widespread in Malaysia, and typically goes undetected. In the forestry context, the costs of such corruption are massive: The Deputy Natural Resources and Environment Minister reported in 2017 that the losses from illegal logging in Peninsular Malaysia amounted to RM15.2 million (about US$3.5 million).

To curtail the rampant destruction of Malaysia’s vital and irreplaceable forest resources, the government needs to do more to combat both these forms of corruption.

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New Podcast Episode, Featuring Mihaly Fazekas

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In the new episode, my ICRN colleagues Nils Kobis and Christopher Starke interview Mihaly Fazekas, Assistant Professor of Public Policy at the Central European University. Professor Fazekas explains how he became interested in the study of corruption and describes some of his lines of research, including his work on measurement of corruption, particularly in the context of public procurement, and the challenges of scaling up the best corruption measures. The interview also covers additional topics such as the role of investigative journalism in fighting corruption, and the anticorruption potential impact of new technologies, including big data analysis and artificial intelligence.

You can also find both this episode and an archive of prior episodes at the following locations:

A quick note: We will be going on summer break, so we will not be releasing any new episodes over the next six weeks, but KickBack will return with new episodes in September. KickBack is a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (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.

Explaining (the Lack of) Corruption in the US Federal Judiciary

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The United States judiciary has a history with corruption. Corruption pervaded every aspect of pre-revolution America, from the customs enforcers up to the colonial judges. Corruption in the United States only worsened a century after the Revolution, with politicians during the late 19th century taking “spectacularly handsome bribes from corporations and demand[ing] kickbacks as the helping hand they extended often came with an open palm.” Early twentieth century America, in many ways, had systemic corruption similar to that seen in modern developing countries. Even as recently as the early 2000s, state judges have come under fire for not only individual corruption, but pervasive, systemic corruption rings. Outright bribery is only one problem: state judges have also been known to engage in misappropriation of public resources, nepotism in appointing counsel, and “skimming off the top.”

Yet in spite of the environment around them, the federal judiciary—more or less since day one—has been mostly corruption-free. As Professor Mathew Stephenson observed, even during the quite corrupt nineteenth century, “at least at the federal level, the institutions of justice—courts and prosecutors—seemed relatively clean and basically functional.” If anything, the federal judiciary, and federal prosecutors, have served as a check on corruption at the state and local level, “particularly in the latter half of the twentieth century.” This pattern continues into the present day: Although the federal judiciary comprises 5% of all judges in the United States, they only account for 0.2% of known cases of judicial bribery.

This raises a question: How did the federal judiciary remain relatively free from corruption, especially during the first century of the country’s existence, when corruption pervaded so many aspects of American society, including state and local courts? There are two broad categories of explanation: historical and structural. These are not mutually exclusive alternatives; rather, the historical and structural explanations complement one another.

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Who You Gonna Call? The Hunt for Ghost Employees in the Philippines

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In the Philippines, as in many other countries, ghost employee fraud is a perennial public corruption problem. Ghost employees are people who are listed on an organization’s payroll but who do not actually work there. (In some cases the ghost employees are entirely fictitious; in other cases, they are real people who do not work at the organization but are included on the payroll—sometimes with their knowledge, and sometimes without.) The corrupt managers of agencies or departments will falsify payroll records to authorize the issuance of paychecks to the ghost employees, while these managers and their accomplices pocket the money that is supposed to pay the ghost employees’ salaries. The scale of ghost employee fraud can be staggering. In the Philippines, senior government officials—particularly at the local level—have used such schemes to siphon millions of pesos from government institutions. Indeed, back in 2016, when current President Rodrigo Duterte was the mayor of Davao, he was credibly accused of pocketing around ₱708 million through the hiring of 11,000 ghost employees. This is just one out of many cases of ghost employee fraud haunting the country (see, for example, here, here, and here). Despite the scope and scale of the problem, the Philippine government has taken no proactive steps to address it. This must change. Though the problem is serious and widespread, there are a number of things the government could do:

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Guest Post: C4I’s New Index Illuminates the Need for Reform of State-Level Campaign Finance Rules in the U.S.

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Today’s guest post comes from Shruti Shah, President and CEO of the Coalition for Integrity (C41), together with Laurie Sherman, C4I’s Policy Advisor, and Stephanie Camhi, a C4I external consultant.

Anticorruption and good governance advocates, in the United States and elsewhere, have long been concerned with the potentially corrupting influence of campaign donations and other political spending on public policy. (Indeed, although the U.S. Supreme Court has deemed political spending to be a form of “speech” protected by the First Amendment of the U.S. Constitution, the Court has also recognized the prevention of corruption, or its appearance, as one of the few interests sufficiently compelling to justify campaign finance laws that limit such spending.) Much of the discussion of the campaign finance issue in the United States focuses on federal elections, yet concerns about the corrupting effect of campaign donations are just as important in state-level elections. State elected officials—legislators, governors, and other elected executive branch officials—play a vital role in creating and implementing public policy, and these officials decide how to spend trillions of dollars on roads, health, education, welfare, and other programs. And money continues to flow into state races in record-breaking amounts. Yet the potential for corruption—both illegal corruption and the “softer” corruption associated with undue access and influence for large donors—does not receive as much attention at the state level as at the federal level.

State-level political candidates must follow campaign finance laws written and enforced by the state, and states vary greatly in terms of the content and quality of their campaign finance systems. To highlight the variance across states in campaign finance laws, and to provide more information to voters and reformers, the Coalition for Integrity (C4I) created the first State Campaign Finance Index analyzing the campaign finance laws and regulations in all fifty states and District of Columbia. The Index assigns states scores based on several factors that, in C4I’s judgment, constitute best practices. The most important factors are as follows: Continue reading →

USAID’s New Dekleptification Guide

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The U.S. Agency for International Development has just published a draft of what it calls a Dekleptification Guide. “Dekleptification,” the authors explain, is the process by which citizens kick kleptocrats out of power and ensure they stay out. The guide discusses a range of projects the agency could fund to support anti-kleptocrat movements, consolidate post-kleptocratic, democratic orders, and prevent kleptocrats from returning to office.

The agency seeks comments on the feasibility and appropriateness of the projects suggested, whether there are others it has overlooked, and generally whether its analysis and approach to dekleptification meshes with experience to date.  

USAID is one of the largest and most influential providers of foreign assistance — thanks not only to the size of its programs but to the quality of analysis that underpins them. The guide will almost surely have an impact far beyond coining a term to organize thinking about how to end kleptocracy. Members of the anticorruption community should therefore take up the agency’s request for comments.

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