Author Archives: Brydne Slattery

Countering Corruption in the Energy Sector: After Initial Missteps, Tanzania Shows the Way

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The effects of corruption can be felt long after the incidents take place. There’s no better illustration of this than the history of Tanzania’s energy sector. In 1992, the Government of Tanzania was facing an energy crisis, and was in discussions with a Canadian company to develop its natural gas fields with funding from the World Bank. But then, the Tanzanian government received an unsolicited proposal from a Malaysian company, which offered to partner with a local Tanzanian firm to build and operate an emergency diesel-fueled power plant. The government abandoned its discussions with the Canadian company and, in 1995, signed a 20-year power purchase agreement (PPA) with Independent Power Tanzania Limited (IPTL), a joint venture entity formed by these Malaysian and Tanzanian private interests. By 1995, however, the energy crisis had already passed, and it was not at all clear that this PPA was in the government’s interest. In fact, Tanzania’s principal energy regulation agency, the Ministry of Energy and Minerals (MEM), consistently opposed the deal. Yet parties with significant ownership interests in IPTL managed to get the PPA through, in part by bribing senior officials and politicians.

The deal was a disaster, one that had a substantial negative impact on Tanzania’s energy sector for close to two decades. (The initial corrupt deal, together with multiple other improprieties, significantly undermined the financial stability of Tanzania’s energy sector, resulting in lower investment, substantial delays in the construction of more efficient power plants, higher energy costs for consumers, and inadequate expansion of electrification into rural communities.) But, without minimizing the seriousness of the mistakes that were made or the costs that resulted from this corrupt deal, ultimately Tanzania’s efforts over the last decade to hold the corrupt actors accountable and to overhaul its regulatory system provide a roadmap for how countries that have suffered from this sort of corruption, in the energy sector and elsewhere, can respond. Continue reading →

High Costs: Corruption Scandals in America’s Legal Marijuana Industry

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The movement to legalize marijuana in the United States has been gaining momentum. Thirty-three states and the District of Columbia have currently legalized marijuana to some degree, and of those, eleven states and D.C. have legalized recreational use of marijuana.  (Selling, possessing, consuming marijuana remains illegal under federal law, but the federal laws against marijuana are rarely enforced, which creates a rather odd situation in the states that have legalized marijuana: those who participate in the marijuana market are still technically engaged in illegal activity, even though that market operates out in the open.) In the absence of uniform federal regulation, those states that have legalized marijuana have adopted different regulatory approaches; most states issue a limited number of licenses to sell or supply marijuana, but have capped the number of licenses in order to limit the amount of marijuana on the market. This makes each license extremely valuable, given that the total value of the marijuana market is estimated to be somewhere in the neighborhood of $52 billion. Additionally, in most states the license evaluation criteria, and the evaluation process, are extremely opaque, and local government officials frequently have substantial discretion regarding who receives these licenses.

Given this combination of factors—state and local officials with the power to issue a small number of extremely valuable licenses through an opaque process—it should come as no surprise that the legal marijuana market has become a hotbed for corruption. Consider just a few examples: Continue reading →

Canada’s SNC-Lavalin Scandal: Why Prime Minister Trudeau Was Wrong To Interfere, Even Though He Was Right on the Merits

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This past year, Canadian Prime Minister Justin Trudeau has been embroiled in allegations that he improperly intervened in one of Canada’s biggest-ever foreign bribery prosecutions. That prosecution, of the Canadian construction firm SNC-Lavalin, began back in 2015, when the Royal Canadian Mounted Police (RCMP) and the Public Prosecution Service of Canada (PPSC) announced they would be bringing charges against the firm for paying approximately CA$48 million in bribes to Libyan government officials to win contracts, and for related misconduct including the defrauding of Libyan companies. This past February, the Globe and Mail reported that Prime Minister Trudeau and his closest advisors had inappropriately attempted to influence the SNC-Lavalin prosecution, and a subsequent inquiry by the Ethics Commissioner found that Trudeau had indeed acted unethically in attempting to influence key prosecutorial decisions that are supposed to be made by the Attorney General. The scandal had political consequences: although Prime Minister Trudeau and his Liberal Party managed to hang on to a minority government in October’s elections, the Liberal Party lost 27 seats and the popular vote.

The specific prosecutorial decision that Prime Minister Trudeau attempted to influence concerned whether the government should negotiate a deferred prosecution agreement (DPA) with SNC-Lavalin. A DPA is a settlement in which the defendant agrees to penalties or other remedial measures, and in return the government agrees to suspend the prosecution, and eventually drop the charges if after an agreed period of time the defendant has complied with the terms of the agreement. A DPA is similar to a plea bargain, but it does not require the defendant to plead guilty, and so avoids imposing on the defendant the stigma and collateral consequences of a criminal conviction. The prosecutor who brought the charges denied SNC-Lavalin’s request for a DPA in late 2018, and the acting Attorney General, Jody Wilson-Raybould, declined to overrule that decision. The Attorney General’s decision is supposed to be final on such matters. Nonetheless, Ms. Wilson-Raybould claims she fielded ten phone calls from the Prime Minister’s office, and was invited in for ten in-person meetings with the Prime Minister and his advisors, regarding this decision—and that the Prime Minister was pushing her to pursue a DPA with SNC-Lavalin. Ms. Wilson-Raybould refused to reconsider her stance on the matter, and shortly afterwards she was removed from her position as Attorney General and named instead Head of Veteran Affairs. In the end, the interference was exposed, the pressure failed, and, unless there’s some other unexpected turn of events, SNC-Lavalin will be going to trial.

This affair raises two questions: First, was Prime Minister Trudeau correct that the prosecutors should negotiate a DPA in this case? Second, if the answer to the first question is yes, was it appropriate for the Prime Minister to press his Attorney General to pursue that approach? My answer is yes to the first question, but no to the second. On the one hand, Prime Minister Trudeau was correct, and Acting Attorney General Wilson-Raybould was incorrect, about the appropriateness of a DPA in this case. However, the principle of prosecutorial independence from political influence—especially in corruption cases—is far more important, and the Prime Minister should never have compromised this core value even if he was right on the merits of this individual decision. Continue reading →