Author Archives: Ben Salvatore

About Ben Salvatore

Ben Salvatore is a student at Harvard Law School. He has previously worked at the U.S. Attorney’s Office for the Eastern District of NY and at the litigation firm Kasowitz Benson Torres LLP, where he worked on white collar criminal cases. He served as a Peace Corps Volunteer in Burkina Faso from 2015-2017.

Security Sector Reform in West Africa Must Include Anticorruption Measures

Posted on by
1

West Africa is beset by internal and external security crises. In addition to burgeoning levels of violence linked to Islamist extremism throughout the Sahel, there has been a string of military coups d’êtat in Burkina Faso, Mali, and Guinea, as well as failed coup attempts in Niger and Guinea-Bissau. The persistence of violence, instability, and military coups throughout the region has intensified calls for comprehensive security sector reform (SSR) throughout the region. (The term SSR, in this context, includes reforms to the policies, structures, and capacities of institutions and groups engaged in the security sector—defined broadly to include defense forces, law enforcement, corrections, intelligence services, border management, and customs agents, as well as certain non-state actors such as private security services—in order to make them more effective, efficient, and responsive to democratic control.) Indeed, many believe that a multilateral, region-wide initiative on SSR is essential during this tense political moment in West Africa.

It was therefore encouraging when, last November, the Economic Community of West African States (ECOWAS) met to announce its commitment to a new Policy Framework for Security Sector Reform and Governance (SSRG). Unfortunately, this Framework is deficient in a number of serious ways. One of the most significant problems is that the Framework focuses too narrowly on things like “resource mobilization and financing” and “professionalization and modernization” of the security sector, while paying insufficient attention to the central role of corruption in the security sector as a key impediment to genuine SSR. As a result, the Framework fails to clearly establish anticorruption as a core principle and a key element of SSR programming, and lacks sufficient guidance to member states on how to mitigate corruption risks in the security sector.

Read more: Security Sector Reform in West Africa Must Include Anticorruption Measures

That corruption in the security sector undermines national security and political stability is well established, both in general and in West Africa specifically. For one thing, corruption in the security sector hollows out defense and security forces, rendering them less effective, less professional, and less well-equipped. Corruption therefore can enable armed groups to gain power and influence—particularly in neglected and under-policed rural areas. Furthermore, when citizens experience or perceive corruption in a country’s security services, this can generate greater resentment and distrust of the central government, which in turn can undermine the state’s legitimacy and the ability of the security services to work effectively with the civilian population.

Yet as Transparency International (TI) correctly observed, SSR initiatives in West Africa—including the ECOWAS Framework—have neglected anticorruption in favor of more technical “train-and-equip” approaches to reform. Especially after the wave of military coups and coup attempts among ECOWAS member states since 2020, it is clear that this approach is insufficient. ECOWAS can and should revise the Framework to include provisions that require member states to implement strong anticorruption measures into their national SSRG programs. Three such revisions are particularly important: Continue reading →

The U.K. Must Legislate to Combat Money Laundering in Its Universities

Posted on by
2

Parents from developing countries have long sought to provide their children with a world-class university education in wealthy Western countries, such as the US and the UK. There is nothing inherently wrong with this—indeed, universities ought to take pride in their ability to provide an elite education to talented young people from around the world. There is, however, a dark side. In 2021, media reports revealed that nearly fifty UK universities had accepted upwards of £52 million in direct cash payments for tuition and fees from students hailing from countries known to be “high risk” for money laundering—most notably the West African countries of Ghana and Nigeria. A Carnegie Endowment Report on this topic observed that although “[t]he overwhelming majority of West African students in the United Kingdom pose little or no corruption risk, … many West African [politically exposed persons (PEPs)] appear to be using unexplained wealth to pay for UK school and university fees.” Indeed, many of West Africa’s nouveau riche made their money through illicit channels, and they may view an elite UK education for their children as a way to launder their reputations as well as their wealth. As Matthew Page, the author of the Carnegie Report, explained, any university that accepts tuition and fee payments in cash—especially from PEPs in countries with high corruption risk—is essentially “putting out a welcome mat for the world’s kleptocrats and money launderers.”

Although most UK universities acknowledge that they have basic anti-money laundering (AML) responsibilities under Sections 327 and 329 of the 2002 Proceeds of Crime Act, universities are not clearly covered as “regulated entities” under the UK’s Money Laundering Regulations. And while some universities have responded to recent high-profile scandals and government warnings by adding basic AML provisions to their fee-collection and admissions policies, this is not the sort of problem that is likely to be solved through unilateral action on the part of universities. The incentives to turn a blind eye to the provenance of tuition and fees from international students—which many UK universities have come to rely on as a revenue stream—are simply too strong. (It’s worth noting here that international students typically pay more than three times the fees paid by students from the UK or the European Union, and many UK universities encourage advance cash payments by offering international students discounts of 20-30% if they can pay their fees in advance.) Solving this problem will therefore require the UK to amend its AML legislation to address the particular vulnerabilities in the university sector. Three such reforms would be particularly prudent: Continue reading →

The Future of FCPA Enforcement After KT Corp.

Posted on by
1

Earlier this year, the US Securities and Exchange Commission (SEC) settled a Foreign Corrupt Practices Act (FCPA) case with KT Corporation, the largest telecommunications operator in South Korea. The facts of the case, as described in the settlement documents, are cinematically scandalous: From at least 2009 through 2017, high level executives at KT maintained enormous slush funds in off-the-books accounts and physical stashes of cash, from which they made illegal political contributions and paid off government officials in both Korea and Vietnam. In their home country, they frequently used these slush funds to pay for substantial unreported gifts, entertainment, and campaign donations to members of the Korean National Assembly who were serving on committees that addressed issues of public policy directly related to KT’s business. Furthermore, after the South Korean press reported on the slush fund allegations back in 2013—reporting that led to a Korean criminal prosecution of KT’s president for embezzlement—the company simply shifted its tactics for filling its slush funds: Rather than siphoning off inflated executive bonuses, KT had its Corporate Relations (CR) Group purchase gift cards, which were then converted into cash to replenish the slush funds. In genuine “cloak and dagger” style, a member of the CR Group would meet the corrupt gift card vendor in the parking lot behind the KT building and receive a paper bag containing a large envelope of cash.

In a magnificent understatement, the Chief of the SEC’s FCPA Enforcement Unit noted that KT “failed to implement sufficient internal accounting controls with respect to key aspects of its business operations,” and that in the future, the company’s leaders should “be sure to devote appropriate attention to meeting their obligations under the FCPA.” But this was not simply a case of a company failing to keep its financial records up to date. Rather, there was a complete and total collapse of any semblance of a culture of compliance at KT. The fact that executives at the highest levels of this corporation, including the president and the CR Group, were directly responsible for these bribery schemes indicates that the culture of this corporation was corrupt, thorough-and-through; bribery was an indispensable component of its business model, and continued even after the company’s president was prosecuted. Yet because KT cooperated with the SEC’s investigation, the SEC only required KT to pay a paltry $6.3 million in combined disgorgement and civil penalties; the SEC also put the company on a two-year probation, during which KT must update the SEC every six months on its compliance measures, though it is unclear what, if anything, will happen if KT somehow mishandles the recommended compliance improvements.

This outcome is unacceptable. If the U.S. government is serious about its intention to deter future misconduct, it must ensure that civil penalties for FCPA violations cannot simply be seen as an “acceptable cost of doing business.” Over the past few years, SEC and DOJ leadership have repeatedly emphasized the importance of anticorruption enforcement and have suggested a desire to reverse the trend of steadily declining FCPA enforcement actions. If deterrence of corrupt corporate conduct is truly a priority for the SEC and the DOJ, then now would be a good time to start substantially ramping up FCPA investigations and enforcement actions, especially in cases of companies like KT that have exhibited the incorrigible culture of brazen corruption.

There are two substantial objections to the call to ramp up FCPA enforcement actions against foreign companies and dramatically stiffen penalties for violations, but on closer inspection neither is compelling. Continue reading →