Visa Denial as an Anticorruption Tool: The Need for Clarity and Communication

This past April, the U.S. Department of State denied an entry visa to the Vice President of Afghanistan, Abdul Rashid Dostrum, a notorious warlord and a key regional leader in the broad kleptocratic network of corruption that dominates Afghanistan. (In response, and seeking to avoid an embarrassing public spectacle, the Afghan government cancelled the trip, citing ostensible “security” issues at home.) This is but one recent example of an emerging element of anticorruption strategy: the denial of visas to corrupt officials (along with those who have abused human rights). This strategy is attractive for officials like Dostrum, who are beyond the jurisdiction of U.S. and other nations’ anticorruption statutes. This sort of diplomatic tool is a subtle way of controlling and manipulating working relationships with corrupt officials, and can act as both a sanction and disincentive for corrupt behavior. High-level, publicized meetings and trips to Western countries enhance the status of leaders in developing countries. More broadly, visas for officials’ family members to study in the West are also highly prized in the developing world. Restricting these visas can thus be an effective way of deterring corrupt behavior in lieu of actual jurisdictional authority.

Using visa denials as a tool to fight corruption has received a fair amount of attention in recent years among NGOs and international groups like the G20 (see here, here and here), with discussion focusing on two broad concerns: fairness and effectiveness. In my view the fairness concern—the idea that denying an entry visa absent a formal conviction or fair trial violates basic notions of due process–is overblown. A ban on travel does not implicate the same due process concerns that would arise with, for example, freezing of assets held in a foreign country. States have broad discretion in immigration matters, and no foreign citizen has a pre-existing “right” to enter any country at will. And the due process concerns in the visa denial context could be assuaged fairly easily, for example by establishing procedures by which those denied visas are informed of reasons and offered the possibility to respond.

The more complicated issue is whether visa denials can be made more effective in deterring corrupt behavior. Here, the effectiveness of this promising tool depends on improvements in two areas: clarity and coordination.

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Electoral Systems and Corruption: Proportional Representation in Brazil

The Petrobras scandal currently engulfing Brazil is unprecedented in its scale and scope. Ironically, when the party of President Dilma Rousseff, the Workers’ Party (PT), initially became a major political player in 1989, it was seen as a clean, ethical alternative after President Collor de Mello stepped down from office amidst corruption allegations. Yet in the years following its rise to power, the PT has been dogged by corruption allegations, even before the explosion of the Petrobras investigations. During the presidency of Ms. Rousseff’s predecessor, Lula Inácio da Silva, prosecutors unearthed a major scheme, known as the Mensalão scandal, under which public funds were being used to pay members of Congress in exchange for their support of the PT government in crucial votes. At the end of the inquiry, 25 politicians and businessmen were convicted. Several other smaller corruption schemes (including Caixa Dois, Bingos, Sanguessugas, and Dossier) also implicated high-ranking members of the PT during Mr. da Silva’s tenure.

Despite this clear evidence of corruption within the PT ranks, the PT has been able to maintain its relative dominance in Brazilian politics, with three successive victories in presidential elections following Mr. da Silva’s initial rise to power, including Ms. Rousseff’s re-election in 2014, six months after the launch of the Petrobras investigations. This raises yet again a question that scholars and commentators have asked over and over again: Why do voters keep re-electing corrupt politicians? Democracy is supposed to enable voters to hold their government accountable, and most voters claim to dislike corruption and to value integrity in government. So why do parties like the PT keep winning elections? While there are many possible explanations (maybe, for example, voters don’t really care as much about corruption as they claim), part of the explanation in certain countries may have to do with the particularities of the electoral system.

Brazil has a hybrid electoral system: the President is elected in a two-round majority run-off system, elections for the Senate are based on plurality votes within states, and elections to the Chamber of Deputies are based on open-list proportional representation. An examination of this system suggests that it is particularly inimical to holding corrupt politicians accountable, and may have in fact contributed to the seemingly intractable problem of corruption in Brazilian politics. Three problems in particular stand out:

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Going Cashless to Fight Corruption: The Case of Kenyan Public Transit

In the fight against petty corruption, a potentially game-changing development is the rise of cashless payments. In a world where people do not use or carry cash, petty bribes to traffic cops or low-level government bureaucrats are either foolish—in that they require a processing mechanism and are therefore easy to detect—or altogether impossible. While some wealthier jurisdictions have made substantial steps towards a cashless economy (see Sweden and Hong Kong), a surprising leader in the rise of cashless payments has been Kenya, reinforcing its role as the Silicon Savannah of Africa and a potential hub for innovation in combatting petty corruption.

In 2007, the Kenyan telecom company Safaricom launched M-PESA, a mobile banking service that allows people to transfer money to other users using their mobile phones, and to withdraw cash from any of over 40,000 agents across the country, creating convenient mobile bank accounts accessible to virtually all Kenyans. M-PESA has been remarkably successful: As of 2015, M-PESA had 20 million subscribers (over two-thirds of Kenya’s adult population), and by some estimates around 25% of the country’s GDP flows through the service. The brilliance of M-PESA is that users do not need to carry around vast sums of cash; instead, they can treat any M-PESA agent as an ATM, and withdraw cash only when needed.

A recent plan has suggested leveraging technology like M-PESA to create cashless payments on the shared buses, known as matatus, that are the main form public transportation in Kenya. Traffic police routinely stop matatus to extort bribes from the drivers and conductors of the vehicles, who often in turn demand cash from passengers in order to continue on their route. In 2014, Kenya’s National Transport and Safety Authority (NTSA) proposed a policy whereby matatus would become cashless, shifting payments to a more easily regulated electronic system. All commuters would have prepaid cards, or funds accessible through their mobile phone that they could use to pay the conductor a flat rate for a given route. Drivers would be discouraged from extorting payments to fund bribes through the online system, as this system would be more stringently regulated and payments would be more easily tracked. Given the ubiquity of M-PESA agents acting as de facto ATMs throughout the country, commuters as well as matatu drivers and conductors would in theory not need to carry cash at all on these routes, thus reducing the incidence of bribes paid to traffic police.

The implementation of this plan, however, has been slow and fraught with difficulties. As of the time of writing, only some matatu associations have begun accepting cashless payments, and cash payments still predominate. In January of 2016, the Chairman of the Matatu Owners Association, Simon Kimutai, stated that full implementation will likely take up to four years, despite the government’s more optimistic timelines. One problem is inter-operability: Ideally, there should be a uniform set of payments on all matatu routes, but this is not yet the case; the unfortunate consequence is that even in matatus with the equipment to receive cashless payments, drivers and conductors still accept cash payments to avoid logistical difficulties. A potentially more serious problem is that some matatu drivers are actively resisting the plan by pretending the card readers are broken or feigning confusion over the new system. One reason for this resistance is the drivers’ desire to preserve their ability to inflate prices at rush hour or in poor weather. But drivers may also resist the cashless system in order to avoid retribution by the criminal gangs that currently patrol certain matatu routes and force drivers to pay bribes for protection. (Similar problems arose in Guatemala, when a similar cashless plan was enacted: When the cashless system limited drivers’ ability to pay these “protection” bribes, gangs reacted with violence, burning buses and threatening drivers and passengers alike.)

These problems mean that in the short term, it is unlikely that this plan to shift to cashless payments will have much effect on the incidence of petty bribes on matatus, as commuters will be forced to carry cash all the same. However, I remain optimistic that this plan nevertheless represents an exciting development, and is one that will ultimately have a meaningful impact. There are three main reasons for my optimism:

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The Petrobras Investigations and the Future of Brazil’s Democracy: Thailand and Italy as Cautionary Tales

In March of 2014, when Alberto Youssef, the initial whistleblower for the now infamous Petrobras scandal disclosed his knowledge of the scheme to his lawyers, he prefaced his revelations with a grim prediction: “Guys, if I speak, the republic is going to fall.” While that prediction may have seemed melodramatic at the time, the recent turmoil in Brazil surrounding the Petrobras scandal and the impeachment proceedings against President Dilma Rousseff have led some to begin to question whether Mr. Youssef’s prediction might in fact ring true.

The Petrobras scandal may be the single biggest corruption scheme in any democracy, ever. By some estimates, up to US$5.3 Billion changed hands through inflated construction contracts and kickbacks to Petrobras executives and politicians. Even for a country accustomed to political corruption scandals, this case is unique in its breadth and scope. Dozens of Brazil’s economic and political elite have been implicated, including the CEO of the country’s largest construction firm (sentenced to 19 years in jail), and the former treasurer of Rousseff’s Workers’ Party (sentenced to 15 years in jail), plummeting Brazil into a true political and economic crisis. The investigations transcend party lines: Eduardo Cunha, the speaker of the House leading the charge for President Rousseff’s impeachment (for using accounting tricks to mask the nation’s deficit), has himself been charged in connection with the Petrobras Scandal. Indeed, this scandal appears to be a political reckoning, an indictment of the entire elite class in Brazil.

By most accounts, Brazil is a thriving democracy—elections are free and fair, and there is a multi-party system marked by vigorous competition between rival parties. Civil liberties are generally well respected. Protests against the government have been massive, but by most accounts peaceful and undisturbed by state authorities. But some have gone so far as to speculate that the unprecedented scale of this scandal may lead to a collapse of Brazil’s democratic system. At least one historical example suggests that this might not be so far-fetched: In Thailand, the political deadlock in 2014 following the ouster of President Yingluck Shinawatra on allegations of corruption and abuse of power ended with a military coup, and democracy has yet to return. Yet perhaps another, somewhat less dramatic but nonetheless troubling precedent is even more apt: In Italy in the 1990s, the Mani Pulite (Clean Hands) campaign revealed endemic corruption and led to the collapse of the four governing political parties. In this case, while democratic elections continued, the political void left in the wake of Clean Hands was filled by new, corrupt actors like Silvio Berlusconi, and political graft remains rampant. Though Brazil seems unlikely to suffer a fate similar to Thailand, it is highly plausible that the aftermath of the Petrobras scandal might resemble the Italian experience.

Let’s consider some of the possible parallels between Brazil and Thailand, on the one hand, and Brazil and Italy, on the other.

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A Modest Proposal for Improving Supervision in World Bank Infrastructure Projects

Infrastructure funding is a massive component of international development—in 2014, the World Bank alone allocated $24 billion to infrastructure, amounting to roughly 40% of its total lending. Yet as has been widely documented (see here, here and here), infrastructure construction and development projects are particularly susceptible to corruption. Compared with other areas of development lending, such as education and public administration, large construction projects require more specialized contractors and consultants, increasing the points of access for corruption or collusion schemes. Furthermore, labor-intensive industries like construction are often captured by organized crime, which increases their susceptibility to corruption.

Corruption schemes in infrastructure projects often take the following form: a contractor pays government officials a bribe to secure a contract, and in an effort to preserve profits, the bribe-paying contractor compensates for the expense of the bribe by failing to build the project to specification. The supervision consultant—the person or entity responsible for evaluating whether the project has in fact been built to specifications—therefore plays a critical role in stopping or enabling infrastructure construction.

However, when the World Bank funds an infrastructure project, whether through a grant or a loan, the recipient country’s government is responsible for hiring the project’s contractors and consultants—including supervision consultants—subject only to arm’s length World Bank supervision. While this process is also subject to the World Bank’s procurement guidelines, these have been criticized as ineffective in addressing corruption (as previously discussed on this blog). Under the current system, if a project has not been adequately completed because of a corruption scheme, government officials have every incentive to retain inspectors willing to mask the abuse of funds. And if the Bank does discover fraud or corruption after the fact, its remedies are limited: the Bank can suspend or bar contractors from future contracts, and can refer matters to national prosecuting authorities, but successful convictions amount to fewer than 10% of sanctioned parties.

The World Bank must therefore prioritize prevention of these situations. Given the existing system, one measure that the World Bank could take to help prevent corruption in infrastructure projects, is to fund independent supervision consultants. Continue reading

Doping and Corruption in Sports: Why We Should Care, and What We Should Do

In December of 2014, a German TV channel, Das Erste, released a documentary alleging that a “majority” of Russian track and field athletes—up to 99% as claimed by one whistleblower—had been illegally doping, and implicated Russian Athletics Federation (RAF) officials with covering up the abuse. The alleged scheme was simple: in exchange for 5% of an athlete’s winnings, the Russian Anti-Doping Agency (RUSADA) would supply athletes and doctors with performance enhancing drugs (PEDs), and RUSADA and the RAF would protect athletes against positive tests through a combination of tip-offs, false identities, and clean urine.

In response to the allegations, Russian and international authorities were quick to express outrage and condemn any wrongdoing. The RAF threatened legal action against what it deemed “slanderous allegations,” while the International Association of Athletics Federations (IAAF) and the International Olympic Committee (IOC) promised to investigate. Last month, however, Lamine Diack, the president of the IAAF, was placed under criminal investigation by French authorities for allegedly taking 200,000 Euros in bribes to cover up positive Russian doping tests, despite having previously referred to allegations of systematic doping and corruption as “a joke.”

The full scope of the scandal was substantiated in an exhaustive report issued by the World Anti-Doping Agency (WADA) on November 9, 2015, which not only implicated high level officials at the RAF and IAAF, but also Russian government officials in the Ministry of Sport, and even the FSB, the modern-day successor to the KGB. While doping scandals may be most commonly thought of as a few bad apples cheating to win, the WADA report made it evident that this was a full-blown state-sponsored corruption scheme that profited public officials, and as such should merit the attention of the anticorruption community.

This scandal offers several takeaways for the anticorruption community:

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The Charbonneau Commission’s Underappreciated Contributions to Fighting Corruption in Quebec

This past November, the four-year saga of the Charbonneau Commission finally drew to a close. Established in 2011, the commission had three main goals: to examine collusion and corruption in Quebec’s construction industry, to identify the ways in which the industry has been infiltrated by organized crime, and to find possible strategies to reduce and prevent corruption and collusion in public contracts. The two thousand page final report (available only in French) was the product of 263 days of testimony from over 300 witnesses, ranging from union bosses to prominent politicians, low-level public servants, and even members of organized criminal syndicates. While the commission had the makings of a potential political bombshell, the final report was met with little acclaim, and commentators have been quick to dismiss the inquiry as an expensive disappointment and a failed mission.

Since the release of the final report, the validity of its findings has even been called into question, with the media seizing on apparent disagreements and infighting between the commissioners. One of the two remaining commissioners (the third had died of lung cancer in 2014), actually dissented from the part of the findings that claimed a link between political party financing and public contracts. Emails subsequently unearthed indicate that the disagreement between the two commissioners on this issue goes beyond simple factual disagreement, with suggestions that the dissenting commissioner had objected to unfavorable portrayals of prominent members of the governing Liberal party. Some sources report that the two commissioners were not even on speaking terms by the conclusion of the inquiry. In light of their fundamental disagreements on such a prominent issue, some critics have called the commission at best dysfunctional, or at worst tainted by political interference.

Given the generally negative coverage of the commission, it would be easy to write off the Charbonneau Commission as yet another failed attempt to stymie corruption. In my view, however, to dismiss the commission entirely would be unreasonable. Certainly, the commission was not perfect, but it did offer meaningful contributions to the promotion of good governance, and there is much that can be learned from it.

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