Author Archives: Jordan Moran

Looking Where They Shouldn’t: China’s Crackdown on Due Diligence Investigators

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As Meng suggested in a recent post, there is something admirable about Chinese President Xi Jinping’s anticorruption crusade. With nearly 182,000 party members reprimanded during his first 18 months in office, President Xi’s program appears both more ambitious and enduring than those of his predecessors. Unfortunately, though, the core of corruption surrounding China’s senior leadership remains largely untouchable. Even as China cracks down on the abusive practices of low-level officials, billions of dollars in “suspicious” funds sit in the foreign accounts of that nation’s “princelings,” protected by the fact that, as Matthew notes, discussion of the corruption of China’s senior leaders remains “absolutely taboo.” After all, shedding too much light on the misbehavior of the nation’s elite threatens to defeat the leadership’s paramount concern: maintaining the legitimacy that undergirds China’s political stability. And this leads to what it is that positive accounts of President Xi’s battle against corruption often overlook: the contemporaneous willingness of China’s senior leaders to crack down on anticorruption efforts whenever those efforts threaten to step on the wrong political toes.

One of the best examples of this phenomenon is the Chinese government’s recent crackdown on investigative companies who perform due diligence. Continue reading →

What if Shame Isn’t Enough: The OECD and a Noncompliant South Africa

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Matthew recently expressed skepticism about proposals to expand the OECD Anti-Bribery Convention to countries like China and India.  As he explained, adding new parties may undermine the peer review system that is key to the Convention’s success.  To succeed, that system requires (in Matthew’s words) that “(1) countries are willing to issue harsh reports about their peers, and (2) countries care about the reports, and find bad reviews embarrassing and/or politically damaging.” But what if public shaming isn’t enough?  Imagine that a member state didn’t care enough to change its ways after critical reports.  What would be next?  Unfortunately, South Africa might help answer that question soon.

Last month, the OECD Working Group on Bribery (“WGB”) issued a scathing Phase 3 Report on South Africa’s compliance with the Convention.  As the FCPA Blog recounted, the OECD appeared to have “encountered a brick wall,” with the reviewing nations “repeatedly express[ing] exasperation with South Africa’s failure . . . to prosecute a single foreign bribery case.”  Calling the need for enforcement “imperative,” the WGB insisted that South Africa take “urgent steps” to address a host of infirmities; among other problems, the WGB found that South Africa had allowed political and economic considerations to impede investigations by the nation’s under-resourced anticorruption unit.  The OECD also took the unusual steps of (1) asking South Africa to submit a self-assessment and (2) threatening to “take appropriate measures,” including requiring an additional Phase 3bis review, to address South Africa’s continued compliance problems.

With South Africa’s ruling party under increasing fire for its failure to combat corruption, the nation’s 2014 elections could mark a turning point in South Africa’s antibribery efforts.  But what if they don’t?  What if continuing to embarrass South Africa through follow-on reports and a statement of noncompliance isn’t enough to jumpstart enforcement of the Convention in Africa’s largest economy?

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