Author Archives: Matthew Stephenson

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About Matthew Stephenson

Professor of Law, Harvard Law School

Guest Post: Reforming Sudan’s Asset Declaration System

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Today’s guest post is from Haytham Karar, an independent international development consultant based in Khartoum, Sudan.

The pro-democratic revolution in Sudan has ended a long-standing autocracy. However, public sector corruption, which remains widespread, threatens Sudan’s emerging democracy. The culture of using public office for private gain remains deeply entrenched, and the line between public and private roles is not clearly drawn or widely respected. Not only do the same people cycle back and forth through the “revolving door” between public office and the private sector, but many government officials own stakes in, or are otherwise directly connected with, private companies even while serving in government. In fact, many government officials continue to operate private enterprises while in office, even though the Constitution explicitly prohibits this practice. This blurring of public and private roles, and the associated conflicts of interest that arise, have contributed to the corruption and cronyism that continue to pervade the system.

One of the tools that is supposed to help combat these problems is the asset declaration system for public officials. While an asset declaration system is not by itself sufficient, a well-designed and operational asset declaration system is a crucial element in a larger strategy for promoting integrity and anticorruption. Unfortunately, Sudan’s asset declaration system is largely ineffective and in desperate need of reform. The current framework—which was designed under the previous government and was never implemented effectively or fairly—has a number of significant problems. Continue reading →

Guest Post: The New French Ruling on Successor Liability Gives French Prosecutors New Leverage to Fight Corruption and Other Corporate Crime

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For today’s guest post, GAB is delighted to welcome back Frederick Davis, a member of the New York and Paris Bars and a Lecturer in Law at Columbia Law School:

Commentators have aptly observed that US prosecutions of firms for foreign bribery and similar crimes has developed into a “US model of corporate crime deterrence,” a model that is based on aggressive pursuit of corporate entities to induce them to cooperate by “detecting, reporting, and helping prove” criminal acts by individuals in return for a negotiated resolution of the criminal charges against the corporation itself, one that avoids a corporate criminal conviction.

Earlier posts on this blog by myself and by others have noted the absence of this model in France, and the relative ineffectiveness of French prosecutors in pursuing corruption and other forms of corporate crime, in significant part because of the difficulty of proving corporate criminal responsibility under French law. As I noted last year, though, efforts by the Legislature to provide new investigative and prosecutorial tools, by the National Financial Prosecutor to use them, and by the courts in clarifying the principles of corporate criminal responsibility have produced encouraging results. French prosecutors have pursued, and French courts have convicted, both French and non-French corporations for serious crimes. On November 25, 2020, the French Supreme Court (Cour de Cassation) took an important additional step by ruling, for the first time, that in an acquisition situation the successor corporation will generally be criminally responsible for acts committed by the acquired company. The decision closes a significant gap in French corporate criminal deterrence, and will have an immediate and positive impact on corporate criminal investigations in France. Continue reading →

Guest Post: The U.S. Just Created a Public Beneficial Ownership Registry for a Subset of Companies

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Today’s guest post is from Neil Gordon, a Senior Researcher at the Project On Government Oversight (POGO).

Companies with anonymous ownership structures are a serious global problem. Anonymous companies, as readers of this blog are likely well aware, play a significant role in facilitating grand corruption. Anonymous companies are associated with a wide range of other criminal misconduct as well. Unfortunately, the United States bears much of the blame for the proliferation of anonymous shell companies and the harm they cause. Most states make it relatively easy to set up a business without revealing the real owners—even easier than getting a library card, according to the anticorruption think tank Global Financial Integrity. That’s why it was so important that Congress finally enacted two key corporate transparency provisions as part of the fiscal year 2021 National Defense Authorization Act (NDAA).

The first provision, the Corporate Transparency Act (CTA), requires most companies to register their beneficial owners—the people who really own, control, and financially benefit from the company—with the Treasury Department’s Financial Crimes Enforcement Network. This provision received a great deal of media coverage, and rightly so. But the second key beneficial ownership transparency provision in the NDAA has received almost no attention, even though it could be a real game-changer. That second provision can be found in Section 885 of the NDAA. Section 885 requires all companies receiving federal contracts or grants over $500,000 to report their beneficial owners in the Federal Awardee Performance and Integrity Information System (FAPIIS), a database containing the misconduct and performance histories of federal contractors and grantees. Continue reading →

New Podcast, Featuring Diana Chigas and Cheyanne Scharbatke-Church

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In this week’s episode, I interview Diana Chigas and Cheyanne Scharbatke-Church, who are Professors of Practice at Tufts University’s Fletcher School of Law and Diplomacy, and affiliated with Tuft’s Henry J. Leir Institute. After describing how they came to a focus on corruption from a background in conflict resolution and peace-building, Professors Chigas and Scharbatke-Church describe the “systems analysis” approach that they use when evaluating and planning anticorruption interventions. That approach stresses understanding the social forces and social norms that sustain corrupt practices as a system, and focuses on identifying useful entry points for policy interventions. The interview moves from this general high-level analytical framework to a discussion of concrete examples of how this methodology can be used to design concrete interventions and support local efforts to promote integrity and change systems. You can also find both this episode and an archive of prior episodes at the following locations: KickBack is a collaborative effort between GAB and the 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.

Anticorruption Bibliography–February 2021 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. As always, I welcome suggestions for other sources that are not yet included, including any papers GAB readers have written.

Guest Post: An Anticorruption Agenda for the Biden Administration

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Today’s guest post is from Lucinda A. Low and Shruti Shah, respectively Acting Chair and President of the Coalition for Integrity, a U.S. based non-governmental organization focused on fighting corruption. The opinions expressed here are those of the authors, and should not be attributed to the organization..  

The United States has a long history, across administrations of both parties, of showing leadership internationally in the fight against corruption. The passage and enforcement of the Foreign Corrupt Practices Act (FCPA) has served as an example for other countries to adopt their own transnational anti-bribery laws. Additionally, the United States has championed international anti-bribery efforts in multilateral organizations and worked to build coalitions to root out all types of corruption. For the last several years, however, U.S. has faltered. In order to reestablish the U.S. as a global leader against corruption, and to get its own house in order, the Biden Administration and the new Congress should embrace an ambitious agenda that includes the following elements: Continue reading →

New Podcast, Featuring Gary Kalman

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In this week’s episode, we’re delighted to welcome back to the podcast Gary Kalman, the Director of Transparency International’s United States office. I was fortunate to be able to interview Gary a little over one year ago, just before he stepped into his new role as TI’s U.S. Director. In our more recent conversation, we had the opportunity to discuss how his first year in this position has gone, touching on some major successes–most notably the passage of the Corporate Transparency Act, which requires companies to provide the government with information on their true beneficial owners–as well as ongoing challenges. Gary discusses some of the advocacy strategies that proved effective on the corporate transparency issues, and suggests how similar strategies might be deployed to advance other aspects of the anticorruption agenda. He also lays out what he sees as the highest priorities for TI’s advocacy work in the United States, and what vulnerabilities have been exposed by the experience with the Trump Administration and how those might be addressed. You can also find both this episode and an archive of prior episodes at the following locations: KickBack is a collaborative effort between GAB and the 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.

Guest Post: Obstacles in Establishing Whistleblower Regimes in Small Developing Countries—From The Bahamas to Kosovo

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Today’s guest post is from Lemarque Campbell, a Policy and Legislative Development Specialist for the International Development Law Organization (IDLO), and Vlora Marmullakaj, a Senior Project Officer for the Project Against Economic Crime implemented by the Council of Europe. The views and analysis expressed in this post are those of the authors and are not attributable to the IDLO or the Council of Europe.

Encouraging whistleblowing is one of the most important tools for detecting and deterring wrongdoing in public sector organizations. Especially in small developing countries that lack strong institutions, insiders may be the best or only source of accurate and reliable information about malfeasance. Moreover, whistleblowers not only help expose corruption, but they also play a significant role in providing information that could lead to the recovery of assets derived from corrupt practices. And in this time of global pandemic, when opportunities for corruption abound and the normal oversight and accountability processes are weakened, whistleblowers are even more crucial—a fact emphasized by, among others, GRECO and Transparency International.

Unfortunately, many developing countries lack an adequate system for encouraging and protecting whistleblowers. Even those countries that have substantially overhauled their whistleblower laws continue to face significant problems of implementation. Considering the recent experience of the Bahamas and Kosovo—two very different small developing countries that have recently overhauled their whistleblower laws—helps illustrate some of the obstacles to achieving effective reforms. Continue reading →

New Paper: “A Proposal for a Global Database of Politically Exposed Persons”

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My former student (and former GAB contributor) Ruta Mrazauskaite and I have a new paper, in the Stanford Journal of International Law, entitled “A Proposal for a Global Database of Politically Exposed Persons.” Here’s the abstract:

As part of the global effort to combat public corruption, anti-money laundering laws require financial institutions and other entities to conduct enhanced scrutiny on so-called “politically exposed persons” (PEPs)–mainly senior government officials, along with their family members and close associates. Unfortunately, the current system for identifying PEPs–which depends entirely on a combination of self-identification, in-house checks, and external private vendors that rely on searches of publicly available source material–is both inefficient and in some cases inaccurate. We therefore propose the creation of a global PEP database, organized and overseen by an inter-governmental body. This database would be populated with data compiled by national governments, drawing primarily on the data those governments already collect pursuant to existing.financial declaration systems for public officials. A global PEP database along the lines we propose has the potential to make PEP identification more accurate and more efficient, reducing overall compliance costs and allowing compliance resources to be used more productively.

I hope readers will find the paper and the proposal to be of interest, and we welcome comments, criticisms, and further ideas about how to address the problem that our proposal is meant to ameliorate.

Guest Post: Corruption in Covid-19 Vaccine Distribution–Early Lessons from Brazil

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Today’s guest post is from Guilherme France, a legislative assistant in the Brazilian Senate

The urgency of halting the Covid-19 pandemic, combined with the limited supply of vaccines, has increased the challenges of distributing the vaccine quickly but fairly. As others have pointed out, including on this blog, there are significant risks of corruption in the vaccine distribution process. Brazil provides a troubling illustration of this problem, with instances of corruption or other improprieties related to vaccine distribution having already sparked investigations into mayors and other local officials. For example, there have been complaints that in Manaus, a Covid-19 epicenter, relatives of a local businessman in were fraudulently appointed as employees in health clinics so that they would qualify for early vaccination. And this is but one of several cases where mayors and other local officials allegedly helped their relatives or close associates cut in the line. There have also been reported attempts to pay bribes to nurses for early vaccine access.

There has been similar line-cutting behavior on a grander scale, with various groups, such as prosecutors and judicial authorities, using their political influence and leverage to attempt (without success) to get priority status for receiving the vaccine, ahead of those, like health care workers and the elderly, who need it more urgently. On other occasions, the government acceded to the use of the “priority status” for vaccine distribution as a bargaining chip. In the midst of strike negotiations, it agreed to place truck drivers and other transportation workers ahead of the general population in the vaccination line.

This behavior, while reprehensible, is understandable. Given how hard Brazil has been hit by Covid-19, access to the vaccine is a life and death matter, and the temptation to cut the line, for oneself or a loved one, is just too great. This is why increased control and transparency for vaccine distribution should be a priority for governments at all levels. Continue reading →