About Matthew Stephenson

Professor of Law, Harvard Law School

Anticorruption Bibliography–April 2019 Update

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.

Whatever Happened with that Charity That the Obiang Settlement Was Supposed to Fund?

When a country seizes assets that a foreign public official stole from his or her own government, the usual next step is to return those assets to the foreign government from which they were stolen–in much the same way that if I were to steal a computer belonging to Harvard University, and the police caught me and recovered the computer, they should give it back to Harvard (assuming it wasn’t needed as evidence in my trial). But of course in the context of countries beset by systemic corruption–or outright kleptocracies–things are not so simple. Returning the money that the corrupt foreign official stole from the national treasury back to that national treasury may be tantamount to giving the money back to the person who stole it in the first place. So what to do?

One possibility, increasingly popular in some quarters, is to use the money to fund charitable activities in the country where the public funds were stolen, on the logic that doing so does return the money to the “victim country,” but does not return it to that country’s government (which is most certainly not a “victim,” whatever its formal legal claim on the assets in question). This mechanism was employed in the 2014 settlement between the U.S. Department of Justice and Teodoro Nguema Obiang Mangue, the son of Equatorial Guinea’s (extremely corrupt and dictatorial) President Teodoro Obiang Nguema Mbasogo. According to the settlement agreement, the proceeds from the sale of the illicit assets the US had seized would go to a charity that would use the funds to benefit the people of Equatorial Guinea. The charity was to be jointly selected by the US and Obiang, or, if they could not agree on a charity within 180 days of the sale of the assets, the proceeds would be controlled and disbursed by a three-person panel, rather than an existing charity. That panel would consist of one member selected by the US government, one member selected by the government of Equatorial Guinea, and a chair jointly selected by the US and Obiang. As a backstop, the settlement stated that if, 220 days after the sale of the assets, the US and Obiang could not agree on a chair, the court that approved the settlement could force the parties to enter mediation or simply appoint a panel chair itself.

My post today is not a commentary on this arrangement, but a question about it: What ever ended up happening with this? I spent a fair amount of time searching online, and I couldn’t find any information about whether a charity had been selected, or whether a panel was formed, and if so how it was formed and who was/is on it. I also can’t find any information about how the charity or panel disbursed the money from the proceeds of the sale of Obiang’s assets. It’s been over five years since the settlement, so I assume whatever was going to happen has happened already. But strangely, though there are lots of references in various recent publications and articles to the provision of the 2014 settlement that calls for the money to be used for charitable purposes in Equatorial Guinea rather than returned to the government, I can’t find any sources that discuss what actually ended up happening. This is not a trivial question, since several people (including on this blog) expressed skepticism that it was possible for a model like this to work in a country like Equatorial Guinea, where there isn’t much/any space for a genuinely independent civil society to operate.

I’m sure there’s a simple answer to my factual question, and I’m probably just not looking in the right place. So I’m hoping someone out there in reader-land can help me. What ended up happening to the proceeds recovered from the sale of Obiang’s assets? Did the parties agree on a charity? If so, which one, and what did it do with the money? Or was the three-person panel formed to handle the money? If so, how was it formed, who was on it, and what did it do with the money? Anyone have any idea?

New Podcast Episode, Featuring Robtel Neejai Pailey

A new episode of KickBack: The Global Anticorruption Podcast is now available. This week’s episode features an interview with Robtel Neejai Pailey, a Liberian academic, activist, and author who has worked on a variety of issues related to corruption and integrity, including through the use of theater, radio, music and other media.

You can find this episode, along with links to previous podcast 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.

Tracking Corruption and Conflicts of Interest in the Trump Administration–April 2019 Update

Since May 2017, GAB has been tracking credible allegations that President Trump, as well as his family members and close associates, are seeking to use the presidency to advance their personal financial interests, and providing monthly updates on media reports of such issues. The April 2019 update is now available here. A couple of the more notable new developments in this update:

  • Ballard Partners, a lobbying firm with close ties to the Trump administration, is apparently explicitly directing the firm’s clients to book rooms and hold events at the Trump International Hotel in Washington, DC, as a way to influence the administration
  • The Trump Hotel is selling merchandise with images of the White House, in an apparent attempt to further marketize/monetize President Trump’s official position.

As always, we note that while we try to include only those allegations that appear credible, we acknowledge that many of the allegations that we discuss are speculative and/or contested. We also do not attempt a full analysis of the laws and regulations that may or may not have been broken if the allegations are true. For an overview of some of the relevant federal laws and regulations that might apply to some of the alleged problematic conduct, see here.

G7 Hypocrisy on Illicit Enrichment Crimes

Last month, I saw a news report about the international reaction to the Ukrainian Constitutional Court’s decision striking down Ukraine’s criminal offense of “illicit enrichment” as unconstitutional. For those unfamiliar with this topic, the crime of “illicit enrichment” makes it a criminal offense for a public official to realize a significant increase in his or her assets that the public official cannot reasonably explain. The crime of illicit enrichment is related to, but distinct from, civil asset forfeiture systems under which the government may seize—as presumptively the proceeds of unlawful activity—assets that the owner cannot reasonably explain. The main difference is that a civil forfeiture order results in the loss of assets, while a criminal offense can result in fines or incarceration, as well as the other collateral consequences of a criminal conviction. Some anticorruption activists support the criminalization of illicit enrichment on the grounds that it is often difficult or impossible to prove the underlying corruption offenses, but a substantial unexplained increase in a public official’s wealth is sufficient to prove that the official is corrupt. Critics warn that criminalizing illicit enrichment is incompatible with traditional notions of the presumption of innocence. (The UN Convention Against Corruption (UNCAC), perhaps unsurprisingly, fudges the issue, with UNCAC Article 20 calling on States Parties to “consider” adopting an illicit enrichment offense, “[s]ubject to [that country’s] constitution and the fundamental principles of its legal system.”)

In its decision last February 26, Ukraine’s Constitutional Court went with the critics, holding that the criminalization of illicit enrichment a criminal offense was an unconstitutional infringement on the presumption of innocence. This decision met with swift condemnation from the G7, which issued a joint statement with the World Bank declaring that the “recent elimination of the illicit enrichment offence from [Ukraine’s] criminal code is a serious setback in the fight against corruption” that has “weakened the impact of the whole anti-corruption architecture.” Illicit enrichment, the G7 and World Bank admonished, “is not a new offence. In 2010 there were more than 40 countries that criminalized illicit enrichment,” and “[c]ourts around the world have recognized that the criminalization of illicit enrichment is a powerful tool in the fight against corruption, while at the same time respecting fundamental human rights and constitutional principles such as [the] presumption of innocence[.]” The G7-World Bank joint statement closed by calling on Ukrainian authorities to “reinstat[e] criminal liability for illicit enrichment in line with UN, OECD, and [European Court of Human Rights] principles.”

Now, as a policy matter, I tend to agree with the G7-World Bank position here. I think that appropriately tailored and cabined illicit enrichment offenses can be useful tools, and (as others have also pointed out), it’s not true that such offenses have any inherent conflict with the presumption of innocence. Nonetheless, I found the letter an exercise in outrageous, condescending hypocrisy, one that the G7 countries in particular should be ashamed to have written. Continue reading

New Podcast Episode, Featuring Deltan Dallagnol

A new episode of KickBack: The Global Anticorruption Podcast is now available. This week’s episode features an interview with Deltan Dallagnol, the coordinator of Brazil’s Lava Jato (“Car Wash”) corruption investigation, who discusses the background of this investigation, the challenges that he and his team face, and the implications for the struggle against entrenched corruption in Brazil.

You can find this episode, along with links to previous podcast 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: Whistleblower Protection in Kosovo–An Unlikely Success Story of Civil Society Collective Action and International Support

Today’s guest post is from Nedim Hogic, a PhD candidate at the Sant’Anna School of Advanced Studies in Pisa, Italy, and Arolda Elbasani, Visiting Scholar at New York University. The research on which this post is based was sponsored by Kosovo Open Society Foundation.

In Kosovo, as in the rest of the Balkans region more generally, anticorruption initiatives and institutional solutions have typically been top-down efforts based on templates recommended by international actors and hastily approved by a circle of local political allies. Few of those international initiatives have proved successful, often because the new laws provided enough discretion for political interests to thwart effective implementation. Hence, Kosovo, like much of the rest of the Balkans, seems trapped in a continuous yet futile cycle of international-sponsored institutional- and capacity-building measures, which have not delivered.

The 2018 amendments to Kosovo’s law on the protection of whistleblowers suggests a more promising model of legislative drafting. The amended law stands out for its collaborative and open mode of drafting, involving various international, governmental, and civil society actors, a welcome contrast to the more prevalent pattern of top-down, and largely futile, approach to legal and institutional reform. Continue reading