Author Archives: Matthew Stephenson

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About Matthew Stephenson

Professor of Law, Harvard Law School

New “CurbingCorruption” Website on Sector-Specific Anticorruption Reform Strategies

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Here at GAB we’re always delighted to welcome more platforms to the online community devoted to discussing, and hopefully making some progress toward addressing, the corruption problem. And so it’s with great pleasure that I commend to all of our readers a new website, CurbingCorruption. The brainchild of Mark Pyman, and developed by him with assistance from several other distinguished anticorruption specialists, CurbingCorruption seeks to provide concrete anticorruption advice tailored to specific sectors (such as construction, education, health, fisheries, etc.) The website is still a work-in-progress, but that’s actually one of the things I found so exciting and innovative about it: The idea, as I understand it, is to use what’s already on the site as a foundation, but to “crowdsource” additions and revisions by inviting users to contribute their own experiences, insights, and suggestions, and eventually for the website to be managed by collaborative groups of users, with different teams focused on different sectors. The site also welcomes inquiries.

This seems like an exciting, innovative experiment in accumulating and synthesizing knowledge about “what works” in anticorruption. I have no idea whether this experiment will be successful—efforts to create online knowledge repositories have had a mixed track record, or so I’ve been told—but I do hope it takes off, and I encourage GAB readers to check it out and perhaps to get involved.

“Say It Ain’t So, Sergio!”: Judge Moro’s Appointment to the Bolsonaro Cabinet Is a Setback for Brazil’s Struggle Against Corruption

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Two weeks ago, far-right candidate Jair Bolsonaro was elected President of Brazil. Likely no single factor explains Bolsonaro’s success, but as I noted in a previous post, disgust at the corruption of the Worker’s Party (the PT), which had been exposed by the so-called Car Wash (Lava Jato) investigation, likely played a significant part. The Lava Jato operation has brought to light shocking levels of corruption, mainly though not exclusively at Brazil’s state-owned oil company Petrobras, and has led to the convictions of scores of businesspeople and politicians. Some of the key figures involved in the Lava Jato operation, including prosecutor Deltan Dallagnol and Judge Sergio Moro, have become national heroes, at least in some quarters. But their popularity is by no means universal. The fact that Lava Jato has investigated and convicted so many PT politicians, including former President Luiz Inacio Lula da Silva (known as Lula), has led some PT members and sympathizers to accuse the investigators, prosecutors, and judges involved in the Lava Jato operation as engaged in a politically-motivated right-wing conspiracy against Lula, the PT, and the left generally. On this account, Lula is a “political prisoner,” and the impeachment and removal of his successor, President Dilma Rousseff, was a “coup.”

Many people, me included, have pushed back hard against the notion that the Lava Jato operation is a politically-motivated conspiracy. The evidence that has come too light seems incontrovertible, and while critics have identified a number of questionable decisions by the prosecutors and judges (criticisms I’m not in a position to evaluate on the merits), the notion that it’s all a politically motivated sham are baseless. Overall my impression, shared by many other domestic and international observers, is that the Lava Jato operation has been conducted with great professionalism. Yes, it’s true that the operation has targeted many PT figures, but Lava Jato has gone after politicians from across the political spectrum, and if PT politicians seem to make up a disproportionate share, this is most likely because the PT had held the presidency from 2003 to 2016, first under Lula and then under Dilma. Furthermore, many of us in the international community, along with a number of Brazilian anticorruption scholars and activists, worried that these unsubstantiated attacks on the integrity of Lava Jato—attacks that go beyond challenging individual decisions or rulings—would do serious damage to the longer-term development of an effective set of institutional checks and balances in Brazil. One doesn’t need to subscribe to a naïve view that prosecutors and judges are entirely “neutral” to recognize the importance of developing institutions of justice that are not, and are not perceived as, partisan or “political” in the crude sense.

It’s in that context that I was so disheartened to learn last week that Judge Moro had accepted President-Elect Bolsonaro’s appointment to serve as Minister for Justice. I have no reason to doubt Judge Moro’s integrity or to believe that he accepted this job for any reason other than because he believes it will give him an opportunity to serve his country. But I nonetheless fear that it was a mistake, one that will set back Brazil’s ongoing efforts to develop more robust anticorruption institutions. Continue reading →

Tracking Corruption and Conflicts of Interest in the Trump Administration–November 2018 Update

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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. It looks like our approach is catching on, given that this past month the New York Times published a similar compendium (which the authors described as “the definitive list”) of Trump-related corruption and conflict-of-interest allegations. It’s not clear whether the NYT plans to regularly update this compendium–if they do, then we might wind down the Trump COI tracker here at GAB, given the NYT‘s much wider reach and greater resources. But for now, we’re going to keep plugging away with our monthly updates. The October 2018 update is now available here. The most notable additions since the previous update include:

  • Reports that Interior Secretary Ryan Zinke may have been involved in a shady property development deal that entails negotiations and transactions with parties connected to firms over which the Interior Department has regulatory authority.
  • Renewed and intensified concern about President Trump’s past and present business ties to Saudi Arabia, in light of the administration’s tepid response to the murder of Saudi journalist and U.S. resident Jamal Kashoggi in the Saudi consulate in Turkey, apparently by Saudi intelligence agents.
  • President Trump’s intercession with Japanese officials on behalf of his campaign donor and supporter Sheldon Adelson, in connection with the latter’s interest in a lucrative license to operate a casino in Japan.

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.

Is the U.S. Political System Characterized by “Legalized Corruption”? Some Tentative Concerns About a Common Rhetorical Strategy

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Today is Election Day in the United States. It’s an important election (they all are, really), and I hope those of our readers who are eligible to vote in the United States will do so. But this post isn’t going to be about these U.S. elections specifically. Rather, I want to consider a question about the U.S. electoral system more generally: Is it accurate to describe the U.S. system as a one of “legalized corruption”? That is, do the campaign finance and lobbying rules in the United States amount to a system in which wealthy individuals and interest groups “purchase” favorable policy through what are effectively “bribes”—in the form of campaign contributions or support?

The use of the rhetoric of corruption and “legalized bribery” to describe the U.S. political system has been around for a while, and it seems to have become even more pronounced over the last few election cycles—perhaps galvanized by the U.S. Supreme Court’s controversial decision in the Citizens United case. (For examples, see here, here, here, and here.) I certainly understand, and indeed share, the underlying concerns about how the influence of concentrated economic wealth can distort the political process and tilt policy outcomes in a direction that favors the affluent. Yet I’ve felt increasingly ambivalent about the use of the language of “systemic corruption” or “legalized bribery” to describe the very real money-in-politics problem in the United States. There are three main reasons for my ambivalence. Continue reading →

Guest Post: To Be Effective, Public Company Ownership Registries Must Be Linked

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Today’s guest post is from Louise Russell-Prywata, Program Manager at OpenOwnership, a global non-governmental organization that promotes greater corporate transparency by making it easier to publish and access data on company ownership.

Danske Bank’s Estonian branch appears to have enabled international money laundering on an enormous scale, with Danske Bank currently investigating  about $236 billion in suspicious transactions (including, but not limited to, the notorious “Azerbaijani Laundromat” in operation from 2012-2014). Yet while money laundering on this scale may be unusual, the mechanisms that allowed funds to flow undetected from countries such as Russia, through Danske Bank Estonia, and into jurisdictions including the UK, are quite familiar. One of the most important of these techniques is the use (and abuse) of anonymously-owned companies.

If we want to stem the tide of money laundering through corporate vehicles, then public registers of the every company’s “ultimate beneficial owners” (UBOs) are an important part of the solution. Publicly available information would decrease reliance on whistleblower allegations to uncover money laundering, and companies themselves would benefit by reducing the costs of due diligence. There has been significant progress to implement public UBO registers in some countries, including the UK and Ukraine, and several other countries have committed to adopting UBO registers in future. There is already some evidence that these registers can make a difference. For example, following the requirement for UBO disclosure for Scottish Limited Partnerships (SLPs), the number of new incorporations fell dramatically; this is encouraging, as SLPs have featured prominently in several grand corruption cases. However, the Danske Bank revelations highlight that the power of national registers in isolation is limited.

To effectively deter and detect corruption and money laundering, public UBO data from different countries needs to be linked in a manner that is useful for law enforcement, investigative journalists, and others. The data from different registers must be compatible, so that it would be possible, for example, to ascertain whether the Ms. Doe owning Doe Holdings Ltd. registered in the UK, is the same Ms. Doe owning Doe’s Ltd. in Cayman Islands. This is important because a money-laundering trail rarely leads neatly from source jurisdiction straight to a company whose UBO is listed in a public register. Criminals and their associates tend to create a complex chain of legal entities to hide the illicit origin of their funds. This was the case in the Azerbaijani Laundromat, for example. Linking together UBO information from different jurisdictions would make it far easier to “follow the money” in grand corruption and money laundering cases. While law enforcement in some cases have powers to do this now, in practice the process can be complex and expensive, and it is not easily possible to link information at scale. Continue reading →

The Persistence of Phony Statistics in Anticorruption Discourse

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Early last month, UN Secretary General António Guterres delivered some brief opening remarks to the Security Council at a meeting on the relationship between corruption and conflict. In these remarks, Secretary General Guterres cited a couple of statistics about the economic costs of corruption: an estimate, attributed to the World Economic Forum (WEF), that the global cost of corruption is $2.6 trillion (or 5% of global GDP), as well as another estimate, attributed to the World Bank, that individuals and businesses cumulatively pay over $1 trillion in bribes each year. And last week, in her opening remarks at the International Anti-Corruption Conference, former Transparency International chair Huguette Labelle repeated these same figures.

Those statistics, as I’ve explained in prior posts (see here and here) are bogus. I realize that Secretary General Guterres’ invocation of those numbers shouldn’t bother me so much, since these figures had no substantive importance in his speech, and the speech itself was just the usual collection of platitudes and bromides about how corruption is bad, how the international community needs to do more to fight it, that the UN is a key player in the global effort against corruption, blah blah blah. Ditto for Ms. Labelle–her speech used these numbers kind of like a rhetorical garnish, to underscore the point that corruption is widespread and harmful, a point with which I very much agree. But just on principle, I feel like it’s important to set the right tone for evidence-based policymaking by eschewing impressive-sounding numbers that do not stand up to even mild scrutiny. Just to recap: Continue reading →

Anticorruption Bibliography–October 2018 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.

What, Besides Creating a New Court, Could the International Community Do To Fight Grand Corruption? A Partial List

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Last week, Richard Goldstone and Robert Rotberg posted a response to Professor Alex Whiting’s critique of the proposal to create an International Anti-Corruption Court (IACC). Early in their response, Goldstone and Rotberg–both advocates for an IACC–remarked, a bit snarkily, that “[n]otably absent from [Professor Whiting’s] post is a description of what the other effective responses to combating grand corruption might be.”

That struck me as a bit of a cheap shot. Professor Whiting’s post offered a careful, thoughtful argument based on his experience and knowledge of the International Criminal Court (ICC) and similar tribunals, and not every such critical commentary on a given proposal must include a full-blown discussion of alternatives. Still, Goldstone and Rotberg’s implicit challenge to IACC skeptics to articulate alternative responses to grand corruption is worth taking seriously, for two reasons:

  • First, this seems to be a common rhetorical gambit by advocates for an IACC, or for other radical measures that critics deem impractical: Rather than answering and attempting to refute the critics’ specific objections directly, the move is to say, “Well, but this is a huge problem, and there’s no other way to solve it, so poking holes in this proposal is really just an excuse for inaction. This may seem like a long shot, but it’s the only option on the table.”
  • Second, and more charitably to those who make this point, grand corruption is indeed an enormous problem that needs to be addressed. And so even though not every critical commentary on a particular proposal needs to include a full-blown discussion of alternatives, those of us who (like me) are skeptical of deus-ex-machina-style responses to the grand corruption problem ought to make a more concerted effort to lay out an alternative vision for what can be done.

In this post I want to (briefly and incompletely) take up the implicit challenge posed by Goldstone and Rotbert (and, in other writings, by other IACC proponents). If the international community is serious about fighting corruption, what else could it do, besides creating a new international court and compelling all countries to join it and submit to its jurisdiction? When people like Professor Whiting (and I) suggest that lavishing time and attention on the IACC proposal might be a distraction from other, more effective approaches, what do we have in mind? What else could international civil society mobilize behind, besides something like an IACC, to address the problem of grand corruption?

Here are a few items on that agenda: Continue reading →

Guest Post: An International Anticorruption Court Is Not a Utopian Dream or a Distraction

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Today’s guest post is from Richard Goldstone, a former Justice of the Constitutional Court of South Africa who also served as the first chief prosecutor of the United Nations International Criminal Tribunals for the former Yugoslavia and Rwanda, and Robert Rotberg, the President Emeritus of the World Peace Foundation and former professor at the Harvard Kennedy School of Government.

In a 2018 Daedalus article, Senior United States District Judge Mark L. Wolf explained that “The World Needs an International Anticorruption Court (IACC)” and charted a course for its creation. In a recent post on this blog, Professor Alex Whiting characterized the IACC as a “utopian” dream and possibly “a distraction from more effective responses to the worldwide scourge of grand corruption.” Notably absent from the post is a description of what the other effective responses to combating grand corruption might be.

In contrast to Professor Whiting, we found Judge Wolf’s original proposal for an IACC compelling. Therefore, we joined him in establishing Integrity Initiatives International (III). Continue reading →

Brazil’s Electoral Dilemma: Which Outcome Will Be Better for Anticorruption?

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My post last week expressed some dismay at the political situation in Brazil, and the role that understandable disgust at widespread corruption in the left-wing Worker’s Party (PT), which controlled the presidency from 2003 to 2016, seems to be playing in contributing to the astonishing electoral success of far-right candidate Jair Bolsonaro. Bolsonaro—whose extremist views, history of bigotry, violent rhetoric, and admiration for autocrats has led some to label him, with justification, as a quasi-fascist—was the top vote-getter in the first round of Brazilian’s two-round presidential election system, and he is favored to win the run-off against PT candidate Fernando Haddad on October 28. Though I’m no expert on Brazil or its politics, this situation—voter revulsion at the corruption of the mainstream parties leading to the rise of a tough-talking extremist—is distressingly familiar. It’s a pattern we’ve seen play out in several countries now, usually with quite unfortunate consequences. So, much as I believe that corruption is a serious problem, and tend to support aggressive anticorruption efforts—including the so-called Car Wash (Lava Jato) investigations in Brazil—I used my last post to express my dismay that anticorruption sentiments might propel someone like Bolsonaro to victory. Some things, I argued, are more important than corruption.

The post seems to have touched a nerve—I’ve gotten far more feedback on that post (some in the public comments section, some in private communications) than anything else I’ve written in the four and half years I’ve been blogging about corruption. While some of the comments have been the sort of substance-free invective one gets used to on the internet, a lot of people have provided useful, thoughtful, constructive criticism and pushback of various kinds. So I thought that perhaps it would be worth doing another post on this general topic, and connecting my thoughts about the current Brazilian political situation to some more general themes or problems that those of us who work on anticorruption need to confront, whether or not we have any particular interest in Brazil. Continue reading →