Author Archives: Matthew Stephenson

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About Matthew Stephenson

Professor of Law, Harvard Law School

Guest Post: The US Needs To Show More Respect for Foreign Prosecutions

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GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

The principle that the state may not criminally prosecute the same defendant twice for the same conduct—known in most of the world as ne bis in idem (“not twice for the same thing”), and known in the United States as the prohibition on “double jeopardy”—is well-settled and uncontroversial, at least in Western democracies. Much more controversial is whether that principle protects a defendant prosecuted by one country from prosecution by a different country for the same (or closely related) conduct. This question is of particular importance in the context of transnational bribery, where the same conduct might violate the criminal laws of multiple governments. As I discussed in my last post, in Europe, a mix of domestic legislation, international treaties, and court decisions have established an international version of the ne bis in idem principle, providing companies with a reasonable assurance that if they are prosecuted in one European country, they are shielded from further prosecution in another. In contrast, in the United States the prohibition on double jeopardy has been consistently interpreted to prohibit only multiple prosecutions by the same sovereign. US laws thus offer no protection against re-prosecution in the United States after a prosecution abroad.

The power of US prosecutors to go after companies that have already been prosecuted in other countries is enhanced by other powers that European prosecutors can only dream about. As noted in an earlier post, a US prosecutor can pursue a corporation when anyone within that corporation can be shown to have committed a crime, giving the prosecutor considerable leverage. US prosecutors also have finely tuned procedural mechanisms, such as deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs), that are only tentatively being explored in other countries, such as the United Kingdom and France. The DOJ regularly asserts aggressive notions of its territorial powers, claiming, for example, that the use of dollars as the currency of an illegal transaction may subject the participants to US prosecution. US prosecutors have essentially unreviewable discretion their investigative decisions, because unlike many countries in Europe, criminal investigations (and, crucially, the decision to charge) are not supervised or reviewed by judges, as the DC Circuit has recently held.

Taken together, these circumstances risk causing two problems: Continue reading →

On Theory, Data, and Academic Malpractice in Anticorruption Research

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I’m committed (probably self-servingly) to the idea that academic research is vital to both understanding and ameliorating corruption. I sometimes worry, though, that we in the research community don’t always live up to our highest ideals. Case in point: A little while back I recently asked my law school’s library to help me track down some research papers on corruption-related topics, including a working paper from a few years ago, co-authored by a very well-known and influential corruption/good-governance researcher. I’d seen the paper cited in other articles but couldn’t find it. The library staff couldn’t find it either, and emailed the authors directly to ask if a copy of the paper was available. Here is a verbatim reproduction of this famous professor’s response:

Thanks for your email. Unfortunately, we decided not to finish this paper since we could not get the data to fit our theory[.]

I have to say, I found this response a bit troubling.

Now, to be fair, maybe what this person (whose first language is not English) actually meant was that he and his coauthor were unable to locate the data that would allow a meaningful test of the theory. (In other words, perhaps the statement “We could not get the data to fit our theory” should be understood to mean: “We could not acquire the sort of data that would be necessary to test our theory.”) But boy, much as I want to be charitable, it sure sounds like what this person meant was that he and his coauthor had tried to slice and dice the data in lots of different ways to get a result that fit a predetermined theory (so-called “Procrustean data torturing”), and that when they couldn’t get nature to confess, they spiked the paper rather than publicizing the null findings (contributing to the so-called “file drawer problem”).

Now, again, maybe that latter reading is wrong and unfair. Maybe the more charitable interpretation is actually the correct one. But still, it’s worrying. Even if this case was not, in fact, itself an illustration of the data torturing and the file-drawer problem, I’m sure those things go on in anticorruption research, just as they do elsewhere. Lots of scholars (including the author of the above email) have their own pet theories about the best way to promote high-quality governance, and spend quite a bit of time advising governments and NGO reformers on the basis of these (allegedly) evidence-based theories. But for the results of academic research to be credible and useful, we all need to be very careful about how we go about producing our scholarship, and to be careful not to let our findings — or our decisions about what projects to pursue, publish, and publicize — be unduly determined by our preconceived notions.

Guest Post: Behavioral Economics, Punishment, and Faith in the Fight Against Corruption

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The following guest post, by Roberto de Michele, Principal Specialist in the Institutional Capacity of the State Division at the Inter-American Development Bank (IDB), is a translated and slightly modified version of a post that Mr. de Michele originally published in Spanish on the IDB’s governance blog on August 29, 2016:

Last August, Hugo Alconada Mon, one of Argentina’s most prestigious investigative journalists, published an article (in Spanish) describing how road construction firms in Argentina created a cartel to fix public work contracts. Members of the cartel would meet in the board room of the sector chamber to conduct their business. The room has a statue of Our Lady of Luján, patroness of Argentina. Before commencing negotiations to fix contracts, assign “winners,” and distribute earnings, members of the cartel would turn around the image of Our Lady of Luján to face the wall, with her back to those gathered there. It was, as one of the sources candidly put it, “so that she doesn’t see what we were about to do.” This remark got me thinking about two possible explanations on why we break the law, cheat, and lie both to the government and to others. Continue reading →

The Walmart FCPA Investigation Revisited (Again): Some Musings and Speculations on the Most Recent Reports

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Earlier this month, there was yet another intriguing story about new developments in the US government’s investigation into possible Foreign Corrupt Practices Act (FCPA) violations by the Walmart’s foreign operations. The Walmart case is probably the most high-profile (and controversial) FCPA case of the last decade, and the reports suggest that it may finally be lurching toward a conclusion, though the recent story raises as many questions than it answers.

Before proceeding to the most recent developments, here’s a quick, and admittedly oversimplified, recap: In 2005, Walmart received a report from a disgruntled former employee that its Mexican subsidiary had engaged in an extensive bribery scheme to pay off government officials to speed the opening of new stores. After internal investigation, however, Walmart’s executives decided in 2006 not to take meaningful action or disclose the apparent FCPA violations to the US government. In 2011, Walmart’s new general counsel initiated a review of Walmart’s anticorruption compliance worldwide; this audit revealed evidence of significant problems in several countries, including Mexico, China, Brazil, and India. Around the same time, Walmart learned that reporters from the New York Times were conducting an extensive investigation into bribery allegations involving Walmart’s Mexico operations. In attempt to get out in front of the story, in December 2011 Walmart disclosed to the DOJ and SEC potential FCPA problems in its Mexican subsidiary, but indicated that the problems were limited to a handful of discrete cases. In April and December 2012, the New York Times published two lengthy articles (here and here) detailing extensive bribery by Walmart’s Mexican subsidiary, orchestrated by the subsidiary’s CEO and general counsel—allegations that went far beyond the isolated incidents Walmart had disclosed the previous year. Since then, the DOJ and SEC investigation into Walmart’s alleged FCPA violations—not only in Mexico, but in other foreign subsidiaries as well—has been ongoing.

There have been quite a few twists and turns in the story. Perhaps the most dramatic was the Wall Street Journal’s surprising report, from almost exactly one year ago. The highlights from that report included the claims (from “people familiar with the probe”) that (1)the investigation was nearly complete (and, by implication, the case would be resolved soon); (2) the US government’s investigation had found “few signs of major misconduct in Mexico”; and (3) although the investigation had uncovered evidence of “widespread but relatively small payments” in India, the Walmart case turned out to be “a much smaller case than investigators first expected” that “wouldn’t be likely to result in any sizeable penalty.”

The first of those three claims has been refuted by the passage of time—it’s more than a year after the WSJ story, and the case has still not been resolved. The latter two claims are flatly contradicted by the more recent report published by Bloomberg (also based on anonymous “people familiar with the matter”). According to the Bloomberg report: Continue reading →

Anticorruption Bibliography–October 2016 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.

A quick note: With the assistance of the library and my administrative assistant, I’m in the process of shifting the bibliography from a simple text document to a citation-management database. We’re still working out the kinks, and so you may notice a few weird or different things about the formatting. We’re hoping to get this worked out by the next update. We’re also hoping to eventually put the bibliography in a form where it will be searchable and sortable by field, instead of just one long pdf. So, as the standard line goes, “please pardon our appearance while we’re remodeling.”

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

Guest Post: Does International Law Require an International Double Jeopardy Bar?

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GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

Most countries prohibit multiple prosecutions for the same acts or offenses. This is known in the United States as the prohibition against “double jeopardy”; in Europe and elsewhere the principle is known as ne bis in idem. But what happens if a person or company is pursued in more than one country? This question is particularly relevant to the fight against foreign bribery, where the same act will often offend the criminal laws of multiple countries. The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, adopted in 1997, clearly anticipated the possibility of multi-state prosecutions, but provided in Article 4.3 only that the relevant authorities should “consult with a view to determining the most appropriate jurisdiction for prosecution,” a provision that has been consistently interpreted as precatory, not providing an individual right against double prosecution.

The law in the United States provides no protection against duplicate prosecution by a different sovereign. The situation is more complex in Europe. In some countries, such as France, domestic legislation limits a prosecutor’s power to pursue a person or entity already the object of a prosecution in another country, but only if the exercise of French jurisdiction is “extraterritorial” (that is, where no constitutive act of the alleged crime took place on French territory, but the prosecution based on some other factor, such as the French nationality of the accused or the victim).  Within Europe, a series of overlapping treaties—Protocol Number 7 of the Convention for the Protection of Human Rights and Fundamental Freedoms (CPHRFF), adopted in 1984 by the Council of Europe and signed by most but not all of its members; Article 54 of the Convention to Implement the Schengen Agreement (CISA), adopted in 1990; and Article 50 of the Charter of Fundamental Rights of the European Union (CFR) adopted in 2009—all contain ne bis in idem provisions, though they are not identical. (The CISA provision, for example, protects against re-prosecution based on the same “acts,” while the CFR and CPHRFF protect against multiple prosecutions for the same “offense.”)  The CISA provision has been expansively interpreted by the European Court of Justice, which has noted that CISA mandates a “mutual trust” in the criminal justice systems of other signatory countries, and respect for their decisions “even when the outcome would be different if [the second country’s] own national law were applied.”

Lurking behind these and other developments in Europe is the possibility that protection against multiple prosecutions may one day be viewed as right, grounded in international treaty obligations, that is cognizable under domestic constitutions. No court has yet so ruled, but there are sufficient intimations of such a possibility in some French decisions, for example, that the issue is frequently raised there. Continue reading →

Guest Post: Please, Criticize Me! (Why Anticorruption Practitioners Should Scrutinize and Challenge Research Methodology)

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GAB is pleased to welcome back Roger Henke, Chairman of the Board of the Southeast Asia Development Program (SADP), who contributes the following guest post:

In a previous post, I described a survey used to estimate the incidence of fraud and associated problems within the Cambodian NGO sector. The response to the results of that survey have so far been somewhat disheartening—not so much because the research has had little influence on action (the fate of most such research), but rather because those who have been told about the study’s results have all taken the results for granted, questioning neither their meaningfulness nor how they were generated. Such at-face-value uptake is, paradoxically, a huge risk to the longer-term public acceptance of the evidence produced by social-scientific research.  I am relieved that methodological considerations (issues of publication bias, replicability, p-hacking, and others) are finally getting some traction within the social science community, but it is evident that the decades-long neglect of these problems dovetails with a public opinion climate that doubts and disparages social science expertise.

Lack of attention to the methodological underpinnings of “interesting” conclusions is hardly a remarkable fate for corruption research results, nor is it specific to corruption research.  But the anticorruption community has a lot to lose by distrust in research, and thus a lot to win by ensuring that the findings it uses to build its cases upon pass basic quality checks. For the remainder of this post I’ll examine some basic questions that the Cambodia NGO corruption survey’s results should have triggered before being accepted as credible and meaningful: Continue reading →

TI’s “Declaration Against Corruption” — A Plug and a Question

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Last week, I got an email alert from Transparency International asking me to sign (and publicize) TI’s new “Declaration Against Corruption.” The declaration is short and sweet:

I will not pay bribes
I will not seek bribes
I will work with others to campaign against corruption
I will speak out against corruption and report on abuse
I will only support candidates for public office who say no to corruption and demonstrate transparency, integrity and accountability

On reading the declaration, I had two thoughts. The first thought was, “Yes, of course I agree with all that, I’m happy to add my name to the list” (which I did). I’m also happy to use this blog post in part to help publicize the declaration in case some of you out there haven’t already heard about this and would like to sign on as well.

My second thought, though, was along the lines of “What’s the point?”

I ask that question with all due respect to TI. I want to pose this as a substantive, serious question about anticorruption campaign strategy: What is a “Declaration Against Corruption” like this supposed to accomplish? It certainly doesn’t do any harm, but what good do TI and other anticorruption campaigners think will come of this?

I have a few hypotheses about why one might think that calling on as many people as possible to sign onto a Declaration Against Corruption might be a useful and meaningful (as opposed to symbolic but ultimately trivial) element of an anticorruption campaign: Continue reading →

Guest Post: What the McDonnell Opinion Portends for U.S. Anticorruption Law, and U.S. Politics

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Jacob Eisler, Lecturer at Cambridge University, contributes the following guest post:

As Matthew observed in his blog post earlier this summer on the Supreme Court’s unanimous decision to vacate the conviction of former Virginia Governor Bob McDonnell, there are two different ways one might interpret this decision. One could read McDonnell narrowly as a case that focuses on overly expansive jury instructions on the meaning of “official act” in the statutory definition of bribery. Alternatively, a more expansive reading would focus on language in the opinion that suggests the Court has a lenient attitude towards self-serving behavior by (high-ranking) public officials. As I argue at length in a forthcoming article, the broader—and for anticorruption activists more troubling—reading of the case is the right one, and the decision therefore has potentially extensive implications for American politics. Continue reading →

Are Aggregate Corruption Indicators Coherent and/or Useful?: Further Reflections

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Last week, I used Professor Michael Johnston’s recent post on the methodological and conceptual problems with national-level perceived corruption indicators as an opportunity to respond to some common criticisms of research that relies on these indicators. In particular, I have frequently heard (and interpreted Professor Johnston as advancing) two related criticisms: (1) composite indicators of “corruption” are inherently flawed because “corruption” is a multifaceted phenomenon, comprised of a range of diverse activities that cannot be compared on the same scale, let alone aggregated into a single metric; and (2) corruption is sufficiently diverse within a single country that it is inappropriate to offer a national-level summary statistic for corruption. (These points are related but separate: One could believe that corruption is a sufficiently coherent concept that one can sensibly talk about the level of “corruption,” but still object to attempting to represent an entire country’s corruption level with a single number; one could also endorse the idea that national-level summary statistics can be useful and appropriate, even when there’s a lot of intra-country variation, but still object to the idea that “corruption” is a sufficiently coherent phenomenon that one can capture different sorts of corruption on the same scale.) For the reasons I laid out in my original post, while I share some of the concerns about over-reliance on national-level perceived corruption indicators, I think these critiques—if understood as fundamental conceptual objections—are misguided. Most of the measures and proxies we use in studying social phenomena aggregate distinct phenomena, and in this regard (perceived) corruption is no different from war, wealth, cancer, or any number of other objects of study.

Professor Johnston has written a nuanced, thoughtful reply (with a terrific title, “1.39 Cheers for Quantitative Analysis”). It is clear that he and I basically agree on many of the most fundamental points. Still, I think there are still a few places where I might respectfully disagree with his position. I realize that this back-and-forth might start to seem a little arcane, but since so much corruption research uses aggregate measures like the Corruption Perceptions Index (CPI), and since criticisms of these measures are likewise so common, I thought that perhaps one more round on this might not be a bad idea.

Let me address the two main lines of criticism noted above, and then make some more general observations. Continue reading →