Author Archives: Matthew Stephenson

Unknown's avatar

About Matthew Stephenson

Professor of Law, Harvard Law School

London Anticorruption Summit–Country Commitment Scorecard, Part 2

Posted on by
2

This post is the second half of my attempt to summarize the commitments (or lack thereof) in the country statements of the 41 countries that attended last week’s London Anticorruption Summit, in four areas highlighted by the Summit’s final Communique:

  1. Increasing access to information on the true beneficial owners of companies, and possibly other legal entities, perhaps through central registers;
  2. Increasing transparency in public procurement;
  3. Strengthening the independence and capacity of national audit institutions, and publicizing audit results (and, more generally, increasing fiscal transparency in other ways); and
  4. Encouraging whistleblowers, strengthening their protection from various forms or retaliation, and developing systems to ensure that law enforcement takes prompt action in response to whistleblower complaints.

These are not the only subjects covered by the Communique and discussed in the country statements. (Other topics include improving asset recovery mechanisms, facilitating more international cooperation and information sharing, joining new initiatives to fight corruption in sports, improving transparency in the extractive sector through initiatives like the Extractive Industries Transparency Initiative, additional measures to fight tax evasion, and several others.) I chose these four partly because they seemed to me of particular importance, and partly because the Communique’s discussion of these four areas seemed particularly focused on prompting substantive legal changes, rather than general improvements in existing mechanisms.

Plenty of others have already provided useful comprehensive assessments of what the country commitments did and did not achieve. My hope is that presenting the results of the rather tedious exercise of going through each country statement one by one for the language on these four issues, and presenting the results in summary form, will be helpful to others out there who want to try to get a sense of how the individual country commitments do or don’t match up against the recommendations in the Communique. My last post covered Afghanistan–Malta; today’s post covers the remaining country statements, Mexico–United States: Continue reading →

London Anticorruption Summit–Country Commitment Scorecard, Part 1

Posted on by
6

Well, between the ICIJ release of the searchable Panama Papers/Offshore Leaks database, the impeachment of President Rousseff in Brazil, and the London Anticorruption Summit, last week was quite a busy week in the world of anticorruption. There’s far too much to write about, and I’ve barely had time to process it all, but let me try to start off by focusing a bit more on the London Summit. I know a lot of our readers have been following it closely (and many participated), but quickly: The Summit was an initiative by David Cameron’s government, which brought together leaders and senior government representatives from over 40 countries to discuss how to move forward in the fight against global corruption. Some had very high hopes for the Summit, others dismissed it as a feel-good political symbolism, and others were somewhere in between.

Prime Minister Cameron stirred things up a bit right before the Summit started by referring to two of the countries in attendance – Afghanistan and Nigeria – as “fantastically corrupt,” but the kerfuffle surrounding that alleged gaffe has already received more than its fair share of media attention, so I won’t say more about it here, except that it calls to mind the American political commentator Michael Kinsley’s old chestnut about how the definition of a “gaffe” is when a politician accidentally tells the truth.) I’m going to instead focus on the main documents coming out of the Summit: The joint Communique issued by the Summit participants, and the individual country statements. There’s already been a lot of early reaction to the Communique—some fairly upbeat, some quite critical (see, for example, here, here, here, and here). A lot of the Communique employs fairly general language, and a lot of it focuses on things like strengthening enforcement of existing laws, improving international cooperation and information exchange, supporting existing institutions and conventions, and exploring the creation of new mechanisms. All that is fine, and some of it might actually turn out to be consequential, but to my mind the most interesting parts of the Communique are those that explicitly announce that intention of the participating governments to take pro-transparency measures in four specific areas:

  1. Gathering more information on the true beneficial owners of companies (and possibly other legal entities, like trusts), perhaps through a central public registry—which might be available only to law enforcement, or which might be made available to the general public (see Communique paragraph 4).
  2. Increasing transparency in public contracting, including making public procurement open by default, and providing usable and timely open data on public contracting activities (see Communique paragraph 9). (There’s actually a bit of an ambiguity here. When the Communique calls for public procurement to be “open by default,” it could be referring to greater transparency, or it could be calling for the use of open bidding processes to increase competition. Given the surrounding context, it appears that the former meaning was intended. The thrust of the recommendation seems to be increasing procurement transparency rather than increasing procurement competition.)
  3. Increasing budget transparency through the strengthening of genuinely independent supreme audit institutions, and the publication of these institutions’ findings (see Communique paragraph 10).
  4. Strengthening protections for whistleblowers and doing more to ensure that credible whistleblower reports prompt follow-up action from law enforcement (see Communique paragraph 13).

Again, that’s far from all that’s included in the Communique. But these four action areas struck me as (a) consequential, and (b) among the parts of the Communique that called for relatively concrete new substantive action at the domestic level. So, I thought it might be a useful (if somewhat tedious) exercise to go through each of the 41 country statements to see what each of the Summit participants had to say in each of these four areas. This is certainly not a complete “report card,” despite the title of this post, but perhaps it might be a helpful start for others out there who are interested in doing an assessment of the extent of actual country commitments on some of the main action items laid out in the Communique. So, here goes: a country-by-country, topic-by-topic, quick-and-dirty summary of what the Summit participants declared or promised with respect to each of these issues. (Because this is so long, I’m going to break the post into two parts. Today I’ll give the info for Afghanistan–Malta, and Thursday’s post will give the info for Mexico–United States). Continue reading →

Anticorruption Bibliography–May 2016 Update

Posted on by
Reply

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.

On Conferences, Speaker Time Allocation, and Simple Division (Warning: Trivial, Non-Substantive, and Snarky)

Posted on by
11

So I’m very excited to have the opportunity to attend tomorrow’s “Tackling Corruption Together” conference in London (a civil society event to precede the government-organized Anticorruption Summit on Thursday). It looks like a great program, and I’m looking forward to doing some substantive posts on the conference discussion after I return home. And given how grateful I am to be included, I probably shouldn’t say anything critical about the conference program in advance. But I just can’t stop myself from pointing out that for the opening session has allocated a total of 45 minutes total for: a welcome address by the Rt. Hon. Patricia Southland (Secretary-General of the Commonwealth of Nations), a keynote speech by President Muhammadu Buhari of Nigeria, and opening remarks from three additional speakers (Jose Ugaz, Mo Ibrahim, and Jan Coos Gessink). That comes out to nine minutes per speaker, on average (assuming a punctual start, no delays between presentations, and no time allocated for remarks from the session chair, Axel Threlfall). And while perhaps President Buhari will prove unusually succinct, I’ve never seen a head-of-state manage to keep his or her remarks under half an hour. This strikes me as absurdly unrealistic time allocation.

The rest of the conference program suffers from similar problems, generally allocating around 9-11 minutes per speaker, on average (not including the session chairs, and again assuming no delays or dead time). And I strongly suspect that the most of these speakers will want to take at least 15 minutes for their presentations. So, what will happen (I predict) is that sessions later in the day will be rushed, there will be no time for Q&A or meaningful exchanges among the panelists, and the coffee breaks and lunch hour–often the most productive times of these meetings, because that’s when people really get a chance to interact–will be drastically compressed.

I’m hoping that I’ll be proven wrong, and if I am, I’ll post a mea culpa. But otherwise, we can add this to my litany of complaints about anticorruption conferences (and other conferences, for that matter): Overcrowded programs, with too many speakers and too little time–and perhaps an over-emphasis on getting “fancy” speakers giving prepared remarks, rather than creating opportunities for genuine dialogue. But, again, I fully expect some useful material to come out of this meeting, given the great lineup of speakers. This is hardly an unusual problem. Consider this not so much a criticism as a plea, for future conference organizers, to think carefully about what’s a realistic allocation of minutes-per-speaker.

The U.S. Government’s New Anticorruption Proposals: A Cause for Cynicism, Optimism, or Both?

Posted on by
5

Last Thursday, two United States cabinet departments – the Department of the Treasury and the Department of Justice – issued separate but thematically related announcements (see here and here) regarding new initiatives to combat corruption, money laundering, and related malfeasance:

  • Treasury announced the finalization of a new Customer Due Diligence (CDD) rule (discussed previously on this blog), which would require that financial institutions collect and verify the personal information of the beneficial owners of accounts held at those institutions. Treasury also announced a proposal for new regulations that would require certain foreign-owned entities (single-member limited liability companies (LLC)) to obtain a tax ID number and report comply with the associated reporting requirements—a move that would close a loophole that currently allows these entities to shield the foreign owners of non-U.S. assets.
  • Treasury also announced that it plans to send draft legislation to Congress (the text of which does not yet seem to be publicly available) that would require companies to know and report accurate beneficial ownership information at the time of a company’s creation, and to file this information with the Treasury Department.
  • Justice also submitted proposed legislation to Congress that would give the Department new investigative powers (including the use of administrative subpoenas, rather than slower and less flexible grand jury subpoenas, for money laundering investigations, enhanced authority to access foreign bank and business records, and the ability to restrain property based on a request from a foreign country for 90 rather than 30 days). The draft legislation would also creating a mechanism to use and protect classified information in civil asset recovery cases, and would expand the scope of the money laundering offense to include, as a sufficient predicate offense, any violation of foreign law that would be a violation of U.S. law if committed in the United States.

I have not yet had time to review the final CCD rule or the proposed LLC rule, and as I noted above, I don’t think the full text of the legislative proposals is yet available. So I’m not yet in a position to comment on the substance, but at least on the surface, all this seems encouraging. It’s possible to take the cynical view that most of this doesn’t mean very much or represent genuine progress. And I’ll admit part of me is inclined to embrace the cynical view. But on the whole, I do think that last week’s announcements are genuinely encouraging, and signal the possibility of building greater political momentum for real progress.

First, though, the reasons for cynicism: Continue reading →

Guest Post: What’s the Problem with Out-of-Court Settlements for Foreign Bribery? A Reply to Stephenson

Posted on by
3

GAB is delighted to welcome back Susan Hawley, policy director of Corruption Watch, for further discussion and debate regarding the proposal to create global standards for out-of-court settlements in foreign bribery cases:

Matthew Stephenson has devoted three successive blog posts (see here, here, and here) to critiquing the position that we outlined in our report, Out of Court, Out of Mind, calling for global standards for corporate settlements on corruption cases. NGOs, including we at Corruption Watch, along with Transparency International, Global Witness, and the UNCAC Coalition, outlined this position in a letter to the OECD. I am delighted that our report and the joint letter has triggered such interest and discussion. This is a hugely important debate: it cuts to the heart of how countries enforce their anticorruption laws and what constitutes effective enforcement.

We wrote our letter to the OECD and released our report precisely to stimulate this kind of debate at a time when:

  • a number of countries are looking at whether to introduce Deferred Prosecution Agreements (DPAs) and/or Non-Prosecution Agreements (NPAs) specifically to improve their track record of dealing with overseas corruption and
  • many countries in Europe appear to be choosing to resolve the few enforcement actions that they are taking through out-of-court settlements.

This post offers a riposte to Professor Stephenson’s criticisms of our case for global standard for corporate settlements in these cases. The fact that Professor Stephenson devoted three blog posts to the subject shows how meaty it is, and it won’t be possible in a single reply post to go into all of his criticisms, but this post replies to some of the most essential points. Continue reading →

The Panama Papers and the Structure of the Market for Asset-Concealment Services: Whack-a-Mole or Squeegee Men?

Posted on by
3

The news item that’s caused the most buzz in the anticorruption community in the past month is likely the bombshell release of the so-called “Panama Papers” (though the initiation of impeachment proceedings against Brazilian President Dilma Rousseff runs a close second). Most readers of this blog probably don’t need much explanation of the Panama Papers or their significance. These documents, leaked from Panamanian law firm Mossack Fonseca to the International Consortium of Investigative Journalists, reveal how a very large number of very wealthy individuals, including many senior government officials and their close associates, have made use of middlemen, shell companies, obscure corporate secrecy rules, and other legal techniques to conceal their wealth from tax authorities, law enforcement, and the general public. (Rick’s post from a few weeks ago usefully highlights some of the most important legal loopholes that Mossack Fonseca helped its clients exploit.) Though in some cases the assets in question may have been acquired legitimately, in many cases they probably weren’t. And while it’s not entirely clear whether Mossack Fonseca broke any laws in assisting its clients, the whole affair is a window into the shadowy and often sordid practices that the very wealthy—including corrupt public officials and their cronies—use to hide their assets.

I haven’t yet weighed in on the Panama Papers brouhaha on this blog, mainly because I’m not sure what there is to say. On the one hand, the Panama Papers leaks are hugely consequential for at least two reasons: First, the identification of specific individuals—in addition to feeding our collective appetite for celebrity gossip—is likely to be important for holding those individuals legally or politically accountable. (And indeed, the release of the Panama Papers has already forced the resignation of Iceland’s former Prime Minister Davio Gunnlaugsson.) Second, the Panama Papers revelations have gotten a great deal of mainstream media attention, including front-page coverage on major newspapers and prominent discussions elsewhere. This may well help build momentum for efforts that anticorruption activists and others have been pushing for some time (such as crackdowns on corporate secrecy, closing gaps in the international money laundering regime, and other matters). Yet at the same time, individual names aside, it’s not clear that the Panama Papers revelations have told the anticorruption community anything that wasn’t already widely known (or at least strongly suspected): That corrupt leaders, and plenty of others with an interest in hiding their assets, take advantage of lax or uneven regulatory oversight, combined with networks of shell companies. So, while the added publicity is a boon, and the identification of individuals is necessary (though of course not sufficient) to holding them accountable, I’m not entirely sure whether the Panama Papers revelations have told us all that much that’s new. Of course, we still have a lot to learn from these documents—many of which haven’t yet been published—and I would be lying if I said I’d studied what has been released carefully enough to have any strong opinions. But I’ve been struggling to come up with something interesting to say about the Panama Papers, and mostly coming up empty.

There is, however, one thing about these revelations did strike me as potentially interesting, which I haven’t seen discussed in the coverage of the Panama Papers that I’ve read so far, so I thought I’d throw it out here to see what other people think: Continue reading →

Guest Post: Fixing the Federal Definition of Bribery–From “Intent to Influence” to “Illegal Contract”

Posted on by
2

Albert W. Alschuler, the Julius Kreeger Professor Emeritus at the University of Chicago Law School, contributes the following guest post:

In the United States, the principal federal criminal statute prohibiting the bribery of federal officials, 18 U.S.C. § 201(b), forbids “corruptly” offering or giving anything of value to an official “with the intent to influence any official act.” Yet, as I argue in a recent article, defining bribery primarily in terms of the payer’s “intent to influence” is overbroad. The phrase “intent to influence” not only seems on its face to reach common and widely accepted practices; it also invites speculation about motives and may produce prosecutions and convictions based on cynicism.

There’s an alternative: The American Law Institute’s 1962 Model Penal Code defines bribery as offering, giving, soliciting or accepting any pecuniary benefit as “consideration” for an official act. As a Texas court said of a state statute modeled on this provision, the Code “requir[es] a bilateral arrangement—in effect an illegal contract to exchange a benefit as consideration for the performance of an official function.” More than two-thirds of the states now embrace an “illegal contract” definition of bribery; the federal government and the remaining states should follow suit. Continue reading →

Video: Columbia Law School Proxy Debate on McDonnell’s Bribery Appeal

Posted on by
Reply

As regular GAB readers know, we’ve had quite a bit of discussion on this blog about the case of former Virginia governor Bob McDonnell, and I’ve been particularly adamant in my views that the conviction ought to be affirmed. (See here, here, here, and here.) The U.S. Supreme Court will hear oral arguments in McDonnell’s case tomorrow morning, and if anything interesting happens I may write about it again. In the meantime, while there won’t be a live audio or video of the Supreme Court argument, anyone who’s dying to hear some live debate about the legal argument is in luck! (Well, sort of.) A couple weeks ago the Columbia Center for the Advancement of Public Integrity hosted (in collaboration with the Columbia Federalist Society) a debate on the McDonnell case between John Malcolm, the director of the Heritage Foundation’s Edwin Meese III Center for Legal and Judicial Studies, and yours truly.

The full video is here. From my perspective, the most important exchange is at 47:13-50:38, where I put to Mr. Malcolm the question whether a federal crime would have been completed if the businessman (Jonnie Williams) and Governor McDonnell agreed that Mr. Williams would provide Governor McDonnell with valuable items (cash or the equivalent), and in exchange—as part of a quid pro quo—the governor would use his influence to get state medical institutions to perform expensive medical studies on the product Mr. Williams’ company produced. Mr. Malcolm concedes that the answer is yes: In that hypothetical example the “official act” element would be satisfied, so long as the quid pro quo is proved. (I make that initial point at 30:59-31:50 of the video and restate it, in the context of the adequacy of the jury instructions, at 34:57-35:32. But, again, the most important part of the exchange is at 47:13-50:38.)

To me, that concession ought to be the end of the argument. Mr. Malcolm’s argument, like that of Governor McDonnell’s lawyers, boils down to the claim that the particular steps that the governor took to try (unsuccessfully) to bring about those tests weren’t official acts (a conclusion, by the way, that I think is just wrong, but put that aside). But that doesn’t matter, because in this case there was an express quid pro quo involving a specific official act. Of course I’ve got my own strongly-held views on this. I leave it to interested readers to watch the video, and read the Supreme Court transcript once it’s available, and decide what you think.

One more aspect of the debate worth noting: In attempting to distinguish the McDonnell case from the Bob Menendez case and certain hypothetical examples I raised (see 38:53-40:25), Mr. Malcolm suggested, as a distinction, that the federal bribery statutes don’t apply if the subject of the quid pro quo is a matter that is not yet pending before the government (see 42:15-45:52 and 45:55-46:21). I didn’t have time to respond to that suggestion during the event itself, nor is it (to my knowledge) an argument that McDonnell’s lawyers have raised in their briefs, but for what it’s worth, I think the claim is inconsistent with the relevant statutes. Notably, 18 U.S.C. 201(a)(3) defines “official act” as “any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit” (emphasis added). Seems clear to me that a promised act can still be “official” even if the matter concerns an action that is not yet pending, but that may be pending in the future, or that could be brought before an official, even if it has not yet been. I suspect Mr. Malcolm may have been improvising a bit here–neither of us had the statute in front of us or committed to memory. In any event, the difficulties in a holding that the federal bribery statutes don’t apply as long as the subject of the quid pro quo is not yet formally pending before the government at the time the bribe takes place ought to be too obvious to belabor.

Anticorruption Bibliography–April 2016 Update

Posted on by
Reply

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. The bibliography now contains over 5,000 sources! On the upside, that means we’ve actually got quite a lot of potentially useful research on corruption’s causes, consequences, and possible solutions. On the downside, there’s so much that it’s a bit overwhelming, and it’s not clear we, as an anticorruption community, have done a great job in distilling the lessons learned from all this research. This is a challenge I’m hoping to tackle in the coming years, and would welcome any help! And, of course, I continue to welcome suggestions for other sources that are not yet included in the bibliography.