Corruption-Proofing Legal Norms: A Technique Worth Copying?

“Corruption-proofing” is a method for assessing whether a draft law or regulation poses a risk of corruption. A independent expert analyzes whether the way a proposed legal norm is drafted or to be implemented is likely to pose a risk of corruption and if so, how it can be amended to minimize or eliminate the risk. First used in the early 2000s by EU Eastern Partnership Countries, it has since spread to other states in Eastern Europe and Central Asia and to South Korea.  

The technique’s immediate value is that it gives lawmakers a chance to revise their drafts to address the corruption risks they might create. Of even greater import, when citizens or civil society have an opportunity to weigh in on corruption risks, it opens the door to public discussion and participation in what is government’s most critical task: the making of legal norms binding on all.

My reading of the experience with corruption-proofing suggests others would benefit from adopting a similar procedure. What I learned about that experience is summarized below. Comments welcome and information on other studies or countries where it has been tried most welcome.

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Moldova’s Fight Against Corruption: Reset Needed

Today’s Guest Post is submitted by Dumitrita Bologan on behalf of Moldova’s Independent Anti-Corruption Advisory Committee (CCIA). The CCIA is a corruption watchdog agency with members drawn equally from Moldovan civil society and the international community. Established by presidential decree in 2021, it recommends measures to bolster Moldova’s fight against corruption and periodically reports on their implementation. The post below is drawn from its latest report, “Disrupting Dysfunctionality”: Resetting Republic of Moldova’s Anti-Corruption Institutions. While specific to Moldova, the issues it raises about coordination between law enforcement agencies and the need for judicial reform will be familiar to those working in other countries and the insights about how to address the problems of value to many.

The Republic of Moldova has been struggling with corruption for years, it being acknowledged as a main obstacle to development. The relevant stakeholders have implemented a wide range of measures to prevent and fight corruption, but they have neither been accompanied by coherent policies nor strict adherence by all parties. As a result, they have often been ineffective, insufficient, and poorly executed.

As Disrupting Dysfunctionality shows, the weakest point has been the reform of justice institutions. Reforms initiated in 2011 produced modest results despite considerable investments and support from development partners, and these efforts suffered significant setbacks during the years 2016 – 2019 when elites captured state institutions. While some advances have been realized since, the impact has yet to be felt.

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Islamic States Agree to Anticorruption Convention

On 28 Jumada Al-Awwal, 1444h (December 22, 2022), Anticorruption Ministers of the Organization of Islamic Cooperation agreed to assist one another in preventing, detecting, investigating, and prosecuting corruption crimes.

The Makkah Al-Mukarramah Convention commits OIC’s 57 member states to exchange information and share expertise on bribery, embezzlement, trading in influence, and the other corruption offenses listed in the United Nations Convention Against Corruption. Member states foreign ministers are expected to ratify the Convention by March of this year.

The Convention is an important step forward. For two reasons. One, as a practical matter requests from one OIC member to another for assistance in locating fugitives, securing evidence, or recovering stolen assets often run up against obstacles ranging from outmoded procedures to a lack of trust between law enforcement agencies.

This makes it easy for embezzlers, bribe takers and payers, and other scam artists to escape prosecution.  Not only does the Convention require states to eliminate these barriers, but its creation of a General Secretariat and a Conference of State Parties should help smooth working relations among law enforcement personnel as well as provide a forum for resolving disputes.

The greater impact is surely the Convention’s demonstrative effect. Beyond an immediate effect on behavior, law serves an expressive function, creating and validating social norms. The OIC is in its own words “the collective voice of the Muslim world.” For the representative of the believers in one of the world’s great religions to join the fight against corruption validates and reaffirms the importance of the fight. That the English for “Makkah Al-Mukarramah” is “Holy City of Mecca” serves to emphasize this importance to Muslims of all states.

Foreign Law Enforcement Agencies to Get U.S. Beneficial Ownership Information

The cause of financial transparency just recovered some of the ground recently lost when the European Court of Justice struck down the EU directive on public access to corporate ownership data. Last Friday the U.S. Financial Crimes Enforcement Network (FinCEN) published draft regulations prescribing how certain limited — but quite important – members of the public can obtain information on the actual, beneficial owners of U.S. corporations.

The privileged group consists of law enforcement personnel. And significantly for the global fight against corruption, they include those from non-American as well as American agencies.

The rules for domestic agencies are straightforward, those for non-U.S. authorities less so as they incorporate the conditions Congress put on foreign agencies’ access. The request must be for a law enforcement purpose or national security or intelligence activity; it must be transmitted through a U.S. law enforcement intermediary, and the requesting government must have either an “applicable treaty” with the U.S. or else be a “trusted foreign government.”

For corruption-related cases these conditions would appear to pose no real hurdle. Moreover, in fleshing them out, FinCEN was attentive to foreign authorities’ needs. FinCEN defines “law enforcement purpose,” for example, to include civil forfeiture actions.

Between the diversity of foreign laws and the many types of agreements foreign partners have with U.S. counterparts, however, the agency cautions the draft regulations might still interfere with current arrangements. Anticorruption agencies, prosecution services, and other non-U.S. authorities should therefore examine the draft carefully, ideally in consultation with the U.S. agency or agencies with which they work. Comments are due by February 23.

I see one potential issue and have one question about the proposed rules.

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Civil Society to the U.S.: Repair the Damage Italy Has Done to the OECD Antibribery Convention

Eni and Shell’s acquittal by an Italian court of foreign bribery threatens to undermine one of the major advances of the fight against corruption: the OECD Antibribery Convention. Italy and the 43 other wealthy nations parties to the Convention pledge to investigate, prosecute, and punish nationals who bribe officials of another government.  

The trial court’s acquittal of Eni, Shell, and four individuals of paying Nigerian officials over $1.1 billion in return for the rights to OPL-245, a lucrative offshore oil field, shocked those following the case. The bribery evidence on the public record was overwhelming. Rumors that the acquittal was bought immediately began circulating. When the prosecutor announced she would not to appeal the acquittal, the rumor mill went into overdrive and put the question Italy’s commitment to the Convention squarely on the international agenda.

And if a G-7 country backs away from it, how long before other parties follow? Especially when, as in Italy, one of their major companies is in the dock?

Below is a letter from a broad coalition of civil society groups, and the lawyer who represents Nigeria in foreign bribery cases asking U.S. Attorney General Merrick Garland to open a case against Eni and Shell for bribing Nigerian officials.  As the authors explain, because Eni and Shell are both subject to Foreign Corrupt Practices Act, when the allegations involving Nigeria first surfaced the U.S. had initiated an investigation. After Italy signaled it was also investigating the companies, the U.S. deferred and closed its case.  Now that Italy has utterly failed to see the case through, they urge the U.S. to pick up the ball. 

Dear Mr. Attorney General:

Urgent action required by US to defend the OECD Anti-Bribery Convention: The Department of Justice must reopen its investigation into Eni and Shell

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Guest Post: Corruption in Water Resources Management? Not Our Job Say Water-Sector Professionals

Today’s Guest Post is by Juliette Martinez-Rossignol, a graduate student of Political Economy of Development at Sciences Po, Paris, and at the London School of Economics; Laura Jean Palmer-Moloney, a hydro-geographer and consultant with Visual Teaching Technologies specializing in wetlands ecology and hydrology; and Mark Pyman a leader in corruption prevention efforts and co-founder of CurbingCorruption.

It is hard to imagine an area where corruption has a greater impact than in the management and distribution of the world’s supply of water. Examples abound. Locally, as in the misuse of water in a municipality; regionally, as in unregulated diversions in watersheds; and globally, as in corrupt mismanagement of marine protected areas or the diversion of funds intended to combat climate change.

We asked a cross-section of those who have devoted their professional careers to managing the world’s water supply what they were doing to combat corruption in the sector.  Interviewees included engineers in water utilities in the U.S., Mexico, and elsewhere, environmental lawyers, geographers, geologists, ocean economy investors, ecosystem scientists, natural resources managers, plus water anti-corruption practitioners and journalists to.

What we found is enormously troublesome.

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Preventing Corruption in the Reconstruction of Ukraine

It is clear Russia’s attempt to break Ukrainians’ will to fight by attacking the nation’s critical infrastructure is failing. No matter how much destruction its daily bombardments wreak on power plants, district heating systems, and the other facilities that support daily life, Ukrainians remain determined to recover every inch of territory the invaders now hold.

Helping to shore up Ukraine’s determination is the commitment its Western partners have made to financing Ukraine’s reconstruction. But as donors pledge their support, concerns are being raised about corruption. It is no secret that at the time Russia attacked, Ukraine was still struggling with the ingrained corruption it inherited from Soviet rule and the post-Soviet oligarchs who grabbed money and power in the first years of independence.

The Ukrainian government must the lead the fight against corruption during reconstruction, and draft legislation now circulating in Kyiv recognizes this. All funds would be channeled through an independent government entity with a 20-person board of directors of which 15 would be drawn from donor organizations and five would be Ukrainian officials. That the majority will be drawn from outside Ukraine is a critical provision, one that should reassure donors that oversight will not be wanting.

A second critical provision is that the entity would have a strong internal audit department reporting directly to the board of directors. The proposed bill provides the department would conduct financial audits, ensure the fund operates within the law, that information the board requested was supplied, and that managers did not act beyond their authorized duties.

As important as these provisions are, they are mainly backwards looking, aimed at identifying where corruption has occurred. More important is preventing it from occurring in the first place.

Ukrainian officials and their partners should thus include strong prevention measures in the final draft. All contractors should have an anticorruption compliance program that has been independently certified to be compliance with the standards for an antibribery management system found in ISO 37001. The legislation should also create a prevention department. One model is that the Millennium Challenge Corporation has. Its unit trains grantees responsible for overseeing construction projects in the creation of a risk register and development of an action plan to reduce if not eliminate corruption in both the award and execution of construction contracts. Regular field visits monitor how well grantees are doing in implementing their action plan.

Current estimates are that rebuilding Ukraine will run upwards of $350 billion, a number sure to grow as Russian bombs continue to fall. That Western nations are prepared to invest such an extraordinary sum in rebuilding a victim of aggression is the most reassuring sign to date that despite economic turmoil, social upheaval, and the election of demagogues, there is indeed a broad and deep global consensus on the value of a liberal, democratic order. Every step possible should be taken to ensure corruption does not undermine it.

Guest Post: U.K. Court Refuses to Compensate Victims of Foreign Bribery

Today’s Guest Post is by Dr Helen Taylor, senior legal researcher at Spotlight on Corruption, a charity that shines a light on the United Kingdom’s role in corruption at home and abroad. Helen leads Spotlight’s court monitoring programme, tracking the enforcement of the UK’s anti-corruption law in major court cases and building an evidence base for advocacy and policy recommendations on asset recovery, victim compensation, and other corruption-related issues.

Last week a London court fined commodities giant Glencore for bribing officials in five African oil producing nations in return for getting “special deals” on their oil. While the court ordered the company to pay £280 million (just over $318 million) for its numerous violations of the U.K. foreign bribery law, it refused to direct Glencore to compensate those its bribes injured: the governments and citizens of the five nations. In fact, victims did not even get a foot in the courtroom door — the Serious Fraud Office, which prosecuted the case, refused to put a compensation request before the court, and the court itself rejected the Nigerian government’s application for compensation.

The case brings home the pressing need to reform the UK’s compensation framework to ensure overseas victims are represented and compensated in complex corruption cases.

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November 2 OSCE Webinar: Asset Recovery and the Concept of Social Reuse

The OSCE Polish Chairpersonship and the Office of the Coordinator of the OSCE Economic and Environmental Activities are holding a series of three webinars on the contribution of the OSCE in preventing corruption and promoting transparency and good governance as part of resilient economic recovery.

The first webinar is entitled:  Innovations in Asset Recovery in the OSCE: The Concept of Social Reuse was held today November 2, 2022, 3:00 to 4:15 pm CET via Zoom webinar.

Opening remarks 

Ms. Courtney Austrian, Deputy Chief of Mission, United States Mission to the OSCE 

Ambassador Igli Hasani, Co-ordinator of OSCE Economic and Environmental Activities 

Ambassador Alena Kupchyna, OSCE Co-ordinator of Activities to Address Transnational Threats 

Speakers: 

Mr. Tristram Hicks, OSCE Asset Recovery Advisor 

Mr. Andrea D’Angelo, Senior Project Manager, Balkan Asset Management Interagency Network (BAMIN) Secretariat  

Ms. Melika Sahinovic, OSCE Expert on Social Re-Use in BiH 

Moderator: Prof. Anita Ramasastry, Special Representative of the OSCE Chairmanship on Combating Corruption 

Asset recovery is a powerful anti-corruption tool ensuring that stolen assets and proceeds of criminal activities are given back to societies and victims of crime.  It remains one of the most effective ways to disrupt serious and organized crime as organized crime groups survive and thrive through illicit financial gains. 

Since 2019, OSCE has been implementing a cross-dimensional project that aims at building the capacities of national authorities and civil society organizations (CSOs) in Southeast Europe and improving regional collaboration in the seizing, confiscating, managing and re-using of criminal assets. Phase II of the project that has just been launched has also been extended to Eastern Europe (Moldova and Ukraine). The project adopts a comprehensive approach to asset recovery and includes three areas of intervention: i) financial investigations, asset seizure and confiscation; ii) asset management; and iii) asset re-use. 

Details for connecting —

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Twentieth International Anticorruption Conference December 6-10 in Washington, D.C.

One mark of the progress in putting the fight against corruption on the global agenda is the size and scope of this year’s International Anticorruption Conference. The first one drew less that 200 people, mostly law enforcement personnel from the United States and 12 other nations (here). Organizers expect this year’s — December 6 through 12 in Washington — to attract more than 2,000 representatives of government, civil society, and the private sector from 135+ nations with many more attending virtually.

Jointly organized by Transparency International and the the U.S. government, speakers include: Delia Ferreiro, Chair of the Transparency International Board of Directors; David Malpass, President of the World Bank; Adesina Akinwumi, President of the African Development Bank; Ghada Waly, Executive Director of the United Nations Office on Drugs and Crime; Samantha Power, Administrator for the United States Agency for International Development; the heads of the Open Government Partnership, the Financial Action Task Force, CIVICS, and the chief executives of several multinational corporations.

The theme of this year’s conference is “Uprooting Corruption, Defending Democratic Values.” Plenary sessions will address the “grand issues:” global security, defending the defenders, kleptocracy and illicit finance.  There will be over 60 workshops, and multiple special thematic events and social gatherings.

More on who is coming, workshop and thematic events, and how to register is here.