Author Archives: Richard Messick

That Corruption Infects the Italian Judiciary Is Now Undeniable

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In March 2021, a Milan trial court acquitted Italian oil giant ENI, its partner Royal Dutch Shell, and numerous individuals of bribing Nigerian President Goodluck Jonathan and pals to secure the rights to the lucrative offshore oil field denominated OPL-245. The evidence of bribery was overwhelming, including internal Shell e-mails describing the scheme and the testimony of an ENI official confirming his bosses were fully aware of it. Suspicions that someone had “gotten” to the judges immediately arose stoked by revelations of close ties between the presiding judge and ENI’s senior counsel.

Any doubt that the verdict was tainted was put to rest when the court published its opinion justifying it. As the attached analysis by the British, Italian, and Nigerian NGOs that have pushed the case shows, the court’s “reasoning” was laughable. Two examples of many. The court wrote off the then oil minister’s sale of OPL-245 rights to a company he secretly owned as a trifle because neither he nor the government officials bribed to approve the sale objected. Equally ridiculous, the court found that a Shell briefing note reporting that part of the bribe would be in the form of political contributions simply recounted a rumor then circulating.

Between the strength of the evidence the prosecution presented and the court’s flimsy if not bizarre reasoning dismissing it, the expectation was that the acquittal would easily and quickly be overturned on appeal. That hope is not to be however.  Last week the Italian prosecutors assigned to handle the appeal announced they were withdrawing it. 

Thus ENI, Shell, and the 13 individuals named as accomplices in the payment of a $1.1 billion bribe stand exonerated. And it now clear that the rot in the Italian judiciary reaches into its once revered prosecution service.

Nor is the damage from the rot limited to Italy. Thanks to the doctrine of ne bis in idem (double jeopardy in American law), a Dutch investigation of Shell’s role had to be dropped (here).  

The last hope for justice now lies with the Nigerian judiciary. Ne bid in idem only bars EU countries from pursuing a case. A Nigerian investigation of the companies and their accomplices is underway. It is critical it continue and that the international anticorruption community do all it can to support it given what has happened in Italy.

Moreover, as this blog has urged, it is critical too that the OECD hold Italy to account for its failure to live up to its obligations to sanction Italian companies that bribe foreign officials. The ENI-Shell case must be an outlier not a precedent.

USAID’s New Dekleptification Guide

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The U.S. Agency for International Development has just published a draft of what it calls a Dekleptification Guide. “Dekleptification,” the authors explain, is the process by which citizens kick kleptocrats out of power and ensure they stay out. The guide discusses a range of projects the agency could fund to support anti-kleptocrat movements, consolidate post-kleptocratic, democratic orders, and prevent kleptocrats from returning to office.

The agency seeks comments on the feasibility and appropriateness of the projects suggested, whether there are others it has overlooked, and generally whether its analysis and approach to dekleptification meshes with experience to date.  

USAID is one of the largest and most influential providers of foreign assistance — thanks not only to the size of its programs but to the quality of analysis that underpins them. The guide will almost surely have an impact far beyond coining a term to organize thinking about how to end kleptocracy. Members of the anticorruption community should therefore take up the agency’s request for comments.

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Trump’s Attempted Coup Explained

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That Donald Trump egregiously abused his power as president in the closing days of his term in office there is now no doubt. Pressuring and threatening election officials and inciting a mob to storm the U.S. Capitol make out abuses that rival if they do not exceed those of America’s most corrupt leaders.

Thanks to the testimony of former Trump officials before the House committee investigating the Capitol riot, we now know the abuses were part of the most serious crime ever attempted against the government of the United States of America and its people: a plot to install Trump as president on January 20, 2021, despite that fact he had lost the election. Trump and accomplices attempted a coup d’état that only just failed.

Americans and democracy’s friends everywhere may find it hard to accept that American democracy narrowly survived a coup d’état. Coups happen in poorer countries with weak governments, not in one of the wealthiest nations in the world with a democracy that has weathered civil war and countless violent demonstrations. But the details that have been exposed, most recently the dramatic, chilling testimony of former White House aide Cassidy Hutchinson, make it clear there is simply no other term that fits.

For those who have not followed the House committee’s work, or who may have but still resist labelling the actions of Trump and accomplices a coup, its broad outlines are described below.

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Hard Truths/Sound Advice: UNDP’s Strategic Programming for Anti-Corruption Agencies

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The United Nations Development Programme’s mission is to help poor countries become wealthy. As evidence that corruption is a, if not the, major obstacle blocking the way, the agency has devoted a growing share of its budget to finding ways combat it. Not all its investments have met with success — as its underpaid staff and consultants (compared to other international agencies) would be the first to admit.

One clear success is a little heralded guidance note for anticorruption agencies in Southeast Asia UNDP released in May. The region is beset with corruption problems large and small, and in response governments have established anticorruption agencies.  But TI’s Corruption Perception Index, the World Governance Indicators, and other cross-national measure of corruption have registered little or no improvement in country scores since the agencies came into existence, and disillusionment has taken hold as policymakers and citizens across the region now sharply question the agencies’ worth.  

Strategic Programming for Anti-Corruption Agencies: Regional Guidance Note for ASEAN makes it clear that the problem starts at the top. That agency leaders have let others set the terms for judging their agency’s success. Echoing advice to criminal justice agencies by the closest student of bureaucracy since Weber, the report explains that until anticorruption agencies define success in realistic, measurable, achievable objectives that will make a difference in citizens’ lives, their standing will not improve and continued support will remain at risk.

Along the way the UNDP report doesn’t gloss over the challenges agencies face while offering sound advice on how to overcome them.  Some especially important hard truths and good examples of sound advice –

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For Goodness Sakes, Buy this Man a Cup of Coffee!

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If you don’t know whom this post’s headline is talking about, you don’t know who Ray Todd is.  And if you don’t know who Ray Todd is, you don’t know about the eponymously named raytodd.blog.  And if you don’t know about the blog, you don’t know about what I think is the single best aggregator of news and information on corruption, money laundering, economic sanctions, and related topics. 

From a blurb flagging FATF’s recent evaluation of Albania’s money laundering regime to a note on GAB contributor Frederick Davis’ important new Columbia Journal of Transnational Law article “Judicial Review of Deferred Prosecution Agreements: A Comparative Study,” to a link to an English language summary of the just released 2021 annual report of the French Anticorruption Agency, you are missing out. On a lot. Ray’s blog is indispensable source of news for those in the anticorruption community.

All he asks in return is that readers occasionally make a small contribution.  Enough to buy him a coffee. Given the blog’s value added, he deserves much more.  But hey readers, how about starting by financing his morning java?    

Antibribery Policy: A Checklist

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That a law against bribery is the keystone of any serious fight against corruption goes without saying. What isn’t said is that an antibribery law is only the keystone. That just as an arch consists of more than its center stone, a robust, effective antibribery policy takes more than a law criminalizing bribery.  Below is my checklist of what else is required. Reader comments solicited.

My list starts with a careful review of the antibribery law itself. For as the United Nations Office on Drugs and Crimes reported in 2017, many nations’ law have gaps that make it easy for bribe takers and payers to maneuver around it unscathed; others contain ambiguities that leave it to the courts to say what is and isn’t a bribe.

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President Biden’s “Fishy” Corruption Statistics Called Out

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Thanks to GAB Editor-in-Chief Matthew Stephenson, readers of this blog have known for years not to believe the many numbers thrown around about the global cost of corruption.  As he has shown in a series of posts, (here, here, here, and here) and in a 2021 paper for the U4 Anticorruption Resource Centre with Cecilie Wathne, these estimates are, not to put too fine a spin on it, baloney. Or what I have somewhat scatologically termed WAGs (Wild A** Guesses).

Unfortunately, White House staff apparently (and disappointingly) neither read GAB nor follow U4’s work. That is the only explanation for why they would have let President Biden say at the launch the other day of the Indo-Pacific Economic Framework for Prosperity that “corruption saps between 2 to 5 percent of global GDP.”

Fortunately, Washington Post crack fact checker Glenn Kessler didn’t let the President’s citation of what his paper termed a “fishy statistic” go unchallenged. Relying on Matthew’s and Cecile’s paper, backed up by a chat with U.S T.I. director Gary Kalman, Kessler termed the 2-5 percent statistic “so discredited” that it should have never been “uttered by the president of the United States.” The White House, he wrote, must in the future do a better job of vetting such “dubious” data.

While I trust White House staff will, I hope the error in no way hope cools theirs or the president’s commitment to upping America’s anticorruption game. After all, as the president also said at the Indo-Pacific launch, corruption “steals our public resources,. . . exacerbates inequality [and] hollows out a country’s ability to deliver for its citizens.”  All unequivocally true. No fishy data required. QED

Guest Post: Do Governments Have a Clue About the Money Laundering Risks They Face? UPDATE

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UPDATE: the World Bank hosts a discussion on the report that is the subject of this post May 30, 12:00 noon EDT. Link to register here.

Today’s guest post summarizes an April World Bank study of money laundering risk assessments. The first step in preventing money laundering is identifying where it occurs and how likely it is to occur. In short, the risks of money laundering. The Bank study evaluated risk assessments eight governments had conducted in accordance with the methodology prescribed by the Financial Action Task Force. For reasons that will become plain, the post’s author has chosen to remain anonymous.

The title from a new World Bank report on money laundering risks could scarcely be blander: National Assessments of Money Laundering Risks: Learning from Eight Advanced Countries’ NRAs.  The content is anything but. Authored by Joras Ferwerda of Utrecht University and Peter Reuter of the University of Maryland, the report concludes that not a one of the eight money laundering risk assessments examined, all done as the report’s title advertises by “advanced” countries, is worth a damn. Not a one merits a passing grade from the two professors, both highly regarded money laundering experts. What’s worse, despite close to a decade of experience doing such assessments, the two find that no government seems to have learned a thing from the mistakes of others.

This raises a fundamental question about the existing AML regime. How can it be effective if national authorities lack an understanding of the money laundering risks their countries face?

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Guest Post: The Government Defence Integrity Index — Assessing Corruption in Defence

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Stephanie Trapnell, Senior Advisor on Defence and Security at Transparency International, and Matthew Steadman, Research Officer at Transparency International UK’s Defence and Security Programme, authored today’s post on the UK Programme’s Government Defence Integrity Index. The Index evaluates corruption risks across defence financing, operations, personnel, political, and procurement for 87 countries using data on 77 defence-related areas. (As the index was produced by TI Defence & Security, a program housed within the TI-UK chapter, the British spelling is followed throughout.)

Corruption in the defence sector poses grave risks for security in both national and international contexts. Transparency International’s flagship report for the Government Defence Integrity Index (GDI) shows 86% of global arms exports between 2016-2020 (worth US$1439.6 billion) originated from countries at a moderate to very high risk of corruption in their defence sectors. The top five exporters – the United States (overall score of 55/100), Russia (36/100), France (50/100), Germany (70/100) and China (28/100) – accounted for 76% of the global total. Meanwhile, 49% of global arms imports are arriving in counties facing a high to critical risk of defence corruption.

Although President Biden’s new anticorruption strategy outlines a “whole-of-government approach” to countering corruption, it stresses the importance of addressing corruption specifically in defence and security. Indeed, the strategy is a critical and welcome acknowledgment, by a global power and major provider of security assistance, that corruption plays a considerable role in destabilising democracy. In Strategic Objective 5.5, emphasis is placed on assessment of corruption risk, causes of corruption, and political will for reform. Specifically for the security sector, there is a call for greater transparency in military budgets, whistle-blower protections, and oversight.

Not only does corruption have a devastating impact on both the defence apparatus itself and on wider peace and security, it can undermine otherwise robust democracies, by serving as a type of statecraft for defence officials and military elites. Corruption undermines the efficiency of security forces, damages popular trust in state institutions, and feeds a sense of disillusionment, which threatens the social contract and the rule of law, and can empower non-state and extremist armed groups.

Given the distinct nature of governance in the defence sector, and the evolving understanding of how corruption operates, the question then turns to what can be done to counter or prevent corruption in a traditionally secretive yet critical sector like defence. The answer is not to measure corruption itself, which is inherently covert and difficult to capture, but instead to measure institutional resilience to it. The Government Defence Integrity Index (GDI) is the only tool that captures comprehensive information on the quality of institutional controls on corruption in the defence sector.

The GDI recognises that:

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Time to Make the OECD Antibribery Convention an Antikleptocracy Convention Too

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Confiscating assets acquired through corruption is a critical part of the fight against corruption. If those who would profit from corruption know they will be denied the benefit of their wrongdoing, there is no incentive to be corrupt.

As Justin explained Monday, Russia’s invasion of Ukraine has given asset confiscation a major boost. Many of Putin’s superrich backers, oligarchs or kleptocrats, became wealthy through corrupt deals, and the seizure of their mega-yachts, mansions and other properties now located outside Russian territory offer the West a way, albeit indirectly, to pressure Putin to end the aggression. Italian, German, and other Western prosecutors are thus now aggressively invoking domestic forfeiture statutes to confiscate them.

But as the Washington Post reports today, with the help of pricey lawyers and other enablers (here and here), the oligarchs have hidden their assets inside complex legal thickets of offshore companies that make confiscation hard if not impossible. In response, last Thursday President Biden asked Congress to give U.S. prosecutors new powers to cut through this underbrush (here).

The President’s initiative is welcome. But it also invites the obvious question: Why shouldn’t other Western nations follow suit?  All are united in their opposition to the war and desire to make Putin’s associates suffer consequences. Why shouldn’t every Western state ease the task their prosecutors face to the rapid seizure of oligarchs’ assets? And indeed to the seizure of any asset corruptly obtained or unlawfully possessed found in their territory?

The most straightforward way to realize this goal would be to amend the OECD Antibribery Convention.

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