Swedish Court’s Stunning Acquittal of ex-Telia Executives for Bribery

A Stockholm District Court’s acquittal of three former executives of Swedish telecom giant Telia of bribery shocked the global anticorruption community and has smirched Sweden’s reputation as a clean government champion (original decision; English translation).  Despite overwhelming evidence, the court refused to find the three guilty of paying Gulnara Karimova, daughter of the then president Uzbekistan, over $300 million in bribes for the right to operate in the country.

E-mails showed defendants directed the money to a Karimova shell company, hid their dealings with her from Telia’s board, and knew paying her violated American antibribery law. (Telia subsidiary’s Statement of Facts in the U.S. prosecution.)  Though defendants argued Karimova had no official role in telecom licensing, the evidence showed her father had given her de facto control of the telecom licensing agency.  Perhaps most damning, the court had the sworn statement Telia made in settling the FCPA case arising from the bribery. It there admitted “Executive A . . . a high-ranking executive of Telia who had authority over Telia’s Eurasian Business Area” and “certain Telia executives” had been the principals behind the bribery scheme (Statement of Facts,  ¶s 12, 17, 19, 26, 30, and 34).

The court defended its acquittal of Tero Kivisaari, apparently Telia “Executive A,” Lars Nyberg, CEO when the bribes were paid, and the lawyer who counseled them on two grounds. One, the prosecutor had not provided “hard evidence” of bribery, and two, even if he had, the law then in effect did not reach defendants’ conduct.

Google’s translation of the decision is rough (mutanklagelser, Swedish for bribery, is rendered as “manslaughter”) but not too rough to see through the court’s skewed findings of fact and flimsy legal reasoning. Continue reading

Are Corporate Anticorruption Compliance Programs Effective?

Requiring business corporations to institute an anticorruption compliance program should be a part of any national strategy to fight corruption.  The argument is simple.  Corporate employees or their agents are always on the paying side of a bribery offense and often a facilitator of conflict of interest and other forms of corruption.  Making it against company policy for employees or agents to participate in any corrupt act with stringent sanctions up to and including termination for a violation will help shut down the supply side of the corruption equation.

Even where a company’s compliance program is a sham, established simply to comply with the law, it can still help in combating corruption.  A sham program would be a violation of law, and were the company investigated, the existence of a sham program would be easy for investigators to spot, easing their task of determining wrongdoing.  So there seems to be no reason why lawmakers shouldn’t insist that firms subject to their law, whether state-owned or privately-held, establish a program.  And between the many guides published by international organizations (examples here and here), NGOs (here and here), academics, the burgeoning compliance industry, and the issuance of an international standard for such programs, there is no dearth of information on how to create and operate an effective one.

I have argued the case for a compliance requirement in several posts (examples here and here), as have many other GAB contributors (examples here and here).  My most recent plea for mandating private sector compliance programs came in this one noting such a requirement in Vietnam’s new anticorruption law.  But one thing I have not done is address two obvious questions about compliance programs that Matthew posed in a comment to the Vietnam post: How are compliance requirement laws enforced? How effective are they in practice?

It turns out these obvious, innocent sounding questions (the kind law professors always seem to ask) aren’t all that easy to answer.  What I have found so far follows.  Readers with more information earnestly requested to supplement it. Continue reading

Uzbekistan’s Own Donald Trump

Donald Trump owes much of his success as a real estate developer to an easy relationship with the anti-money laundering laws, and he continues to profit from his investments while President thanks to an even easier relationship with conflict of interest norms.  Reports out of Uzbekistan suggest Jahongir Artykhodjaev, mayor of the capital city Tashkent, has followed a Trumpian-like path to wealth and power.  Like Trump, Artykhodjaev has looked past how investors in his real estate projects came into their money; like Trump, while in public office he has steered government contracts to companies he owns, and like Trump, when called on his dual role as businessman and government officials, he claims to have distanced himself from his business empire upon taking office.

The main difference (besides hair color) between Trump and Artykhodjaev is that independent prosecutors are examining whether Trump broke rather than simply bent anti-money laundering and conflict of interest laws. By contrast, after accounts in the international press (here and here) exposed Artykhodjaev’s Trumpian proclivities, senior Uzbek officials called a press conference where they leapt to his defense, going so far as to deny there is any Uzbekistan law that Artykhodjaev could have broken. Continue reading

Vietnam Enlists the Private Sector in the Fight Against Corruption

Last November Vietnam approved a new anticorruption law.  Initial reports in the English language press recounted the measures cracking down on public officials: the closing of loopholes in the conflict of interest rules, the increased information officials must provide about their personal finances, stiffer penalties for engaging in corruption, and so forth.  The recent publication of an English translation of the law reveals these early reports failed to mention a critical provision. As of July 1, all firms doing business in Vietnam, whether domestic or foreign, must:

  • determine if any employee or officer has engaged in corruption and if so promptly report him or her to the competent authority;
  • train employees on the anti-corruption laws; and
  • implement a code of business conduct that must include a rule barring conflicts of interest.

By my count (nations with anticorruption compliance laws january 2019), Vietnam is now the 25th nation to require some or all of the companies that do business in its territory to have some type of anticorruption compliance program.  Like every other anticorruption policy, requiring the private sector to join the fight against corruption is not a panacea.  But it surely is a part of the solution.

What are the rest of the world’s nations waiting for?  Do they think they can win the fight on their own?  Don’t they think the private sector has something to do with corruption?  Why aren’t they enlisting it in struggle?

Who Will Get to Prosecute Mozambique’s Former Finance Minister for Corruption?

Manuel Chang must surely feel special these days. He is the first former Minister of Finance in history (or at least that history recorded on the internet) whose is being sought for corruption by two countries. As explained here, Chang was arrested in South Africa December 30 after the United States had filed a preliminary request for extradition. Two weeks later, Mozambique filed its own extradition request.  Both countries want to bring him to trial for offenses arising from his alleged corrupt approval of government guarantees for bonds issued by private firms while minster.  Soon after their issue, the bonds went into default, costing the impoverished nation (GNI per capita $1200) as much as $2 billion and throwing the economy into recession.

Which country will get to prosecute Chang will turn on how South African authorities construe recondite provisions in South Africa’s extradition treaties with the United States and Mozambique.  As obscure as the provisions in the two treaties are, how South African authorities choose to interpret them will remain anything but.  For their interpretation will have significant consequences for the global fight against corruption. Continue reading

The Promise – and Risk – of Internationalizing the Corruption Fight: Prosecuting the Mozambique Loan Fraud

Manuel Chang, Mozambique’s longest serving Finance Minister, has just lost the first round in his attempt to duck U.S. charges he defrauded the Mozambique people out of some $2 billion.  A South African Magistrate ruled January 9 that Chang’s December 30 arrest in South Africa, requested by the U.S. Justice Department, was valid.  Assuming South Africa stands firm in the face of legal maneuvering by Chang and political pressure by the Mozambique government, Chang will join accomplices in a Brooklyn jail to await trial for corruption.

That the corruption trial of a former official of the one of the world’s poorest nations will be held in the courts of one of the world’s wealthiest and that the trial turns on the strength of a third country ’s legal system and the political resolve of its government shows both the promise – and the risk – of the internationalization of the fight against corruption. Continue reading

2018: Five Great Reads on Corruption

 

Twenty eighteen produced many fine analyses of corruption and how to fight it. The five books pictured above, four by journalists and one by a former Nigerian Finance Minister, are among the best.  Combing in-depth reporting with thoughtful analyses, all merit a place on corruption fighters’ book shelf. Continue reading