Author Archives: Richard Messick

Will Hosting the UNCAC Meeting Prompt the UAE to Comply with the Convention?

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The largest, most important anticorruption conference of the year is underway this week in the United Arab Emirates. Formally known as the eighth session of the Conference of States Parties to the United Nations Convention Against Corruption, the 186 nations that have ratified UNCAC are convening to examine how they can strengthen the fight against corruption.  They have not said why they chose to meet in the UAE, a collection of seven tiny, wealthy monarchies.  Perhaps it is because the Emirates’ location on the eastern end of the Arabian Peninsula makes it an easy place to reach from anywhere on the globe. Or perhaps it is because of its top-notch conference facilities and first-rate restaurants and hotels.

Or perhaps something more subtle is at work.

It’s no secret that the UAE and the governments of its seven federated emirates, especially Abu Dhabi and Dubai, have repeatedly flouted their UNCAC obligations.  In researching The Despot’s Guide to Wealth Management, author Jason Sharman was told by staff from the World Bank/UNODC Stolen Asset Recovery Initiative, the IMF, and the governments of Switzerland and the United States that “the UAE and particularly Dubai . . . were the leading haven for international corruption funds,” a conclusion Susan Hawley confirmed on this blog, writing that an “increasing numbers of corrupt money trails lead” to the UAE. Mozambique’s Prosecutor General reports that the UAE has stonewalled her request for help in prosecuting the accused in the “hidden debt” scandal, and evidence presented in the recently concluded U.S. trial of one of the accused revealed numerous violations of its anticorruption laws that the UAE has ignored.

Perhaps the other 185 parties to UNCAC hope that holding the meeting in the UAE will persuade its government to finally meet the nation’s obligations as an UNCAC party. Five indicators of whether their stratagem is succeeding: Continue reading →

Asset Recovery: Report from Angola

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Angola appears at last to have turned the corner in the fight against corruption.  The long-awaited trial of two “big fish,” the son of the former president and a former central bank governor, for looting the sovereign wealth fund began December 9.  While the international media have focused on what the trial means for the government’s fight against corruption  (Reuters story here, Bloomberg here, and BBC here), a less heralded equally significant development is quietly unfolding in Eduarda Rodrigues’ office. Deputy prosecutor general and since January head of the newly created asset recovery agency (Serviço Nacional vai Recuperar Activos), Rodrigues has begun slowly clawing back assets corrupt Angolan officials have stolen over the years. 

Below is an account the results to date taken from a November presentation to the Norwegian Corruption Hunters Network.

AssetQuantityAmount Kz
Properties2519,438, 912, 257
Vehicles2110,000,000
Cash Kwanza–33,879,229
Cash Dollars322,832–
  19,482,791,487
approx $40 million

As the table shows, Rodrigues’ agency has recovered assets worth more than 19 billion Angolan Kwanza or some $40 million along with more than $300,000 in U.S. currency. 

Rodrigues’ efforts began with the expiration of the Law of Repatriation of Financial Resources.   Passed June 26, 2018, it gave those holding stolen assets 180 days to voluntary return them without sanction.  Few took the government up on its offer (here), apparently believing the law was meant simply to show the international community the government was doing something to fight corruption. 

As Rodrigues and her growing team of experts expand their work, an ever larger number of corrupt official will regret passing on amnesty.   Law enforcement authorities in jurisdictions where Angolan stolen assets may be stashed now have a trustworthy partner to work with to see that monies stolen from the Angolan people are returned.

 

Don’t Believe the Spin on the Mozambican Acquittal

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The jury in the federal criminal trial in Brooklyn of  Jean Boustani acquitted him December 2 of charges arising from a scheme to pay Mozambican officials tens of millions of dollars in bribes in return for the government borrowing hundreds of millions of dollars to pay for ships it could not afford. No sooner was the verdict announced than Privinvest — Boustani’s employer, the supplier of the ships, and a major beneficiary of the scheme — crowed it had been completely vindicated.  Despite evidence produced at the trial, charges pending in Mozambique, and allegations in a civil action in the United Kingdom, Privinvest lawyers are telling the press the acquittal proves the company had no part of the scheme.  That it did not pay bribes to win the business.

If it were true the company paid no bribes, three Credit Suisse executives would not have pled guilty to accepting bribes from it in the same court where Boustani was acquitted. Nor would they have named its CEO Iskander Safa, CFO Najib Allam, and Boustani as bribe payers (here). Nor would a trial witness have explained that Government Exhibit 2758, an April 2014 e-mail from Boustani to Allam, is a list of bribes the company paid Mozambican officials.  A list that includes President Filipe Jacinto Nyusi (“Nuy” in the e-mail), former Finance Minister Manuel Chang (“Chopstick”), and former intelligence chief António Carlos do Rosário (“Ros”). (Complete decoded list here.)

No, the verdict of acquittal does not exonerate Privinvest.  Nor anyone else for that matter.  What it shows is two things.

Continue reading →

Will the Swiss Condone Torture in the Rush to Return Assets to Uzbekistan?

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Allegations of torture have dogged the planned return of stolen assets from Switzerland to Uzbekistan for years (here). In a recent interview, a cellmate of one of the alleged torture victims has given the claims new life.  And should give Swiss citizens and their government pause before proceeding with any return.

The assets to be returned are the several hundred million dollars in bribes paid to Gulnara Karimova for the grant of mobile phone licenses in Uzbekistan, something within her power as daughter of the country’s then president.  She stashed most of the money in Switzerland, and when the scheme was exposed, Swiss prosecutors promptly opened a money laundering case against Gulnara and her accomplices. From the outset, the Swiss government made it clear that, if and when defendants were found guilty, the laundered funds would be returned to Uzbekistan.

A breakthrough came in 2018 when Gayane Avakyan, one of Gulnara’s accomplices, signed a Swiss Summary Penalty Order confessing to her role in the money laundering scheme and giving up any claim to the laundered funds.  The order was signed while she was serving time in an Uzbekistan prison, and because of multiple, credible reports that torture is commonly practiced in Uzbek prisons, questions were immediately raised about whether torture or the threat of torture was used to get Avakyan to sign.  A prison cellmate now says she was in fact subjected to a particularly harsh form of torture while incarcerated. Continue reading →

Essential Reading for Enforcers: The EIB Fraud Investigation Unit and CPS Inspectorate Reports

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Enforcing the anticorruption laws is the backbone of the fight against corruption, and improving enforcement agencies’ performance is thus critical.  Two recent reports, one by the European Investment Bank’s Fraud Investigation Unit and a second by the Inspectorate of the United Kingdom’s Crown Prosecution Service, offer a wealth of data, analysis, and tips from which all enforcement agencies can profit.  Highlights from each below.

Fraud Investigations Activity Report 2018.  This latest report of the EIB’s Fraud Investigations Unit documents the Unit’s fight against fraud and corruption in projects funded by the lending arm of the European Union, the world’s largest development finance agency. Compliance and investigative personnel in other bilateral and multilateral financial institutions will find much useful data for benchmarking their performance against the EIB unit. Case studies of different fraud and corruption schemes it has uncovered will help investigators in other institutions spot similar types of wrongdoing.

Most interesting to this reader was the description of the Proactive Integrity Reviews (PIRs) the Fraud Investigation Unit conducts.  All active operations in the Bank’s portfolio are scored each year against 30 risk factors to identify corruption and fraud vulnerabilities, and a PIR conducted on two or three of the operations most at risk.  Of the 27 projects subjected to a PIR, the unit found five, almost 20 percent, where funds have been misused.

Would a similar intensive review of a small number of World Bank, Asian, Inter-American, or African Development Bank produce similar numbers?  Will the new United States International Development Finance Corporation follow the EIB’s lead and institute a similar review?

Case Progression in the Serious Fraud Office. The Serious Fraud Office is the United Kingdom’s version of an anticorruption agency, with investigators, accountants, IT specialists, and prosecutors who work in teams to investigate complex fraud and corruption cases.  Case progression is the U.K. term to describe the time it takes for a team to reach a conclusion about a case, from opening an investigation to a decision either to file a criminal charge or to drop the matter altogether. The Crown Prosecution Service Inspectorate recently examined the procedures the SFO uses to ensure cases move through the system in a timely manner.  Other anticorruption agencies wanting to improve their performance will find a wealth of useful information and practical tips. Some of the key observations:

* Recognize that in a lengthy case there will be staff turnover. Maintain a key documents folder for those joining the team so they can get up to speed quickly.

* A unit with the technical skill to decrypt and download data kept on cell phones, computers, and other electronic devices is essential.  But realize that decryption can take enormous time.  Don’t overload the unit by seizing equipment of only secondary or passing interest.

* Periodic review of the progress of each case is essential to ensure deadlines for achieving key objectives or stages in the case are set, and met, and unfruitful lines of investigation abandoned. The SFO exercises oversight in several ways.  How each one works and suggestions for improving each will be of value to any anticorruption enforcement authority.

* The average number of days from the acceptance of a case to charging has been reduced from 41 months to 38 months, or 7.5%.

Can A “Fudgy” Adverb Save Trump From Impeachment?

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For weeks President Trump’s defenders have claimed he did not demand Ukraine investigate the Bidens in return for approving the delivery of weapons to Ukraine. In legal terms, the argument was that there was no exchange of one for the other, no quid pro quo, the cornerstone of the crime of bribery.  That defense has now collapsed (here and here). The evidence that Trump sought a “quo,” a personal favor in the form of an investigation of the Bidens, in return for a “quid,” weapons, is overwhelming (here).  His defenders have thus now fallen back to a secondary defensive line: there was a quid pro quo but it was merely an “inappropriate” one. It was not, defenders insist, an impeachable quid pro quo.

Whether this new defense will carry the day remains to be seen.  No American president has ever faced impeachment for soliciting a bribe.  There is thus no standard jurors in a Trump impeachment trial, the 100 members of the United States Senate, can consult in deciding whether Trump’s attempt to use the power of the presidency to obtain a personal benefit is impeachable. But as Senators construct a standard, they might consider the one a 12-person jury of lay people in a criminal trial must use when a public servant is accused of soliciting a bribe. Continue reading →

Quid Pro Quo: A Primer

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Thanks to the Trump impeachment imbroglio, Americans are brushing up on Latin.  Or at least on the Latin phrase quid pro quo. Though Trump’s partisans and opponents are at each other’s throats about virtually everything, a consensus has emerged that if his dealings with Ukraine involved a quid pro quo, he is in trouble. The reason: the U.S. Supreme Court has repeatedly held (examples here and here) that the touchstone of the American federal crime of bribery is the presence of a quid pro quo. If the impeachment investigation were to uncover one in his Ukraine dealings, Trump would be guilty of bribery, one of three crimes, along with treason and high crimes and misdemeanors, for which he can be removed from office under Article II of the U.S. Constitution.

Quid pro quo means “this for that,” the archetypal example being someone who provides “this money” for “that action” by a public official. But the translation misleads by its simplicity, glossing over critical questions which Congress will have to answer in deciding whether Trump should be removed from office for his actions involving Ukraine:

Must the “this for that” be in the form of an explicit agreement?  Must, that is, there be a meeting of the minds between the two?

Or is a promise enough? That the payer or the recipient merely asked for something – a payment, the performance of an official act — from the other.

Must the terms of the agreement or promise be express? Stated clearly, leaving nor room for doubt. Explicit? Put into words whether written or not.

The Supreme Court, the lower courts, and academic commentators have wrestled with these questions for decades, and while not bound by their answers in an impeachment proceeding, Congress should surely pay heed to them. The federal judiciary arrived at them not during a white-hot partisan debate, with one eye on the effect of one’s chances for reelection. Instead, the answers were reached after deliberate, studied attention to the facts, to answers reached in previous cases, and to the consequences the answers would have on public servants’ future conduct.

Members of the House and Senate are not the only ones that would profit from a study of the American law of quid pro quo. Prosecutors, judges, and legislators in other nations would as well, for the quid pro quo requirement is part of all nations’ antibribery statutes (expressly stated in article VIII of the InterAmerican Convention Against Corruption and article IV of African Union Convention on Preventing and Combatting Corruption and following directly from the texts of the United Nations Convention Against Corruption (article 15), the Council of Europe Criminal Law Convention on Corruption (article 2) and the OECD Antibribery Convention (article 1)).  The United States is not the only nation with a bribery jurisprudence (here and here), but thanks to its size, aggressive law enforcement, and quality of its judiciary, its case law applying the quid pro quo standard is surely richer than most if not all.

A primer on it is below. Continue reading →

Will Congressional Republicans Hold Trump to the Standard to Which They Are Held?

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It is no surprise House and Senate Republicans are finding it difficult to defend President Trump’s mixing political business with official business in his dealings with Ukraine. From the day they are elected, members are warned to keep the two separate lest they run afoul of the federal bribery law.  Nor should it be a surprise that President Trump would mix the two, for by his own admission, as a New York City real estate developer he frequently did.

House and Senate Ethics Committee Manuals both tell members “the federal bribery statute makes it a crime for a public official . . .  to ask for . . .  gifts, money, or other things of value in connection with the performance of official duties.”  The “connection” between the request and the duty performed need not be an explicit quid pro quo — contrary to what some Trump defenders say.  Were that the standard, as Justice Kennedy explained in a landmark case, an official could easily escape sanction by resort to “knowing winks and nods.” Continue reading →

DRC Government Members to Post Ethics Code on Office Wall, Resign if They Violate It

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The newly installed government of the Democratic Republic of the Congo has taken a major, and for the DRC, unprecedented step in the fight against corruption.  At their September 18 swearing in ceremony, each member signed an “Acte d’Engagement,” a one-page letter to Prime Minster Ilunga Ilunkamba containing an ethics code each agrees to observe.  Although the code’s provisions are nothing out of the ordinary, what is out of the ordinary is that ministers of the DRC would publicly commit to them. This represents an important milestone in the effort of the Prime Minister and President Félix Tshisekedi to arrest the corruption that has plagued the mineral-rich but desperately poor nation for so long.

Even more out of the ordinary, the signers pledge to resign if they are found to violate any code provision. Most unusually, they agree to post a copy of the letter in their office and to circulate it to their immediate staff and the civil servant they oversee. The one-page letter with code is written in non-technical, easily understandable prose. Ministers cannot excuse a violation by claiming they did not understand it, and its wide circulation and posting in the ministers’ offices increases the chances they will be held to it.

There is no reason why the governments of other nations where corruption is endemic should not follow the DRC’s lead.  They too should require leaders to publicly commit to a strong ethics code and to post a copy of the code and their pledge to honor it on the wall of their office.  This will remind them and all who meet with them of that commitment.

A translation of the commitment letter/code that each DRC government member signed follows. Continue reading →

Modernizing Legislative Ethics: Costa Rica’s Turn?

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The conduct of parliamentarians has not escaped the anticorruption community’s attention.  Ethics codes and parliamentary immunities are everywhere being examined to ensure legislators adhere to the highest standards of conduct and can be held to account if they do not. In Costa Rica, for example, reform-minded parliamentarians recently launched an effort to determine whether their legislative ethics code and immunity rules, unchanged for several decades, need revision.

As a first step, the parliament’s in-house research center prepared a fine summary and analysis of legislative codes of conduct and member immunities in selected European and Western Hemisphere nations. To follow up, I met with reformers to discuss what issues to weigh when amending ethics codes or revising parliamentary immunities. The English PowerPoint Slides for my presentation are here, the Spanish version here. Points emphasized during the discussion: Continue reading →