Author Archives: Richard Messick

Preventing Corruption in Development Projects: The World Bank’s La Guajira Project

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Report Number No: 38508-CO for a Proposed Loan in the Amount of US$ 90 Million to the Department of La Guajira with the Guarantee of the Republic of Colombia for a Water and Sanitation Infrastructure and Service Management Program is probably not the first place one would turn for advice on preventing corruption in development projects.  But it should be.  For annex 11 contains a text book example of how to identify and mitigate the risk of corruption in a donor-funded project.

The annex is part of the project appraisal document, the paper the World Bank’s Board of Directors relied upon in February 2007 in approving a $90 million loan to the Department of La Guajira in Colombia to upgrade the department’s water and sanitation services.  The loan was for the purchase of equipment and construction of civil works in some dozen or so municipalities and pilot water and sanitation projects in several remote rural areas.  While the project document made a strong case for the project’s benefits, it minced no words when it came to the risks of corruption the project faced: “The Department of La Guajira has a reputation for weak governance, corruption, and the continued presence of parallel institutions which have prevented public sector efforts to meet citizen needs in an equitable and effective manner.”  To be sure the message was not lost on board members, the authors went on to warn that “corruption, public sector malfeasance, capture by elites and special interests, and the paucity of accountability and transparency” is endemic in La Guajira and is the reason why the department remains so poor.

After reading such a clear, candid statement of the project’s corruption risks, one might question the sanity of any board member who voted to put $90 million of World Bank funds at risk.  But in fact an unvarnished analysis of the risk of corruption in the project is the first reason why the board was right to approve the loan the corrupt environment in La Guajira notwithstanding.  Project managers cannot prevent corruption in their projects if they are in denial about the risks they face.

The second reason why the board was right to approve the project loan is the chart that appears in the annex. Continue reading →

Uzbek Civil Society on the Hazards of Investing in Kleptocracies

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Tonight Uzbekistan President Shavkat Mirziyoyev will tout the benefits of investing in his country to executives of multinational firms at a swank dinner at the Onyx Room in mid-town Manhattan.  He will point to measures the government has taken since the death last year of its first president, renowned kleptocrat lslam Karimov, to open the country to foreign investment — from reforms to economic policy to steps to improve its atrocious human rights record.  But before they open their checkbooks, the execs will want to heed the warnings contained in a letter Uzbek civil society activities just sent Washington lawyer Carolyn Lamm, chair of the American-Uzbekistan Chamber of Commerce, the host of tonight’s get-together.

Reprinted below, the letter cautions that there are still many signs that Uzbekistan has yet to shed its kleptocratic past, from the appointment of one of the most notorious kleptocrats of the previous regime as prime minister to the rise to power of Mirziyoyev’s sons-in-law.  The authors remind Ms Lamm and the members of her organization what happened to those who invested in Karimov’s kleptocracy.  Not only did their investments turn out to be a bust, but the bribes the investors had to pay to do business have cost them (or more accurately their shareholders) dearly.  One firm was fined $795 million by Dutch and American authorities and a second recently told shareholders it anticipates paying over $1 billion to resolve the case against it.

The authors sent a copy of their letter to the members of Ms Lamm’s organization, a group that includes General Electric,  General Motors, Boeing, Catepillar, Coca-Cola, Honeywell, Visa, and other well-know, well-respected companies traded on American stock exchanges (and thus subject to the Foreign Corrupt Practices Act). Readers holding shares in any of these companies will want to ensure company executives pay careful attention to the letter’s warnings.

Ms Carolyn Lamm
Chair
American-Uzbekistan Chamber of Commerce
601 13th St NW # 600S
Washington, D.C. 20005

September 18, 2017

An Open Letter to the American-Uzbekistan Chamber of Commerce regarding the Situation in Uzbekistan on the Eve of its Meeting with President Mirziyoev

Dear Chairwoman Lamm:

We, the undersigned Uzbek citizens and activists, write to you on the eve of your dinner with President Shavkat Mirziyoev on September 20, 2017, to express concern that your members may be misled into believing that meaningful reform is underway in our country. We ask you to share with them this letter explaining the current conditions in Uzbekistan and the risks any firm investing or doing business in the country will face. We further ask you to urge the President to reform the judiciary and create an independent, impartial and effective body to investigate allegations of corruption. Continue reading →

ISO 37001 and the Federal Sentencing Guidelines Compared

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The International Standards Organization’s ISO 37001: Antibribery Management Systems – Requirements with Guidance for Use has prompted an outpouring of commentary since publication last October.  Meant to set forth “reasonable and proportionate” measures organizations of any kind and size located anywhere can take to prevent, detect, and respond to bribery, it has received generally positive reviews — on this blog, the FCPA blog (examples here and here), and elsewhere (here, here, and here for examples).  Commentators offer it as a best practice guide for corporations wanting to instill an ethical culture among their employees and, not incidentally, avoid prosecution under the Foreign Corrupt Practices Act and its many offspring.  But none of the commentary, or at least none I have seen (a Google search for ISO 37001 brings back several hundred thousand hits), lists, let alone discusses, what ISO 37001 recommends.

As a start on filling this gap, the recommendations are summarized on this spreadsheet.  For perspective, ISO 37001 is compared to the latest version of the granddaddy of corporate compliance guides, the U.S. Government’s Federal Sentencing Guidelines (pp. 525 -33).  To make the comparison, both are benchmarked against the elements of a compliance program listed in the Anticorruption Ethics and Compliance Handbook for Business, a volume jointly issued by the OECD, the World Bank, and the UNODC in 2013.

Continue reading →

Internationalizing the Fight Against Corruption: The EU Mission in Kosovo

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For countries saddled with a tight-knit, corrupt leadership class, what happened last week in Guatemala is cause for celebration.  There a normally meek judiciary slapped down the president’s effort to end a corruption investigation that threatens his rule.  What made the difference was the investigation is led by a United Nations entity created under an accord an earlier government had signed with the U.N.  The agreement, and the support it enjoys both in Guatemala and abroad, gave the nation’s Constitutional Court both the legal rationale and the backbone to tell the president that even he was not above the law.

Before corruption fighters embrace internationalization as the deus ex machina in the corruption fight, however, they will want to pay heed to another, far less publicized event, that also took place last week: publication of Joschka Proksik’s analyis of the European Union’s rule of law mission in Kosovo ( (published in this volume). As with Guatemala, the government of Kosovo agreed to share with an international agency the power to enforce the nation’s criminal law.  Unlike Guatemala, however, where the U.N. can only investigate allegations of criminal misconduct and domestic prosecutors and courts must take it from there, in Kosovo the EU’s power is unlimited.  EU personnel can at any time and for any reason investigate, prosecute, and judge whether a Kosovar has violated the nation’s criminal law — without any involvement whatsoever by local authorities.  Moreover, EULEX, as the mission is known, is far larger and far better resourced than the UN’s Guatemalan mission, staffed at its peak by some 1,900 international personnel at a cost of over €100 million in administrative expense alone.

Proksik interviewed dozens of current and former EULEX staff, analyzed data on investigations, prosecutions, and convictions, and perused pervious evaluations by the European Union and independent observers to determine what the progress EULEX has made in its almost nine-year life in realizing its core objectives of helping Kosovo’s judiciary and law enforcement agencies remain “free from political interference” and adhere to “internationally recognized standards and European best practices.”  Because his careful, balanced, professional assessment merits the attention of aIl looking for ways to help countries stuck with corrupt leaders, I won’t give away the bottom line.  But safe to say it forms an important counter to the Guatemala experience.

Proksik suggests some reasons why the results of internationalizing the corruption fight in the two countries differ so: EU’s large and unwieldy bureaucracy, the lack of a shared language between Kosovars and internationals, and the short-term secondments of many international staff.  As Matthew explained earlier this year, there are pros and cons to internationalizing, or outsourcing, the fight against corruption.  Given what a successful effort can achieve, understanding why the results in Kosovo have been so different from those in Guatemala is surely a topic worthy of sustained, careful attention.

Internationalizing the Fight Against Corruption: the Guatemala Showdown

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Guatemala shows how a beleaguered citizenry can fight a thoroughly corrupt leadership.  A joint United Nations/Guatemalan agency, known by its Spanish initials CICIG, has for several years been waging all out war against corruption in Guatemala (details here).  Besides winning corruption convictions against countless senior politicians and military leaders, its investigations led to the 2015 ouster of then President Otto Pérez Molina and Vice President Roxana Baldetti for orchestrating a massive corruption scheme in customs.  CICIG has been able to withstand the inevitable backlash that cases against the powerful generate thanks to a remarkable alliance between Guatemalans fed up with corruption and impunity and those in the international community willing to provide not only financial support but political backing too.

Fearing he is about to become the target of a CICIG investigation, Guatemala’s current president Jimmy Moralesis is testing the strength of the alliance. On August 26 he issued a decree expelling CICIG’s head, claiming the commission was compromising the country’s sovereignty.  Given Guatemala’s experience with foreign intervention, one would expect his claim to resonate, but so far outside far right circles it has gained little traction. The day after his order issued the Guatemalan Constitutional Court granted an amparo (protective order) staying the expulsion order pending a hearing on its lawfulness.  Guatemalans have taken to the streets, and commentators to the airwaves and op-ed pages, to protest Morales’ action.

International backers of CICIG have come to its defense too.  The U.N. Secretary General, the U.S. State Department, the European Union, and the Latin American Association of Ombudsmen have all denounced Morales’ order.  CICIG’s most important international ally may well be U.S. Congresswoman Norma Torres.  Guatemalan by birth, she is a leading voice on U.S. policy towards Guatemala, from shaping a responsible foreign assistance program, to devising a humane immigration policy, to supporting the fight against corruption. In an August 29 opinion piece in a Guatemalan daily (reprinted below in English) she not only strongly backed CICIG but reminded Morales his actions were putting millions of dollars of U.S. aid at risk. However much cheap demagoguery about foreign intervention and “Yankee imperialism” might undermine the credibility of CICIG’s other international supporters, the Congresswoman would seem immune.

Guatemala is a model for how a small country stuck with entrenched, powerful and corrupt leaders can mobilize international organizations, friendly governments, and key members of the diaspora to help purge the nation of corruption.  The outcome of the showdown between President Moralies and that alliance in Guatemala will be a critical test of the model’s viability.

Iván Velásquez and the Future of Guatemala
by Congresswoman Norma Torres

Like many chapines [Guatemalans] in Guatemala and abroad, I was shocked and dismayed by President Morales’s decision to declare Iván Velásquez “persona non grata.”  This decision is not only a devastating step back in the progress that has been made in anti-corruption efforts, it will delay justice in the important investigations and that are currently underway. It may also have lasting repercussions for Guatemala’s future by putting at risk millions of dollars in critical assistance. Continue reading →

The Obiang Trial: Misstatements of Facts and Law in the Defense’s Closing Arguments

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GAB is pleased to publish this account and analysis by Shirley Pouget and Ken Hurwitz of the Open Society Justice Initiative of the final arguments of Equatorial Guinean Vice President Teodoro Nguema Obiang’s lawyers at his Paris trial for what is in effect kleptocracy.

court roomTeodoro Nguema Obiang Mangue’s trial concluded July 5, 2017, with closing arguments by his defense counsel. The trial marks a major milestone in the struggle to ensure accountability for grand corruption, even when committed by those at the highest political levels.  A spicy mixture of high principle, juridical gravitas, and sophisticated argumentation on intricate issues of pressing urgency in the real world, the trial also contained moments of wrenching emotion and undignified, even scandalous, claims and insinuations.

The final day was devoted to arguments by Teodorin’s lawyers: Emmanuel Marsigny, Equatoguinean jurist Sergio Tomo, and Thierry Marembert.  In sum they claimed i) that their client didn’t steal enormous sums of money from the people of Equatorial Guinea, ii) that even if he did, the theft wasn’t illegal under Equatorial Guinean law, and iii) that even if he did steal the money and it was a violation of EG law, a French court did not have the right to try him for it.  Their arguments mixed misleading and often downright false statements of the evidence with strained and fanciful interpretations of the law, all seasoned with dark suggestions that the trial was about race and politics rather than the massive theft of resources from the citizens of Equatorial Guinea.     Continue reading →

The Obiang Trial: Prosecutor Seeks 3 Years Imprisonment, Large Fine, Asset Confiscation  

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GAB is pleased to publish this account and analysis by Shirley Pouget and Ken Hurwitz of the Open Society Justice Initiative of the concluding arguments the civil parties and the prosecution made at the trial of Equatorial Guinean Vice President Teodorin Nguema Obiang.

The July 5th proceedings in the Obiang trial opened with the court rejecting the defense request that it be allowed to pursue its claim that the prosecution was unconstitutional.  It closed with the state prosecutor asking the court to find Teodorin guilty, sentence to him three years in prison, fine him €30 million, and confiscate all of his assets located in France.  In between the two civil parties – CORED, a coalition of Equatorial Guinean political parties, and Transparency International-France – presented their arguments in support of conviction.  Continue reading →

The Obiang Trial: Lessons from a Decade-long Legal Battle

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The trial of Equatorial Guinean Vice President Teodorin Nguema Obiang before a French court for what is in effect kleptocracy is by any measure a giant step forward in the fight against grand corruption.  Indeed, it is such a significant milestone that GAB has, thanks to the Open Society Justice Initiative’s Shirley Pouget and Ken Hurwitz, provided readers in-depth reports of how it is unfolding (here, here, here, here, here, here).

Criminal trials are the result of a long and complex process meant to protect a defendant’s rights, and frustratingly, these human rights safeguards provide wealthy defendants, no matter their guilt, with many opportunities to derail a case.  In Teodorin’s case, not only does he have apparently limitless resources to spend on lawyers to pursue every legal defense to the nth degree, but the government of Equatorial Guinea, a family enterprise run by his father, has gone to extraordinary lengths to keep Teodorin from facing justice: naming him an ambassador to try and create a defense of diplomatic immunity, claiming that property he bought is state-owned and thus immune from legal challenge, and even filing an action against the French government in the International Court of Justice.

As Shirley and Ken draft the next installment in their series, this is an opportune time to stand back and examine how these many obstacles were overcome.   How did it come to pass that a senior official of the government of Equatorial Guinea is being held accountable before a criminal court in Paris for the wholesale theft of his nation’s wealth?  And more importantly, what can be done to ensure the Obiang trial is no fluke?  That the hundreds, if not thousands, of public officials who have stolen massive amounts from the people of their countries also find themselves in court answering for their crimes.

Thankfully, a fine paper answering these questions is now available. Authored by French attorney Maude Perdriel-Vaissière, a critical actor in shepherding the Obiang case through the French legal system, it recounts how a small, dedicated band of civil society activists overcame the many legal and political obstacles to bring Obiang before the bar of justice.  Continue reading →

Day Six of the Trial of Teodorin Obiang

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GAB is pleased to publish this account and analysis of the 6th day of the trial of Equatorial Guinean Vice President Teodorin Nguema Obiang by Shirley Pouget and Ken Hurwitz of the Open Society Justice.

On day six of his trial for actions arising from theft of public monies, Teodorin’s lawyers offered several legal defenses.  The most bizarre, and the one most strenuously advanced, was that in Equatorial Guinea theft of public funds is not a crime if the thief is a senior government official.  Teodorin was a government minister at the time he stole the money, and according to his lawyers, there was no law in Equatorial Guinea that made it a crime for a minister to steal public funds.

The defense also tried to lob a procedural bombshell into the proceedings.  It claimed that the way French courts have interpretred bribery as a predicate offense for money laundering is unconstitutional.  This constitutional objection, a Question Prioritaire de Constitutionalite, could have been lodged early in the proceeding.  Raising it so late in the case, would, if the court accepted the defense request, postpone the trial proceedings for many months. 

Continue reading →

Day Four of the Trial of Teodorin Obiang, Part II

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GAB is pleased to publish this account of the second part of the 4th day of the trial of Equatorial Guinean Vice President Teodorin Nguema Obiang by Shirley Pouget of the Open Society Justice Initiative.

As detailed in an earlier post, five witnesses testified June 26, 2017, in support of the corruption charges laid against Equatorial Vice President Teodorin Nguema Obiang.  Teodorin called but a single witness in his defense: Simon Mann, an assistant to Teodoro Obiang Nguema Mbasogo, who has been President of Equatorial Guinea for the past 38 years and also happens to be Teodorin’s father.

Mann came into President Obiang’s employ by a strange route.  Hired by a Lebanese businessman to overthrow Obiang, he was captured and jailed.  Mann explained that Obiang later pardoned him and then hired him as an advisor.  When the court asked if he was still employed by Obiang he replied:

“They pay my expenses as well as a per diem.”

He denied, however, that he was being paid to testify. Continue reading →