Category Archives: Commentary

Should the TPP Address Corruption? If So, How?

Posted on by
5

The Office of the U.S. Trade Representative (USTR) says it is trying to include anticorruption pledges in the proposed Trans-Pacific Partnership (TPP) trade deal. According to USTR, it not only wants “commitments to promote transparency, participation, and accountability” in trade issues (commitments USTR claims it has already had some success securing recently), but also more general “commitments discouraging corruption . . . among public officials.” It’s not entirely clear what USTR means, particularly with respect to this latter suggestion that it is going to push for more general anticorruption pledges in the TPP. Maybe it doesn’t mean much – it might just be feel-good rhetoric, with little connection to what’s actually going on in the closed-door TPP negotiations. But suppose that USTR is sincere, and that it genuinely hopes to include some sort of anticorruption language in the final TPP deal. Is this a good idea? If so, what sorts of anticorruption commitments would be appropriate in a mega-regional trade agreement like the TPP?

The idea of incorporating anticorruption measures into trade deals is hardly novel. (See this panel summary for some high-level background). Last year, Colette’s post on this blog recommended adopting Transparency International’s suggested anticorruption measures for the proposed Transatlantic Trade and Investment Partnership (the T-TIP), though she also opposed addressing corruption through the multilateral WTO regime. Other commentators and civil society groups have pressed for the incorporation of anticorruption measures in other regional free trade agreements (for example, see here and here). With respect to the TPP, these prior discussions suggest several considerations that USTR negotiators should keep in mind if they are serious about pushing for more anticorruption language in this agreement: Continue reading →

CICIG’s Success in Guatemala: Independence Is Not Enough

Posted on by
3

Few contemporary developments in the struggle against impunity for high-level corruption are as extraordinary—and encouraging—as recent events in Guatemala, culminating last month in the resignation, and subsequent indictment, of President Otto Perez Molina in connection with a corruption ring in the customs service (known as the “La Linea” scheme). Perez, the first Guatemalan president ever to resign, has been on the impunity radar ever since the end of Guatemala’s 30-year civil war in 1996. These latest accusations against him are just a step, though perhaps the most successful step, in the sustained campaign to hold him accountable for various transgressions.

Before he was elected, Perez was the military general responsible for a remote region in Guatemala that saw some of the bloodiest massacres of the civil war. New evidence corroborates what many in Guatemala already strongly suspected – that he not only knew about but actually ordered the raids, murders, and torture that occurred under his watch. Perez—the military’s representative during negotiation of the 1996 Peace Accords—is also implicated in the murder of a Catholic bishop which occurred days after the Bishop published a report about the military’s culpability for genocidal war crimes.

Compared to these other alleged crimes, the customs fraud that triggered Perez’s resignation may seem, if not benign, then at least relatively mild. That is not to diminish the significance of the “La Linea” scheme: Hundreds of thousands of dollars (at least) that could have been spent to improve the welfare of Guatemalan citizens instead wound up in the pockets of corrupt leaders. But it does seem peculiar that a man who not only evaded prosecution but also became president amid allegations of genocide is now facing justice not for these violent crimes but rather for stealing money. (That said, additional charges related to his war crimes could and perhaps must still be filed against Perez. Yet it remains the case that it was the corruption scandal, not the war crimes allegations, that ultimately forced his resignation.) Why has this campaign to force Perez to answer for his crimes been successful, where past attempts have failed? Continue reading →

Sustainable Development Goal 16: Am I the Only One Who Thinks It Is a Major Setback in the Fight Against Corruption?

Posted on by
13

Last week Matthew asked if he were the only one who wasn’t excited about Sustainable Development Goal 16.   At first glance it is hard to understand why he would ask such a question.  One of 17 goals approved September 25 by the United Nations General Assembly to end poverty by 2030, SDG 16 establishes an ambitious agenda for improving the way the nations of the world govern their citizens by, among other measures, requiring concerted global action to “substantially reduce corruption and bribery in all their forms.”  How could anyone, particularly one who works on corruption issues, not be ecstatic that the 193 member-states of the United Nations unanimously endorsed this objective? And indeed numerous anticorruption advocates have already celebrated its approval (click here for Transparency International’s enthusiastic endorsement).

Although the opening of Matthew’s post was low-key (am I the only one not excited?), readers quickly learned that he was in fact severely critical of SDG 16’s corruption and bribery target because of the way progress towards realizing it is to be measured: by changes in a nation’s score on Transparency International’s Corruption Perceptions Index.  Matthew nicely summarized why this is insane on technical grounds.  Here I explain why using the CPI to measure progress is not only insane but represents a major setback in the fight against corruption. Continue reading →

Should FCPA Enforcers Focus on Bribe-Paying Employees or Their Corporate Employers?

Posted on by
7

These days most (though not all) resolutions in Foreign Corrupt Practices Act cases involve corporate defendants paying fines or other penalties to the government. Usually (again, not always) the government does not bother prosecuting the employees who paid the bribes. (While the government has recently made individual liability in corporate criminal cases more of a point of emphasis — as exemplified by the DOJ’s Yates Memo, which Danielle discussed in yesterday’s post — the targets in those cases are typically senior executives who orchestrated bribe-paying schemes, not the lower-level executives or employees who actually paid the bribes.) The government also uses various legal tools to encourage lower-level employees blow the whistle on their employers.

Do we have this backwards? Right now, the government focuses its enforcement efforts on the corporate employers, rather than the lower-level employees who pay the bribes. Should the government instead emphasize enforcement actions against the employees? Right now, the government tries to give employees incentives to uncover and disclose evidence of FCPA violations committed by their employers. Should the government instead focus on encouraging the employers to uncover and disclose FCPA violations committed by their employees?

This past summer, I was fortunate enough to attend the Third Annual Conference on Evidence-Based Anti-Corruption Policies in Bangkok, and the keynote speaker at that event, New York University Law Professor Jennifer Arlen, made a case along those lines. (Professor Arlen’s address was actually a much more wide-ranging discussion of corporate criminal liability; I’ve extracted, and possibly oversimplified or distorted, one thread of her argument. But it’s an interesting enough argument that I think it’s worth engaging, and I’ll focus on the simple version, even though her position is more nuanced.) The argument goes something like this: The DOJ should adopt a policy that any corporation that discovers FCPA violations by its employees, and then promptly (a) discloses the violation to the government, (b) provides the government with information, and (c) assists the government in prosecuting the employee, should be exempt from corporate criminal liability for the violation; the DOJ should instead vigorously prosecute the individual employees in this situation (using the evidence that the corporate employer has itself provided). If the corporation fails to promptly disclose such a violation, however, and the government subsequently finds out about it, the corporation should be held criminally liable for the FCPA violation, and penalized accordingly.

I think this proposal is interesting enough to take seriously, though in the end I remain unconvinced that this shift in emphasis would be a good idea. Let me first lay out the argument in favor of this change, and then explain why I ultimately disagree. Continue reading →

No Longer a Cost of Doing Business: The Yates Memo Signals DOJ Is Serious About Going After Individuals

Posted on by
7

As many observers have noted, penalties for Foreign Corrupt Practices Act (FCPA) violations tend to fall on corporations, rather than individual wrongdoers. The individual employees responsible for the unlawful conduct rarely pay fines or go to prison. The FCPA is not unique in this regard; many U.S. Department of Justice (DOJ) settlements with corporate defendants shield executives and employees from personal liability so long as the corporation accepts institutional responsibility. Yet this enforcement posture has been unsatisfying, and critics argue that many corporations simply treat the fines as an accepted cost of doing business. In response to this concern, and after much foreshadowing, the DOJ formally released a new policy on individual liability last week—a policy that applies to all corporate prosecutions and settlements, including those involving the FCPA. Known as the “Yates Memo” (it was announced by Deputy Attorney General Sally Quillian Yates in her remarks at NYU School of Law on September 9th), this new policy statement—the first major policy announcement from the DOJ under Attorney General Loretta Lynch—signals that the “cost of doing business” model of corporate compliance is coming to a definitive end.

Continue reading →

Long Walks to Where? The Limits of Popular Protest as an Anticorruption Tool in South Africa

Posted on by
9

Anticorruption popular protests seem to be having a moment.  From Brazil to Guatemala to Malaysia, citizens have taken to the streets in response to allegations of bribery and graft. Now, a group of South Africans is hoping to add their home to the list of countries where direct action has taken hold.  A loosely knit coalition of groups calling itself Unite Against Corruption has scheduled marches in Cape Town and Pretoria next week, on September 30.

The group has good reason to believe that South Africa is ready for this kind of popular movement, given the country’s many recent corruption scandals: despite the Public Protector’s best efforts and significant initial public outcry, the “security upgrades” at President Zuma’s home in Nkandla have been brushed off (though the Constitutional Court has agreed to take up the issue); a 1990s arms deal continues to have spillover effects; the Public Protector recently released a report highlighting widespread corruption and improper conduct at the nation’s rail agency.  The list could go on and on.

Nevertheless, even if high-profile events like these may have primed the general South African public to be open to a popular anticorruption movement, there are reasons to be doubtful that these marches will have meaningful long-term effects. The obstacles that Unite Against Corruption and its marches are likely to face are not necessarily unique to South Africa, but worth noting in an attempt to analyze this particular situation:

Continue reading →

Will the Canadian Courts Wreck International Law Enforcement Cooperation on Corruption Cases?

Posted on by
7

The answer to the question posed in the title depends upon how the Canadian Supreme Court rules in World Bank Group v. Kevin Wallace.  If the court rules that, despite laws providing it is not subject to the orders of domestic courts, the World Bank must obey a directive of the Ontario Superior Court, cooperation between the Bank and national law enforcement agencies is likely to end – or be severely weakened at the least.  The pleadings filed in the case, and just made available on the Supreme Court’s web site, describe how the court is poised to weaken transnational efforts to curb corruption. In summary . . . Continue reading →

Am I the Only One Who’s Not So Excited About SDG 16?

Posted on by
12

This Friday, over 190 world leaders are scheduled to gather at the UN headquarters in New York City for the UN Sustainable Development Summit to endorse a new set of “Sustainable Development Goals” (SDGs) to be achieved over the next 15 years. The SDGs are a follow-up to the Millennium Development Goals (MDGs), but the SDGs are much more expansive and cover a wider range of topics. Most relevant to the anticorruption community is Goal 16 (“Promote Peaceful and Inclusive Societies for Sustainable Development, Provide Access to Justice for All and Build Effective, Accountable and Inclusive Institutions at all Levels”), and in particular SDG “Target” 16.5 (“substantially reduce corruption and bribery in all their forms”).

There seems to be a lot of excitement among anticorruption activists and reformers about Goal 16 and Target 16.5 (see here, here, and here)—but to be honest, I’m not sure why. Indeed, I tend to think that the formal endorsement of anticorruption as part of the SDGs will do little good, and the inclusion of Target 16.5 might, if anything, be counterproductive. Continue reading →

Ridding the Courts of Corrupt Judges: Ghana Takes the First Step

Posted on by
6

Last week Ghanaians awoke to depressing news.  A team of investigative reporters revealed they had 500 plus hours of video tapes showing High Court judges and lower court magistrates accepting payoffs to acquit defendants in cases ranging from robbery and murder to bribery itself.  (Click here, here, and here for news accounts.) For Ghana, this is bad news, very bad news: dangerous criminals remain at large; some innocent individuals may have been jailed because they didn’t pay off a judge; and whatever confidence citizens may have had in the courts has been shattered.

But the initial reports contain some very good news as well.  The government is taking forceful and responsible action to cleanse a critical state institution of corruption. In accordance with article 146 of the Ghanaian Constitution, Chief Justice Georgina Theodora Wood has established a committee to examine the allegations against each judge and advise Ghanaian President Mahama whether he should remove any of them from office per the constitutional test of “stated misbehavior.”  At the same time, the Attorney General has announced his intention to prosecute judges, magistrates, and their accomplices for bribery and related crimes.

The scandal is similar in many ways to the one that engulfed Chicago’s courts in the 1980s, recounted in a Foreign Policy article flagged here last week.  As in Ghana, the Chicago cases arose from secret tape recordings showing judges fixing cases for money.  Like the Chicago judges caught on tape, some of those implicated in the Ghanaian scandal claim the taping violated the sanctity of the judicial chambers and evidence from them should therefore not be heard in any legal proceeding.  And, as in Chicago, many in Ghana are urging that those who bribed their way out of a criminal case be re-tried before an honest judge.

As the Ghanaian scandal unfolds difference between it and the one in Chicago will emerge, but some issues will be the same, and it may help Ghanaian authorities and citizens to know about Chicago’s experience. Probably most useful is the reasoning American courts relied upon to overcome the defense of double jeopardy when prosecutors sought to retry those defendant who had paid a judge to acquit them. Continue reading →

Don’t Be Fooled: Bob McDonnell’s Supporters Want To Legalize Bribery of Senior Government Officials

Posted on by
Reply

Last week, as many readers (at least those who follow corruption issues in the U.S.) are probably aware, the U.S. Supreme Court issued an order allowing former Virginia Governor Bob McDonnell to remain free on bail while his appeal is pending, a signal that the Supreme Court is likely to hear his case. As readers of the blog are also likely aware, I think that the appeals court that affirmed McDonnell’s bribery conviction decided correctly, meaning that the Supreme Court should either decline to hear the case, or should take it and affirm it. I really don’t think I have much more to say about the substance of the legal issues, and I wouldn’t bother posting about it again, except that an op-ed in last week’s Washington Post (by C. Boyden Gray, former White House counsel to President George H.W. Bush) got me so bloody angry that I just have to weigh in on this again, if only to point out the absurd consequences of the position advocated by Mr. Gray and others who argue that the conviction should be overturned.

The linchpin of Mr. Gray’s argument is that the alleged “official acts” that Governor McDonnell provided to private businessman Jonnie Williams (in exchange for lavish gifts, loans, and other tangible benefits) were “nothing more than speaking with aides and arranging a single meeting between an aide and [Mr. Williams],” and that criminalizing such routine conversations and meetings would be absurd. Described that way, McDonnell’s acts do indeed sound innocuous. But Mr. Gray’s characterization is so flagrantly misleading that there’s only one word to describe it, and it’s not a word I can use on a family blog. Continue reading →