Category Archives: Commentary

Demand-Side Prosecutions: Be Careful What You Wish For

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Many anticorruption activists and commentators–including many contributors to this blog (see here, here, here, and here)–dream of a world in which acts of transnational bribery would trigger not only an enforcement by the “supply-side” state (that is, the home or listing jurisdiction of the bribe-paying firm) but also parallel enforcement against the bribe-taking public officials by the “demand-side” government. In such a dream world, if a large US multinational were to bribe a public official in a developing country to obtain contracts, two things would happen: the US would prosecute the firm under the Foreign Corrupt Practices Act (FCPA) and the government official who took the bribes would be prosecuted by their domestic authorities. This would create a strong deterrent effect, both for the companies for the government officials.

I, too, support the vision of a truly global fight against corruption. But perhaps some caution is warranted. This is one of those areas where the old adage to “be careful what you wish for” may apply. Continue reading →

A Mexican Candidate’s Income and Asset Declaration Lambasted as “Amazing,” “Absurd,” “Inconsistent”   

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Under pressure from civil society, Mexican officials are starting to come clean about their personal finances, but as Marcelo Ebrard, a candidate in this June’s parliamentary elections, has learned, a half-baked disclosure of one’s financial life can backfire.  His disclosure drew nothing but scorn from the experts the on-line journal Sinembargo had review it. They found it implausible that a senior member of the Mexican political establishment claimed to own no house and to earn less than 150,000 pesos (~ $9,600) a month after leaving high office.  They questioned why money he received from his political party was not disclosed, contracts that might create conflict of interest were he elected not revealed, and his wife’s assets not reported.  What he released did not meet international standards for financial disclosure, and the disclosure, they bemoaned, was thus a “lost opportunity” to establish a new benchmark for transparency by political candidates.

While these criticisms may harm Ebrard’s chances of being elected to Mexico’s lower house of parliament, that he had to release a financial statement and that civil society invested the time and effort to examine it are both encouraging signs that Mexico’s anticorruption movement is taking off. Continue reading →

There Is No “East Asian Paradox” of Corruption and Development

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Imagine that you’re talking to a friend, and you mention that smoking shortens average life expectancy, and that smokers should therefore be encouraged to quit. Suppose your friend replies, “Well, but my uncle Fred smoked every day, and he lived into his 80s.” If your friend means this either (a) as a serious challenge to your empirical claim that smoking is bad for you, or (b) as a critique of your prescriptive argument that smokers should therefore be encouraged to quit, then you would probably find his response absurd on its face. And if your friend were to say that he has posed a serious conceptual conundrum—say he calls it the “Uncle Fred Paradox”—you would probably laugh at him. His argument might seem marginally less ridiculous if he pointed not to his Uncle Fred but to, say, France—which has relatively high smoking rates and relatively high life expectancy—but we probably still wouldn’t view this as a serious challenge to the view that smoking is bad for you, nor would we spend a lot of time wringing our hands worrying about the “France Paradox” in the smoking-health relationship.

Yet for some reason, in serious discussions about the relationship between corruption and economic development, people seem to make precisely this sort of specious argument, and the argument gets taken very seriously by people who should know better. The form the argument takes in this context goes something like this: “It may be true that high corruption seems to be correlated with lower levels of economic development on average. However, many countries in East and Southeast Asia—such as China, South Korea, Japan, Taiwan, Thailand, and Indonesia—either achieved or currently are achieving impressively rapid economic growth despite widespread corruption.” This is the so-called “East Asian Paradox” (a term coined, as far as I know, by Professor Andrew Wedeman — see also his recent book). The somewhat more sophisticated version of the argument, developed most prominently in an article by Professor Michael Rock and Heidi Bonnett, notes that although perceived corruption has a negative relationship with growth and investment in most countries (especially small developing countries), this relationship becomes positive in a subsample consisting of five large, newly-industrializing Asian countries (China, Indonesia, South Korea, Thailand, and Japan), using data drawn from the early 1980s through the mid-1990s.

One encounters more-or-less sophisticated versions of the “East Asian Paradox” argument all the time when talking about the adverse impact of corruption on development. When someone says something like, “Corruption is a major threat to economic development,” someone almost invariably responds with something like, “But what about China? It has achieved impressive economic growth despite widespread corruption.” As far as I’m concerned, this is equivalent to saying, “But what about my Uncle Fred, the lifelong smoker who lived into his 80s?” But in case this is not completely obvious, let me explain why I think the “East Asian Paradox” argument, at least in its usual crude form, is mostly bogus. Continue reading →

Why International Double Jeopardy Is a Bad Idea

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In a recent post, I argued that U.S. authorities investigating British pharma giant GlaxoSmithKline (“GSK”) should consider criminally prosecuting GSK but partially offsetting any attendant penalty in light of the $490 million fine already imposed by China. This option is only available to the DOJ, though, because it stands on one side of a crucial divide in the global anticorruption regime: the U.S. — unlike Canada, the U.K., and the European Union — does not recognize an international variant of ne bis in idem (“not twice for the same thing”) (also known as “international double jeopardy”).

Recognizing an international double jeopardy bar can have a dramatic impact on a country’s capacity to combat international corruption. For countries like the U.K., being second-in-line to target an instance of transnational bribery often means not being able to prosecute the conduct at all. (For example, in 2011, the U.K. had to forego criminal sanctions against DePuy International because the U.S. had already prosecuted the British subsidiary.) In recent years, though, a spike in the number of parallel and successive international prosecutions has inspired a small but growing chorus of commentators calling for countries like the U.S. to formally embrace international double jeopardy.

To these commentators’ credit, many of their arguments sound in basic notions of fairness: you shouldn’t punish someone twice for the same crime. But before we jump on the double jeopardy bandwagon, I want to spend a few minutes explaining why, when it comes to the global fight against transnational bribery, double jeopardy probably isn’t all it’s cracked up to be.

Continue reading →

It’s Time to Stop Branding Public Works in the Philippines

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In a post a few months ago, Matthew noted some challenges involved with education initiatives in the Philippines, where income disparities played a significant role in the success of an anti-vote-buying campaign. In particular, poor Filipinos perceived one campaign as condescending or insulting, and believed that the middle- and upper-class individuals behind those campaigns demonstrated a lack of respect in their approach to voter education. The issue goes much deeper than a single poorly-executed education campaign. Even popular anticorruption movements—such as the one that ousted President Joseph Estrada in 2001—were divided along class lines. Poorer Filipinos celebrated (and continue to regard) Estrada as a champion of the poor, while middle- and upper-class Filipinos demanded his resignation following allegations of plunder.

This tension between socioeconomic classes affects countless issues tied to Philippine corruption—from how Filipinos view their politicians, to how they define corruption at all. In his post, Matthew noted one such definitional problem–whether a politician helping constituents to pay for expenses associated with events like funerals or weddings can be classified as “vote buying”–but there are many other similar socioeconomic disparities in the perception of such interactions. It seems that members of different socioeconomic classes expect different things from their local, provincial, and national governments and politicians. To many of those facing extreme poverty, receiving a free birthday cake each year, or having government officials pay for a funeral, are not acts of impropriety, but rather are demonstrations of goodwill and a concern for wellbeing—values which they admire in political candidates.

But the conceptual problem is not simply borne of economic disparity. In many ways, politicians exacerbate these problems by “branding” public acts as their own personal contributions to society, rather than as official acts of their office. A simple drive around any Philippine province demonstrates the extent of this problem. Countless bridges, banners, buses, public housing units, food, disaster relief goods, and even announcements of recent public school graduates prominently feature the names and photographs of politicians. These purposeful efforts to put ones personal stamp on government works are insidious and must be eradicated from Philippine politics.

Continue reading →

The New Head of the DOJ’s Fraud Unit Advocated Gutting the FCPA: Shouldn’t We Be More Upset About That?

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Two months ago, the U.S. Department of Justice announced that Andrew Weissmann would take over as chief of Fraud Section in the DOJ’s Criminal Division, a position that involves responsibility for, among other things, the DOJ’s enforcement of the Foreign Corrupt Practices Act (FCPA). Mr. Weissmann has had a distinguished professional career, with previous stints in private practice and in government, including prior positions as Special Counsel to the Director of the FBI, and as the director of the DOJ’s Enron Task Force. But for those of us who care about maintaining the US government’s aggressive enforcement of the FCPA and its leadership in the global fight against corruption, Mr. Weissmann’s appointment should be cause for concern. The reason? Mr. Weissmann was one of the principal authors of the U.S. Chamber of Commerce’s 2010 report, Restoring Balance: Proposed Amendments to the Foreign Corrupt Practices Act. That report is notable principally for three things: (1) its strident attack on aggressive FCPA enforcement, (2) its proposal of a series of amendments to the statute that would gut the FCPA, and (3) its misleading manipulation (and sometimes outright misrepresentation) of both facts and law in making its case.

Fortunately, Professor Dan Danielsen at Northeastern School of Law and my Harvard colleague Professor David Kennedy provided an exceptionally thorough take-down of the Chamber of Commerce’s arguments in a report for the Open Society Foundations (OSF), called Busting Bribery: Sustaining the Global Momentum of the Foreign Corrupt Practices Act. Aside from a few small (but admittedly important) errors, the OSF report provides a sufficiently thorough rebuttal that I won’t attempt to summarize it all here; rather, I urge readers to follow the links above. But let me just highlight a few aspects of Mr. Weissmann’s report for the Chamber of Commerce to explain why I think it deserves the harsh language I used. Continue reading →

Are We Underestimating the Extent of Bribery in the World?

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The astounding figure Richard Rose and Caryn Peiffer report in their new book, Paying Bribes for Public Services, that almost one quarter of world’s population or 1.6 billion people, recently paid a bribe would suggest the answer to the question above is a resounding “No.”  The 1.6 billion figure sounds so fantastically large that the suspicion arises that it is one of those gauzy numbers conjured up using shaky assumptions and questionable sources to capture headlines rather than advance learning.  Yet recent research by the World Bank’ Art Kraay and University of Maryland Professor Peter Murrell shows that, if anything, the Rose and Peiffer 1.6 billion number is low.

Their figure is based on the most solid of evidence: interviews by phone or in-person where respondents are asked whether they had to pay a bribe to obtain a public service.  Transparency International’s 2013 Global Corruption Barometer, a main source for the 1.6 billion number, is an example.  Surveyors first ask respondents if they or anyone else in their household has had any contact in the past 12 months with anyone associated with any of eight government services: i) the education system, ii) the judiciary, iii) medical or health services, iv) the police, v) registry and permit services, vi) utilities, vii) tax collection or, viii) land service.  If the answer is yes, the surveyor then asks:

In your contact or contacts have you or anyone living in your household paid a bribe in any form in the past 12 months?    

What could be a more reliable way to gather evidence of bribery?  Instead of asking what people think about bribery or what their perceptions of bribery or corruption are, they are asked about their own personal experience, or that of close relatives, with the crime of bribery.  The rub comes with the last phrase in the preceding sentence: the respondent is being questioned about “the crime of bribery.”

Continue reading →

An International Success, Applied in the US: The OECD Law Enforcement Group as a Model for US State Prosecutors

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In the United States, the federal government plays a lead role in prosecuting corruption at the state and local level–and many anticorruption advocates and scholars (both in the US and internationally) credit this federalization of anticorruption enforcement with getting rampant local corruption under control. Indeed, the DOJ’s Public Integrity Section was founded in 1976 precisely because it was thought that federal enforcement efforts were required to fill the vacuum created by the inability or unwillingness of state and local law enforcement authorities to bring cases against government officials in their own communities.

Leaving aside for the moment the substantial federalism and sovereignty concerns that have been leveled against this approach, it seems that the federalization of state and local corruption prosecutions worked, and contributed to a significant reduction in corruption across the United States. For this reason, anticorruption advocates frequently suggest that the US experience with federal enforcement should serve as a model for the international community. For example, Judge Mark Wolf’s proposal for an International Anticorruption Court explicitly draws on the US approach, and was likely influenced by Judge Wolf’s personal experience as a federal prosecutor of state and local officials.

I would like to propose the reverse: The United States should take a page out of the international enforcement playbook to improve state-level prosecution of state and local corruption, by implementing something like the OECD Anti-Bribery Convention’s closed-door meetings of law enforcement officials, but for US state-level prosecutors. Here’s why: Continue reading →

Who Calls the Shots?: Boko Haram and the Legacy of Military Leadership in Nigeria

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When Boko Haram operatives attacked a Nigerian military outpost near the village where I lived in northern Cameroon in 2011, locals condemned the assault. But they admitted that something had to be done about soldiers who, they said, regularly apprehended people and held them for ransom. Boko Haram’s tenor and tactics have grown increasingly radical and destructive since, but the early perceptions of the group highlight, in part, the relationship between corruption and instability. In that case, alleged military corruption directly contributed to violent conflict. Indeed, many analysts have drawn connections between government corruption and the rise of Boko Haram (see here, here, and here).

Transparency International has weighed in on the situation, as well, detailing how corruption has both continued to fuel instability and hampered the response to Boko Haram attacks. TI calls on the Nigerian government to “speak out against corruption and … invite civil society organizations to take part in developing an anti-corruption strategy.” Each course requires significant political will. Nigerian leaders’ historic relationship with the military may do a lot to explain why the requisite political commitment has failed to materialize within past administrations. Continue reading →

Anticorruption Policymaking: The Critical Role of Information

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“. . . [S]ound policies require good information – about the existence, nature, and causes of a problem, about the costs and benefits to the affected public of various possible solutions to the problem, and about the effectiveness of current policies.” Peter H. Schuck, Why Government Fails So Often: And How it Can Do Better. Princeton: Princeton University Press, 2014, p. 162.

Few axioms of policymaking would seem as self-evident as the one above, and few are so often observed in the breach.  Developing the knowledge required for good policymaking can be expensive, time-consuming, and intellectually challenging.  At the same time, policymakers are often under pressure to act; the problem is urgent; the public demands a solution, and they want to address the nation’s ills, or at least appear to address them, quickly.  So policy is made on the basis of incomplete data, hunches, intuition, and plain guesswork. The unfortunate result, as the title of Schuck’s book advertises, is almost always a policy failure.

Anticorruption is an area that seems particularly prone to policymaking on the fly.  In 2007 the U4 Anticorruption Resource Centre examined different countries experiences developing and implementing a national anticorruption strategy.  A major finding: “information, knowledge, and understanding of corruption continue to be a great weakness for the formulation and prioritization of anticorruption initiatives . . . .”  A more recent review of national anticorruption strategies Matthew and I have underway for the UNODC suggests matters have changed little in the intervening years. Countries as different as India, Bosnia-Herzegovina, and Thailand have constructed detailed, complex strategies for combating corruption on a thin to non-existent knowledge base.

Given the challenges of building a sound knowledge base for anticorruption policymaking, it is easy to understand why this critical step in the process is so often ignored. Continue reading →