Category Archives: Commentary

More Flagrant Abuse of CPI Numbers by People and Outlets that Should Know Better

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As regular readers of this blog know, I’ve been (figuratively) pounding my fists on the table for a while now about various misuses and misinterpretations of Transparency International’s Corruption Perceptions Index (CPI), particularly in the context of misleading year-to-year comparisons (see here, here, here, here, here, and here). Perhaps I’m overemphasizing a relatively small issue, but it seems that the problem just won’t go away.

Case in point: A piece in last Friday’s New York Times by Carol Giacomo – a member of the New York Times’ editorial board – on recent developments in Indonesia. Most of the piece is a perfectly fine discussion of recent troubling events involving conflict between the Indonesian anticorruption agency (the KPK) and the Indonesian police.  But near the end, in discussing the broader implications of recent events for anticorruption efforts in Indonesia, Ms. Giacomo writes:

Transparency International, which annually rates countries on corruption in their public sectors, says Indonesia has improved its performance on the organization’s “corruption perception index” from 1.9 in 2003 to 34 in 2014[.]

Almost everything about that statement is flawed. Continue reading →

Mexico’s Corrupt Mayors: Who Gets Punished at the Ballot Box, and Why

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In a democracy, when and why are some politicians electorally punished for corrupt acts, while others get off scot-free? Some answers are commonsense: major scandals generally draw more ire than minor malfeasance; media coverage (and hence voter knowledge) matters; and citizens consider a variety of performance indicators—not just corruption or lack thereof—in selecting politicians. But the details are hazy. Some studies suggest politicians who get caught are more likely face electoral loss, but others find little to no such correlation. Likewise, we know anticorruption candidates often flounder for political reasons, but sometimes they succeed against the odds. So what drives, or contributes to, voter backlash against corrupt politicians?

A recent paper by Harvard scholars Horacio Larreguy, John Marshall, and James Snyder addresses this question in the context of mayoral elections in Mexico. Its conclusions should give pause to anticorruption activists looking for broad-brush solutions. In brief, the paper finds that the devil is in the details: local media coverage can reduce a corrupt incumbent’s vote share, but regional or national media doesn’t seem to matter much; voters do punish corrupt politicians on average, but certain political parties are punished much more than others for the same misconduct; and guaranteeing an audit of public programs reduces malfeasance, but merely threatening a possible audit has little if any effect.

These nuanced findings provide insight into voters’ habits, but they also reinforce the notion that corruption is deeply political—and therefore anticorruption interventions must be context-specific. To unpack this all a bit more, consider the study’s main findings: Continue reading →

An Uncommon Victory for India’s Common Man

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Indian voters signaled their distaste for corruption last year with the historic defeat of the Congress Party, but never have Indian voters spoken so overwhelmingly against corruption as in last week’s landslide victory for India’s first anticorruption party, the Aam Aadmi (Common Man) Party in the Delhi elections. The AAP won 67 of the 70 seats, leaving just three for the BJP (Prime Minister Modi’s party), and shutting out the Congress Party altogether. Dubbed a “political earthquake,” this win for the AAP, led by Arvind Kejriwal, is monumental for several reasons. Continue reading →

The 2014 CPI Data Demonstrates Why, Even Post-2012, CPI Scores Cannot Be Compared Over Time

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A little while back, I expressed some skepticism about whether Transparency International’s Corruption Perceptions Index (CPI) scores can be compared across time, even after TI changed its methodology in 2012 and claimed that its new scores would now be comparable across years.  More recently, I criticized TI’s 2014 CPI for burying the information on the margins of error associated with the CPI values, and for wrongly asserting that changes in the CPI score between 2013 and 2014 for certain countries (most notably China) were substantively meaningful.  (In fact, not only does the change in China’s score between 2013 and 2014 seem not to be statistically significant, but the change was due almost entirely to the dropping of a source in which China did abnormally well in 2013, and an abnormally large movement in a single other source.) I decided to follow up on this by taking a closer look at the other ten countries that TI singled out as having experienced significant CPI changes (in either direction) between 2013 and 2014.

Upon closer examination, I’m even more certain that CPI scores cannot be compared over time. I’m also more confident in my judgment that TI has been unforgivably sloppy — and downright misleading — in how it, and its representatives, have portrayed the substantive significance of these CPI changes. It turns out that the problem I found with the China calculations was not unusual. For almost all of the eleven countries TI identified as big movers, the CPI changes were driven by (1) the addition or elimination of sources from year to year for particular countries, and/or (2) abnormally large (indeed, implausibly large) movements in a single source. Until TI fixes its methodology, the safest thing to do is to ignore year-to-year changes in the CPI. And for the sake of preserving its own integrity and credibility, TI should either (A) persuasively explain why I am wrong in my analysis of the data (in which case I will gladly concede error), or (B) issue some sort of retraction or correction to its earlier press releases, and either drop the claim that post-2012 CPI scores can be compared across time or fix its methodology going forward.

Allow me to elaborate my analysis of the data: Continue reading →

Egyptian Courts Should Permit Money Laundering Convictions without Conviction on the Predicate Offence

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Prosecuting money laundering and corruption are inextricably interwoven. Corrupt officials, like other sophisticated criminals, frequently resort to various forms of money laundering to conceal their ill-gotten funds. That is why the UN Convention Against Corruption (UNCAC) adopted a specific article addressing money laundering. One of the legal challenges in prosecuting money laundering, however, is proving that the property involved is the proceeds of a crime. And one of the ongoing legal controversies on this point concerns whether proving that element of the money laundering offense requires, as a prerequisite, a prior or simultaneous criminal conviction for the predicate offense. Different legal systems have taken different positions on this question, which is perhaps unsurprising. More striking is the fact that, within Egypt right now, this question has divided the circuits of the Court of Cassation (the highest Egyptian criminal court), with no immediate resolution in sight.

One circuit has adopted a “restrictive approach” that requires a prior or simultaneous conviction of the predicate offense as a precondition for a money laundering conviction.  Although a majority of lower courts apply this restrictive approach, another circuit has held—in the case against former President Mubarak’s Minister of interior—that although the prosecution must prove beyond a reasonable doubt the illicit origin of the money to secure a money laundering conviction, the prosecution can establish this fact in other ways; a prior conviction for the underlying offense is not necessary. This division of opinion has persisted despite the fact that there is a provision calling for the Court of Cassation’s General Assembly to vote on controversial matters. Unfortunately, the Court does not apply this provision rigorously.

Although both positions have some merit, the Court of Cassation’s General Assembly–or, if it fails to act, the Egyptian legislature–should reject the restrictive approach and allow the prosecution to prove the elements of money laundering, even in the absence of a conviction for the predicate offense. The purported disadvantages of that approach are greatly exaggerated, and it would enhance the Egyptian government’s capacity to combat high-level official corruption, as well as other serious offenses. Continue reading →

Prosecuting Elected Officials for Corruption: A Tale of Four Governors

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As Phil and Rick pointed out a few months ago, America’s domestic anti-bribery laws and the attendant court interpretations are, for lack of a better term, a hot mess. In principle, the crime of bribery is straightforward: To secure a conviction, the prosecutor need only convince the jury that (1) there was some agreement (explicit or otherwise) whereby (2) the official would receive something of value (3) in exchange for using his official position in some manner. Unfortunately, though, that burden of proof often becomes far more complicated when the alleged bribe recipient is a high-ranking elected official. When a politician regularly solicits campaign contributions and simultaneously wields political influence to the benefit of constituents, it is often hard to see where politics ends and corruption begins. And after the U.S. Supreme Court’s decisions in cases like Citizens United and Skilling, prosecutors are left wondering when the corrupting influence of money on politics can still be prosecuted as “corruption.”

Today, I want to step back from this confusion and distill a few lessons that I believe still hold true for any US prosecutor investigating an elected official for bribery. To do that, I consider allegations that have been made against four past and present governors — Rod Blagojevich (Illinois), Andrew Cuomo (New York), Don Siegelman (Alabama), and Robert McDonnell (Virginia) — and ask one loaded question: what does it take to prove that an elected official misused his position in exchange for something of value?

Continue reading →

A Workable Conflict of Interest Law

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My January 28 post on conflict of interest complained that the laws of many countries were unduly vague making it next to impossible for officeholders to know what constitutes an unlawful conflict of interest.  Matthew noted in his comment that lawmakers commonly face a dilemma in such situations.  They can either write a rule that clearly specifies what is prohibited, but which can then be easily circumvented, or draft a broadly drawn standard that covers a wider range of conduct but at the cost of vagueness.  (Click here for more on the rules versus standards dilemma.)

Matthew asked how legislators can resolve the tension between these two conflicting objectives. I recommend that the law distinguish between two types of conflict of interest.

Continue reading →

Combating Corruption via Constitutional Courts: South Africa as a Model?

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Can a constitutional court function as an effective anticorruption advocate? South Africa’s Constitutional Court (the “ConCourt”) has taken on exactly such a role. Perhaps the high water mark of the ConCourt’s efforts to combat corruption came in Glenister v. President of South Africa, a 2011 case in which the court found the Constitution contained an implied governmental obligation to establish an effective anticorruption unit. The ConCourt’s track record on anticorruption is admittedly not perfect. The legislature has yet to fully give effect to Glenister, and the declining power of parliamentary moderates may impede full implementation of the decision. Perhaps more troubling, in 2013, two ConCourt justices refused to testify before a tribunal investigating claims that, on behalf of President Jacob Zuma, a lower court judge allegedly requested that the two justices issue Zuma-friendly rulings. Nonetheless, in addition to its watershed decision in Glenister, the ConCourt has found against Zuma in several cases, despite six of its eleven justices being appointed by him. When combined with its continued insistence that the anticorruption unit must be truly indenpedent, the ConCourt’s past successes in changing government behavior suggest that it may yet succeed in forcing parliament to act on Glenister.

Overall, then, the story of the South African ConCourt’s role in fighting corruption appears to be an optimistic one. The ConCourt’s example seems to demonstrate that not only can a constitutional court be an anticorruption tool, it can be such a tool even in an incredibly unfriendly political environment. Indeed, the South African ConCourt’s success may suggest that in systemically corrupt environments, the courts–and the Constitutional (or Supreme) Court in particular–may be the best hope for reformers seeking bulwark against corruption and an instrument of change.

On closer examination, however, it appears that the South African ConCourt’s success may not be easy to replicate elsewhere. The South African ConCourt has managed to attack corruption, despite the political and institutional odds stacked against it, due to a set of unusual, perhaps unique, circumstances.

Continue reading →

Banning the Appearance of a Conflict of Interest: Another Misguided Ethics Rule

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Last week I wrote about the problems arising from laws which make “conflicts of interest” illegal but which do not define “interest.”  As I explained, the harm that results from leaving “interest” undefined, or vaguely defined, is of several kinds:  Public employees have no way to know when they should avoid making or participating in a decision; authorities can easily slant enforcement of the law to serve their own ends; and the ease with which charges of conflict of interest can be leveled in the court of public opinion undermines public confidence by creating the impression that conflicts of interest are ubiquitous.

Making “the appearance of a conflict of interest” illegal can do as much, if not more, harm. Continue reading →

Dear Governments: Please Don’t Make Private Certification the Touchstone of an Adequate Anti-Bribery Program!!!

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A little while back, I posted a couple of critical commentaries (here and here) about the efforts underway to develop an International Organization for Standardization (ISO) standard for corporate anti-bribery programs (ISO 37001), modeled on the already-existing UK standard developed by the British Standard Institute (BS 10500). (For those unfamiliar with these organizations or what they do, these standards are developed by a private consortium, and then private firms conduct–for a fee–audits of companies and provide a “certification” that the company is in compliance with the standard. These standards in the past have dealt with technical or quality control issues — the proposed anti-bribery standard is, to the best of my knowledge, the first ISO standard to deal with a legal issue of this type.) Without rehashing my earlier posts here, I raised questions both about how these certifications were supposed to work in practice, and about what they were for. I raised but dismissed the possibility that law enforcement might treat ISO/BS certification as an adequate indicator that a firm had a satisfactory compliance program (or that absence of ISO/BS certification as an indicator the compliance program was inadequate). I dismissed the possibility because lots of people (including those who work in the compliance certification business and those involved with the development of the ISO standard), assured me that such certification was not intended to have that kind of dispositive legal significance (even if it might be relevant to the law enforcement agency’s inquiry).

I would have left the matter there, and probably not written about it again, but for some remarks at last December’s World Bank International Corruption Hunters Alliance meeting. On a panel about “Fighting Transnational Bribery,” Detective Inspector Roger Cook, with the Operations area in the City of London Police’s Economic Crime Directorate, spoke with great enthusiasm about BS 10500, the model for the proposed ISO 37001. (This is perhaps unsurprising given that, as I just learned from his City of London police bio, he “contributed to the development and implementation of … BS 10500 and the developing ISO 37001.”) I don’t have a transcript or a video, nor am I a trained stenographer, but I tried to copy down Detective Inspector Cook’s remarks on this topic as close to verbatim as possible, and they went (according to my notes) more or less like this:

[If you’re a company, the BS 10500 standard] is going to give you a lot of comfort. Simply by getting accredited, then you have those adequate procedures that the UK Bribery Act requires companies to have [(that is, to satisfy the affirmative defense to the strict liability offense of failure to prevent foreign bribery)]. If the company has BS 10500 [certification], we’re not going to look much further, as long as they’re applying it properly. And an ISO standard [ISO 37001] is also in the works, about 18 months away. Think how good that would be, if every company going for a public contract were accredited. [We should] make that [certification] a condition for public contracts.

Now, Detective Inspector Cook was speaking in his personal capacity, not on behalf of the City of London Police or the British government. And he is not affiliated with the Serious Fraud Office (SFO), which has principal responsibility for bringing enforcement actions under the UK Bribery Act. But I nonetheless found these remarks quite troubling, so perhaps it’s worth restating the reasons why private anti-bribery certification or accreditation, according to something like the proposed ISO standard, should not be considered necessary or sufficient to establish the compliance defense under the UK Bribery Act, and should not be considered necessary or sufficient to engage in government contracting. Continue reading →