An Almost Entirely Trivial Complaint About Terminology: Can We Please Retire the Term “Passive Bribery”?

Alright, alright, I know there’s so much important and serious going on in the anticorruption world, and the world in general, that I have to apologize right up front for the topic of this post, which is has virtually no importance to anything substantive. But I’ll post about it anyway, partly because it’s been bugging me, partly because right now I’m too burnt out to take up anything more weighty. Here’s today’s trivial terminological complaint:

The term “passive bribery.”

I don’t know when or how this happened, but in large segments of the anticorruption community, it’s become standard to refer to the act of requesting, demanding, or taking a bribe as “passive bribery”—which is contrasted with “active bribery,” defined as the act of promising, offering, or giving a bribe. This terminology has become so standard that it appears repeatedly in glossaries prepared by international organizations (see, for example, here and here) and leading anticorruption NGOs (see, for example, here and here), though to the best of my knowledge these terms aren’t actually used in any legal codes, nor in the UN Convention Against Corruption.

The problem is that describing the act of taking (or demanding) a bribe as “passive bribery” is both an abuse of language and potentially confusing or misleading. Continue reading

Leveraging Blockchain to Combat Procurement Corruption

Procurement corruption–including things like bid rigging, shadow vendors, and the steering of public contracts to politically connected firms—is an enormous worldwide problem, costing taxpayers up to $2 trillion annually. New technologies, though certainly no panacea, may offer new techniques for combating this sort of corruption. One such technology is blockchain.

Blockchain, most famous as the foundational technology for cryptocurrencies such as Bitcoin, is a “distributed ledger technology” (DLT)—a tamper-proof record of activities that are time-stamped and verified by a distributed network of computers. DLT creates a trail of information which allows for the full traceability of every transaction and stores a chronological list of transactions in an encrypted ledger. Transactions are bundled into a secure and identifiable block and then added to a corresponding chain. The blockchain is maintained and verified by the distributed crowd, eliminating the need for hierarchy and any centralized authority or middleman. And while blockchain is best known for its role in making cryptocurrencies feasible, it also has a range of other applications, including anticorruption applications. For example, Tanzania has utilized the technology to weed out “ghost workers” from the public sector, ending the monthly outflow of 430 billion Tanzanian shillings (approximately US$195.4 million) in salaries to fake employees who exist only on paper. Nigeria’s customs service has also used blockchain technology to store information on financial transactions and share these transactions across multiple computer networks.

Blockchain technology could also be used to combat common forms of procurement corruption, particularly those that involve after-the-fact tampering with submitted bids and supporting documentation. Such a system would work as follows: Continue reading

Corruption Is Not (Mainly) an Assurance Problem

The study of corruption these days is often heavily empirical, involving the close analysis of case studies or quantitative data. But sometimes it’s helpful to take a step back and think about the nature of the corruption phenomenon in more abstract, theoretical terms—not because this sort of abstract thinking translates neatly and directly into specific policy recommendations (it usually doesn’t), but rather because it helps us organize the otherwise overwhelming mass of particular information in a way that facilitates thinking, in broad strategic terms, about the kind of problem we’re dealing with and what kinds of interventions might be most promising.

It’s in that spirit that a range of contributions have suggested that our conventional ways of thinking about and responding to corruption are flawed, or at least incomplete, because they fail to recognize the extent to which the problem of corruption is a manifestation of the bad equilibrium in what game theorists would call an “assurance game.” The basic idea behind an assurance game is often traced back to Rousseau’s parable of the “Stag Hunt,” in which two hunters are chasing a stag when a hare runs by; if both hunters continue to pursue the stag, they’ll catch it and both will be better off (half a stag is better than a whole hare), but if one hunter chases after the hare, that hunter will get something while the other ends up with nothing. The key feature of this game is that it captures a setting where there are two stable outcomes (“equilibria”)—either both hunters hunt the stag or both chase the hare—and one of those (the stag) is clearly better for both of them. If both hunters go after the stag, and expect the other to do so as well, neither has an incentive to get distracted chasing the hare. But if both hunters expect the other to go after the hare, then both hunters will go after the hare themselves, because hunting the stage alone (in this parable) guarantees one will go hungry, while chasing the hare at least yields something. In that sense, the assurance game differs from the more famous “Prisoners’ Dilemma” game (and from other so-called “free rider” problems), because in the latter class of games each player has an incentive to take the “anti-social” action regardless of what everyone else is expected to do, even though everyone would be better off if they all cooperated.

What does this all have to do with corruption? Well, a number of scholars have advanced quite explicit arguments that the corruption is basically the equivalent of the hare-chasing equilibrium in the Stag Hunt: Everyone does it because everyone expects everyone else to do it, but if everyone could be assured that everyone else would act honestly, nobody would have an incentive to behave corruptly. The earliest scholarly paper of which I’m aware that argued that corruption is more like an assurance game than a prisoners’ dilemma is Professor Philip Nichols’ 2004 article, but the idea has been developed further by other scholars. For example, Professors Persson, Rothstein, and Teorell interpret the results of interviews in Kenya and Uganda as suggesting that corruption in those societies is more like an assurance game than a principal-agent problem, and in a 2019 follow-up paper these scholars argue more generally that systematic corruption “resemble[s] an assurance game…. Within this collective-action framework, unlike the single-equilibrium ‘prisoners dilemma,’ … what action is taken by any individual depends on expectations regarding how others will act.” And Professor Avinash Dixit, though more agnostic as to whether systemic corruption more closely resembles a prisoners’ dilemma or an assurance game, suggests that the latter is an important possibility. And for these and like-minded scholars, seeing corruption in these terms has important implications for how we might fight it. Professors Nichols and Dixit, for example, each independently argue for (somewhat different forms of) certification systems, which, in the assurance game context, can induce a shift from the “bad” (corrupt) equilibrium to the “good” (honest) equilibrium even without material sanctions. Professors Persson, Rothstein, and Teorell are somewhat less specific in the policy proposals that flow from seeing corruption as primarily an assurance problem, but they argue that understanding the problem in this way implies that “rather than ‘fixing the incentives,’ the important thing will be to change actors’ believes about what ‘all’ other actors are likely to do,” and that this in turn requires “a more revolutionary type of change,” though they acknowledge that we still don’t have a clear sense of what can induce successful “equilibrium shifts” of this type.

I want to push back (gently but firmly) against the notion that it’s helpful to think of corruption as (primarily) an assurance problem. But before I pursue my critique of this idea, let me start out by acknowledging that the scholars who have framed corruption as an assurance problem are almost certainly correct in highlighting that corruption is one of those social phenomena for which pervasiveness correlates with attractiveness. In other words, the more people who (are expected to) engage in corruption, the more people who (have an incentive to) engage in corruption. That insight is hardly unique to corruption, but it is certainly important in the corruption context, and may have a range of significant implications for anticorruption policy. My beef with the “corruption is an assurance problem” is not with that key insight, but with what seems to me to be a substantial exaggeration of the importance of that factor relative to other factors. Continue reading

Preserving Electoral Integrity Without Disenfranchising the Poor: Suggestions for Improving a Voter Residence Verification System in Colombia

Vote-buying—a particularly corrosive form of political corruption—is present in many jurisdictions, especially in the Global South. And not only is vote-buying itself a form of corruption, but the practice exacerbates other forms of corruption, because politicians need to raise enough money to buy enough votes to beat their opponents (who are also engaged in vote-buying), and in order to raise enough money, politicians often enter into deals with private parties who (illegally) “lend” the politician the money he or she needs to buy enough votes to win the election, and then, once in office, the politician pays back the private parties—either directly, with embezzled funds, or with inflated government contracts (see, for example, here and here).

But sometimes a candidate might worry that she won’t be able to buy enough votes from voters who actually live in the district where the candidate is running. This is especially true when competing candidates are trying to buy votes. In a competitive district, a relatively small number of votes can swing the election, so politicians have an incentive to scrounge for extra votes. This, understandably, also drives up the “price” for votes in the district. In Colombia, one way that politicians have developed to increase the pool of voters they can “buy,” and hence keep the price down, is to pay voters to illegally register in a district other than the district where they actually live. (In Colombia, as in many countries, adult citizens may only register to vote in the district where they actually reside.) So, the politician pays these voters twice—first to illegally register in another district, and then to vote in that district for the politician—and on both registration day and election day the politician will arrange for the transportation of these non-resident voters to the district where the politician is running. This practice, known as electoral transhumance, is illegal, yet there have long been concerns that it is pervasive in many parts of the country.

In October 2015, Colombia introduced a new tool to fight this sort of electoral fraud. Using so-called “big data analytics,” the authorities were able to cross-reference the National Electoral Registry databases with the System for the Identification of Potential Beneficiaries of Social Programs (known as SISBEN), and as a result of these checks, nearly 1.6 million voter registrations to vote were declared void—a large number in a country with 33 million registered voters. That seems like a big win, and a nice example of how new technologies can help crack down on pervasive corruption (here, electoral corruption). But a closer look reveals that the picture is not as rosy as it first appears: Despite its good intentions, and some positive results, this purge of the voter rolls ended up disproportionately disenfranchising low-income voters. Continue reading

The Importance of Public Relations in the Fight against Corruption

It’s long been recognized that public relations (PR) is a crucial tool in the fight against corruption. (For a recent exposition of that argument on this blog, see here.) This recognition is codified in the United Nations Convention Against Corruption (UNCAC), Article 13 of which requires state parties to “[u]ndertak[e] public information activities that contribute to non-tolerance of corruption, as well as public education programs,” and Article 6 of which calls on state parties to “increase[e] and disseminat[e] knowledge about the prevention of corruption.” Governments fulfill their UNCAC obligations in a variety of ways, and examples of anticorruption public awareness campaigns are as diverse as they are numerous. A famous example of how PR can be used effectively comes from Hong Kong’s Independent Commission Against Corruption, which spends millions of dollars annually on thousands of workshops to educate public employees and private citizens about the effects of corruption and how to combat it. New York City has likewise deployed large-scale educational programming with similar success. In addition to government-run campaigns such as these, multilateral organizations such as the UN Office on Drugs and Crime (UNODC) and NGOs like Transparency International also regularly engage in efforts to raise public awareness around corruption issues (see here, here, here, and here). These campaigns deploy tools as varied as video, music, and drawing to convey their anticorruption messages.

Critics sometimes contend that these PR campaigns consume scarce anticorruption resources that would be better devoted to investigation or enforcement efforts. This criticism is misguided and shortsighted. Of course a badly-designed PR effort can waste resources. Yet effective anticorruption PR helps accomplish several goals that other, “harder” anticorruption measures are incapable or ineffective at achieving on their own:

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We Need An Extraterritorial Law To Hold Companies Responsible For Clean Global Supply Chains.

Six years ago, the deadliest garment industry accident in modern history killed more than 1,100 people and injured 2,500 in an apparel manufacturing facility, Rana Plaza, in Bangladesh. Perhaps the worst part is that the tragedy was entirely preventable, and the result of corrupt practices by the politically well-connected owner. The Rana Plaza building violated codes, with the four upper floors having been constructed illegally without permits. The foundation was substandard, and despite safety warnings that led shop owners and a bank branch on lower floors to immediately close, owners of the garment factories on the upper floors instructed employees to work the next day to keep up with customer demand. The customers that the garment factory was trying to satisfy? Mango, Primark, Walmart, the Dutch retailer C & A, Benetton, and Cato Fashions, among other recognizable global brands. And yet none of the US brands accepted responsibility for the problems in their supply chains that enabled this disaster (unlike non-US brands that contributed millions of dollars into a victim support fund).

Years later, not much has changed. Despite some recent encouraging developments, the current legal regime still does not do enough to hold international companies responsible for health and safety violations by their suppliers, and two-thirds of corporations continue to turn a blind eye to supply chain corruption. Such corruption can lower production costs and increase profits by enabling suppliers to engage in a wide range of insidious practices, including cutting critical corners on labor, health and safety. And when an accident does happen, companies can walk away free of any liability for the practices of their subcontractors, as in Rana Plaza. The beneficiaries of these corrupt practices are not only the owners of the supply factories, but also the multinational purchasers and their consumers in rich countries, who get cheaper goods at the expense of the health and safety of disadvantaged workers in low-cost manufacturing hubs.

This is ethically unacceptable.  And because we cannot expect companies to engage in responsible sourcing on their own volition, the right response is more expansive liability on companies that do not take sufficient steps to ensure clean supply chains. While the ideal solution might be some sort of broad international legal regime, that isn’t going to be feasible anytime soon, meaning that countries like the United States should act unilaterally and create a bill focused on bringing about clean supply chains.

The law I advocate here would have the following features:

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Even “Tough on Corruption” Proponents Should Worry about “Zero Tolerance” Rules

“Zero tolerance for corruption,” as Professor Stephenson suggested in a 2014 post, is an expression that can be construed in several different ways: from a general attitude that corruption should be considered “a high priority,” to an uncompromising policy mandating that “all feasible measures to minimize corruption must always be used.” In this post I will discuss another common, narrower understanding of “zero tolerance for corruption,” according to which corruption – at least in certain contexts – must always be addressed with a mandatory predetermined harsh sanction. A clear example of such a “zero tolerance” rule is the Colombian and Peruvian law demanding the instant termination of “any public contract tainted by corruption.” Another illustrative example is the EU’s directive mandating debarment from public contracting of any company convicted of offenses of corruption, fraud, or money laundering.

Granted, the potential deterrent value of mandatory harsh sanctions for corruption is substantial. A company aware that any conviction for corruption will inevitably incur severe penalties is more likely to be dissuaded from violating the law. Nevertheless, the costs of this “take no prisoners” approach to anticorruption may be much higher than the actual benefit. Thus, as Rick Messick recently showed, the law mandating termination of corruption-tainted public contracts has proven to have disastrous ramifications for the infrastructure in Peru and Colombia. As it turns out, not only has the nondiscretionary cancellation of corruption-tainted public contracts halted the advancement of existing infrastructure projects, but it has also deterred investors and developers from taking any part in such projects, for fear that they will be cancelled due to “the tiniest of infractions by anyone associated with the project.” Similarly, debarment is nothing less than “a death-sentence” for companies whose main business involves public contracts, and its mandatory imposition for even a relatively minor offense may be so draconian as to be counterproductive.

This kind of cost-benefit reasoning, though compelling to some, would not convince many proponents of an unequivocally “tough on corruption” stance. Many anticorruption hardliners believe in maximizing deterrence notwithstanding any associated costs. From this point of view, the end of deterring corruption justifies all necessary means. Yet even for those who take this view, it turns out that “zero tolerance” may not be the ideal approach. Supporters of “zero tolerance” rules assume that adoption of mandatory sanctions for corruption would guarantee that actors in the anticorruption system – judges, prosecutors, and legislators – will adhere to the “zero tolerance” ideal, and that such rules would be sustainable. But these decisionmakers in the anticorruption system may evade the application of “zero tolerance” rules where doing so would lead to sanctions perceived (rightly or wrongly) as patently absurd or unjust. In other words, a “zero tolerance” rule on the books does not guarantee that a “zero tolerance” policy would actually be implemented. Consider the various ways that actors in the anticorruption system may avoid triggering the mandatory sanctions for corruption:

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