On February 10, President Trump ordered a pause in the enforcement of the FCPA. His executive order claimed that its enforcement damaged American businesses while “impeding United States’ foreign policy objectives.” The order directed Attorney General Pamela Bondi to stop enforcing the act for 180 days to provide time to assess current enforcement policy and update the Department’s enforcement guidelines.
During the pause, some cases proceeded as normal. One FCPA defendant was sentenced and trials in three cases remained at least provisionally on track (here).
Other cases were derailed. One against two former executives of Cognizant Technology Solutions was dismissed, and several FCPA practitioners reported investigations they were handling were halted.
No official data on the number of investigations or cases dropped has been released, but there are insider reports.
On July 22 Ukraine’s parliament approved without debate or warning legislation sharply curbing the independence of Ukraine’s corruption fighting agencies. Nine days later it okayed a second bill largely repealing the curbs. In between were massive demonstrations by citizens protesting the July 22 law and threats by the European Union to cut financial support.
Ukraine’s Institute for Legislative Ideas today published a report offering lessons from these events. The think tank’s analysis explains who and what was behind the attempt to defang the nation’s anticorruption agency and special corruption prosecutor and how the sudden backtracking is likely to affect Ukraine’s fight against corruption. Along the way the report provides a careful legal analysis of the July 22 legislation, what the second bill repeals and what it leaves intact; the stated reason for the July 22 law (cleanse the agencies of “Russian influence”); the real reason for its passage (investigations were getting too close to those in power), and what civil society and international partners must do to ensure there is no further effort to undermine the fight.
Critical reading not only for those concerned about corruption in Ukraine but for those in other nations where a transnational coalition is working to keep the corruption fight on track.
Thanks to a last-minute legal maneuver, defendants in Namibia’s largest ever corruption case again escaped answering for their crimes. Set to start August 5, their trial was postponed pending a ruling on a long-shot motion to invalidate all pre-trial rulings. While unlikely to succeed, the motion opens the chance for even more delay as its denial will almost surely be appealed.
It is now approaching six years since former Justice Minister Sacky Shanghala, former Fisheries and Marine Resources Minister Bernard Esau and accomplices were arrested for their roles in a bribery scheme giving Icelandic fishing company Samherji the exclusive right to catch horse mackerel in Namibian territorial waters.
Dubbed the “Fishrot scandal,” the case initially promised much. To Namibians who lost their livelihood thanks to the scheme, the chance for compensation. To the international community, a demonstration that a young nation still consolidating democratic norms could hold the powerful to account.
What the case has become instead is another demonstration of a principle all too common in corruption cases: justice delayed is justice denied.
As a party to the OECD Antibribery Convention, Italy is bound by international law to investigate any Italian citizen or company alleged to have bribed an official of another government. In pursuing a case, the treaty requires that Italy “not be influenced by considerations of national economic interest. . . or the identity of the natural or legal persons involved.”
Successive Italian governments have ignored the no favoritism requirement. Economically important and politically influential Italian firms have regularly escaped punishment on the flimsiest of grounds: €10.5 million paid to a foreign public official’s cousins called not a bribe but a “consulting fee,” €197 million to well-connected insiders termed a “lobbying fee” (here).
Italy’s most recent breach of its treaty obligation: the refusal to appeal the acquittal of oil giant and partially state-owned firm Eni for paying a $1.1 billion bribe to Nigerian officials. A case where the evidence of wrongdoing was overwhelming (here); the trial court’s acquittal reeks of judicial incompetence or worse (here); and in an extraordinary, unprecedented move that will surely deter future foreign bribery cases, the prosecutors are themselves being prosecuted for pursuing the case (here).
That economic considerations or political pressure might dissuade a government from enforcing its foreign antibribery law was not lost on the drafters of the Antibribery Convention. To guard against it the included an article requiring the parties to submit to a “program of systematic follow-up to monitor and promote the full implementation of this Convention.” That follow up takes the form of a periodic review of compliance by the Antibribery Working Group, a committee consisting of a representative from each treaty party with a senior diplomat chairing.
On its website the Working Group stresses its commitment “to global engagement on anti-bribery.” Italy’s flagrant treaty violations have sparked anticorruption activists to take the group on its promise of a global dialogue. Last October more than two dozen of them asked it to review Italy’s compliance (here); in a tightly reasoned 47-page submission this June a coalition of civil society groups laid out the case for considering Italy’s (non)compliance (a request later amended to overcome the reason the chair gave for putting off review – amended submission here).
Most recently the Federación Latinoamericana de Fiscales, a federation of national associations of prosecutors from Latin American states, has written to the court hearing the Italian prosecutors’ case to emphasize that the proceedings are “undermining the sense of security and institutional trust that all prosecutors must have” to faithfully discharge their duties (here).
President Zelensky is proposing legislation that supporters say remedies the problem Parliament created Tuesday by enacting Law No. 4555-IX (English translation).
As yesterday’s post explained, that law gives the Prosecutor General unchecked power to
order both the anticorruption agency (NABU) and the special corruption prosecutor (SAP) follow his directions,
review pretrial investigations,
reassign NABU-led cases to other law enforcement bodies,
close cases at the request of the defense, and
appoint staff to prosecution teams.
The simple way to undo the damage this law has created is to repeal it, and indeed some reports say that is precisely what Zelensky’s proposed legislation does. But an analysis by Ukraine’s Laboratory of Legislative Initiatives makes clear that that is not the case.
Rather, the analysis shows that in several ways Zelensky’s bill exacerbates the damage 4555-IX did to the two agencies. Most damaging is it perpetuates the myth that the two have been infiltrated by Russian spies. As the Laboratory’s analysis explains:
Ukraine’s National Anticorruption Bureau (NABU), the independent agency responsible for investigating corruption, was searched July 21 by agents of the State Security Office and the Prosecutor General’s Office. In a post on X, NABU says no warrant or other legal authorization was presented to justify the search (here).
On Tuesday, the day after the search, Parliament approved legislation putting both NABU and the Special Anti-Corruption Prosecutor’s Office (SAP), which is responsible for prosecuting NABU cases, under the control of the Prosecutor General of Ukraine, an appointee of the Ukrainian President (here).
Both actions come a little more than a week after security service personnel searched the home and office of Vitaly Shabunin, a leading anticorruption activist.
The searches and the legislation were justified on two grounds. First, NABU and SAP have abused their powers. Second, and more significantly and darkly, the two are alleged to have ties to Russia and are furthering its interests.
The grounds for these actions seem shaky to say the least. A July 16 letter (original here; translation here) by Ukrainian civil society organizations shows the allegations levelled at Shabunin are without foundation. It also observes that all first appeared on anonymous Telegram channels.
Close observers say there may be cases where NABU or SAP or both were overly aggressive, but that is a far cry from doing Russia’s bidding. And indeed the real fear is that it is the critics of a vigorous anticorruption campaign who are doing the aggressor’s bidding.
The bill curbing NABU and SAP’s independence is now before President Zelensky for signature or veto. The European Union, which made the independence of NABU and SAP a condition for continued support, have weighed in with Zelensky. Pictures from demonstrations in Kyiv urging a veto (by GAB special correspondent) are below. More demonstrations planned for Wednesday.
On July 7 the U.N. Human Rights Council approved without dissent a resolution stressing the close link between the advancement of human rights and the fight against corruption. It unequivocally and without qualification proclaims what advocates of each have long recognized:
“the promotion and protection of human rights and the prevention of and fight against corruption are mutually reinforcing;”
U.N. Human Rights Council REsolution 59/6
Importantly, the resolution spells out how corruption fighters and human rights advocates can work together to achieve the two objectives. And to further this cooperation, it mandates:
A comprehensive, new study by the Human Rights Council Advisory Committee to develop concrete guidelines for implementing States’ procedural and substantive human rights obligations in the context of preventing and combating corruption, with broad consultation of stakeholders, including civil society.
The encouragement for Human Rights Council mechanisms to consider corruption’s impact within their existing mandates.
Stronger policy coherence across United Nations processes in Geneva, Vienna, and New York on corruption and its human rights implications.
The resolution’s passage is the latest effort by the UNCAC Coalition, a global network of almost 400 civil society organizations in over 120 countries, to foster ties between those working to advance human rights and those fighting corruption. Its other work towards this end includes:
Not really. That’s the answer Mirko Nazzari and Peter Reuter provide at the conclusion to their comprehensive review of the evidence on the impact of the global AML scheme.
Nazzari, a postdoctoral research fellow in Political Science at the Università degli Studi di Sassari, and Reuter, a Distinguished University Professor in the School of Public Policy and Department of Criminology, University of Maryland, find no evidence antimoney laundering laws have deterred the laundering of the proceeds of crime. For one reason, the U.S. and other wealthy countries, which pushed the poorer nations of the world to follow them in enacting complex, expensive AML controls, have failed to implement critical elements of the control system themselves (inclusion of lawyers and real estate professionals in the U.S. for example). Another reason: banks, especially large, multinational ones, have failed to comply (flouted?) the laws and national regulators done little to see they do.
The one redeeming factor is the help AML regimes provide law enforcement agencies when making cases against those whose crimes generate huge sums of money. The authors summarize findings from the U.S. that show that the suspicious transaction reports banks, casinos, and other institutions must file frequently support investigations of drug traffickers, human smugglers and other criminals who launder large sums, providing additional details of their activities or corroborating evidence.
The 86-page article (here) appears in the journal Crime and Justice but unfortunately behind a paywall. It is likely to be made public shortly given the importance of the article to so many around the globe. In the meantime, the abstract and a few notable highlights are below.
In a June 5 submission to Kathleen Roussel, Chair of the OECD Working Group on Bribery, three NGOs have asked the group to find Italy has failed to prevent political interference in a case where, in the face of overwhelming evidence, Italian oil giant Eni, Shell, and accomplices were acquitted of paying a $1.1 billion bribe to acquire rights to Nigerian oil field license OPL-245 (here).
As a party to the OECD Antibribery Convention, Italy pledged that the investigation and prosecution of foreign bribery cases would not “be influenced by considerations of national economic interest. . . or the identity of the natural or legal persons involved” (article 5). In their submission, the NGOs list 60 different instances where politics, Eni’s nationality, or both compromised the case. The evidence includes:
Admissions by Italian officials Eni associates conspired with state officials to “pollute” the OPL 245 investigation
The current trial of Eni’s former chief legal counsel for his alleged role in the plot
The termination of the OPL 245 prosecutions on overtly political grounds
The disciplining and criminal conviction of the two First Instance court prosecutors on charges that an independent judicial expert has described as “questionable conjectures
The complaining NGOs are Corner House Research of the United Kingdom; Hawkmoth, a Netherlands-stichting; and Nigeria’s HEDA Resource Centre.
The Working Group on Bribery is responsible for monitoring compliance with the Convention, and the NGOs’ submission is now circulating among its members. The Convention remains a signal commitment in the global fight against corruption.The Working Group should act promptly and decisively to see Italy observes its commitment to eradicating foreign bribery – no matter the political implications or the bribe payor’s identity.
Alina Mungiu-Pippidi and Iva Parvanova just released a report on corruption in 41 European nations, EU members plus those seeking to join the EU and those that neighbor these countries. A joint publication of Bridge//Gap and LUISS, the highlights include:
Non-EU states (Norway, Switzerland, UK) outperform most EU members, while Turkey and Bosnia lag furthest behind.
Accession countries and new member states perform well on transparency indicators, sometimes better than more developed countries.
Oligarchization is on the rise, especially in Turkey, Cyprus and Hungary.
Packed with useful, objective information on trends in corruption and measures to curb it, the authors find the EU still needs to more to assess the extent and nature of corruption across the 41, recommending it “integrate national-level data across Member and candidate states, enabling cross-border tracking of individuals and companies involved in corruption through unified risk indicators.” They urge implementation of a “pan-European disbarment system …to prevent chronic-offender favorite companies from accessing public contracts.” In addition, they emphasize that corruption risks in public procurement should be managed at the contracting agency level “with officials held accountable for transparency and integrity benchmarks” rather than solely relying on after the fact criminal prosecutions.
GAB | The Global Anticorruption Blog 