Category Archives: Commentary

In Pressuring Ukraine To Open Criminal Investigations, Trump’s Associates May Have Committed Many Crimes. But Violating the Foreign Corrupt Practices Act Probably Wasn’t One of Them.

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Right now, the biggest corruption story in the U.S., and probably the world, concerns efforts by President Trump and his associates, both inside and outside the U.S. government, threaten to withhold U.S. military aid from Ukraine in order to pressure the Ukrainian government into opening investigations that would help Trump politically. It’s clear at this point, except perhaps to the most rabid partisans, that there was indeed a “quid pro quo,” and the discussion has now turned to the question whether, with respect to President Trump specifically, he should be impeached for his conduct related to this episode (the issue that Rick focused on in yesterday’s post), and, with respect to whether Trump, his private lawyer Rudy Giuliani, or anyone else committed any crimes.

On that second question, commentators have suggested a whole range of criminal laws that some or all of the parties involved might have broken, including:

  • The section of the campaign finance laws that prohibits the “solicit[ation” from a foreign national of a “contribution or donation” to an election campaign of any “thing of value”;
  • The federal anti-bribery statute’s prohibition on any federal public official “directly or indirectly, corruptly demand[ing or] seek[ing] … anything of value personally or for any other person or entity, in return for being influenced in the performance of any official act”;
  • The anti-extortion provision of the Hobbs Act, which prohibits “the obtaining of property for another … under color of official right” (as well as the attempt or conspiracy to do so);
  • The wire fraud statute, which prohibits the devising of any “scheme or artifice to defraud” that involves use of any interstate (or international) wire communication (such as a phone call), where the term “scheme or artifice to defraud” is specifically defined elsewhere in the statute as including a scheme “to deprive another of the intangible right of honest services.” (This may seem a bit opaque to readers unfamiliar with this corner of U.S. law, but in a nutshell, so-called “honest services fraud” is a theory that when a public official, or some other person in a position of trust, engages in a corrupt scheme to, say, solicit bribes, that individual defrauds her principals by depriving them of her honest services. For an explanation of how this could apply to Trump in the Ukraine case, see here.)
  • In the case of Mr. Giuliani and other parties who do not work for the U.S. government, the Logan Act, which prohibits private citizens from corresponding with any foreign government or foreign government official “with the intent to influence the measures or conduct of any foreign government …. in relation to any disputes or controversies with the United States.”
  • Various provisions of Ukrainian law.

In addition to all of these possibilities, which strike me as at least facially plausible given the evidence that has come to light so far, some commentators have suggested that President Trump’s associates, such as Mr. Giuliani, may have violated the Foreign Corrupt Practices Act (FCPA) (see here and here). This argument hasn’t gotten much traction, in my view for good reason. Even for someone like me, who generally has a more expansive view of the FCPA than do some other commentators, it’s hard to see how the evidence we have so far would suggest a plausible FCPA violation. There are two main reasons for this: Continue reading →

Can A “Fudgy” Adverb Save Trump From Impeachment?

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For weeks President Trump’s defenders have claimed he did not demand Ukraine investigate the Bidens in return for approving the delivery of weapons to Ukraine. In legal terms, the argument was that there was no exchange of one for the other, no quid pro quo, the cornerstone of the crime of bribery.  That defense has now collapsed (here and here). The evidence that Trump sought a “quo,” a personal favor in the form of an investigation of the Bidens, in return for a “quid,” weapons, is overwhelming (here).  His defenders have thus now fallen back to a secondary defensive line: there was a quid pro quo but it was merely an “inappropriate” one. It was not, defenders insist, an impeachable quid pro quo.

Whether this new defense will carry the day remains to be seen.  No American president has ever faced impeachment for soliciting a bribe.  There is thus no standard jurors in a Trump impeachment trial, the 100 members of the United States Senate, can consult in deciding whether Trump’s attempt to use the power of the presidency to obtain a personal benefit is impeachable. But as Senators construct a standard, they might consider the one a 12-person jury of lay people in a criminal trial must use when a public servant is accused of soliciting a bribe. Continue reading →

What Is the Effect of Market Competition on Corruption? Some Surprising New Findings

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How does market competition affect the prevalence of corruption? Some people think that increasing competition could decrease corruption (see here and here). The intuition is that increased competition lowers firms’ profits, meaning that public officials cannot extract as much money out of the firms through extortive threats (e.g., a threat to falsely report noncompliance with safety regulations unless the firm pays a bribe). As the saying goes, you can’t squeeze blood from a turnip. By contrast, the argument continues, in less competitive markets firms have higher profits, and officials, knowing this, can use threats to extract some or all of this surplus for themselves. However, others have argued that increased market competition may lead to more corruption. Those taking this position tend to emphasize collusive rather than extortive corruption (see here and here) and point out that increased market competition makes collusion—which is, of course, a risky proposition—more attractive to firms, because the firms have more to gain from a leg up on their competitors. For example, an importing firm that pays a bribe to avoid paying customs duty will receive greater benefit from this competitive advantage when competition is fierce, since it will allow the firm to reduce prices and increase its market share more extensively. A monopolistic importer, by contrast, has less of an interest in paying the bribe to avoid the import duty, since a monopolist can offset much of the duty by raising consumer prices without needing to worry about losing much market share.

So, one can construct plausible theoretical arguments in both directions. What does the empirical data say about which story is closer to the truth? There have been a handful of studies so far, but they provide contradictory or equivocal results—some studies find that more competitive markets are associated with less corruption (see here, here and here), but others have found the opposite. But these studies focus on “corruption” generally, while the theories sketched above suggest that the effect of market competition on corruption may differ depending on the type of corruption—coercive or collusive. One prominent study, by Alexeev and Song (2013), explicitly incorporates this distinction and finds—based on analysis of data from the World Bank Enterprise Surveys of manufacturing firms in different countries—that increased competition increases the prevalence of collusive corruption. While this is an important step in the right direction, the survey data used here is still not ideal: the measure of “collusive corruption” is based on the respondent firms’ answer to a question about the amount of money firms in their line of business typically need to pay to public officials each year “to get things done,” which seems both vague and potentially overinclusive.

Luckily, later on the World Bank Enterprise Surveys expanded the range of corruption measures collected as part of its Investment Climate surveys in developing countries, recently publishing the latest of these surveys (get the data here), that may shed new light on this debate. The attractive feature of this more comprehensive survey data is that, in contrast to the data used by Alxeev and Song, the new surveys ask not only about the one vague measure of corruption, but ask separately about four different kinds of informal payments: to tax officials (hereinafter tax bribe); to secure government contracts (hereinafter contract bribe); to secure an import license (hereinafter import bribe); and to secure an operating licensing (hereinafter operating bribe). The survey, both in its current and older version, further asked every firm to report the number of competitors that it faces in its market of operation, which provides a ready firm-specific measure of market competition.

A thorough analysis of the competition-corruption link using this new data will need to await future work, but as a first step, I conducted some preliminary, exploratory quantitative analysis of the Investment Climate survey data. The results were surprising, and suggest not only that asking whether “corruption” is positively or negatively correlated with market competition is too crude, but also that even the proposed collusive-coercive distinction does not adequately capture the nuances of the relationships between competition and various forms of corruption.

Continue reading →

Amazonia Is Burning. Corruption Is One of the Reasons.

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Amazonia is the largest tropical rainforest in the world, spread over nine South American countries (Brazil, Bolivia, Colombia, Ecuador, Guyana, French Guyana, Peru, Surinam, and Venezuela), with approximately 60% of the forest (over four million square kilometers) located in in the north of Brazil. Brazilian Amazonia is home to around 45,000 different plant and animal species. This rainforest is also crucial to the global environment, especially with respect to climate change. During the past several months, an increase in the number and extent of forest fires in Brazilian Amazonia has triggered great concern, much of it focused on whether the Bolsonaro Administration’s policies are partly to blame for the widespread fires. While that conversation is no doubt important, it is also crucial to recognize that environmental crimes in Amazonia—including those related to the fires—are in part the product of widespread corruption, and that addressing Amazonia’s environmental crisis will require addressing Brazil’s governance crisis as well.

To understand how and why corruption is contributing to the destruction of the Amazon rainforest, a bit of background is in order. The greatest environmental threats in this region are the illegal harvesting of timber and the illegal clearing of land (often through burning) to prepare the land for commercial use for agriculture and livestock. (Between 70% and 80% of the deforested area in Amazonia has been used to create pasture for breeding cattle to produce meat for domestic and international consumption.) To be sure, Brazil has laws in place to protect Amazonia from over-exploitation and other forms of environmental damage. About 80% of the land in Amazonia is publicly owned; on this public land, the forest may not be exploited or burned. The remaining 20% of Amazonia is private land owned by individuals or corporations; even for this privately owned land, Brazilian law requires that the owners keep between 50% and 80% of the area intact and unexploited. The Brazilian government is responsible for enforcing these rules and for regulating and overseeing the extraction, transportation, and commercialization of timber from Amazonia. The regulatory system involves government approval of forest management plans, the issuance of permits for timber harvesting and land clearing, and the tracking of timber to ensure that it was not illegally removed from public lands or from the protected areas of private lands.

That’s how it’s supposed to work. But in practice, private companies collude with corrupt public servants—forest wardens, police officers, and others—to evade these rules. As a result, substantial quantities of timber are illegally extracted from public lands and protected private areas, and agricultural and livestock interests illegally burn and clear irreplaceable forests. The corrupted public servants not only turn a blind eye to these environmental crimes, but they also warn the infringers about possible inspections by other agents.

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Quid Pro Quo: A Primer

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Thanks to the Trump impeachment imbroglio, Americans are brushing up on Latin.  Or at least on the Latin phrase quid pro quo. Though Trump’s partisans and opponents are at each other’s throats about virtually everything, a consensus has emerged that if his dealings with Ukraine involved a quid pro quo, he is in trouble. The reason: the U.S. Supreme Court has repeatedly held (examples here and here) that the touchstone of the American federal crime of bribery is the presence of a quid pro quo. If the impeachment investigation were to uncover one in his Ukraine dealings, Trump would be guilty of bribery, one of three crimes, along with treason and high crimes and misdemeanors, for which he can be removed from office under Article II of the U.S. Constitution.

Quid pro quo means “this for that,” the archetypal example being someone who provides “this money” for “that action” by a public official. But the translation misleads by its simplicity, glossing over critical questions which Congress will have to answer in deciding whether Trump should be removed from office for his actions involving Ukraine:

Must the “this for that” be in the form of an explicit agreement?  Must, that is, there be a meeting of the minds between the two?

Or is a promise enough? That the payer or the recipient merely asked for something – a payment, the performance of an official act — from the other.

Must the terms of the agreement or promise be express? Stated clearly, leaving nor room for doubt. Explicit? Put into words whether written or not.

The Supreme Court, the lower courts, and academic commentators have wrestled with these questions for decades, and while not bound by their answers in an impeachment proceeding, Congress should surely pay heed to them. The federal judiciary arrived at them not during a white-hot partisan debate, with one eye on the effect of one’s chances for reelection. Instead, the answers were reached after deliberate, studied attention to the facts, to answers reached in previous cases, and to the consequences the answers would have on public servants’ future conduct.

Members of the House and Senate are not the only ones that would profit from a study of the American law of quid pro quo. Prosecutors, judges, and legislators in other nations would as well, for the quid pro quo requirement is part of all nations’ antibribery statutes (expressly stated in article VIII of the InterAmerican Convention Against Corruption and article IV of African Union Convention on Preventing and Combatting Corruption and following directly from the texts of the United Nations Convention Against Corruption (article 15), the Council of Europe Criminal Law Convention on Corruption (article 2) and the OECD Antibribery Convention (article 1)).  The United States is not the only nation with a bribery jurisprudence (here and here), but thanks to its size, aggressive law enforcement, and quality of its judiciary, its case law applying the quid pro quo standard is surely richer than most if not all.

A primer on it is below. Continue reading →

One Year After Bolsonaro’s Election, How Well Is His Administration Fighting Corruption in Brazil?

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Exactly one year ago, on October 28th, 2018, Jair Bolsonaro, a right-wing congressman and former army captain, was declared the winner of Brazil’s presidential election after receiving 55.13% of the valid votes. He defeated the center-left-wing Workers’ Party (PT) candidate Fernando Haddad, ending the PT’s streak of four consecutive presidential election victories that had begun in 2002.

Brazil’s corruption problem played a major role in the election and in Bolsonaro’s victory. The Car Wash Operation had not only uncovered widespread corruption scandals during the PT administrations, but that Operation also led to the prosecution and conviction of former President Luiz Inácio “Lula” da Silva, which rendered Lula ineligible to compete in the 2018 election. Moreover, Bolsonaro centered his campaign especially on a vigorous anticorruption discourse, promising to set a new standard of public integrity and to hold corrupt companies and politicians liable for their misconduct (see here and here). To be sure, Bolsonaro did not campaign exclusively on an anticorruption platform. He also positioned himself as the defender of more conservative social values and pledged to take a hardline approach to violent crime and drug trafficking. Yet his anticorruption rhetoric undoubtedly played a key role in his victory.

Even before the election, though, some commentators expressed skepticism that Bolsonaro would undertake genuine efforts to fight corruption and strengthen the institutions needed to promote integrity, and this skeptical view has been echoed by other commentators, both inside and outside of Brazil, during Bolsonaro’s first term (see, for example, here and here).

Now, one year since Bolsonaro’s electoral victory, is a suitable time to analyze the Bolsonaro Administration’s performance so far on anticorruption related issues. Have his substantive accomplishments in this area matched his tough rhetoric?

Continue reading →

Will Congressional Republicans Hold Trump to the Standard to Which They Are Held?

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It is no surprise House and Senate Republicans are finding it difficult to defend President Trump’s mixing political business with official business in his dealings with Ukraine. From the day they are elected, members are warned to keep the two separate lest they run afoul of the federal bribery law.  Nor should it be a surprise that President Trump would mix the two, for by his own admission, as a New York City real estate developer he frequently did.

House and Senate Ethics Committee Manuals both tell members “the federal bribery statute makes it a crime for a public official . . .  to ask for . . .  gifts, money, or other things of value in connection with the performance of official duties.”  The “connection” between the request and the duty performed need not be an explicit quid pro quo — contrary to what some Trump defenders say.  Were that the standard, as Justice Kennedy explained in a landmark case, an official could easily escape sanction by resort to “knowing winks and nods.” Continue reading →

Must the IMF Quantify Grand Corruption? A Friendly-But-Skeptical Reply to Global Financial Integrity

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The World Bank and IMF held their annual meetings last week, and it appears from the agenda that considerable attention was devoted to corruption—an encouraging sign that these organizations continue to treat this problem as both serious and relevant to their work. But does addressing the corruption problem effectively require that these organizations make more of an effort to quantify the problem? In a provocative post last week on Global Financial Integrity’s blog, Tom Cardamone (GFI’s President) and Maureen Heydt (GFI’s Communications Coordinator) argue that the answer is yes. In particular, they argue that the IMF should “undertake two analyses”: First the IMF “should conduct an annual assessment of grand corruption in all countries and publish the dollar value of that analysis.” Second, the IMF “should conduct an opportunity cost analysis of [] stolen assets”—calculating, for example, how many hospital beds or vaccines the stolen money could have purchased, or how many school teachers could have been hired.

This second analysis is more straightforward, and dependent on the first—once we know the dollar value of stolen assets (or grand corruption more generally), it’s not too hard to do some simple division to show how that money might otherwise have been spent. So it seems to me that the real question is whether it indeed makes sense for the IMF to produce an annual estimate, for each country, of the total amount stolen or otherwise lost to grand corruption.

I’m skeptical, despite my general enthusiasm for evidence-based policymaking/advocacy generally, and for the need for more and better quantitative data on corruption. The reasons for my skepticism are as follows: Continue reading →

International Scholars, Stay in Your Lane: The Risks of Uninformed Foreign Commentary on Corruption Cases

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Last June, a group of international scholars and jurists published an article in the French newspaper Le Monde arguing that former Brazilian President Luiz Inácio Lula da Silva (known as Lula), who was convicted and imprisoned in a case related to the Lava Jato (Car Wash) anticorruption investigation, did not receive a fair trial, and was the victim of political persecution. A couple months later, a slightly revised version of the article, styled as an open letter to the Brazilian people and Supreme Court, appeared in the Brazilian media, where it made quite a splash. The letter, which was republished on GAB last month, was signed by prominent US scholars, including Susan Rose-Ackerman and Bruce Ackerman, as well as lawyers, professors, and former judges from numerous Latin American and European countries. Echoing accusations leveled by The Intercept and other media outlets, the letter claimed that presiding judge Sergio Moro (now Justice Minister) conducted the proceedings in a partial fashion and directed the prosecution “in contempt for fundamental rules of the Brazilian procedure.” Judge Moro, the letter asserts, “manipulated substantial assistance plea bargaining mechanisms, oriented the prosecution service works, required the substitution of a prosecutor, and directed the prosecution’s public communication strategy.” Furthermore, the letter states that the Judge “wiretapped Lula’s lawyers” and “disobeyed an order from an appeal judge to release Lula”. The letter also contended that there was no material evidence of Lula’s corruption, and that his arrest, prosecution, and conviction were all prompted by the illicit political motive of excluding him from the 2018 presidential elections. In light of all this, the letter asserted that the Brazilian Supreme Court has a duty to release Lula and nullify his conviction.

These accusations are largely baseless, or at least presented in an extremely one-sided fashion that parrots what have become the standard talking points of Lula’s supporters. The Car Wash prosecutors effectively debunked the texts’ main arguments in a rebuttal also published on this blog. (The blog also published a response from Lula’s lawyers that rehashed the same talking points and alluded to as-yet-undisclosed evidence, but that didn’t otherwise counter the prosecutors’ clear documentation of the open letter’s many errors.) What most troubled me about the original article and the open letter was less the fact that these arguments were being advanced—again, by now they’re familiar pro-Lula talking points—but the fact that the texts were signed not only by lawyers, but also by renowned law and political science professors. Lawyers are expected to act as advocates. But scholars are supposed to be more judicious, more scrupulous about evidence, and more circumspect about making bold, aggressive claims on subjects whose factual and legal particularities they don’t fully understand. Continue reading →

DRC Government Members to Post Ethics Code on Office Wall, Resign if They Violate It

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The newly installed government of the Democratic Republic of the Congo has taken a major, and for the DRC, unprecedented step in the fight against corruption.  At their September 18 swearing in ceremony, each member signed an “Acte d’Engagement,” a one-page letter to Prime Minster Ilunga Ilunkamba containing an ethics code each agrees to observe.  Although the code’s provisions are nothing out of the ordinary, what is out of the ordinary is that ministers of the DRC would publicly commit to them. This represents an important milestone in the effort of the Prime Minister and President Félix Tshisekedi to arrest the corruption that has plagued the mineral-rich but desperately poor nation for so long.

Even more out of the ordinary, the signers pledge to resign if they are found to violate any code provision. Most unusually, they agree to post a copy of the letter in their office and to circulate it to their immediate staff and the civil servant they oversee. The one-page letter with code is written in non-technical, easily understandable prose. Ministers cannot excuse a violation by claiming they did not understand it, and its wide circulation and posting in the ministers’ offices increases the chances they will be held to it.

There is no reason why the governments of other nations where corruption is endemic should not follow the DRC’s lead.  They too should require leaders to publicly commit to a strong ethics code and to post a copy of the code and their pledge to honor it on the wall of their office.  This will remind them and all who meet with them of that commitment.

A translation of the commitment letter/code that each DRC government member signed follows. Continue reading →