Category Archives: Commentary

Cautious Optimism: Leveraging Free Trade Agreements as Anticorruption Tools

Posted on by
Reply

The international trading system has had a dire decade. There has been a stunning drop-off in the growth of global trade, and the most recent World Trade Organization Ministerial Conference did little, if anything, to halt the multilateral trading system’s decline. Yet anticorruption policy’s place in international trade negotiations has never been stronger. Many of the most prominent regional free trade agreements (FTAs) that have either come into force or been the subject of intense negotiations over the last half-decade have featured remarkably strong anticorruption provisions. The United States-Mexico-Canada Agreement (USMCA), which came into force in 2020 as a replacement for NAFTA, included entirely new anticorruption protections alongside only modest, technocratic tweaks to actual barriers to cross-border trade. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the post-2016 replacement for the U.S.-led Trans-Pacific Partnership (TPP), includes almost all of the anticorruption provisions that the U.S. championed in the TPP. The negotiations for an Indo-Pacific Economic Framework (IPEF), though much maligned for their failure to coalesce around meaningful trade liberalization, nevertheless produced a “Fair Economy” pillar that includes substantial initiatives aimed at fighting corruption. And these are not the only examples: Indeed, there has been a general increase in anticorruption provisions in FTAs and bilateral investment treaties.

Of course, lumping all of these different provisions together is a bit misleading, because the “anticorruption” provisions in FTAs take a wide variety of forms. Many, including the anticorruption provisions of the USMCA and the CPTPP, commit members to adopting laws that either directly criminalize certain behavior (bribery, facilitation payments, etc.) or require that firms adopt transparency measures, such as regular financial disclosures. Other FTAs, like the IPEF or the World Customs Organization’s Anti-Corruption and Integrity Promotion (A-CIP) Program, focus on capacity building through information sharing, technical assistance, and training programs. Still others, like the African Continental Free Trade Area (which is still being negotiated), attempt to tackle corruption in trade through measures like simplifying and automating the customs process. Yet despite this diversity, it is fair to say that anticorruption is now firmly part of the international trade agenda—thanks in large part to sustained advocacy by pro-transparency and anticorruption advocates since the 1990s.

While the incorporation of anticorruption provisions in FTAs has obvious symbolic importance, we don’t yet know as much about the practical impact of these provisions. This is partly because it’s just too soon to make such assessments: Other than a few exceptional cases, the inclusion of anticorruption language in FTAs is a relatively recent phenomenon). Very few studies have engaged in empirical assessments of how FTA anticorruption commitments actually fare as anticorruption tools in practice. But the limited evidence we do have appears encouraging:

Continue reading →

Towards Preventing Corruption During Ukraine’s Reconstruction: Bilingual Compilation of Ukrainian Procurement Laws

Posted on by
Reply

Russia’s war of aggression against Ukraine has inflicted massive damage on the country’s infrastructure, a half trillion dollars and growing daily (here). While Ukraine’s government is just beginning the massive task of letting contracts for the reconstruction of schools, hospitals, and other public works destroyed by Russian bombs and artillery shells, reports are already circulating that corruption has infected the procurement of some large works.

Fighting corruption in procurement is about much more than tightening and strictly enforcing laws on what to buy from whom. Rules governing political contributions, gifts to officeholders, conflicts of interest and business practices that facilitate bid rigging are all part of the equation. But preventing and detecting corruption in government contracting starts with what the law does (or doesn’t) say about who makes purchasing decisions and how specifications are drawn, contractors selected, and performance assured.

The fight against corruption in Ukrainian reconstruction just got an important boost. An online data base of some 450 Ukrainian statutes and Cabinet decrees along with English summaries is now available here. Included is everything from the text of ProZorro, Ukraine’s award-winning e-procurement law to statutes on permitting and land use to detailed rules governing the construction of roads and ports. A dropdown menu allows users to search by topic – critical infrastructure, damaged property, public procurement, urban development – or hone in on a specific area such as construction standards, PPPs, or telecommunications.

The database will help frontline corruption fighters – in the Ukrainian government, civil society organizations, and those overseeing reconstruction funding – determine if procurement rules are being observed in a project. Vigorous competition for procurement contracts is perhaps the most important way to curb corruption. By offering a free guide to Ukrainian procurement law, the database reduces the cost to new or foreign firms of preparing bids, increasing the chances more companies will bid on a project and thus spurring competition.

The database is the result of a heroic, pro bono effort by a squad of multilingual lawyers at the international law firm Debevoise & Plimpton aided by Ukraine’s Institute for Legislative Ideas. It was the brainchild of Jennifer Widner, Princeton University professor and director of the University’s Innovations for Successful Societies, and Oksana Nesterenko, head of the Anticorruption Research & Education Centre at Kyiv-Mohyla Academy. Both provided guidance and overall direction. Worth MacMurray, president and chief executive officer of the Coalition for Integrity, oversaw Debevoise’s work on behalf of ISS. The project is part of a larger effort by ISS and ACREC to prevent corruption during Ukrainian reconstruction.

Corruption on the Northeast Corridor: Addressing Bribery in Amtrak Procurement

Posted on by
Reply

Under the 2021 Bipartisan Infrastructure Law (BIL), the US federal government plans to allocate upwards of $550 billion to giving America’s infrastructure a much-needed facelift. About one-fifth of these funds have been pledged for public transportation improvements. Few agencies stand to receive more money than Amtrak, which has heralded its $66 billion cash infusion as ushering in “a new era of rail.” The BIL promises to provide sufficient capital to guarantee faster and more reliable rail service in the nation’s congested Northeast Corridor. Amtrak’s track record of project mismanagement, however, raises serious questions as to whether it can execute its vision. Poor financial planning has undoubtedly contributed to Amtrak’s inability to provide service on par with its Asian and Western European counterparts. Yet there is another factor that has that has been overlooked in discussions about Amtrak’s middling quality. In recent years, the agency has been rocked by multiple bribery scandals that have inflated costs and delayed projects. For example, this past March, federal prosecutors charged a contractor with bribing an Amtrak employee to inflate the costs of repairs to Philadelphia’s 30th Street Station—a project whose costs nearly doubled before its completion. A similar corruption scheme resulted in the conviction of a Delaware-based contractor in 2021. More generally, a 2023 report from Amtrak’s internal watchdog, the Office of Inspector General (OIG), estimated that nearly 10% of all infrastructure spending by the railroad could be lost to corruption.

Given the huge infusion of federal grant money under the BIL, it is especially important that the US government gets serious right now about rooting out what appears to be an alarming culture of corruption at Amtrak: Continue reading →

Cracking Down on Conflict of Interest in Indian Cricket

Posted on by
Reply

Cricket has become a mainstay of India’s sports culture, particularly after the Indian Men’s Cricket Team brought home its first World Cup in 1983. Yet Indian cricket has also been rocked by numerous embarrassing corruption scandals, many involving match-fixing and illegal betting (see, for example, here and here). These scandals have also prompted questions about more pervasive corruption, cronyism, and conflict of interest in the sport’s governing bodies, particularly the Board of Control for Cricket in India (BCCI). It has proven especially difficult to root out these problems because the BCCI is considered a private organization, and is therefore not covered by India’s Prevention of Corruption Act (PoCA) and Right to Information (RTI) Act. Notably, this is something of an anomaly: Most other sports authorities in India are “National Sports Federations,” autonomous bodies that are considered public bodies for legal purposes. Yet the BCCI has so far successfully resisted being similarly classified, on the grounds that, unlike these other sports authorities, it does not receive direct financial support from the state.

This should change, on grounds of both law and policy. As a legal matter, the BCCI meets the criteria for classification as a public body. As a policy matter, subjecting the BCCI to the PoCA, RTI Act, and other Indian anticorruption and pro-transparency laws would go a long way to cleaning up the corruption mess in Indian cricket. Continue reading →

When Did EU Anticorruption Conditionality Work, and When Did It Fail?

Posted on by
Reply

When countries apply for membership in the European Union (EU), the EU has substantial leverage to insist on various economic, political, and governance reforms—including anticorruption reforms. The EU has used this leverage, mandating (among other things) various anticorruption measures as a condition for accession. Has this worked? Does this form of conditionality help galvanize meaningful improvement in the corruption situation in candidate countries?

One of the most systematic attempts to answer this question, a 2014 study by Mert Kartal, compared corruption trends from 1995-2012 in Central and Eastern European (CEE) countries that did and did not apply for EU membership. The study found that applicant countries made significant progress during the accession process—but after accession, these countries’ anticorruption performance tended to deteriorate substantially. This is perhaps not surprising, given that the EU loses its leverage after accession takes place. Nevertheless, the finding is disheartening, in that it casts doubt on whether the EU was able to spur meaningful, lasting anticorruption reform. Notably, though, the results were not uniform across the twelve applicant countries studied: In some, the improvement that occurred prior to accession almost completely reversed after accession, but in others, the improvements appeared more sustainable. Diving into individual stories of accession suggests several factors that may have played an important role in the success or failure of EU attempts at using the carrot of membership to spur sustainable anticorruption reform. Continue reading →

Sri Lankan Bill on Proceeds of Crime and Corruption Damage Actions

Posted on by
Reply

A distinguished group of Sri Lankan judges and lawyers recently released draft legislation to recover the proceeds of crime and compensate corruption victims. Prepared at the request of Justice Minister Wijeyadasa Rajapakshe, enactment of such a bill is one of conditions of the $2.9 billion International Monetary Fund loan to stabilize the economy and restore economic growth.

While the proposed legislation exceeds the IMF requirement, providing for both criminal and non-conviction-based forfeiture of the proceeds of any crime, its overriding significance is it offers means for recovering the hundreds of millions if not billions of dollars corrupt officials have stolen from Sri Lankan citizens. The bill also establishes administrative procedures for compensating those injured by the corrupt act that generated the confiscated assets and granting anyone harmed by corruption the right to bring a civil action for damages.

The bill is accompanied by a clearly written report spelling out its provisions and explaining their rationale. A very nice diagram illistrates how the various freezing, seizure, and confiscation provisions will operate. Those in other nations struggling to write their own asset recovery or victim compensation legislation will find much of value in the Sri Lankans’ effort. (Text of bill with report and diagram here.)

At the same time, the bill is still in draft. Its authors welcome comments and critiques from Sri Lankans and international observers. Comments can be sent directly to the Ministry of Justice. Or GAB will be pleased to forward them to the appropriate personnel.

UPDATE. GAB just learned that Transparency International Sri Lanka has also posted a request for comments on the bill along with a brief explanation of the bill importance and the need for public input in English, Sinhalese, and Tamil here. The link includes an address to which comments can be sent.

Reconciling Tradition and Modernity in Africa’s Anticorruption Struggle

Posted on by
1

Even the most educated African citizens and public officials often have attachments to their cultural heritage. Perhaps for this reason, many African countries have retained traditional practices alongside modern governance institutions. While this has many advantages, such as increasing legitimacy and social cohesion, some of these traditional practices and attitudes are in tension with the contemporary state’s demands for accountability and transparency, and it can be challenging to differentiate acceptable and unacceptable practices at the intersection of the traditional and modern spheres.

Consider, for example, Sierra Leone. Prior to the establishment of the modern state, much of Sierra Leone consisted of chiefdoms. Sierra Leone considers the traditional institution of the chiefdom so vital that the Constitution reserves twelve seats in Parliament for Paramount Chiefs under customary law. What is the appropriate practice regarding gift-giving to chiefs who are also serving in Parliament? In traditional Sierra Leonean culture, visitors and petitioners are expected to give chiefs expensive gifts. However, under Sierra Leonean law, public officials, including Members of Parliament, are not allowed to accept gifts above a certain value. Similarly, in many of Sierra Leone’s chiefdoms, by custom, the chief would have the authority to determine land use rights, including those for activities like mining. However, under Sierra Leone’s written law, particularly the Mines and Minerals Development Act, the Ministry of Mines and the National Minerals Agency are empowered to grant licensing rights pursuant to the provisions of that Act. Mining company representatives often offer gifts to chiefs to acquire mining rights in their Chiefdoms—as tradition dictates. But offering such gifts to ministry officials would be an unlawful bribe under Sierra Leone’s anticorruption laws. More broadly, in many African societies—like most societies the world over—the traditional practice is to favor one’s family. This traditional kinship preference can create serious tensions for public servants: the expectations of their families and communities may conflict with ethical and professional rules that embrace universalism and prohibit nepotism as a form of corruption. Continue reading →

Fiddling While the Rainforest Burns: The KPK, Indonesia’s Natural Resources Sector, and Global Environmental Crisis

Posted on by
Reply

Indonesia, the world’s fourth most-populated country and third largest democracy, has attracted global media attention for its fight against high-level political corruption. Indonesia’s Corruption Eradication Commission (the Komisi Pemberantasan Korupsi, or KPK), which was established in 2004, has successfully prosecuted officials across the political spectrum and at levels ranging from corrupt city council members to the well-connected relatives of high-ranking central government officials. Yet despite the KPK’s many successes, corruption remains pervasive in resource extraction industries in Indonesia’s outlying islands. This entrenched corruption is a matter of concern not just for Indonesia but for the whole world, because corruption in this sector could kneecap efforts to control greenhouse gas emissions and could threaten the global transition to a green economy. The two sectors where this threat is most serious are nickel ore mining and palm oil farming:

Continue reading →

Does Corruption Flourish in a “Culture of Corruption”?

Posted on by
Reply

A common intuition about corruption is that individuals are more likely to engage in corruption when they witness others committing corrupt acts without facing serious consequences—in other words, a “culture of corruption” can be self-perpetuating (see here and here), and the perception or belief that corruption is widespread can itself be a cause of corruption. While compelling, this intuition has not been subjected to much empirical scrutiny. While there does seem to be some evidence of an association between individuals’ perceptions of the prevalence of domestic corruption and those individuals’ inclination to act corruptly, the research on this topic is relatively thin.

In a recent paper, a group of academics (Israel Waismel-Manor, Patricia Moy, Rico Neumann, and Moran Shechnick) weighed in, presenting the results of a controlled lab experiment that sought to assess whether news about corruption by public officials affected individuals’ incentives to behave dishonestly. The study was conducted in Israel, and participants were required first to watch a short television news segment. The treatment group’s segment revolved around an Israeli mayor suspected of certain corrupt acts, while the control group’s segment was unrelated to corruption. The participants were also given a short quiz about the segment they’d seen, and half of the participants in each group were offered a monetary reward if they answered all the questions correctly; they were told “to answer all questions from memory” and not look anything up on the internet. However, unbeknownst to the participants, one of the questions could not be answered without doing additional searches, so the researchers could use the answer to this question to identify those participants who cheated on the test. The real goal of the study (of which participants were not aware) was to see whether exposure to the corruption news story (alone or in combination with the financial incentive) affected participants’ likelihood of cheating.

Unsurprisingly, participants who were offered money for answering all questions correctly cheated far more often, regardless of which news story they watched. The study’s authors seem to have expected that those participants who watched the corruption-related story would also cheat more (holding constant whether they had financial incentives to answer questions correctly). But this did not occur: Participants who watched the news segment involving a mayor suspected of corruption did not cheat in statistically significantly higher rates than those who watched the other, unrelated-to-corruption segment. The researchers suggested that perhaps the reason was that Israelis had been inundated with so much news about official corruption around the time of the experiment (which took place in 2019), particularly in connection with the investigation and prosecution of Prime Minister Benjamin Netanyahu and other senior politicians (see here, here, and here), that the marginal impact of exposure to additional news about corruption, in the form of this one story, would not have much impact.

While that explanation is plausible, I have some other concerns about the research’s design and methodology, which make me question whether this experiment was in fact a good way to assess the “culture of corruption” hypothesis.

Continue reading →

Anticorruption Protests in Central and Eastern Europe: What They Do and How They Can Do More

Posted on by
Reply

The beginning of 2024 was a period of unrest for several Central and Eastern European (CEE) countries. In Slovakia, a series of protests erupted over Prime Minister Robert Fico’s plan to weaken the country’s anticorruption infrastructure. Meanwhile, in Albania, demonstrators took to the streets alleging corruption in the cabinet, demanding investigations, seeking the end of retaliatory investigations against opposition figures, and pushing for the ouster of corrupt officials. And journalists in Croatia turned out in masses to protest a whistleblowing law that would make the investigation of misconduct more difficult.

These aren’t the first anticorruption protests in CEE, and they won’t be the last. Over the past decade, citizens in CEE countries have become much more attuned to the problem of corruption and to their governments’ failure to do much about it. The result has been numerous episodes of citizen-based anticorruption movements. But while such movements have great potential for spurring meaningful change, many have proved ineffective. Why is this? Examining past episodes—for example, in Bulgaria, Slovakia, and the Balkans—may help us better understand the conditions under which anticorruption demonstrations succeed. These past episodes offer a few key lessons:

Continue reading →