Category Archives: Commentary

Corruption and Federal Pensions: A Case for Rewriting the Hiss Act

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David Lee, an employee of the Department of Homeland Security, was tasked with investigating a foreign businessman accused of sex trafficking.  Instead of doing his job, however, he did something very different: He solicited and received $13,000 in bribes to report that that the foreign in question was not involved in criminal activity.  This case is not that unusual. In the last ten years, according to a report by the New York Times, immigration enforcement officials have taken over $5 million in bribes. They’ve sold green cards, ignored illegal activity, and even given information to the very drug cartels they are tasked with combating.

Shockingly, however, even after these officials are fired, they remain eligible for federal pensions. This is not unusual, but rather typical: most federal employees convicted of bribery remain eligible for their government pensions.  This was not always the case: The original 1954 version of a statute called the Hiss Act (named for Alger Hiss, a State Department employee who was convicted of passing state secrets to a communist agent) prohibited the payment of a federal pension to a former federal employee who had been convicted of federal law offenses related to bribery and graft, conflict of interest, disloyalty, national defense and national security, and more generally to the exercise of one’s “authority, influence, power, or privileges as an officer or employee of the Government.” In 1961, however, Congress amended the law to prohibit the payment of pensions only for convictions for serious national security-related offenses. The reason for the change was the view that the original version of the Hiss Act went too far, leaving former federal officials (who had already been punished with termination, fines, and imprisonment), as well as their innocent spouses and children, facing the possibility of destitution. The additional punishment supposedly did not fit the crime, unless the crime directly concerned the national security of the United States.

The impulse not to over-punish is commendable, but the 1961 amendment to the Hiss Act was an overcorrection. The law should be amended to find a middle ground between the 1954 and 1961 versions. The federal government should have the authority to at least limit, and occasionally bar, pensions to certain public officials who have been convicted of a corruption-related offenses such as bribery and extortion. The case for doing so is as follows:

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The Obiang Trial: Lessons from a Decade-long Legal Battle

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The trial of Equatorial Guinean Vice President Teodorin Nguema Obiang before a French court for what is in effect kleptocracy is by any measure a giant step forward in the fight against grand corruption.  Indeed, it is such a significant milestone that GAB has, thanks to the Open Society Justice Initiative’s Shirley Pouget and Ken Hurwitz, provided readers in-depth reports of how it is unfolding (here, here, here, here, here, here).

Criminal trials are the result of a long and complex process meant to protect a defendant’s rights, and frustratingly, these human rights safeguards provide wealthy defendants, no matter their guilt, with many opportunities to derail a case.  In Teodorin’s case, not only does he have apparently limitless resources to spend on lawyers to pursue every legal defense to the nth degree, but the government of Equatorial Guinea, a family enterprise run by his father, has gone to extraordinary lengths to keep Teodorin from facing justice: naming him an ambassador to try and create a defense of diplomatic immunity, claiming that property he bought is state-owned and thus immune from legal challenge, and even filing an action against the French government in the International Court of Justice.

As Shirley and Ken draft the next installment in their series, this is an opportune time to stand back and examine how these many obstacles were overcome.   How did it come to pass that a senior official of the government of Equatorial Guinea is being held accountable before a criminal court in Paris for the wholesale theft of his nation’s wealth?  And more importantly, what can be done to ensure the Obiang trial is no fluke?  That the hundreds, if not thousands, of public officials who have stolen massive amounts from the people of their countries also find themselves in court answering for their crimes.

Thankfully, a fine paper answering these questions is now available. Authored by French attorney Maude Perdriel-Vaissière, a critical actor in shepherding the Obiang case through the French legal system, it recounts how a small, dedicated band of civil society activists overcame the many legal and political obstacles to bring Obiang before the bar of justice.  Continue reading →

State-Level Anticorruption Commissions: What the U.S. Can Learn from Australia’s Model

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Australia does not currently have a dedicated national-level anticorruption agency (ACA), though the question of whether to create one has been on the table since 2014 (see here, here, and here). Yet Australia has plenty of experience with ACAs—at the state level. Australia’s first, and still most prominent, state-level ACA was the Independent Commission Against Corruption (ICAC) in New South Wales (the state including financial capital Sydney), which will mark its thirtieth anniversary next year. The ICAC, led by an independent commissioner, has independent investigatory powers over almost all state-level government officials and is charged with both exposing public sector corruption and educating the public about corruption. Queensland and Western Australia followed suit with their Corruption and Crime Commissions, established in their current forms in 2001 and 2003 respectively. The states of Victoria, South Australia, and tiny Tasmania all instituted independent agencies in recent years as well. Even the 250,000-strong Northern Territory resolved to start its own ACA after several high-profile scandals, and the Australian Capital Territory (the Canberra-sized equivalent of Washington, DC) has discussed creating its own anticorruption body. The permeation of Australia with state-level agencies is essentially complete.

Thus, in true laboratories-of-democracy fashion, Australian states have tried, solidified, and publicized the model of creating an independent investigatory group focused on the issue of corruption. Could U.S. states do the same? Easily. Should they? Yes, for at least three reasons:

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Improving Mutual Legal Assistance: Lessons from Asia

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Back in 2014, Rick called for further analysis of mutual legal assistance (MLA) processes and potential reforms that would promote responsiveness to MLA requests in anticorruption cases (and others). As a follow-up, I wanted to highlight the findings of a recent report from the Asian Development Bank (ADB)/Organization for Economic Cooperation and Development (OECD) Anti-Corruption Initiative for Asia and the Pacific. The report, entitled “Mutual Legal Assistance in Asia and the Pacific: Experiences in 31 Jurisdictions,” provides examples of various obstacles to effective MLA, which I have sorted into two general categories: legal and practical. Continue reading →

Argentina’s Draft Bill on Corporate Criminal Liability for Bribery: Some Striking Innovations on Sanctions

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A few weeks ago, I had the good fortune to be able to attend an event at the University of Buenos Aires (co-sponsored by the New York University Law School), that focused, among other things, on a new draft bill, currently under consideration in the Argentinian legislature, that would impose criminal liability on corporations and other legal persons for corruption-related offenses. I’m largely unfamiliar with Argentina’s legal system, so I was very much an outside observer for this discussion, but there were a couple of things about the draft bill that struck me as interesting and worthy of attention from the wider anticorruption community. (Apologies for not providing a link: I’m working off a hardcopy of an unofficial English translation of the draft bill, which I can’t find on the web.)

A lot of the provisions in the bill are fairly standard, though in many respects the bill is quite aggressive. For example, Article 3 makes parent companies jointly and severally liable for sanctions imposed on their subsidiaries (without any requirement to show that the subsidiary was an agent of the parent), while Article 4 imposes successor (criminal) liability in all cases of merger, acquisition, or other corporate transformation. In both these respects, the draft Argentinian bill imposes more sweeping corporate criminal liability than does U.S. law. Also, like U.S. law, the Argentinian bill (in Article 2) would make corporations criminally liable for the actions of its officers, employees, and agents.

But what most caught my attention were the draft bill’s provisions on sanctions: Continue reading →

Corruption as a Jurisdictional Barrier in Investment Arbitration: Consequences and Solutions

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As has been explored on this blog and elsewhere, corruption is a controversial topic in investor-state arbitration disputes. First emerging as a defense by states seeking to avoid liability, multiple tribunals have refused to enforce arbitration contracts tainted by corruption (see World Duty Free v Kenya and Plama Consortium v Bulgaria). Corruption has also been used as a cause of action by investors claiming unfair treatment (see Yukos v Russian Federation and here). The unclear incentive effects of corruption in arbitration proceedings have been analyzed from different angles—whether it provides countries with perverse incentives that might encourage corruption or instead buttresses anticorruption principles and promotes accountability.

Unfortunately, less attention has been paid to the procedural step at which tribunals discuss corruption. In the past ten years, an increasing number of tribunals are evaluating evidence of corruption at the jurisdictional stage of arbitration rather than at the merits stage. Those readers who are not lawyers (and even those who are), may be wondering, “Who cares? Why does it matter if corruption is treated as a ‘jurisdictional’ issue as opposed to a ‘merits’ issue?”

Actually, it matters a lot.  Continue reading →

Planning and Zoning Board Corruption: Finding the Missing Whistleblowers

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My last post looked at the constant, pernicious corruption and conflict of interest in local land use planning decisions in the United States. Despite shocking stories and a handful of high-profile investigations and prosecutions (see, for example, here and here), little comprehensive work has been done to address the potential for corruption in planning and zoning decisions, even when warning signs abound. Instead, most instances of corruption in land use planning decisions remain undetected, perhaps because the seemingly small stakes make it unlikely that external investigators will scrutinize these decisions too closely.

Yet potential whistleblowers surely see or suspect bribery, conflicted dealings, or other malfeasance in land use planning. Reforms should make it easier for those individuals to come forward, as well as make it more likely that their reports will lead to action. Ideally, these measures would recognize the particular characteristics of land use decisions, such as the challenges posed by the large numbers of local officials involved in planning and zoning. Here are a few suggestions for how to encourage simpler, more consistent reporting:

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China’s Anticorruption Campaign Adds Popular Culture Entertainment Into its Toolbox

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A TV series called In the Name of the People, featuring China’s current fight against high-level government corruption, has gone viral in China. Dubbed the Chinese House of Cards, the show reached an 8% TV viewing rate (the highest in 12 years) and by the end of April 2017, had been watched over 20 billion times across major Chinese online video platforms. The show is widely acclaimed for its quality production, intriguing storylines, and, more importantly, for its bold, vivid depiction of the ugly side of China’s political and social reality. Shows like this are not merely entertainment: popular culture, including TV shows, can be an important tool in the fight against corruption.

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In Accordance with a Comprehensive Scam: Bribery and Conflicts in U.S. Land Use Planning

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Corruption in land used decisions is widespread. Quid pro quo exchanges are relatively common, as are conflicts of interest, especially in small communities. In 2011, Transparency International released a report on land use that found “[a]round the world more than one out of 10 people reported paying bribes when dealing with ordinary land issues.” The United States is far from immune. Consider just a handful of recent examples: The City of Boston has asked for help from the FBI in its approach to corruption, particularly corruption in zoning boards. In 2008, the Chicago Tribune ran an eight-part series on corruption in Chicago real estate decisions. An earlier case revealed that an Indianapolis city official with sway over the zoning board regularly asking for bribes. The former mayor of Charlotte resigned after bribery accusations, including taking cash for influencing zoning decisions. And in a recent review, Minneapolis found that conflicts of interest are common in its planning and zoning boards.

What makes land use planners so susceptible to corruption, even in countries, like the United States, that are not usually thought of as suffering from endemic bribery? Part of the problem concerns the institutional set-up. In a typical U.S. community, there will often be a Planning Commission, responsible for approval of individual site development or demolition plans, oversight of subdivisions, and review of the area’s Master Plan for zoning and development. (For some insight into what these meetings might look like, the City of Syracuse, New York makes its applications and minutes available online.) The community (city or county) would usually also have a Zoning Board of Appeals or Zoning Board of Adjustment—tasked with creating a Master Plan, reviewing zoning ordinance changes, and providing special permits or variances from zoning requirements.

The risk factors associated with this approach to land-use decisionmaking include excessive autonomy, complexity, and delay:

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Incorporating Corruption and Accountability into Public Health Education

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Corruption is a serious threat to achieving global health objectives. As Professor Taryn Vian pointed out, corruption increases the cost and decreases the availability of medicines and medical equipment, creates barriers to health services, enables the spread of fake medicines. As I argued in a previous post, corruption also undermines the trust in government that is essential to dealing with public health emergencies. The importance of training and educating public health professionals on how to identify and understand problems of corruption in health, along with how to incorporate anticorruption strategies into programs and institutions, would therefore seem quite obvious. Yet the core public health curriculum at leading graduate institutions generally does not include a serious discussion of corruption and its impacts on public health. There are exceptions–Professor Vian, for example, teaches on this topic in her courses at Boston University’s School of Public Health—but for the most part corruption appears to be absent from public health course catalogs.

It’s not clear why this is the case. It may be that there is a shortage of professors who are knowledgeable or willing to teach on the topic, or perhaps most graduate students do not see the value in enrolling in such a course, especially if they have not witnessed corruption firsthand. Whatever the reasons, the end result is that students graduate from public health programs with little knowledge about the causes and consequences of corruption in the health sector, the reasons why good governance is so important to health care systems, the best ways to prevent, detect, and report cases of corruption. This is a problem. Public health education can and should place greater emphasis on corruption (and related topics like good governance and accountability), for three main reasons: Continue reading →