The Trial of Suspected Kleptocrat Teodorin Obiang: Report on Day One

GAB is pleased to publish this account of the first day of the Obiang trial by Shirley Pouget, a French lawyer observing the proceedings on behalf of the Open Society Justice Initiative

The worldwide fight against grand corruption took a giant stride forward Monday June 19 with First Vice President of Equatorial Guinea Teodoro Nguema Obiang Mangue standing trial for corruptly diverting millions from the national treasury.  Known to cronies as Teodorin, the case appears to be the first ever where a high-level official, while in office, is called to account for grand corruption before a foreign court. The precedent setting case, the culmination of a decade of determined struggle by French and Equatorial Guinean civil society, is being heard before the Tribunal Correctionnel in Paris.

As the trial opened, the courtroom overflowed with journalists, civil society representatives, and Equatorial Guineans in exile: we were all there to see if indeed a powerful politician whose corrupt activities have left his nation in penury would be held to account.  The three judges hearing the case, all women, took their seats at 1:30. The presiding judge opened by recalling that the accused was before the court on charges of misappropriation of public funds, complicity in the misappropriation of public funds, misuse of corporate assets, complicity in the misuse of corporate assets, and the concealment of each of these offences.  She explained that the court had jurisdiction because each offense, or an element of each, was committed in France.  She then expressed concern that defense counsel had only provided answers to the charges a few days before the trial began.

The defense launched into a series of objections to the commencement of the trial that consumed the entire afternoon hearing.  Teodorin’s high-priced lawyers argued that 1) the case should be stayed pending a final decision by the International Court of Justice in a case between France and Equatorial Guinea, 2) the magistrates’ decision to refer the accused for trial was illegal, and 3) a coalition of Equatorial Guineans should not be permitted to participate in the case as a civil party.  They also raised an unexpected claim based on a highly technical reading of the charging document.    Continue reading

Guest Post: The IOC Is Lagging Behind In Fighting Corruption in Sports Mega Events

Professor Thomas Kruessman, of the Johan Skytte Institute of Political Studies at the University of Tartu in Estonia, contributes today’s guest post:

Recently Jimmy McEntee criticized the anticorruption provisions that the International Olympic Committee (IOC) had added into its standard Host Country Contract (HCC), arguing that the revised HCC language fails to represent genuine progress in fighting Olympic corruption. I might quibble with a few of his arguments, but McEntee’s larger point is essentially correct. For example, while I think McEntee erred as a technical legal matter in asserting that the HCC contains no legal enforcement mechanism, he’s right that as a practical matter, the IOC may not be able to credibly threaten to enforce the anticorruption provisions against a host city, or host National Olympic Committee (NOC) that violates them. Although the IOC is entitled to terminate the HCC and to withdraw the Games from the Host City if there is a violation of or failure to perform “any material obligation pursuant to the HCC or under any applicable law,” this threat is not very credible, given the high stakes involved for the IOC, the demanding timeline on which Olympic Games are prepared, and the fact that termination may invite burdensome and uncertain litigation over what counts as a “material obligation.” For similar reasons, the less extreme remedy of retaining or withholding funds from the host city or NOC or Host National Olympic Committee (NOC) is also not very appealing, and therefore not very credible, in light of the IOC’s strong interest in making the Olympic Games a success and the fact that withholding funds which would weaken the local hosts.

But perhaps McEntee’s most important point—and the one I want to explore further here—is his argument that the HCC’s anticorruption languate is excessively vague. He argues that “a meaningful anticorruption provision – one consistent with best practices for such provisions – would need to include language that requires the host city to ensure that its agents, contractors, suppliers, and consultants do not participate in any corrupt practice” (emphasis in the original). It is here, especially with respect to the failure to deal clearly and adequately with third-party corruption, where the revised HCC lags behind most, and where comparison with another international sporting association’s approach to the same issue—the Union of European Football Associations (UEFA) Tournament Requirements for the EURO 2024 tournament—is most enlightening. Continue reading

Guest Post: Turning Big Data Into a Useful Anticorruption Tool in Africa

GAB is delighted to welcome back Dr. Elizabeth Dávid-Barrett of the University of Sussex, who contributes today’s guest post:

Many anticorruption advocates are excited about the prospects that “big data” will help detect and deter graft and other forms of malfeasance. As part of a project in this vein, titled Curbing Corruption in Development Aid-Funded Procurement, Mihály Fazekas, Olli Hellmann, and I have collected contract-level data on how aid money from three major donors is spent through national procurement systems; our dataset comprises more than half a million contracts and stretching back almost 20 years. But good data alone isn’t enough. To be useful, there must be a group of interested and informed users, who have both the tools and the skills to analyse the data to uncover misconduct, and then lobby governments and donors to listen to and act on the findings. The analysis of big datasets to find evidence of corruption – for example, the method developed by Mihály Fazekas to identify “red flags” of corruption risks in procurement contract data—requires statistical skills and software, both of which are in short supply in many parts of the developing world, such as sub-Saharan Africa.

Yet some ambitious recent initiatives are trying to address this problem. Lately I’ve had the privilege to be involved in one such initiative, led by Oxford mathematician Balázs Szendrői, that helps empower a group of young African mathematicians to analyse “big data” on public corruption. Continue reading

Guest Post: Trump’s Pledge To Enforce the Global Magnitsky Act–A Skeptical View

Ilya Zaslavskiy, a research expert with the Free Russia Foundation, contributes today’s guest post:

Earlier this month the White House sent a letter to Congress pledging a commitment to the “robust and thorough enforcement” of the 2016 Global Magnitsky Act (GMA). The GMA, which grew out of a similar 2012 law that focused only on Russia, allows the executive branch to impose certain sanctions—including visa bans and freezing of U.S. assets—on any foreign citizen who commits gross human rights violations or who retaliates against whistleblowers who expose corruption. After Trump won the election, many feared that his administration would shelve meaningful enforcement of the GMA. (After all, the Obama Administration had also been reluctant to implement the original Magnitsky Act aggressively, and did so only under pressure from Congress.) In light of those low expectations, the White House’s statement was taken by many as an encouraging sign.

But many activists and NGOs fighting corruption, in Putin’s Russia and elsewhere, remain rightly skeptical. After all, Trump’s praise and upbeat rhetoric about corrupt authoritarian leaders—not only Putin, but President Erdogan or Turkey and President Duterte of the Philippines—naturally call into question the Administration’s seriousness about aggressive GMA enforcement. Consider further the fact that, despite the overwhelming evidence coming out of Chechnya that its president Ramzan Kadyrov has authorized massive abuses against the LGBT community and opened what is amounting to prisons for gays, there are no signs that the Trump Administration is considering adding Kadyrov to any open sanctions lists, despite not only recent events, but his long track record of corruption and human rights abuses.

Moreover, the White House’s statement in support of the GMA might be an attempt to create the appearance of taking a firm stand against corruption and human rights abuses, to diminish political momentum for more consequential actions. Specifically in regard to Russia, the latest statement about the GMA should also be understood in the context of the broader scandal regarding the Trump team’s ties to Russia. This scandal has, if anything, intensified anti-Russian sentiment in Congress. Not only have leading Senators and Representatives come out in strong support of sustaining existing sanctions against Russia, but there are now a half-dozen initiatives under consideration in Congress that would both codify and expand these sanctions. In such context, it might actually be useful to Trump (and arguably his Russian friends) to appear to be taking firm measures against Russia and other kleptocrats, while resisting adoption or implementation of more meaningful responses. The recent White House statement pledging robust enforcement of the GMA fits that narrative. After all, rhetoric aside, neither the original Magnitsky Act nor the GMA create more than a small headache for Trump and Russians. Only few really high level names have been sanctioned under those initiatives. Financial sanctions (particularly restrictions on long-term loans) are what matters for the Kremlin most. Indeed, Russian leadership might even be happy to have the Magnitsky laws in place if those restrictions are relaxed.

 

Guest Post: A Pending Federal Case Could–and Should–Limit the FCPA’s Extraterritorial Reach

GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

Can the U.S. government prosecute an individual for Foreign Corrupt Practices Act (FCPA) violations if that individual is not a U.S. citizen or resident, and committed no unlawful act in U.S. territory? An important case posing that question is now before a U.S. appeals court. The decision may have important implications on the territorial reach of the FCPA.

The facts and relevant statutory provisions are straightforward, although the analysis is not. The defendant, Lawrence Hoskins, is a British national who at all relevant times was an officer of a British subsidiary of French manufacturing giant Alstom. Alstom and several of its subsidiaries were investigated by the US Department of Justice for alleged illicit payments in Indonesia, and ultimately reached a global corporate settlement that included several corporate guilty pleas and Deferred Prosecution Agreements, pursuant to which the corporate entities paid US fines of over US$750 million. The DOJ also pursued several individuals, including Mr. Hoskins, who was ultimately arrested when he arrived in the United States on vacation. His attorneys moved to dismiss the indictment on the ground that the US prosecutor lacked power to prosecute him. After energetic procedural activity by both sides, the District Court granted his motion in significant part. Unusually, the prosecutor appealed, and oral argument was heard on March 2, 2017.

Continue reading

Guest Post: Did the London Summit Make a Difference to Open Contracting? Does Open Contracting Make a Difference for Tackling Procurement Corruption?

Gavin Hayman, Executive Director of the Open Contracting Partnership, provides today’s guest post:

Anyone remember the London Anti-Corruption Summit last May? It seems like a long, long time ago now, but it was a big deal for us when 14 countries stepped forward at the Summit to implement the Open Contracting Data Standard to open, share, and track all data and documents coming from the billions of dollars that they are spending on public contracting and procurement each year.

One year later, how well have these countries have followed through on their commitments, and how much of a difference open contracting has made in combating corruption in public procurement? After all, it is government’s number one corruption risk; it’s where money, opacity, and government discretion collide.

The news is generally positive: the Summit commitments appear to have promoted genuine progress toward more open contracting in many of those countries, and the preliminary evidence indicates that such moves help reduce procurement corruption. Continue reading

Guest Post: An Exercise in Underachievement–The UK’s Half-Hearted Half-Measures To Exclude Corrupt Bidders from Public Procurement

GAB is delighted to welcome back Susan Hawley, policy director of Corruption Watch, to contribute today’s guest post:

A year ago, in May 2016, the UK government gathered 43 nations around the world together at the London Anti-Corruption Summit to show their commitment to fighting corruption. The resulting declaration made a number of bold promises. One of the most important—though not one that grabbed a lot of headlines—was the announcement that corrupt bidders should not be allowed to bid for government contracts, and the associated pledge by the declaration’s signatories that they would commit to ensuring that information about final convictions would be made available to procurement bodies across borders. Seventeen signatories went further, making specific commitments to exclude corrupt bidders, while six countries pledged to establish a centralized database of convicted companies as a way of ensuring procurement bodies could access relevant information. (Three other countries committed to exploring that possibility.)

The London Anti-Corruption Summit was right to be ambitious about focus on this issue in its declaration. Research shows that the risk of losing business opportunities such as through debarment from public contracts ranks has a powerful deterrent effect—equal to that associated with individual executives facing imprisonment, and much greater than one-off penalties such as fines. Yet debarment of corrupt companies for public contracting is quite rare. The OECD Foreign Bribery report found that while 57% of the 427 foreign bribery cases it looked at spanning 15 years involved bribes to obtain government procurement contracts, only two resulted in debarment. Even the US which has a relatively advanced debarment regime and which debars or suspends around 5000 entities a year from public procurement, appears to debar very few for foreign bribery and corruption. And the UK does not appear to have ever excluded a company from public procurement, despite laws in place since 2006 that require companies convicted of corruption and other serious crimes to be excluded from public contracts.

Did the London Anti-Corruption Summit mark significant turning point in the UK’s approach to this issue? Having persuaded 43 countries to sign a declaration that included a commitment to exclude corrupt bidders, did the UK have its own bold new vision to implement that commitment domestically? Unfortunately, the answer is no. Continue reading