Category Archives: Guest Commentary

Guest Post: Do More Candidate-Centric Electoral Systems Help Reduce Corruption?

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Today’s guest post is from Rumilda Cañete-Straub, Josepa Miquel-Florensa, Stéphane Straub, and Karine Van der Straeten.

Although many people hope and expect that regular elections will help reduce corruption, this is not always the case: In many democracies, voters elect and reelect corrupt politicians. Why is this? Scholars have suggested that the efficacy of electoral democracy in reducing corruption depends on specific features of the electoral system, and the information available to voters. With respect to the electoral system, a common view is that electoral rules that give voters more formal control over individual candidates—such as primaries in majoritarian systems or open lists rather than closed lists in proportional representation (PR) systems—are more effective in reducing corruption. With respect to information, the conventional wisdom holds that providing voters with more information should help them identify corrupt politicians, thus increasing the chances that those politicians will be punished at the ballot box.

In our recent article, we present findings that challenge both aspects of this conventional wisdom. We focus on the comparison between closed-list PR system (in which voters vote only for a party, with the individual candidates elected depending on their position on the party’s list) and an open-list PR system in which voters can vote for any number of candidates on the list, without any constraint. Continue reading →

Guest Post: Corruption on the Gualcarque River — Will Its Victims Have their Day in Court?

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GAB’ s latest post on compensating victims of corruption is below. Authored by Naomi Roht-Arriaza, Distinguished Professor of Law at UC Hastings Law and President of the Board of the Due Process of Law Foundation, it recounts the harm those living along the Gualcarque river in Western Honduras suffered from the corrupt award of a contract for a hydroelectric dam and the community’s efforts to recover damages for their injuries.  While a trial court has recognized the community is entitled to relief as corruption victims, on specious reasoning an appellate court denied them victim status.  As Professor Roht-Arriaza explains, the case is now before the Constitutional Chamber of the Honduran Supreme Court. It can either reverse the appellate court decision or affirm its denial of an effective remedy for the enormous harm corruption has wreaked on the community.     Leer en español.

Who are the victims of grand corruption?  The answer used to be “no one” or, at best, the state itself.  But especially with the advent of a human rights approach to corruption in the Inter-American and United Nations human rights systems, that perception is slowly changing.  Grand corruption affects the full range of human rights of individuals and groups.  When rights are violated, states have an obligation under international law to investigate, prosecute, and provide redress.  The UN Convention Against Corruption mirrors this requirement in Article 35. 

And yet national courts have been reluctant to recognize the rights of those who have suffered damage — either to participate in proceedings involving grand corruption or to recognize them as victims due compensation.  In part, the reluctance stems from difficulties legal doctrine creates for establishing the causal link between a specific act of corruption and harm to a specific person or group.   To create the same “justice cascade” as in human rights cases, corruption victims should be able to seek relief through either a criminal or civil action and as either individuals or communities or through representative organizations.  Where a state prosecutor has brought charges, victims should be able, as they can in  France and Spain, to be full participants in the prosecution.      

The corruption in the bidding, contracting and construction of the Agua Zarca hydroelectric dam on the Gualcarque River in Honduras would seem to be the poster child for victims’ compensation.  In an atmosphere of widespread corruption from the top down, a well-known elite family won a contract to generate and sell electricity to the state: without being on the list of approved bidders, without a valid environmental impact statement, and with a design apparently aimed at maximizing the haul from government coffers. 

Continue reading →

Guest Post: Reforming Sudan’s Asset Declaration System

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Today’s guest post is from Haytham Karar, an independent international development consultant based in Khartoum, Sudan.

The pro-democratic revolution in Sudan has ended a long-standing autocracy. However, public sector corruption, which remains widespread, threatens Sudan’s emerging democracy. The culture of using public office for private gain remains deeply entrenched, and the line between public and private roles is not clearly drawn or widely respected. Not only do the same people cycle back and forth through the “revolving door” between public office and the private sector, but many government officials own stakes in, or are otherwise directly connected with, private companies even while serving in government. In fact, many government officials continue to operate private enterprises while in office, even though the Constitution explicitly prohibits this practice. This blurring of public and private roles, and the associated conflicts of interest that arise, have contributed to the corruption and cronyism that continue to pervade the system.

One of the tools that is supposed to help combat these problems is the asset declaration system for public officials. While an asset declaration system is not by itself sufficient, a well-designed and operational asset declaration system is a crucial element in a larger strategy for promoting integrity and anticorruption. Unfortunately, Sudan’s asset declaration system is largely ineffective and in desperate need of reform. The current framework—which was designed under the previous government and was never implemented effectively or fairly—has a number of significant problems. Continue reading →

Guest Post: The New French Ruling on Successor Liability Gives French Prosecutors New Leverage to Fight Corruption and Other Corporate Crime

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For today’s guest post, GAB is delighted to welcome back Frederick Davis, a member of the New York and Paris Bars and a Lecturer in Law at Columbia Law School:

Commentators have aptly observed that US prosecutions of firms for foreign bribery and similar crimes has developed into a “US model of corporate crime deterrence,” a model that is based on aggressive pursuit of corporate entities to induce them to cooperate by “detecting, reporting, and helping prove” criminal acts by individuals in return for a negotiated resolution of the criminal charges against the corporation itself, one that avoids a corporate criminal conviction.

Earlier posts on this blog by myself and by others have noted the absence of this model in France, and the relative ineffectiveness of French prosecutors in pursuing corruption and other forms of corporate crime, in significant part because of the difficulty of proving corporate criminal responsibility under French law. As I noted last year, though, efforts by the Legislature to provide new investigative and prosecutorial tools, by the National Financial Prosecutor to use them, and by the courts in clarifying the principles of corporate criminal responsibility have produced encouraging results. French prosecutors have pursued, and French courts have convicted, both French and non-French corporations for serious crimes. On November 25, 2020, the French Supreme Court (Cour de Cassation) took an important additional step by ruling, for the first time, that in an acquisition situation the successor corporation will generally be criminally responsible for acts committed by the acquired company. The decision closes a significant gap in French corporate criminal deterrence, and will have an immediate and positive impact on corporate criminal investigations in France. Continue reading →

Guest Post: The U.S. Just Created a Public Beneficial Ownership Registry for a Subset of Companies

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Today’s guest post is from Neil Gordon, a Senior Researcher at the Project On Government Oversight (POGO).

Companies with anonymous ownership structures are a serious global problem. Anonymous companies, as readers of this blog are likely well aware, play a significant role in facilitating grand corruption. Anonymous companies are associated with a wide range of other criminal misconduct as well. Unfortunately, the United States bears much of the blame for the proliferation of anonymous shell companies and the harm they cause. Most states make it relatively easy to set up a business without revealing the real owners—even easier than getting a library card, according to the anticorruption think tank Global Financial Integrity. That’s why it was so important that Congress finally enacted two key corporate transparency provisions as part of the fiscal year 2021 National Defense Authorization Act (NDAA).

The first provision, the Corporate Transparency Act (CTA), requires most companies to register their beneficial owners—the people who really own, control, and financially benefit from the company—with the Treasury Department’s Financial Crimes Enforcement Network. This provision received a great deal of media coverage, and rightly so. But the second key beneficial ownership transparency provision in the NDAA has received almost no attention, even though it could be a real game-changer. That second provision can be found in Section 885 of the NDAA. Section 885 requires all companies receiving federal contracts or grants over $500,000 to report their beneficial owners in the Federal Awardee Performance and Integrity Information System (FAPIIS), a database containing the misconduct and performance histories of federal contractors and grantees. Continue reading →

Guest Post: An Anticorruption Agenda for the Biden Administration

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Today’s guest post is from Lucinda A. Low and Shruti Shah, respectively Acting Chair and President of the Coalition for Integrity, a U.S. based non-governmental organization focused on fighting corruption. The opinions expressed here are those of the authors, and should not be attributed to the organization..  

The United States has a long history, across administrations of both parties, of showing leadership internationally in the fight against corruption. The passage and enforcement of the Foreign Corrupt Practices Act (FCPA) has served as an example for other countries to adopt their own transnational anti-bribery laws. Additionally, the United States has championed international anti-bribery efforts in multilateral organizations and worked to build coalitions to root out all types of corruption. For the last several years, however, U.S. has faltered. In order to reestablish the U.S. as a global leader against corruption, and to get its own house in order, the Biden Administration and the new Congress should embrace an ambitious agenda that includes the following elements: Continue reading →

Guest Post: Obstacles in Establishing Whistleblower Regimes in Small Developing Countries—From The Bahamas to Kosovo

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Today’s guest post is from Lemarque Campbell, a Policy and Legislative Development Specialist for the International Development Law Organization (IDLO), and Vlora Marmullakaj, a Senior Project Officer for the Project Against Economic Crime implemented by the Council of Europe. The views and analysis expressed in this post are those of the authors and are not attributable to the IDLO or the Council of Europe.

Encouraging whistleblowing is one of the most important tools for detecting and deterring wrongdoing in public sector organizations. Especially in small developing countries that lack strong institutions, insiders may be the best or only source of accurate and reliable information about malfeasance. Moreover, whistleblowers not only help expose corruption, but they also play a significant role in providing information that could lead to the recovery of assets derived from corrupt practices. And in this time of global pandemic, when opportunities for corruption abound and the normal oversight and accountability processes are weakened, whistleblowers are even more crucial—a fact emphasized by, among others, GRECO and Transparency International.

Unfortunately, many developing countries lack an adequate system for encouraging and protecting whistleblowers. Even those countries that have substantially overhauled their whistleblower laws continue to face significant problems of implementation. Considering the recent experience of the Bahamas and Kosovo—two very different small developing countries that have recently overhauled their whistleblower laws—helps illustrate some of the obstacles to achieving effective reforms. Continue reading →

Guest Post: Corruption in Covid-19 Vaccine Distribution–Early Lessons from Brazil

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Today’s guest post is from Guilherme France, a legislative assistant in the Brazilian Senate

The urgency of halting the Covid-19 pandemic, combined with the limited supply of vaccines, has increased the challenges of distributing the vaccine quickly but fairly. As others have pointed out, including on this blog, there are significant risks of corruption in the vaccine distribution process. Brazil provides a troubling illustration of this problem, with instances of corruption or other improprieties related to vaccine distribution having already sparked investigations into mayors and other local officials. For example, there have been complaints that in Manaus, a Covid-19 epicenter, relatives of a local businessman in were fraudulently appointed as employees in health clinics so that they would qualify for early vaccination. And this is but one of several cases where mayors and other local officials allegedly helped their relatives or close associates cut in the line. There have also been reported attempts to pay bribes to nurses for early vaccine access.

There has been similar line-cutting behavior on a grander scale, with various groups, such as prosecutors and judicial authorities, using their political influence and leverage to attempt (without success) to get priority status for receiving the vaccine, ahead of those, like health care workers and the elderly, who need it more urgently. On other occasions, the government acceded to the use of the “priority status” for vaccine distribution as a bargaining chip. In the midst of strike negotiations, it agreed to place truck drivers and other transportation workers ahead of the general population in the vaccination line.

This behavior, while reprehensible, is understandable. Given how hard Brazil has been hit by Covid-19, access to the vaccine is a life and death matter, and the temptation to cut the line, for oneself or a loved one, is just too great. This is why increased control and transparency for vaccine distribution should be a priority for governments at all levels. Continue reading →

Guest Post: Guidelines for Settling Foreign Bribery Cases

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The OECD Antibribery Convention requires parties to impose “effective, proportionate, and dissuasive criminal penalties” on those found guilty of bribing an official of another nation. As GAB readers know, most prosecutions for foreign bribery end not with a trial but with a settlement (here). GAB readers also know that a vigorous debate has ensued on this blog (here and here) and elsewhere (here, here and here) as to whether these settlements have met the “effective, proportionate, and dissuasive” test. In response, and with the assistance of the private bar, the OECD has been developing guidelines to help prosecutors and defense counsel ensure that future settlements do.

 GAB is delighted to welcome this guest post by Peter Solmssen, a leader in this effort from the private bar, in which he describes where the guidelines project stands.  As General Counsel of Siemens AG, Mr. Solmssen negotiated its settlement of foreign bribery cases with, among others, the Federal Republic of German and the United States.  He now chairs the Non-trial Resolutions of Bribery Cases Subcommittee of the International Bar Association (IBA).

Work on international guidelines for the settlement of foreign bribery cases is accelerating. The IBA made its latest submission to the OECD Working Group on Bribery January 22. It there urged the Working Group to move quickly with its anticipated international guidelines on settling transnational bribery cases and to resolve those aspects of settlements that remain contentious. As described here, the IBA has been pushing the OECD to issue guidelines that will encourage prosecutors to cooperate internationally and programmatically to increase the use of settlements, or non-trial resolutions as they are formally referred to internationally.

Continue reading →

Guest Post: Trump’s Pardons and Putin’s Palace Show Why Biden Must Tackle Corruption at Home and Abroad

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Today’s guest post is from Joe Powell, the Deputy Chief Executive Officer for the Open Government Partnership.

The corruption continued to the end. A cast of convicted fraudsters, tax dodgers, and money launderers littered President Trump’s final pardon list. One clemency went to Elliott Broidy, a former top fundraiser for Mr. Trump who had been implicated in illegal lobbying in connection with Malaysia’s multi-billion dollar 1MDB embezzlement scandal. Trump’s final official act as President, taken minutes before the official transfer of power, was to pardon the tax evading ex-husband of one his favorite Fox News hosts, Jeanine Pirro.

None of this was remotely surprising after four years in which ethics, conflict of interest, and the rule of law did not seem to apply to the executive branch of the U.S. government. Contrast this with the extraordinary act of bravery from Russian opposition leader Alexey Navalny, who despite being jailed on his return to Moscow after his near-fatal poisoning, released a viral documentary last week about the construction of President Putin’s palace on the Black Sea. The film, which within days had racked up nearly 100 million views, details the corruption, bribery, and opaque corporate structures used to fund what Navalny claims is the world’s most expensive real estate project, with an estimated price tag of at least $1.4 billion. The funds come from Putin’s oligarch friends who dominate the top positions in many of Russia’s biggest companies, and drain state resources that could improve the lives of ordinary Russians. A single gold toilet brush and toilet paper holder, purchased for one of Putin’s wineries near the palace, cost more than the average annual state pension in Russia. No wonder Putin is so desperate to silence Navalny.

What ties Trump’s pardons and Putin’s palace together is the insidious effect of corruption on democracy. Globally, corruption has been one of the main drivers of 14 years of consecutive decline in civil and political liberties around the world. This democratic recession has affected long-standing and emerging democracies alike, and has spurred street protests and civil society campaigns in many countries. Hungary is a textbook example. Prime Minister Orbán has used state funds for patronage, ensuring that only close supporters receive high value government contracts, and threatening to veto the European Union budget over any checks on his power. Throughout the world, dark money has increasingly fueled online disinformation and a decline in press freedom, which has made accountability harder to achieve.

To turn the tide on this democratic backsliding, a major global effort to combat corruption is needed. President Biden is well placed to help lead the charge. Continue reading →