Category Archives: Guest Commentary

Guest Post: Living in a Kleptocracy–What to Expect Under President Trump

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Bonnie J. Palifka, Assistant Professor of Economics at Mexico’s Tecnológico de Monterrey (ITESM) contributes today’s guest post:

The news regarding President Donald Trump appointments and nominations, and the increase in foreign governments’ business at Trump properties, has caused considerable concern regarding possible conflicts of interest, nepotism, insider trading, and other types of grand corruption. Many are worried about what this means—if President Trump’s tendencies toward crony capitalism, or quasi-kleptocracy, are as serious as his critics fear, what can we expect will happen over the next four or eight years?

While grand corruption among the political elite may be new for US citizens, this challenge is all too familiar in many other parts of the world. As a long-time resident of Mexico and corruption scholar, I have some insight regarding life in a relatively corrupt environment, which might be relevant to what the US is about to face: Continue reading →

Guest Post: Using Animated Videos to Change Children’s Attitude Toward Corruption

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Robert Clark, Legal Research Manager at TRACE International, contributes today’s guest post:

Although corruption is a broadly entrenched social ill, each corrupt act is a decision made in its own specific place and time. To address the global problem of corruption, we need to focus our attention locally and join together in our individual acts of resistance. That dynamic is concisely expressed in the phrase “United Against Corruption”—the official slogan of 2016’s International Anti-Corruption Day (officially observed this past December 9th). The associated “United Against Corruption” campaign focuses on corruption as an impediment to development, and offers a wide range of suggestions for what governments, media, businesses, and individuals can do to participate in the ongoing struggle. The campaign’s website includes a series of powerful videos illustrating the dire effects of corruption.

Children are often the ones that suffer the effects of corruption, but they can also play a key role in changing a society’s tolerance of it. The United Against Corruption campaign encourages individuals to “[e]ngage the youth of your country about what ethical behavior is, what corruption is and how to fight it.” In that spirit, TRACE International has created a series of short animated stories featuring the “Bribe Busters”—an elite young team of corruption fighters who fight corruption around the world with the help of a time travel teleportation super-computer. Their mission: to ensure that children everywhere have a fair future. Each episode focuses on a different aspect of corruption, and shows the viewer that although the world is full of unfairness, things don’t have to be that way. (For example, in episode two, the team is able to convince a government safety inspector not to look the other way at building code violations by showing him—with the help of their time-traveling computer friend—the devastation of a consequent building collapse. In another episode, the team helps an underserved remote village organize to get rid of a kleptocrat whose greed has prevented an important road project from being completed.) These videos, which have already been viewed in 44 different countries, are available on YouTube in English, French, and Spanish, with Arabic coming soon. Additionally, comic versions of the episodes (in PDF form) can be downloaded here.

TRACE is working with anti-corruption networks around the world–including Anti-Corruption International (ACI), the Economic and Financial Crimes commission (EFCC) / Creative Youth Initiative against Corruption, the Global Youth Anti-Corruption Network (GYAC), and ZERO Tolerance-Wise Youth Trust –to distribute the videos. If you are interested in distributing the Bribe Busters series in your anticorruption network, please contact us here. We hope that this series can not only help teach children about the harms of corruption (as if they didn’t already know), but also help them develop a sense that they can do something about it. We believe that’s also the basic message of the United Against Corruption campaign, and it’s one we are happy to endorse.

Guest Post: Why Disclosures in Foreign Settlements Don’t Spur Domestic Prosecutions in Argentina

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Natalia Volosin, a doctoral candidate at Yale Law School and clerk in the Asset Recovery Unit at Argentina’s Attorney General’s Office, contributes the following guest post (adapted and from an op-ed previously published in Spanish in the Argentine newspaper Infobae):

The so-called “Lavo Jato” investigation into bribery and money laundering at Brazil’s state-owned oil company Petrobras led to the biggest transnational bribery settlement in history: In December 2016, the Brazilian construction conglomerate Odebrecht reached a settlement with law enforcement authorities in the United States, Brazil, and Switzerland; in exchange for its guilty plea, Odebrecht and its affiliate Braskem agreed to pay the three countries a total of $3.5 billion, of which the first firm alone will pay $2.6 billion. (Odebrecht agreed that the total criminal penalty amounts to $4.5 billion, but the final number will be determined according to its ability to pay, though it will be no less than $2.6 billion.) According to the agreement, Brazil will get 80 per cent of the penalty, while the United States and Switzerland will get 10 per cent each.

Some hope that the Odebrecht settlement will provide a boost to anticorruption investigations in other countries. After all, in the settlement documents, the firm acknowledged to having made illegal payments worth $788 million between 2001 and 2016, not only in Brazil, but in a dozen countries including Angola, Argentina, Colombia, Mexico, and Venezuela. In Argentina specifically, Odebrecht admitted that between 2007 and 2014, in three separate infrastructure projects, it paid intermediaries a total of $35 million knowing that they would be partially transferred to government officials. These criminal practices earned the company a $278 million benefit—a return on “investment” of over 694% (the highest among all the recipient countries). Will these revelations have significant consequences for the prosecution of corruption cases in Argentina?

The answer is probably no, at least not in the short term. Continue reading →

Guest Post: The US and Afghanistan Need a New, Long-Term Anticorruption Strategy

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Ahmad Shah Katawazai, Defense Liaison at the Embassy of Afghanistan to the United States, contributes the following guest post:

President-elect Trump has declared that he will stop American taxpayers’ money from being squandered abroad. This position poses a threat to a continued US presence in Afghanistan, in light of Afghanistan’s endemic corruption. Retired Lt. Gen. Michael Flynn, President-Elect Trump’s pick to be National Security Advisor, has been arguing from a long time that abetting corrupt officials–“backing thugs”–would tarnish the U.S. military’s reputation. Thus Trump might threaten Afghan officials that the US will cut off foreign aid if the Afghan government fails to crack down on corruption.

The U.S.-led coalition mission in Afghanistan laid the foundations for systemic corruption right from the start of the war in 2001. The U.S. provided millions of dollars in cash to the so-called warlords, as well as opium and arms smugglers. These warlords and criminals needed to protect themselves, and they found that the best way to do so was to secure high-level governmental positions. It is these people who are mainly responsible for running the mafia-style corruption machine in Afghanistan.

Yet Western policymakers neglected this problem, largely because they were focusing more on security as their top priority. What these policymakers failed to grasp was the fact that corruption could turn into a serious security threat in Afghanistan. For too long the focus was solely on fighting the insurgents, but corruption undermined this fight by fueling grievances against the Afghan government and the West. Corruption, including the diversion of Afghan resources and donor aid for the private gain of the political elite, impoverished and alienated the common people. Public anger over massive graft and corruption in the country turned people against the government and the West, thus strengthening the ranks of Taliban. Moreover, according to the Special Inspector General for Afghanistan Reconstruction (SIGAR)‘s recent report, “U.S. money was flowing to the insurgency via corruption.” Corruption in Afghanistan cuts across all aspects of the society, with 90% of Afghans saying that corruption is a problem in their daily lives, and this endemic corruption threatens the legitimacy of Afghanistan’s government.

What has been achieved in the past 15 years in Afghanistan—at the cost of billions of dollars and the sacrifices of thousands of lives—today remains at jeopardy. The country is in a fragile and vulnerable position. Yet it would be shortsighted for the US to simply disengage, or threaten to cut off aid if the Afghan government fails to crack down sufficiently. What is needed both from the Afghan government and the new U.S. administration is a unified, long-term, practical, results-oriented strategy that could produce solid outcomes. It would be wise for the Trump administration to come up with such a strategy. Afghanistan should remain a priority because of its geo-strategic location and an important U.S. ally in the region. Given the existing circumstances and the need to bolster Afghanistan’s security and economy, and to prevent the country from becoming a safe haven for terrorists and insurgents, a long-term commitment and a coherent strategy to get corruption under control would be in the interests of both the U.S. and Afghan governments.

Guest Post: Corporate or Individual Liability? Converging Approaches to Fighting Corruption

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GAB is delighted to welcome back Gönenç Gürkaynak (Managing Partner at ELIG Attorneys-at-Law in Istanbul and 2015 Co-Chair of the B20 Anti-Corruption Task Force), who, along with his colleagues Ç. Olgu Kama (ELIG partner and B20 Anti-Corruption Task Force Deputy Co-Chair) and Burcu Ergün (ELIG associate), contributes the following guest post:

Combating international corruption has come a long way in the last decade. More and more jurisdictions are adapting and updating their legal systems in an effort to eradicate impunity for corruption crimes. Yet an important question persists: Who should be held primarily liable for corruption crimes, the individual or the company? The US and European countries have traditionally provided diverging answers to this question, but there now seems to be some evidence of an emerging convergence, though a consensus is yet to be reached.

In the United States—the pioneering legal system in terms of fighting international corruption—although individuals can be charged with violations of the Foreign Corrupt Practices Act (FCPA), it is the companies that are primarily held liable for FCPA violations. The US embraces a broad notion of corporate criminal liability, based on the principle of respondeat superior (the employer is responsible for the acts or omissions of its employees) and the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have employed this theory as the basis for FCPA settlements with scores of corporations, raking in hundreds of millions of dollars in fines. However, there have been relatively few FCPA cases brought against individuals. This may be due in part to the fact that it is often difficult to attribute a corrupt act to any one specific individual, though it may also be due to the DOJ’s and the SEC’s traditional focus on going after the “deep pockets” of the corporations that come under their scrutiny.

In contrast to the US, the focus of criminal law in continental European systems has typically been on the culpability of individuals; thus, the introduction of the concept of “corporate criminal liability” is a relatively new development. Traditionally, the continental European systems have taken the view that criminal punishment can only be imposed on grounds of personal culpability, and that organizations cannot be held liable under criminal law (societas delinquere non potest). To that end, some European jurisdictions have preferred imposing administrative liability on corporations for actions that are considered to be administrative (rather than criminal) offenses.

In terms of deterring corrupt acts, a broad notion of corporate criminal liability goes a long way. The willingness of US authorities to impose significant fines on corporations provides powerful incentives for corporations to self-police. Furthermore, the threat of criminal FCPA sanctions—and the associated “moral sanctioning” of criminal liability—may have a more powerful effect on corporations than would similar fines imposed as administrative sanctions. On the other hand, the threat of corporate criminal liability is likely not sufficient, on its own, to foster a compliance culture within an organization. In a legal environment in which individuals face a credible threat of prosecution for their personal roles in organizational corruption, corporations could maintain a stronger culture of compliance as the employees themselves would be legally responsible for their misconduct and therefore less likely to engage in (or turn a blind eye to) corrupt practices.

Even though significant differences remain among jurisdictions, it is an encouraging development that there now seems to be gradually converging views regarding corporate criminal liability among these different legal systems. Continue reading →

Guest Post: Aid Agencies Need to Improve Their Anticorruption Strategies and Implementation in Fragile States

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GAB is pleased to welcome back Jesper Johnson, who contributes the following guest post:

Last year, Nils Taxell, Thor Olav Iversen and I contributed a guest post about the EU’s anticorruption strategy and its implementation (calling development aid a blind spot for EU anticorruption efforts), based on a report which was presented twice in the European Parliament. This material was part of a wider comparative study of the anticorruption strategies of the World Bank, European Commission, and UNDP that has just been published as a book by Edward Elgar. The book is the first major comparative study of work to help governments in fragile states counter corruption by the three multilateral aid agencies. The focus is on fragile states, where aid agencies face the greatest challenges in terms of both strategy and implementation. Although many recent reports and agreements, including the OECD’s New Deal for Engagement in Fragile States and the World Bank’s 2011 World Development Report, have emphasized that agencies need to change the way they work in fragile states—in particular, the traditional policy frameworks cannot be uncritically copied from a non-fragile contexts—this message has not yet trickled down to the way these three multilateral aid agencies do anticorruption. Anticorruption and state-building policies are often disconnected or incoherent, and challenges rooted in the organization of the agencies prevent strategies from translating into results. More specifically, all three aid agencies shared a number of characteristics that inhibited their ability to address corruption in fragile states more effectively: Continue reading →

Guest Post: The Metaphysics of “Corruption” (or, The Fundamental Challenge to Comparative Corruption Measurement)

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GAB is pleased to welcome back Jacob Eisler, Lecturer at Cambridge University, who contributes the following guest post:

A couple months back, Matthew Stephenson and Michael Johnston engaged in a lively debate on the question of if aggregate-level data of corruption is useful, focusing on the appropriate level of methodological skepticism that should be directed towards large-scale efforts to quantify corruption (see here, here, here, and here). While this debate touched on a number of fascinating questions regarding how to best treat data regarding corruption, it has drifted away from why Michael had a concern with overly aggressive quantification in the first place: Actually addressing corruption requires a “standard of goodness,” and the difficulty in coming up with such a standard explains why the social sciences have faced a “longstanding inability to come to a working consensus over how to define corruption.” In other words, when we talk about corruption, we are inevitably talking about something bad that suggests the vitiation or distortion of something good. It is difficult to conceptualize corruption except as a distortion of a non-objectionable political process—that is, political practice undertaken with integrity. This need not mean that there must be some shared first-order property of good governance; but it does suggest that there is a shared property to distorted or corrupted governance that must derive from some shared property of all politics.

If this idea of a “shared feature” is taken seriously, it would suggest those who argue for the value of comparative corruption metrics are making a very strong claim: that if you are comparing corruption within a country, or across countries, all the relevant polities and types of practice must have some shared feature, deviation from which counts as corruption. This shared feature in turn would be an aspect of governance. It could be any number of constants in human society – a constant feature of morality in governance, or tendencies of human anthropology. But in any case, this is a very distinctive and powerful claim, and one that requires strong assumptions or assertions regarding the nature of governance. To weave this back to the original dispute, our willingness to rely on quantitative metrics should depend on our level of commitment to our faith in this constant feature of politics that makes corruption a transferable, or, more aggressively put, “universal” thing. Our use of these homogenizing empirical metrics implies that we are committed to the robustness of the constant feature. Yet it doesn’t seem like this conceptual work has been done. Continue reading →

Guest Post: When and How Will We Learn How To Curb Corruption?

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GAB is pleased to welcome Finn Heinrich, Research Director at Transparency International, who contributes the following guest post:

Listening to conversations about corruption among global policy-makers, corruption researchers, and anticorruption activists alike, I can’t help but notice that the focus of anticorruption research and policy is changing. The 1990s focused mainly on demonstrating that corruption exists and finding ways to measure it (largely through perception-based indicators), and the early 2000s were about assessing corruption risks in specific countries, sectors, or communities, and assessing the performance of anticorruption institutions. More recently, researchers (and their funders and clients) are shifting from the “Where is corruption?” question toward the “How can we fight corruption?” question. They ask: Do we know what works, when, where, and under which circumstances in curbing a specific type of corrupt behavior?

Answering such questions is extremely challenging. Corruption’s clandestine nature makes it difficult to measure, data is often of low quality or simply not available for time-series or cross-sectional analysis beyond aggregate country-level indicators. Furthermore, anticorruption interventions often lack an underlying theory of change which would be needed to design robust research evaluations to find out whether they worked and if so, how (and if not, why not). And we lack realistic but parsimonious causal models which can take account of contextual factors, which are so important to understand and tackle corruption, as corruption is an integral part of broader social and political power structures and relationships which differ across contexts. Similarly, there is a lack of exchange between micro-level approaches focusing on specific, usually local anticorruption interventions, on the one hand, and the macro-level literature on anti-corruption strategies and theories, on the other.

While we at Transparency International certainly do not have any ready-made solutions for these extremely tricky methodological and conceptual issues, we are committed to joining others in making headway on them and have therefore put the “what works” question at the heart of our organizational learning agenda by engaging in reviews of the existing evidence as well as ramping up impact reviews of some of our own key interventions. For example, we have just released a first rapid evidence review on how to curb political corruption, written by David Jackson and Daniel Salgado Moreno, which showcases some fascinating evidence from the vibrant field of political anticorruption research. We are also working with colleagues from Global Integrity on a more thorough evidence review on corruption grievance as a motivator for anti-corruption engagement and are planning further evidence reviews and impact evaluations.

As we start to get our feet wet and figure out how to best go about generating and making sense of the existing evidence on what works in anti-corruption, we are keen to engage with the broader anticorruption research community. Maybe there are others out there who have some ideas about how to go about learning about what works in fighting corruption? If so, please use the comment box on this blog or get in touch directly at acevidence@transparency.org.

Guest Post: The US Needs To Show More Respect for Foreign Prosecutions

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

The principle that the state may not criminally prosecute the same defendant twice for the same conduct—known in most of the world as ne bis in idem (“not twice for the same thing”), and known in the United States as the prohibition on “double jeopardy”—is well-settled and uncontroversial, at least in Western democracies. Much more controversial is whether that principle protects a defendant prosecuted by one country from prosecution by a different country for the same (or closely related) conduct. This question is of particular importance in the context of transnational bribery, where the same conduct might violate the criminal laws of multiple governments. As I discussed in my last post, in Europe, a mix of domestic legislation, international treaties, and court decisions have established an international version of the ne bis in idem principle, providing companies with a reasonable assurance that if they are prosecuted in one European country, they are shielded from further prosecution in another. In contrast, in the United States the prohibition on double jeopardy has been consistently interpreted to prohibit only multiple prosecutions by the same sovereign. US laws thus offer no protection against re-prosecution in the United States after a prosecution abroad.

The power of US prosecutors to go after companies that have already been prosecuted in other countries is enhanced by other powers that European prosecutors can only dream about. As noted in an earlier post, a US prosecutor can pursue a corporation when anyone within that corporation can be shown to have committed a crime, giving the prosecutor considerable leverage. US prosecutors also have finely tuned procedural mechanisms, such as deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs), that are only tentatively being explored in other countries, such as the United Kingdom and France. The DOJ regularly asserts aggressive notions of its territorial powers, claiming, for example, that the use of dollars as the currency of an illegal transaction may subject the participants to US prosecution. US prosecutors have essentially unreviewable discretion their investigative decisions, because unlike many countries in Europe, criminal investigations (and, crucially, the decision to charge) are not supervised or reviewed by judges, as the DC Circuit has recently held.

Taken together, these circumstances risk causing two problems: Continue reading →

Guest Post: Behavioral Economics, Punishment, and Faith in the Fight Against Corruption

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The following guest post, by Roberto de Michele, Principal Specialist in the Institutional Capacity of the State Division at the Inter-American Development Bank (IDB), is a translated and slightly modified version of a post that Mr. de Michele originally published in Spanish on the IDB’s governance blog on August 29, 2016:

Last August, Hugo Alconada Mon, one of Argentina’s most prestigious investigative journalists, published an article (in Spanish) describing how road construction firms in Argentina created a cartel to fix public work contracts. Members of the cartel would meet in the board room of the sector chamber to conduct their business. The room has a statue of Our Lady of Luján, patroness of Argentina. Before commencing negotiations to fix contracts, assign “winners,” and distribute earnings, members of the cartel would turn around the image of Our Lady of Luján to face the wall, with her back to those gathered there. It was, as one of the sources candidly put it, “so that she doesn’t see what we were about to do.” This remark got me thinking about two possible explanations on why we break the law, cheat, and lie both to the government and to others. Continue reading →