Category Archives: Guest Commentary

Guest Post: The Double Jeopardy Bar Should Not Apply When Acquittals Are Tainted By Corruption

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Federico Morgenstern (fedemorg@gmail.com), Prosecretario in the Federal Criminal Chamber of Appeals in Buenos Aires, Argentina, contributes the following guest post:

All around the world, a culture of impunity impedes the effective criminal prosecution of corruption cases, particularly of senior government officials and their close associates. Due to the interference of power political actors, judges and prosecutors often do not pursue these cases promptly or properly. Although there has been some attention – including on this blog – to concerns about prosecutors dropping or shelving cases, there is a closely related problem that is even more difficult, and that has received much less attention: fraudulently obtained acquittals, or contaminated absolutions.

Unfortunately, corruption cases in which powerful politicians are acquitted without a real and thorough investigation by independent prosecutors and judges are very common. And these corrupt acquittals are even more pernicious than prosecutorial decisions to shelve an investigation because the double jeopardy rule (also known as cosa juzgada or ne bis in idem) forbids the government to try the same defendant again on the same (or similar) charges following an acquittal. Thus, even following a change of government—which might lead prosecutors and judges to “strategically defect” against the corrupt old regime, or might simply produce a new set of the prosecutors and judges who are more willing to go after corrupt former officials—a prior acquittal would shield those corrupt actors from having to answer for their crimes.

Somewhat surprisingly, both the legal academy and the anticorruption community have largely ignored the double jeopardy doctrine’s implications for anticorruption efforts. But, as Guillermo Orce and I argue in our recent book, Cosa Juzgada Fraudulenta. Dos Ensayos Sobre la Llamada Cosa Juzgada Irrita (Abeledo-Perrot), there are compelling arguments for limiting the scope of the double jeopardy principle, in particular by allowing—under certain circumstances—the reopening of “contaminated” acquittals (cosa juzgada fraudulenta or cosa juzgada irrita): cases in which an acquittal is tainted by fraud, political interference, or clear disregard for the evidence. The core of the argument is as follows: Continue reading →

Guest Post: The Impact of Foreign Anti-Bribery Laws on the Demand-Side Countries

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Francesco De Simone, an Advisor at the U4 Anti-Corruption Resource Centre, contributes the following guest post:

What are the consequences of “supply side” foreign bribery laws, like the US Foreign Corrupt Practices Act (FCPA) and UK Bribery Act (UKBA), on the developing countries that are often the bribe receivers in foreign bribery cases (the “demand side”)? When can OECD country (say, the United States) prosecutes a company for paying a bribe in a developing country (say Nigeria), what are the implications for Nigeria – for its institutions and for its overall corruption environment and anti-corruption framework? How does the investigation or prosecution affect Nigeria’s ability to investigate prosecute the same case? What are the consequences if the U.S. case is settled? How can Nigeria obtain restitution of the proceeds of the bribe? And should it?

Although foreign anti-bribery laws like the FCPA have attracted a great deal of analysis and discussion (including on this blog: see here, here, here, here, and here), there is much less material on those sorts of questions. (An exception is the work by Professor Kevin Davis, see here and here, also discussed on this blog.) In a new U4 paper I co-wrote with Bruce Zagaris, we attempt to provide a more in-depth analysis of how supply-side enforcement of foreign anti-bribery laws by OECD countries affects parallel investigation and enforcement action in the demand-side country whose officials allegedly took the bribes. Unfortunately, reliable information on how many supply-side enforcement actions result in parallel investigations by the demand-side host countries is not currently available (so far as we know), but we were able to extract a great deal of useful information from FCPA and UKBA cases, as well as other recent studies like the Stolen Asset Recovery Initiative (StAR) Left Out of the Bargain report.

The main takeaways from our study can be summarized as follows: Continue reading →

Guest Post: Countering Corruption in Nigeria with Results-Based Financing

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Lauren Abel and Andrew Blackman, recent graduates of the Harvard Kennedy School’s Masters Program in International Development, contribute the following guest post:

The Ebola virus spreading through West Africa has reached Nigeria. While the number of Ebola cases in Nigeria is small, the highly contagious disease can spread quickly, especially in a country with chronically low-quality health services. One might think that the biggest economy in Africa should have the resources and infrastructure to battle the health threat, but despite billions of dollars in annual oil revenues, Nigeria’s poor health services are putting the country at risk of spreading the epidemic. Unfortunately, the problems with public service delivery in Nigeria do not stop with health. Authorities have recognized that Nigeria is unlikely to achieve any of the Millennium Development Goals (MDGs) by 2015 (see the Government’s full review here).

Why the dearth of public services in a booming economy? Corruption. Above all else, pervasive and endemic corruption remains the Achilles Heel of the Nigerian economy. As the Finance Minister recently noted, “Corruption is a serious issue for us because it is destroying our country, eating deep into the fabrics of the economy, we can’t have infrastructure and development with these level of corruption.” In an environment of such endemic corruption, what can be done to help translate huge natural resource revenues into tangible improvements in the lives of the 110 million Nigerians living on less than US$1.25 a day?

In a recent study conducted with the Centre for the Studies of the Economies of Africa – an Abuja-based economic think-tank – we put forward an approach designed to improve the provision of public goods and services that we believe could work within the current Nigerian system. That approach is known as Results-Based Financing (RBF). (For an example of the RBF approach, see this World Bank initiative; the approach is conceptually similar to other ideas such as Pay for Performance, Cash on Delivery Aid and Output-Based Aid.) Continue reading →

Guest Post: The Potentially Perverse Effects of Campaign Finance Disclosure Laws

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Professor Michael Gilbert from the University of Virginia Law School contributes the following guest post:

Since at least the 1970s, proponents of campaign finance regulations in the United States and elsewhere have supported mandatory disclosure of monies spent on politics.  Notwithstanding some significant loopholes, those proponents have in many respects gotten their way in the United States and many other countries. Much of the enthusiasm for disclosure is based on the notion that it helps combat a certain kind of corruption—the exchange of campaign support for policy favors. Publicizing the flow of money to politicians exposes illicit relationships and quid pro quos.  In Justice Brandeis’s famous phrase, “Sunlight is said to be the best disinfectant.”

This logic is correct but incomplete.  Disclosure does indeed provide information that officials and the public can use to combat corruption.  But, as Ben Aiken and I argue in a new paper, corrupt actors can also use that information to overcome an impediment to illegal exchanges:  lack of trust.  Private parties cannot sign enforceable contracts with politicians for quid pro quos. Instead, they must trust one another—if I give you the money today will you deliver the vote tomorrow?  That need for trust means that both sides to a potentially corrupt exchange must assess one another’s credibility. Disclosure laws can, perversely, help foster that undesirable trust. After all, disclosure of campaign donations reveals which parties reward compliant politicians; this same disclosure, combined with politicians’ voting records, reveals which politicians reward their financial supporters most consistently.  Through those channels disclosure can bring conspirators together and reduce the uncertainty that inheres in illegal transactions.  As a colleague put it, “disclosure is like match.com for criminals.” Continue reading →

Guest Post: Compliance Culture in Emerging Markets — Tone at the Top or Tone in the Middle?

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Today’s guest post is from Gönenç Gürkaynak, the managing partner and head of the Regulatory and Compliance Department at ELIG, Attorneys-at-Law, a leading law firm in Istanbul:

When listing the fundamental pillars of a compliance program, guidance on the Foreign Corrupt Practices Act and UK Bribery Act both stress the importance of the top-level commitment — “tone at the top” — for creating and maintaining a compliance culture within the company. Because the actions and stances of the board of directors and senior executives reflect and shape the corporate compliance culture, these directors and managers are expected to fulfill leadership roles within scope of the compliance program of the company. But the compliance leadership of the top-level management can be undermined by the reckless actions of the mid-level managers who have the obligation to meet operational targets and deal with the various problems posed in the field. Accordingly, a tone from the top is not enough to create or sustain a compliance program — especially in emerging markets — unless such tone is supplemented by the voice of the mid-level management (“tone in the middle”). Continue reading →

Guest Post: Compliance, No Science

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Liz David-Barrett, the Director of the Oxford Centre for the Study of Corruption and Transparency, contributes the following guest post:

More and more countries are introducing and enforcing anti-bribery laws these days, as governments implement their commitments under the OECD Anti-Bribery Convention and the UN Convention Against Corruption.  By making companies liable for prosecution if they pay bribes to foreign public officials, the drafters hope to persuade companies to stop paying bribes and take measures to ensure that no bribes are paid on their behalf.  But do they work?   What do companies do when faced with a new anti-bribery law?

The United Kingdom since the introduction of the Bribery Act is a good laboratory for researching this question.  Passed in 2010, the Act came into effect only in July 2011.  But companies had ample time to prepare, given the prolonged hype as the Bill was debated in parliament. Some companies were — and still are — in denial, perhaps because they think they are not at risk, or the chances of being caught are slim. At the other end of the spectrum, some companies concluded that the Bribery Act created such serious legal risks that they opted to withdraw from certain high-risk markets entirely. But the vast majority of companies have responded to the Bribery Act by introducing or reforming their anti-bribery policies — that is, by amping up their corporate compliance programs.  So what have we learned so far from research on UK firms’ anti-bribery compliance programs? Continue reading →

Guest Post: Reaching Bribery’s Victims (Part 3)

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This month GAB is delighted to feature a series of guest posts from Andy Spalding, Assistant Professor at the University of Richmond School of Law and Senior Editor of the FCPA Blog.  This is the third and final post in the series on how to compensate the victims of transnational bribery:

I began this series of guest posts by applauding the StAR Initiative’s recent report, Left Out of the Bargain, for calling attention to the need for settlements in anti-bribery cases to provide more compensation to the overseas victims of bribery. In my last post, I explored a series of encouraging, but perhaps not quite promising, ways of doing so in the specific context of US FCPA enforcement actions.

What we’re looking for is an enforcement mechanism that satisfies these criteria: 1) it benefits the citizens of the bribed government; 2) it funds initiatives to remedy past bribery (to the extent possible) and to curb future bribery; 3) it reallocates a portion of the penalty money, rather than relying on recovered assets; 4) the money goes to private-sector organizations and programs, rather than the host governments; and 5) the mechanism is authorized under existing US law, requiring no new statutes or regulations.

Continue reading →

Guest Post: Reaching Bribery’s Victims (Part 2)

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This month GAB is delighted to feature a series of guest posts from Andy Spalding, Assistant Professor at the University of Richmond School of Law and Senior Editor of the FCPA Blog.  This is the second in the series of three posts on how to compensate the victims of transnational bribery:

In my last post, I weighed in on the discussion concerning whether the UN Convention Against Corruption (UNCAC) Article 53(b) (or any other provision), establishes a duty to allocate anti-bribery penalty money to the overseas victims. I’d like to suggest now that regardless of how one answers that question, using enforcement monies to benefit those victims is a good idea. We could engage any number of ethical, economic, foreign policy, or other arguments on this point; I’ll save those for another day. For the remainder of my post, I’ll assume that: 1) the citizens of corrupted governments are the principal victims of transnational bribery; and 2) enforcement should somehow benefit them. The next question, which is no less difficult, is how.

Continue reading →

Guest Post: Reaching Bribery’s Victims (Part 1)

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This month GAB is delighted to feature a series of guest posts from Andy Spalding, Assistant Professor at the University of Richmond School of Law and Senior Editor of the FCPA Blog.  This is the first in the series of three posts on how to compensate the victims of transnational bribery:

Who are the victims of transnational corporate bribery? Do existing anti-bribery laws help them? And should they? The answers may not be as intellectually crisp as our gut feelings are strong. But the questions are now unmistakably central to anti-bribery debates, as illustrated by the lively exchange concerning the StAR Initiative’s Left Out of the Bargain report.  (On this debate, see Matthew’s original critique, the rejoinder by two of the report’s authors, and Matthew’s subsequent reply.) In this three-part series of posts, I’ll consider who the victims of bribery are, briefly weigh in on the StAR report debate, and then see if I can’t broaden this discussion a bit.

Most of us would agree that overseas corporate bribery is not a victimless crime. Though there are many possible victims–the bribed governments, the shareholders in the defendant companies, even the companies themselves (which often pay bribes in response to near-extortionate demands)–the principal victims of overseas bribery are the citizens of those countries – almost always developing countries – whose governments have been corrupted. Yet the profound irony of modern anti-bribery enforcement: those substantial monetary penalties are deposited in the public fisc of the perpetrator. They hardly touch the victims at all. And this isn’t by design. It’s a sort of accident of extraterritorial white-collar crime. Continue reading →

Guest Post: India’s Whistleblower Protection Act — An Important Step, But Not Enough

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Christine Liu, an associate at Cravath, Swaine & Moore’s New York Office, contributes the following guest post:

As Raj noted in his last post, the recent election of Narendra Modi as prime minister of India demonstrates that the Indian population wants change and supports actions against corruption (as do recent polls, such as the Lowy Institute study, which found that 96 percent of Indians believe corruption is holding the country back, and 92 percent believe that reducing corruption should be one of the government’s top priorities). One of the most important obstacles to fighting corruption in India has been the lack of adequate whistleblower protections. Individuals reporting incidents of bribery or corruption faced numerous hurdles, including verbal threats, physical violence, and ostracism. Others encountered workplace retaliation. Confronted with these risks, many potential whistleblowers chose to remain silent.

But there are encouraging signs that this may change. On May 14, 2014, Indian President Pranab Mukherjee cleared the way for the Whistleblowers Protection Act. This action represents a much-needed change from the history of delay surrounding the original bill, which was first introduced in August 2010 and then took years to pass the two Houses of Parliament—it passed in Lok Sabha on December 11, 2011 and in Rajya Sabha on February 21, 2014. The new whistleblower law is a significant achievement. Nonetheless, the law has some important limitations, and there are outstanding concerns about whether the law will be enforced effectively and foster public confidence. Continue reading →