Category Archives: Guest Commentary

Guest Post: France’s Anticorruption Turnaround–and the Path Forward

Posted on by
Reply

Today’s guest post is from Valentina Lana, a lawyer and lecturer at Sciences Po, and Michel Sapin, who served in multiple senior positions in the French government, including as Minister of Finance from 2014-2017 and Minister of the Economy in 2016-2017, and who was the principal author of the Loi Sapin II, the French anticorruption law.

Since the OECD Anti-Bribery Convention entered into force back in 1999, France has been a member, and as such France committed to adopt and enforce an effective legal framework to detect, punish, and deter transnational bribery. Yet in October 2012, when the OECD’s Working Group on Bribery released its Phase 3 report on France’s compliance with its obligations under the Convention, France received very poor marks. The report emphasized the Working Group’s “serious concern[]” about the paucity of enforcement proceedings addressing foreign bribery by French entities, expressed its disappointment in France’s failure to address key legal obstacles to holding companies liable for foreign bribery, and the insufficient penalties. In short, while France had laws on the books that supposedly criminalized foreign bribery, in practice France was doing very little to make those laws meaningful in practice.

The highly critical Phase 3 report served as a wake-up call for French policymakers. But it was not only this very public and embarrassing OECD criticism that prompted France to act. French companies that issued securities in the United States also found themselves targeted by the U.S. Department of Justice for alleged violations of the U.S. Foreign Corrupt Practices Act (FCPA). Many French firms and government officials bristled at what seemed like the intrusive and extraterritorial prosecutions by the U.S. government. But in high-level conversations between leading figures from the two countries, the U.S. representatives made clear their position that they were pursuing these cases, even though France might seem to have a greater interest, because France couldn’t or wouldn’t prosecute foreign bribery cases involving French companies vigorously and effectively. “We are doing your job,” was the basic position of the U.S. representatives.

There was also pressure for reform from the French business community. This at first seems counterintuitive, given that companies are generally reluctant to accept more stringent regulations. But business operators in France perceived that France needed to promote a more transparent, corruption-averse environment, in order to increase the attractiveness of France for investors and shake off France’s bad reputation as an unfair business environment where bribes would count more than skills, experience, and competence. Though one might think that French firms would care only about domestic corruption, in fact many business leaders embraced the idea that taking a stronger stand against foreign bribery—and embracing legal reforms that would elevate France to the level of countries like the US or the UK, at the forefront of the fight against transnational corruption—would help improve France’s reputation and overall business environment.

These factors contributed to an environment that enabled reformers, particularly those in the French Ministry of the Economy, to act. In 2016, the French parliament adopted a crucial set of reforms contained in a law known as the la loi Sapin II (the Sapin II Act). This broad law covers more than just the fight against corruption; it contains a range of provisions intended to improve France’s attractiveness to local and foreign investors through greater transparency and modernization of economic life. But several of the Act’s most important reforms were motivated by, and targeted toward—the fight against corruption, including transnational corruption, a fact acknowledged symbolically by the date of the Act’s adoption: December 9th, UN International Anti-Corruption Day.

Among the Sapin II Act’s key measures, three can be considered as essential to driving France’s progress on anticorruption: Continue reading →

Guest Post: The Millennium Challenge Corporation’s Approach to Curbing Corruption in Development Projects

Posted on by
2

Today’s Guest Post is by Chris Williams, Senior Director for Anti-Fraud and Corruption at the Millennium Challenge Corporation, a U.S. development agency. Chris explains the measures MCC takes to prevent corruption from infecting the projects it supports and reviews some lessons it has learned about preventing corruption in large infrastructure projects.  (Full disclosure. I consult with the MCC on corruption prevention although its prevention policies long pre-date my consultancy. I have hounded Chris for some time to write this post, for whatever bias I may have, I think MCC’s corruption prevention efforts provide a model for others in the development community.)

The Millennium Challenge Corporation is an independent U.S. government development agency working to reduce global poverty through economic growth. Created in 2004, MCC provides time-limited grants that pair investments in infrastructure with policy and institutional reforms to countries that meet rigorous standards for good governance, fighting corruption and respecting democratic rights. MCC provides an example of “smart” development assistance, using competitive selection of grant recipients, country-led solutions, country led implementation, and a focus on results to prioritize the use of U.S. taxpayer funds.

A central feature of MCC’s approach, country ownership, is that each partner government receiving a grant from MCC must identify a legal entity to which the government will delegate the responsibility for the projects funded by the MCC. A sign of the importance MCC places on fighting fraud and corruption is that this entity is formally designated the “accountable entity” (generally referred to as an “MCA,” as many are named Millennium Challenge Account Moldova, Millennium Challenge Account Senegal, etc.). This underlines the MCA’s responsibility for ensuring MCC funds are used only for the purposes intended.

MCC doesn’t just assign responsibility for managing fraud and corruption risks to the MCAs, however. Upon establishment of the MCA, MCC immediately begins working with it to put in place financial controls and other standard safeguards to prevent funds from being lost through fraud or corruption.

Continue reading →

Guest Post: The Ukraine Crisis Demonstrates (Again) that the U.S. Must Crack Down on Illicit Finance

Posted on by
5

GAB is pleased to welcome back Shruti Shah, the President of the Coalition for Integrity, to contribute today’s guest post:

Like so many of us, I am shocked and horrified by Russia’s invasion of Ukraine and unforgivable attacks on civilian targets. At the same time, I have been encouraged by the resistance to Russia’s unprovoked aggression—most obviously and importantly by the brave Ukrainians defending their homeland, but also by the response of the international community. The United States, the European Union, Canada, the United Kingdom, and other nations have announced coordinated sanctions against Russia, including cutting off major Russian banks from the SWIFT system and preventing Russia’s central bank from drawing on foreign currency reserves held abroad. In addition to sanctions targeted at Russia’s financial system, Western nations have also sought to use targeted sanctions aimed at oligarchs close to President Putin. The Biden Administration also announced a transatlantic task force to ensure the effective implementation of financial sanctions by identifying and freezing the assets of sanctioned individuals and companies and an interagency law enforcement group called KleptoCapture.

This renewed focus on the corruption of the Russian political and economic elite is welcome. Russia’s deep-rooted corruption is one of the reasons that Putin has been free to engage in such outrageous acts. He relies on the security services and corrupt oligarchs to protect him. Oligarchs also serve as his personal wallet. Yet for far too long, these corrupt oligarchs have lived lives of luxury off of ill-gotten wealth, which they have used to purchase luxury property in places like New York and London. Yet while some oligarchs and Russian political figures were already the subject of targeted sanctions prior to the recent attack on Ukraine. Overall the West had been far too complacent. The Ukraine tragedy seems to have prompted Western governments to pay more attention to this problem. Indeed, the new sanctions are significant in both scope and size, and they welcomed by the Coalition for Integrity and most other anticorruption activists around the world.

But there’s more work to be done. It’s time for Western governments to ask some hard questions about how these corrupt elites were able to use their ill-gotten gains to buy luxury property and assets and enjoy their wealth in places like New York and in London for so long, and about the role of Western “enablers” in hiding the sources of their wealth and shielding questionable transactions from scrutiny. And, to turn to more specific priorities for policy reform in the United States, there are three specific things that the U.S. government should do to crack down further on illicit finance and thereby advance the agenda laid out in the White House’s Strategy On Countering Corruption: Continue reading →

Guest Post: Did Putin Invade Ukraine to Expand State Corruption?

Posted on by
11

Today’s guest post is from Matthew Murray, currently Adjunct Professor at Columbia University, who previously served as U.S. Deputy Assistant Secretary of Commerce for Europe, the Middle East, and Africa.

When President Putin began Russia’s expanded military invasion of Ukraine on February 24, the imprisoned Russian anticorruption activist and political opposition leader Alexey Navalny was on trial once again over fabricated charges of embezzlement. Though Mr. Navalny faces another 15 years in a penal colony, he seized the opportunity during his February 24 hearing to publicly state his opposition to Russia’s war on Ukraine. “This war between Russia and Ukraine was unleashed to cover up the theft from Russian citizens and divert their attention from problems that exist inside the country,” he said.

Mr. Navalny’s statement reflects a deep understanding of the causes of war. Throughout history rulers have started wars to divert and distract attention of their citizens from growing domestic problems and restiveness. And this pattern fits the Russian situation well. In recent years, Putin’s popularity has declined due to failure to modernize Russia’s economy, his flawed management of the Covid-19 pandemic, and—not least—the corruption of his regime and his inner circle. Indeed, last February, when Russian courts initially sentenced Navalny to over two years in prison, tens of thousands of Russian citizens from 109 cities across the country went to the streets to demonstrate against Putin’s rule. In ordering the invasion of Ukraine, Putin may well have been seeking to divert attention from failures at home, including his autocratic control of the political economy for the benefit of himself and the Russian oligarchy.

But it’s more than that: Putin’s aggression may also be aimed at legitimizing his rule at home by installing a new state-sponsored oligarchy in Ukraine. He may be seeking to kill the idea, which took hold in Ukraine during the 2014 Revolution of Dignity at the Maidan. The Maidan Revolution started when Ukrainians took to the streets of the Maidan in central Kyiv to protest then-President Victor Yanukovych’s sudden decision to reverse the nation’s course to join the European Union and engage in free trade with the world’s largest economic bloc. But the Maidan Revolution was not just about one decision or one administration. The Maidan uprising was a revolution against the system of corrupt rule of Yanukovych and the oligarch class that was choking the nation’s potential—and it was also about the idea: the idea that every individual should have the freedom, the right, and the path to fulfill their human potential. This idea fundamentally threatens Putin’s personal authority and autocratic rule. As Ukraine’s reformers have begun to take concrete steps to embed this idea in independent institutions, they set an example for Russian citizens, who may be inspired by Ukraine’s example to demand that their government suppress official corruption and respect for human rights. Continue reading →

Guest Post: The Keys to the Success of Transnational Investigative Journalism

Posted on by
4

Today’s guest post is from Professor Liz Dávid-Barrett, the Director of the Centre for the Study of Corruption at the University of Sussex, and Slobodan Tomić, Lecturer in Public Management at the University of York.

Over the last decade, investigative journalists have broken a series of blockbuster stories on financial secrecy and illicit financial flows. These clusters of stories have typically been based on, and named after, leaked documents and data from law firms, financial institutions, or government agencies: LuxLeaks (2014), SwissLeaks (2015), the Panama Papers (2016), the Paradise Papers (2017), the FinCEN Files (2020), the Pandora Papers (2021), and, most recently, Suisse Secrets (2022). One of the remarkable things about each of these cases is that they involved not a single story or series of stories by a single media outlet in a single country, but rather were the product of a transnational collaboration of a network of investigative journalists. It has always been the case that investigative journalism has been a vital tool for exposing and deterring corruption. But what we seem to be seeing now is the emergence of a transnational coalition of journalists that is sufficiently agile, dynamic, and capable of working across borders to be a match for the perpetrators of grand corruption, money laundering, and other forms of organized crime.

Indeed, these transnational networks of investigative journalists can be seen as a new institution of global governance. Yet their emergence presents a series of puzzles. How have they overcome the difficulties that plague law enforcement when they try to act transnationally? How have journalists learned to trust one another in handling sensitive data, and to have faith that their colleagues will hold off on publishing until the agreed date? In addition to questions like these, the emergence of transnational networks of investigative journalists raises a broader question: What does this new form of global governance add to our collective efforts to tackle grand corruption?

With support from the UK government’s Serious Organised Crime and Anti-Corruption Evidence (SOC ACE) programme, we have been investigating these questions, principally through interviews with investigative journalists in Latin America and the Balkans who have participated in these networks. Our research has highlighted three important features of these transnational journalistic networks. Continue reading →

Guest Post: The Orientalist Criticisms of Qatar’s World Cup

Posted on by
5

Today’s guest post is from Andy Spalding, a professor at the University of Richmond School of Law and the Chair of the Olympics Compliance Task Force.

This year is bookended by two high-profile and highly controversial megasports events: the Beijing Olympics, happening now, and the FIFA Men’s World Cup, to be held in Qatar in November and December. But while commentators often lump these two events together as depressing examples of how megasports events are all too often hosted by corrupt regimes with appalling human rights records, in fact they are quite different. As I argued in my last post, the Beijing Winter Games represents the end of an era—the last Olympics to be awarded before the International Olympic Committee (IOC) insisted on human rights and anticorruption clauses in its contracts with host countries. But Qatar marks a transition to something entirely new, and much more encouraging.

You wouldn’t know that from most of the Western/Northern commentary on Qatar’s hosting of the World Cup, which portrays this as yet another example of megasport abuse. That mischaracterization smacks of what Edward Said called “orientalism”: the tendency of the West/North to dismiss Eastern, and particularly Islamic, perspectives and experiences with an arrogance or hypocrisy that serves to reproduce neocolonial patterns of privilege and domination. Continue reading →

Guest Post: The Beijing Olympics Marks the End of the Era of Corrupt Authoritarian Megasports—But What Comes Next?

Posted on by
4

Today’s guest post is from Andy Spalding, a professor at the University of Richmond School of Law and the Chair of the Olympics Compliance Task Force.

The present Beijing Winter Olympics are widely seen as yet another chapter in what has become all-too-familiar story of governance disasters in megasport events like the Olympics and the FIFA World Cup: 2008, China; 2010, South Africa; 2014, Brazil; and Russia; 2016, Brazil . . . again; 2018, Russia . . . again. And now, China . . . again. But for the last decade, pressure has been building for change in how the organizers of these megasport events approach anticorruption and human rights policy. And at last, change has come—even if it’s not yet obvious to casual observers only looking at the current games.

The period between roughly 2014 and 2018 became a tipping point in megasport anti-corruption and human rights policy. Russia consecutively hosted the Sochi Winter Olympics and FIFA Men’s World Cup with dizzying human rights and corruption problems. Meanwhile, the only two bidders for the 2022 Winter Olympics were China and Kazakhstan. Something had to change. Continue reading →

Guest Post: France Continues to Modernize its Procedures for Fighting Global Corruption—and Has Some Interesting New Ideas

Posted on by
3

Frederick Davis, a member of the New York and Paris Bars and a Lecturer in Law at Columbia Law School, contributes today’s guest post:

As recently as a few years ago, posts in this space by me and others bemoaned the striking inability of French authorities to prosecute French companies involved in global corruption. In the first fifteen years after France criminalized overseas bribery (thereby meeting its obligations under the OECD Convention on Combatting Bribery for Foreign Officials that France had signed in 1997), not a single French company had been convicted of this crime. This was attributed to the difficulty of pinning corporate criminal responsibility on corporations, as well as to limits in French criminal procedures that rendered its prosecutors unable to move as quickly, efficiently, and effectively as their U.S. counterparts. French deficiencies included the lack of both “sticks” (the credible threat of significant sanctions) and “carrots” (the ability to offer a deferred prosecution agreement (DPA) in exchange for self-disclosure and cooperation). The result: a number of iconic French companies reached negotiated outcomes with the U.S. Department of Justice (DOJ), and paid well over US$2 billion in fines and other payments to the U.S. government.

Resisting populist demands for retaliation, France instead changed its criminal procedures and enforcement institutions to address the challenge. The most notable changes include the creation of a National Financial Prosecutor’s Office with nationwide responsibility for many economic crimes, the creation of the French Anti-Corruption Agency to enforce compliance regimes, and the passage of the so-called Loi Sapin II, which increased penalties for financial crimes and introduced a French-style DPA called a Judicial Convention in the Public Interest. In addition to these reforms, France’s highest court has clarified the laws on corporate criminal responsibility, and in an unprecedented decision ruled that a parent or successor corporation remains criminally responsible for acts of an acquired entity even the acts took place prior to the acquisition.

The results of these reforms have been nothing short of remarkable: Continue reading →

Guest Post: What Should Brazil’s Next President Do To Get the Anticorruption Agenda Back on Track?

Posted on by
1

Today’s guest post is from Marcelo Malheiros Cerqueira, a Brazilian federal prosecutor and a member of the GAECO/MPF (Special Action Group for Combating Organized Crime) in the state of Minas Gerais, Brazil.

Since 2019, Brazil´s anticorruption efforts have been disrupted and derailed. Institutions in charge of fighting corruption are being constantly weakened or attacked. Tools that have been central to Brazilian prosecutors’ anticorruption investigations, such as plea bargains and leniency agreements, are being dismantled by new legislation, and the Congress has not moved forward on proposals that would enhance the fight against corruption (see here and here). The judiciary, mainly by its Supreme Court, has have nullified convictions, or sometimes entire investigations, in major corruption cases, and in so doing has weakened the anticorruption system (see some examples here, here and also here). And despite the fact that anticorruption was a central theme of the 2018 presidential campaign, the government has been questioned for lending its support to pushback against the anticorruption agenda and politicizing formerly non-partisan bodies like the Federal Police.

While the backlash against Brazil’s anticorruption efforts is a three-branch problem, Brazilian voters have an opportunity to address at least one aspect of the problem next year, when they go to the polls to select Brazil’s next president.

This brings us to the question: What should the next Brazilian president do, whoever he or she may be? To put this question another way, when voters and civil society organizations are assessing the future presidential candidates’ anticorruption platforms, what sorts of policies and proposals should they look for? While the issue is obviously quite complicated, here are four initial proposals, from the simplest to the most difficult to implement:

  • First, the president needs to demonstrate a commitment to integrity as a core values of the administration—and must do so not simply through rhetoric, but by taking practical action such as refusing to appoint individuals implicated in corruption cases to senior government positions and pushing for the adoption of integrity measures at lower levels of the bureaucratic hierarchy. Doing so will not only help ensure integrity in the Federal government, but will also set a positive example for state governors and mayors, and help foster a culture of integrity more broadly in the society.
  • Second, the president should respect and empower the institutions of the anticorruption system, avoiding any risk of their political capture. This requires that the appointment of directors for bodies such as the Financial Activity Control Council (COAF), the Federal Police, and the Comptroller General of the Union (CGU) be guided by non-partisan technical criteria, instead of making appointments on the basis of political alignment or personal relationships. Likewise, the next president should restore the longstanding tradition of choosing the Prosecutor General of the Republic (PGR) from the list of three candidates previously voted by the members of the Federal Prosecution Office. This model is ideal for guaranteeing the autonomy of the PGR, which, in turn, is essential for the criminal investigation and prosecution of higher-ranking political agents (including the president) for possible acts of corruption.
  • Third, the president must commit to working to enact legislative and constitutional reforms that decrease impunity for acts of corruption, such as the proposed constitutional amendments to allow incarceration of defendants after the first affirmation of a conviction in an appeal´s court (rather than allowing convicted defendants to remain at liberty until all possible appeals are exhausted) and end to the “privileged forum” rule that says high-level public officials can only be tried in higher courts. On the other hand, the president must also oppose—and if necessary veto—any attempt by the Congress to inhibit the action of anticorruption bodies or to weaken existing anticorruption tools (as unfortunately occurred recently with respect to amendments to Brazil’s Administrative Misconduct Act).
  • Fourth, the most difficult anticorruption challenge facing Brazil’s next president will be reforming the Brazilian electoral system, which is a root cause of the grand corruption that recent investigations have exposed. Any attempt to change the electoral system will face strong opposition by influential politicians, whose power relies in rules that ensure expensive campaigns and unequal distribution of the public electoral fund. Thus, the president must spearhead the attempt to reform the political system—but should probably only do so when he or she has sufficient high public approval, probably after the implementation of the other three proposals mentioned above.

This short list obviously does not encompass all the possible measures that can be taken by the next president against corruption. It would be helpful to know what GAB readers think about these suggestions, as well as what other proposals they might suggest.

One last word. Political leaders can do a lot to help the anticorruption agenda. But that does not mean that societies depend exclusively on them. Good education, transparency, popular control, high standards of morality and many other factors are crucial to the success of the fight against corruption. Therefore, although the central question posed here brings the opportunity to debate the role of the president, civil society also needs to take care of its role.

Guest Post: Five Observations on the New US Strategy on Countering Corruption

Posted on by
2

For today’s guest post, GAB is pleased to welcome back Robert Barrington, professor of practice at the University of Sussex’s Centre for the Study of Corruption.

Earlier this week, in the run-up to the Summit for Democracy, the US government launched its first-ever national anticorruption strategy, a move that was widely praised by advocacy groups such as Transparency International and the FACT Coalition. Indeed, the promulgation of this US “countering corruption” strategy document may turn out to be one of the most significant outcomes of the Summit, even though it preceded the Summit itself.

Only time will tell how much of an impact this new strategy document will make, but here are five initial observations: Continue reading →