The New Frontier: Using Artificial Intelligence To Help Fight Corruption

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In January 2018, scientists from Valladolid, Spain brought a piece of inspiring news to anticorruption advocates: they created an artificial intelligence (AI) system that can predict in which Spanish provinces are at higher risk for corruption, and also identifies the variables that are associated with greater corruption (including the real estate tax, inflated housing prices, the opening of bank branches, and the establishment of new companies, among others). This is hardly the first example of computer technology being used in the fight against corruption. Governments, international organizations, and civil society organizations have already been mining “big data” (see, for example, here and here) and using mobile apps to encourage reporting (see, for example, here and here). What makes the recent Spanish innovation notable is its use of AI.

AI is a cluster of technologies that are distinct in their ability to “learn,” rather than relying solely on the instructions specified in advance by human programmers. AI systems come in several types, including “machine learning” (in which a computer analyzes large quantities of data to identify patterns, which in turn enables the machine to perform tasks and make predictions when confronted with new information) and more advanced “deep learning” systems that can find patterns in unstructured data – in hundreds of thousands of dimensions – and can obtain something resembling human cognitive capabilities, though capable of making predictions beyond normal human capacity.

AI is a potentially transformative technology in many fields, including anticorruption. Consider three examples of the anticorruption potential of AI systems:

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Integrity Pacts: A Contractual Approach to Facilitate Civic Monitoring of Public Procurement

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Public procurement is one of the highest risk areas for corruption. A public project contaminated with corruption is a recipe for disaster: ordinary citizens suffer from substandard facilities and services; competitive companies lose out when the bidding is rigged; and government money vanishes without making a difference. To rein in procurement corruption in, improving transparency and civic monitoring is vital. That’s why an “integrity pact” (IP)—a legally-binding contractual provision that commits all parties to comply with anticorruption best practices from the time the tender is designed to the completion of the project—can be such a useful tool.

An IP is more than a demonstration of commitment to avoid corruption practices on the part of its signatories. An IP contains obligations for bidders and government authorities, among other things, to refrain from offering or accepting bribes and to disclose all contract expenses and commissions; the IP also sets out sanctions for non-compliance, such as termination of the contract, liability for damages, or debarment from future public contracts. Perhaps most importantly, an IP creates a monitoring process where an Independent External Monitor—which can be an individual, a civil society organization, or a group with combined expertise and technical support—independently scrutinizes the deal for any anomaly or violation of the IP, and ensures proper implementation of the contract and the satisfaction of all stakeholders’ obligations. To execute these functions, the monitor is entrusted to examine government tender documents, bidders’ proposals, and evaluator’ assessment reports of the bids, to visit construction sites and contractor offices, and to facilitate exchange with the local communities and public hearings.

IPs have previously been used in public procurement projects in many countries, including Romania, Bulgaria, the Czech Republic, Slovenia, Portugal, Hungary, Latvia, Poland, Greece, Italy, India, and many others. It’s notable that many of the states that have embraced IPs are countries where governments have a long track record of corruption and abuse of power. IPs have at least three roles to play to help facilitate transparency and civic monitoring so as to safeguard the competitiveness and fairness of the procurement process:

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Guest Post: What To Make of Latin America’s Wave of Anticorruption Prosecutions?

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Today’s guest post is from Professor Manuel Balan of the McGill University Political Science Department:

There seems to be a surge in corruption prosecutions of current or former presidents throughout in Latin America (see, for example, here, here, and here). In the last year we have seen sitting or former presidents prosecuted for corruption in Brazil, Guatemala, El Salvador, Honduras, Colombia, Costa Rica, Ecuador, and Panama. In Peru, Pedro Pablo Kuczynski resigned from the presidency amid corruption probes, and the last three former presidents are either facing trial or serving time for corruption. Argentina may soon join this list as a result of the so-called “Notebook Scandal,” which has triggered a fast-moving investigation that has already snared 11 businessmen and one public official, and is getting closer to former President, Cristina Fernández de Kirchner. (Argentina’s former vice-president Amado Boudou was also sentenced to almost six years in prison for corruption in a separate case.) Indeed, it now seems that Latin American presidents are almost certain to be prosecuted for corruption at some point after leaving office, if not before. My colleagues and I have documented the growing trend of prosecution of former chief executives in the region since democratization in the 1980s: Out of all presidents who started their terms in the 1980s, 30% were prosecuted for corruption. Of those that entered office in the 1990s, 52% were or are being currently prosecuted for corruption. In the group of presidents that began their terms in the 2000s, 61% underwent prosecution for corruption. And, remarkably, 10 out of the 11 presidents elected since 2010 who have finished their mandates either have been or are currently being prosecuted for corruption.

The explanation for this trend is not entirely clear. It’s probably not that Latin American presidents have become more corrupt. Some have suggested that the uptick in corruption prosecutions is a reaction, by the more conservative legal establishment, against Latin America’s “Left Turn.” But the trend towards increased prosecution is hardly limited to the region’s self-identified leftist leaders; in fact, left and non-left leaders are nearly equally likely to be prosecuted for corruption. Part of the explanation might have something to do with changes in prosecutorial and judicial institutions, media, or public expectations—the reasons are still unclear, and likely vary from country to country. Whatever the explanation, is this trend something to celebrate? Some observers say yes, arguing that the anticorruption wave sweeping Latin America is the result of Latin American citizens, fed up with corruption and taking to the streets in protest, putting pressure on institutions to investigate and punish corrupt politicians.

While I wish I could share this optimism, I think it’s likely misplaced. Continue reading →

Brazil’s “Clean Slate” Law Keeps Lula Off Ballot — Now Let’s Smear His Prosecutors

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Brazil’s top electoral court ruled Friday, August 5 (here), that former President Luiz Inacio Lula da Silva, now serving a 12-year sentence for accepting a bribe, cannot stand as a candidate in Brazil’s upcoming presidential elections.  “Lula,” as he is universally known, was to be the candidate of one of Brazil’s major parties, and if pre-election polls are to be believed, he stood a very good chance of winning, setting up the unusual (to say the least) situation of a head of state governing from a jail cell.  Absent a last-minute reversal by Brazil’s Supreme Court, Lula will now sit out the election in jail and the threat Brazil’s government will be run by a convict is over.

Lula’s supporters claim he is a political prisoner and is being unfairly denied the right to run for president.   In doing so, they have glossed over the extraordinary protections the Brazilian legal system has afforded him, both in his effort to overturn his conviction and to run for office.  Having failed in the courts of law, they are now trying to smear the prosecution in the court of public opinion.  A report from a well-placed source in Brazil — Continue reading →

Some Preliminary Thoughts on US v. Hoskins and its Implications for FCPA Enforcement

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The US Foreign Corrupt Practices Act (FCPA) is aggressively enforced but rarely litigated—most actions are brought against corporate entities that settle with the government. For that reason, any judicial opinion on the FCPA’s meaning, especially one from an appellate court, will attract a great deal of attention.

A couple weeks back, a US federal appeals court based in New York decided such a case, US v. Hoskins. The case addressed the question of whether a foreign national whose relevant conduct took place entirely outside the United States could be charged, not with violating the FCPA, but with conspiracy to violate the FCPA and/or aiding and abetting an FCPA violation. I’m a bit late to the discussion of Hoskins, which has already produced a great deal of commentary in the FCPA blogosphere (see here, here, here, here, and here). But for what it’s worth, here’s my quick summary of what the case is about, followed by some knee-jerk thoughts and observations about its significance. Continue reading →

IACA Regional Anticorruption Academy: East and Southeast Asia

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The International Anticorruption Academy holds in fourth annual regional academy on corruption-related topics September 9 – 16 in Beijing.  Topics include asset tracing and recovery, best practices for anti-corruption agencies, and strengthening the anti-corruption dialogue in the region and beyond.

ACA has lined up a number of notable speakers including Cao Fuguo, Professor of Law at the Central University of Finance and Economics Law School in Beijing; Claremont University Professor Robert Klitgaard;  Martin Kreutner, Dean and Executive Secretary of IACA; Shervin Majlessi, Senior Legal Adviser, World Bank/UNODC Stolen Asset Recovery Initiative (StAR); Abu Kassim bin Mohamed, Director-General, the National Centre for Governance, Integrity and Anti-Corruption of Malaysia; Elisabeth Täubl, Senior Prosecutor, Public Prosecutor’s Office for Combating Economic Crimes and Corruption, Vienna/Austria; and Ai Li Zhao, Asia Australia Compliance Head, Siemens. I will give two presentations, one on extradition and a second on mutual legal assistance.

More information about the event is here.

 

Corporate Liability for Corruption in India: Some Notes on Reform

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Last month, the Indian legislature passed sweeping amendments to the Prevention of Corruption Act. If accepted in their present form, those amendments portend a major shift in India’s antiquated legal regime pursuing corporate criminal liability, making it much easier to go after corporations on corruption charges. (The amendments make other changes as well, which I have discussed elsewhere. Here, I only focus on the changes that would pertain to corporate liability for corruption offenses.) The amendments do make some welcome changes, but they do not go far enough to update India’s antiquated legal regime for corporate criminal liability. I’ll touch on three features of this regime and discuss how the new amendments do or do not effect significant changes. Continue reading →

Guest Post: The One Belt, One Road Initiative Needs a Centralized Anticorruption Body

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Today’s guest post is from Edmund Bao, a lawyer with King & Wood Mallesons who works principally in the areas of international arbitration and anticorruption:

The “One Belt, One Road” Initiative (OBOR), spearheaded by China, is an enormous and ambitious infrastructure development project (or series of integrated projects) involving an inland economic “belt” and a maritime silk “road” that together will include approximately 65 countries across Eurasia and parts of Africa, require a total capital expenditure of approximately US$4-8 trillion dollars, and affect around 4.4 billion people (63% of global population). Given the size of the initiative—as well as the fact that infrastructure projects are often considered especially high corruption risks, and the fact that so many of the countries involved are known to suffer from high levels of public corruption—ensuring integrity in this project must be a top priority if it is to succeed. Some projects have already been affected by corruption, including the cancelled US$2.5 billion Budhi Gandaki Hydro Electric Dam Project in Nepal (irregularities in the project bid phase) and the temporary funding halt for the flagship China-Pakistan Economic Corridor Road Project (due to graft).

The countries participating in OBOR have acknowledged this concern. At the opening of the Belt and Road Forum in June 2017, President Xi Jingping called for countries to “strengthen international counter-corruption coordination so that the Belt and Road will be a road with high ethical standards.” And in the joint communique released at the conclusion of the Forum, the leaders of OBOR countries in attendance agreed to “work together to fight against corruption and bribery in all their forms.” Yet it is not yet clear what measures can or will be put in place to achieve the sort of coordination that President Xi and the other OBOR country leaders recognized is necessary.

I suggest that one way—perhaps the best way—to achieve the requisite level of anticorruption coordination in the context of the OBOR initiative is to establish a supranational anticorruption body with oversight for OBOR projects. That is, I advocate the creation of a “Silk Road Anticorruption Body” that would have four primary functions: Continue reading →

Will the Swiss Government Heed Civil Society’s Advice When Returning Stolen Assets to Uzbekistan?

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Readers of this blog know the Swiss government faces a dilemma in returning several hundred million Swiss francs of stolen assets to Uzbekistan (here and here).  Although the current government has taken small steps towards reform, it remains dominated by the same clique of Soviet-era apparatchiks whose corrupt ways were behind the theft of the assets. Returning the money thus runs a high risk that it will go right back to the culprits or their cronies.

At the same time, the Swiss government has an obligation under the UN Convention Against Corruption to return the assets. Moreover, thanks to decades of misrule, living condition for the average Uzbek remain dismal at best.  Money for everything from basic education and health programs to investment in public works is desparately needed.

Uzbek civil society now offers a solution to the Swiss dilemma.  Acknowledging the reformist leanings of the current government, and wanting to encourage them, civil society proposes that the Swiss government return the funds in tranches.  The return would be keyed to progress in realizing the kinds of reforms the government says it is committed to making.   Internationally recognized measures would be used to gauge progress.

A phased, conditioned return has two advantages.  It offers those in the Uzbek government leverage to persuade reluctant colleagues of the need for change.  At the same time, a phased return avoids swamping the government with a massive amount of money its primitive public financial system simply couldn’t manage responsibly.

The proposal appears in a letter to Swiss authorities authored by prominent Uzbek citizen, both those who have had to flee the country to escape political repression and those (anonymously) who remain.  The English version is here; a Russian version here.  A commentary on the proposal in the Swiss press is here, and background on the circumstance the led to the theft is here.

Guest Post: The Problem With Anticorruption Diagnostic Tools Is Not (Primarily) Too Much Standardization

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José-Miguel Bello y Villarino, an official with the Spanish Ministry of Foreign Affairs and doctoral candidate at the University of Sydney, contributes today’s guest post:

There is a wide debate about how to produce and use data to assess and compare countries’ performance, particularly in domains that are, by nature, global such as human rights. In the corruption domain there are some well-known international indexes that purport to express a country’s perceived corruption level in a single number, such as the Corruption Perceptions Index (CPI) published annually by Transparency International (TI). Other diagnostic tools have been developed to assess individual countries’ anticorruption frameworks and policies against some global standard or benchmark. Among the latter, TI produces the National Integrity System (NIS) Country Assessments.

These assessments do not try to determine how much corruption there is in a country, but rather “how well a country tackles the problem.” NIS assessments do not aim to give each country a final “score” that can be compared to the scores of other countries. The assessments’ declared objective is to look into the effectiveness of each country’s anticorruption institutions by focusing on a standard set of “pillars” (things like democratic institutions, the judiciary , the media, and civil society). Consequently, NIS assessments are not meant to provide definitive conclusions, but rather observations within a common framework to supply a starting point for analysis, and to identify risks and possible areas for improvement. Their conclusions are designed to help stakeholders work to develop more concrete and country-specific responses.

The NIS Country Assessments, and similar tools (TI has identifies roughly 500 diagnostic tools used in the anticorruption area), have come in for a fair share of criticism. Much of this criticism centers upon their allegedly formalistic, formulaic, standardized approach to assessing anticorruption institutions. Some of those criticisms have appeared on this blog. A few months ago Richard Messick posted a commentary on a piece by Paul Heywood and Elizabeth Johnson that challenged the relevance and value of NIS reports for developing democracies (using Cambodia as an illustrative example), principally due to insufficient appreciation of cultural distinctiveness and an overemphasis on compliance-based approaches. Last month, Alan Doig’s post continued this conversation. Mr. Doig defended the value of the NIS Country Assessments as they were originally conceived, but argued that TI’s current approach to NIS assessments has become overly formalistic, which limits the utility of NIS country studies as an effective starting point for analysis or platform for progression. Though coming from a different perspective, Mr. Doig’s criticism is very similar to the core argument of Professors Heywood and Johnson. In essence, they share a skepticism that one can usefully apply broad global standards or categories to individual countries, given each country’s unique, particular, idiosyncratic circumstances.

Respectfully, I think these criticisms go too far. Taking individual country circumstances into consideration of course has value. However, standardization of assessment methodologies, the somewhat “formulaic” approach, can have benefits that may outweigh the costs. Continue reading →