Two Essential Volumes on Corruption

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The study of corruption and what to do about it is no longer an academic or policy-studies backwater.  Matthew’s bibliography of corruption-related publications now lists over 6,000 books, articles, and reports and, as his regular updates show (thank you Matthew), the list continues to grow at the rate of some 50 plus per month.  That is the good news.  It is also of the course the bad news.  Few practitioners, and I suspect even academics, can claim to have absorbed the learning in the 6,000 current documents let alone keep up with the outpouring of new works.

For those who can’t , I recommend two recent books: Dan Hough’s Analysing Corruption and Alina Mungui-Pippidi and Michael Johnston’s Transitions to Good Governance: Creating Virtuous Circles of Anti-Corruption.  Both do an excellent job of synthesizing and extending recent scholarship on corruption issues, and both do so in a sophisticated but accessible manner.  Both have the added virtue of being available in reasonably priced paperback editions. Continue reading →

The New Corruption Perceptions Index Identifies Countries with Statistically Significant Changes in Perceived Corruption–Should We Credit the Results?

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As most readers of this blog are likely aware, last month Transparency International (TI) released the 2017 edition of its important and influential Corruption Perceptions Index (CPI). As usual, the publication of the CPI triggered a fair bit of media coverage, much of it focused on how various countries ranked, and how individual country scores had changed from one year to the next (see, for example, here, here, here, and here).

There’s a lot to say about the most recent CPI—I may devote a post at some point to TI’s interesting decision to focus the press release accompanying the publication of the 2017 CPI less on the index itself than on the connection between (perceived) corruption and a lack of adequate freedom and protections for the media and civil society. But in this preliminary post, I want to take up an issue that regular GAB readers will know has been something of a fixation of mine in past years: the emphasis—in my view mostly misplaced—on how individual country CPI scores have changed from year to year.

In prior posts, I’ve raised a number of related but distinct concerns about the tendency of some commentators—and, more disturbingly, of some policymakers—to attach great significance to whether a country’s CPI score has gone up or down relative to previous years. For one thing, the sources used to construct the CPI for any given country may change from year to year—and adding or dropping an idiosyncratic source can have a substantial effect on the aggregate CPI score. For another, even when the underlying sources don’t change, we don’t know whether those sources are on the same implicit scale from year to year. And even if we put these problems to one side, a focus on changes in the final CPI score can sometimes obscure the statistical uncertainty associated with the estimated CPI—these scores can be noisy enough that changes in scores, even those that seem large, may not be statistically meaningful according to the conventional tests. Although TI always calculates statistical confidence intervals, in prior years these intervals have been buried in hard-to-find Excel spreadsheets, and the changes in CPI scores that TI highlights in its annual press releases haven’t always been statistically significant by TI’s own calculations. In an earlier post, I suggested that at the very least, TI should provide an easy-to-find, easy-to-read table assessing which changes in country scores are statistically significant at conventional levels, preferably over a 4-year period (as 1-year changes are both harder to detect if trends are gradual, and less interesting).

Apparently some folks within TI were thinking along similar lines, and I was pleased to see that in the 2017 CPI includes a reasonably prominent link to a spreadsheet showing those countries for which the 2017 CPI score showed a “statistically significant difference” from that country’s CPI score in each of five comparison years (2012, 2013, 2014, 2015, and 2016).

I’ve still got some criticisms and concerns, which—in the spirit of constructive engagement—I’ll turn to in just a moment. But before getting to that, let me pause to note my admiration for TI as an organization, and in this case its research department in particular, for constantly working to improve both the CPI itself and how it is presented and interpreted. It’s easy for folks like me to criticize—and I’ll continue to do so, in the interests of pushing for further improvements—but it’s much more challenging to absorb the raft of criticisms from so many quarters, sift through them, and invest the necessary time and resources to adapt and adjust from year to year. So, in case any folks at TI are reading this, let me first acknowledge and express my appreciation for how much work (often thankless) goes into the creation and continued improvement of this valuable tool.

Having said that, let me now proceed to raising some comments, questions, and concerns about TI’s claims about countries that appear to have experienced statistically meaningful changes in their CPI scores over the last five years. Continue reading →

How Can an Anticorruption Agency Repair Its Reputation After a Scandal? Lessons from Ghana

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Corruption-plagued countries often create independent anticorruption agencies (ACAs) to ensure the integrity of other institutions. But sometimes ACAs get caught up in their own scandals—scandals that can undermine their credibility and hard-won public trust. ACAs may be particularly at risk because of the threat they pose to powerful elites, who will always be on the lookout for ways to undercut ACAs. Of course, ACAs should be attuned to these risks and to put measures in place to minimize them. But no preventative system is perfect. What to do when it fails? When an ACA’s reputation has been besmirched by an internal corruption scandal, what can the agency do to restore public trust?

Ghana’s experience may offer some lessons. In 2008, Ghana established the Commission on Human Rights and Administrative Justice (CHRAJ), which is responsible for anticorruption enforcement, among other things. CHRAJ has done much good work, from conducting investigations of corruption allegations to producing conflict-of-interest guidelines and a code of conduct. But in 2011, the CHRAJ was rocked by an internal scandal when it was revealed that Lauretta Lamptey, then chief of the CHRAJ, had misappropriated public funds to renovate her official residence, to pay hotel bills, and to upgrade her air tickets. The scandal “dented the image of the CHRAJ both nationally and internationally” and jeopardized public trust in the CHRAJ and the willingness of Ghanaian citizens to report corruption cases to the commission.

Damage control was absolutely crucial—and seems to have been largely successful. According to the US State Department’s Ghana 2016 Human Rights Report, public confidence in the CHRAJ is again high. The CHRAJ’s relative success in restoring credibility after its internal corruption scandal suggests a few guidelines for how an ACA can respond effectively in this sort of situation:

Continue reading →

India’s 2G Spectrum Case: The Scam That Wasn’t?

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It all started in May 2009 with a report filed by an NGO, Telecom Watchdog, with India’s Central Vigilance Commission. The NGO claimed that there were gross irregularities, likely due to corruption, in the allocation of licenses to operators for the 2nd Generation mobile communication standard spectrum (2G spectrum for short). By October 2009, India’s premier investigating agency, the Central Bureau of Investigation (CBI), had opened an investigation into the allegations, and in November 2010, the Comptroller and Auditor General of India estimated the losses to the government from the alleged misconduct at a whopping US$29 billion. Indian media called it the “biggest scam in the history of Independent India.” Time Magazine put it just behind Watergate as the second worst case of abusing executive power.

Petitions were filed in the Supreme Court of India pressing for cancelling the allocation and making sure that those behind the corruption would be held responsible. In 2012, the Supreme Court obliged, canceling all 122 licenses and imposing huge fines. The Court declared that the then-Minister for Communications and Information Technology, A. Raja, had used an inappropriate allocation procedure (first-come-first-served rather than an auction) to “favor some of the applicants … at the cost of the exchequer.” In an unprecedented move, the Court also ordered the creation of a “Special Court” to try the cases, and modified regular criminal procedure by curbing intermediate challenges, in order to ensure a speedy trial. The first case was instituted against the former Minister, senior bureaucrats, and prominent businessmen for conspiring to rig the allocation process and cheat the government of revenue.

On December 21, 2017, the Special Court announced its verdict—and it was not what many had expected: The Special Court acquitted all the accused, declaring that “a huge scam was seen by everyone when there was none,” and that “some people created [the perception of] a scam by artfully arranging a few selected facts and exaggerating things beyond recognition to astronomical levels.” The Court also found that, notwithstanding the earlier 2010 report (which others had already suggested was methodologically problematic), the actual losses to the government were marginal at most.

Many commentators were stunned and dismayed by the Special Court’s decision, denouncing it as “shocking” and “flawed.” But after reading the Special Court’s decision, I find myself in agreement with the Special Court’s reasoning. While it’s impossible, in a short blog post, to wade through the merits of the Special Court’s analysis for each of its conclusions, here I want highlight some of the most important arguments in support of the Special Court’s controversial decision. Continue reading →

Tracking Corruption and Conflicts of Interest in the Trump Administration–March 2018 Update

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Last May, we launched our project to track credible allegations that President Trump, as well as his family members and close associates, are seeking to use the presidency to advance their personal financial interests.Just as President Trump’s son Eric will be providing President Trump with “quarterly” updates on the Trump Organization’s business affairs, we will do our best to provide readers with regular updates on credible allegations of presidential profiteering (despite the fact that Eric Trump seems to think this is a violation of his family’s First Amendment rights). Our March 2018 update is now available here.

The most notable new developments over the last month include:

  • New reports concerning the financial entanglements of Jared Kushner, the President’s son-in-law and senior advisor, in particular an allegation that multiple foreign governments may have already attempted to use Kushner’s business interests as a form of leverage to influence U.S. policy.
  • The controversy surrounding Donald Trump Jr.’s visit to India, which he ostensibly took in a solely private capacity, but which critics pointed to as exactly the sort of blending of public and private rolls that is of such great concern in this administration.
  • Additional troubling financial conflict-of-interest reports involving senior administration officials outside of the Trump family circle, including former CDC director Brenda Fitzgerald, who resigned after it was revealed that she had purchased stock in tobacco and health care companies while director, and HUD Secretary Ben Carson, whose “listening tour” appears to have been organized in such a way as to benefit his son’s business interests.

As always, we note that while we try to include only those allegations that appear credible, we acknowledge that many of the allegations that we discuss are speculative and/or contested. We also do not attempt a full analysis of the laws and regulations that may or may not have been broken if the allegations are true. For an overview of some of the relevant federal laws and regulations that might apply to some of the alleged problematic conduct, see here.

Asset Recovery and Fair Trials: The European Court of Human Rights Jurisprudence

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Article 54 of the UN Convention Against Corruption requires state parties to have procedures “to give effect to an order of confiscation issued by a court of another State Party.”  Once a party receives a request to return assets backed by a confiscation order issued by a court in the requesting state, the process is simple.  The requested party brings the order before a domestic court, and the court orders the assets forfeited.  The requested state then hands over the money, securities, title to the property, or whatever is required to transfer the assets from their current owner to the requesting state.

What if the asset’s owner contests the transfer, however?  What if the owner asserts the court proceedings that led to the confiscation order issuing in the requesting state were not fair?  Does the requested state have an obligation to entertain the complaint? Continue reading →

Announcement: New York Activists Soliciting Comments on Proposed Constitutional Amendment to Create a Public Integrity Commission

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While most of the posts on this blog focus on national-level corruption, we’ve also had quite a few posts on corruption in certain subnational jurisdictions—and for one reason or another, we’ve had a particularly large number on corruption in New York State (see, for example, here, here, here, here, and here). While New York is by most accounts not among the most corrupt states in the U.S. (see here and here), corruption there has attracted a great deal of attention given New York’s social, political, and economic importance—and the egregiousness of some of the state-level corruption that has been discovered or alleged in New York state politics.

Is institutional reform the answer? Last year, GAB contributor Kaitlin Beach argued that U.S. states should follow Australia’s example by establishing anticorruption agencies (ACAs) at the state level, and it seems some New York activists have been thinking along similar lines (though perhaps without the explicit foreign inspiration). A coalition of nongovernmental organizations—including Columbia Law School’s Center for the Advancement of Public Integrity, the New York City Bar Association’s Committee on Government Ethics, and the New York chapters of the League of Women Voters, Common Cause, and the Public Interest Research Group—has, under the auspices of the “Committee to Reform the State Constitution,” been developing a proposed amendment to the New York State Constitution that would create a new “Commission on State Government Integrity,” that would assume the responsibilities (now dispersed among various other state organs) for investigating and penalizing ethics violations (as well as other forms of workplace misconduct) for both the legislative and executive branches, and for administering and enforcing campaign finance laws.

The full text of the draft of the proposed amendment is available here. I have not yet had an opportunity to read it carefully and form my own opinion. But I wanted to post an announcement about this proposal expeditiously, because the Committee to Reform the State Constitution is actively soliciting comments on its draft, and has requested that such comments be submitted by March 9th (a week from this Friday). Many of this blog’s readers may have relevant expertise—and perhaps also a useful comparative perspective—that may be helpful to these New York activists as they develop and refine their proposal. I encourage any of you out there with an interest in the institutional design of anticorruption agencies to take a look at the current draft proposal and to submit comments, if you have something potentially useful to contribute. Comments should be emailed to comments@detercorruption.info.

Unfriended: Should Facebook be Required to Enforce US Sanctions Against its Users?

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Late last year, Facebook abruptly shut down the accounts of Ramzan Kadyrov, the despotic leader of the Chechen Republic. The social media giant claimed that it had a “legal obligation” to disable Kadyrov’s Facebook and Instagram accounts because of new sanctions imposed by the United States government under the Magnitsky Act. Among other things, Kadyrov has been accused of ordering the assassination of a political opponent, personally torturing another, and leading a violent purge of gay men. He’s also an active social media user: four million people followed his Facebook and Instagram profiles, and 400,000 continue to follow him on Twitter. Kadyrov had become famous for posting videos of himself wrestling a crocodile, praising Russian President Vladmir Putin, and—perhaps ironically—mocking what he saw as the ineffectiveness of American sanctions.

As many journalists noticed, Facebook hasn’t disabled the accounts of other sanctioned individuals, including Venezuelan President Nicolas Maduro, Russian Deputy Prime Minister Dmitry Rogozin, and Israeli billionaire Dan Gertler. Facebook explained this seeming inconsistency with an unhelpful truism that it “operate[s] under the constraints of US laws, which vary by circumstance.” Its statements have led observers to speculate that Facebook is using the sanctions as a pretextual reason to cut off a user it already disliked, or that it’s “picking and choosing compliance” in an attempt to please the government. Although those explanations seem plausible at first glance, a careful look at the relevant laws suggests an even simpler (albeit more mundane) one: Facebook may actually be correct that it had a legal obligation to suspend Kadyrov’s accounts but not those of others targeted by American sanctions.

Continue reading →

Argentinians Cry Out “Cambiemos,” But Can They?

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In early January 2018, five prominent Argentinian officials were arrested on corruption charges, including Amado Boudou, Argentina’s former vice president. These arrests come on the heels of President Mauricio Macri’s landslide victory on a “Cambiemos,” or “Let’s Change,” platform—a promise to root out public corruption. Late last year, Argentina’s Congress passed a new anticorruption law, which punishes companies for corruption by blacklisting them from public contracts and levying fines of up to five times the amount companies have obtained by illegal means. The new law also requires corporate compliance programs for the first time. But, while these reforms are welcome, the Argentinian judiciary remains an obstacle to genuine progress in eradicating the rot of corruption.

While the Macri government should be praised for making steps in the right direction, its efforts will fall short unless something is done about Argentina’s judicial system. More specifically, Argentina’s judicial institutions suffer from three problems that impede effective anticorruption efforts: Continue reading →

Guest Post: Pakistan’s Culture of Corruption

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Zagham H. Chaudry, a student at Temple Law School, contributes today’s guest post:

Pakistan is the world’s fifth-most populous country, a regional power in a strategic location with a powerful military, and nuclear weapons. Yet Pakistan is far from reaching its full potential, and corruption is a main reason for that. Corruption in Pakistan is well-known and well-documented, and extends from the top (the Prime Minister) all the way down to the bottom (the local bazaar). Talk to random Pakistanis on the street and chances are they’ll tell you how corruption has affected them—how they couldn’t get jobs in the police or be admitted into good universities because they refused to pay bribes. Corruption has become part of the culture in Pakistan. It has become engrained in the beliefs, attitudes, and customs of the Pakistani people.

The corrupt (often wealthy and often politicians) in Pakistan have used their political influence to manipulate the laws, policies, and rules of procedure of the country to sustain their power, status, and wealth, causing serious and extensive harm to Pakistani society which has mostly gone unpunished. This sort of corruption eats away at state institutions like termites eat wood. Additionally, according to Transparency International, there is a “[strong] connection between corruption and inequality, which feed off each other to create a vicious circle between corruption, unequal distribution of power in society, and unequal distribution of wealth.” One has to look no further than the lifestyle of the corrupt ruling class in Pakistan as compared to the rest of the country to see the connection between corruption and inequality. The corrupt live in expensive bungalows in gated communities, drive fancy cars, have dozens of servants and security, and live luxurious lives—while four out of ten Pakistanis continue to live in poverty.

In a society where so few have so much and so many have so little, and where politically-motivated hiring, patronage, and nepotism reign supreme, you end up with a situation where becoming part of the corrupt system seems to be the only way out of poverty for millions of disadvantaged and deprived people. And in this way, subcultures of corruption begin to take root in the lower levels of society which all conform to the overall culture of corruption on the highest levels (e.g. federal and provincial governments). Consider the following stylized example, which despite its simplicity accurately captures how business often gets done in Pakistan: Continue reading →