Corruption Risk Assessments: Am I Missing Something?

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Surely one of most salutary developments to result from the intense focus on corruption over the past two decades is the growing use of corruption risk assessments by public and private entities alike.  Risk assessments were first employed in the 17th century to assess the likelihood a steam engine would explode and refined over the years to address risks as varied as the meltdown of a nuclear reactor or climate change.  A corruption risk assessment estimates the chances a government agency or private corporation will experience one or more types of corruption.  Just as assessing the risks of an engine explosion or reactor melt-down is an indispensable prerequisite for designing measures to mitigate if not eliminate these risks, a corruption risk assessment provides the critical information public and private sector decisionmakers need to design practicable corruption prevention programs.

A plethora of guides explaining how to conduct a corruption risk assessment are posted on the internet (examples for the public sector here and here; for the private sector here, here, and here).  All recite the standard method for assessing risks of any kind found in text books and government reports.  First, all conceivable forms of corruption to which the organization, the activity, the sector, or the project might be exposed is catalogued.  Second, an estimate of how likely it is that each of the possible forms of corruption will occur is prepared and third an estimate of the harm that will result if each occurs is developed.  The fourth step combines the chances of occurrence with the probability of its impact to produce a list of risks by priority.

The critical steps are the second and third.  If the estimate of where bribery is likely occur or its impact if it does occur is wrong, prevention efforts will not be properly targeted. That happened to the U.K. insurance firm Aon Limited.  Thinking bribery was more likely to occur in its U.K. operations than those overseas, it put the bulk of its enforcement efforts into preventing bribery in the U.K.  Because, as the U.K. financial regulator found, it “failed properly to assess … the higher risks presented by some of the countries in which [its overseas] divisions operated,” it thus spent little time overseeing its non-U.K. agents.  That mistake was costly.  When it was revealed that many non-U.K. agents had paid bribes, the U.K. Financial Services Authority, the U.S. Department of Justice, and Securities Exchange Commission all brought enforcement actions.

Given the importance of accurate estimates of bribery risk and impact to developing a corruption risk assessment, one would expect “how to” guides to explain ways to improve the accuracy of the estimates.  Especially since risk assessments in other areas do. Continue reading →

Petty Corruption, Grand Corruption, and the Politics of Absolution

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My post last month offered some reflections on Professor Giovanni Orsina’s interesting observations, at last September’s Populist Plutocrats conference, about how the wide-ranging Clean Hands (mani pulite) investigations in Italy may have contributed to the rise of Silvio Berlusconi—first by creating a power vacuum, and second by contributing to the delegitimation of professional politicians and traditional political organizations. Today I want to pick up on another thread of Professor Orsina’s analysis, echoed and amplified by his co-panelist, the journalist Beppe Severgnini. Professor Orsina and Mr. Severgnini’s insight is that is that part of the secret to Berlusconi’s success – and the apparent willingness of many Italian voters to overlook his corruption and other misdeeds – is what for lack of better terminology I’ll call the “politics of absolution.” Here’s how Mr. Severgnini describes the phenomenon (see 57:34 on the video):

[A] populist plutocrat [like Berlusconi] is warm, empathetic, admits his sins – and forgives yours. It’s a very smart thing because he admits his huge sins, and he forgives your little sins…. [To] every shopkeeper who gave 50 Euros to the local policeman, … Berlusconi [said] “OK, don’t worry, this is not important.” … The smart thing, and the very subtle thing [is that by saying,] “I forgive you for those 50 Euros,” … in a way I buy your [acquittal of] me, [even though for me] it was 50 billion, not 50 Euro…. I forgive you the small things, so you forgive me for the big things – and maybe you vote for me. And that’s exactly the psychological trick, and it works extremely well.

Professor Orsina’s analysis is similar, emphasizing the contrast between Berlusconi’s forgiving, indulgent populism and what many voters perceived as the arrogant moralization of his chief opponents on the Italian left (at 45:20):

[The Italian left said to the voters,] “This is a corrupt country, this is a country that must be … corrected, … and we are those who can … teach the Italians how to behave.” Now, this was perceived as extremely arrogant…. On the other side, [Berlusconi] was saying, “Come on, guys! You are good! This is a great country…. I am in no position to tell you what to do…. What I want to do is to create the conditions for you to do what you want to do because what you want to do is good.” Of course there was no match…. Now, of course, when Berlusconi was telling the Italians, “You’re good, you can do whatever you want,” he was wrong. And when the left was telling the Italians, “We should behave better,” they were right…. [But] this [is] … why Berlusconi won the elections and the left lost.

I lack the expertise to assess, or even to intelligently discuss, whether this analysis of Italian politics is correct. But it strikes me as plausible, and moreover, if the diagnosis is accurate in this or other contexts, then understanding the politics of absolution may have at least two implications for efforts to combat corruption. Continue reading →

“Petty” Corruption Isn’t Petty

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Grand corruption attracts plenty of attention—from activists, the mainstream media, and other commentators (including on this blog)—and for good reason. While the media may simply be riveted by the decadent lifestyles of corrupt actors, the anticorruption community has increasingly recognized the devastating impact that kleptocrats and their cronies can have. No doubt, this attention to grand corruption is welcome and recent successes in fighting it are laudable. At the same time, though, this increased focus on grand corruption carries with it the risk of making smaller, more everyday forms of corruption—sometimes called “petty” corruption—seem less consequential.

Yet so-called “petty” corruption remains widespread, and its aggregate impact should not be underestimated. By way of example, consider the most recent results from the Transparency International (TI) Global Corruption Barometer (GCB) survey of citizens in Latin America and the Caribbean, which found that one-third of people who used a public service paid a bribe in order to do so. In other words, for these 90 million people, their ability to access a government service to which they were entitled was conditioned upon an extralegal payment—and that’s just accounting for this one region.

Even as the anticorruption community rightly focuses attention on combatting grand corruption, we can’t forget the real havoc wreaked by smaller-scale corruption. So-called “petty” corruption is not a petty concern. Rather, it’s a serious, pervasive problem that deserves just as much sustained attention as does politicians buying collector cars and oceanfront properties with assets from their secret offshore bank accounts. At the risk of repeating familiar points, it’s worth reviewing the ways in which small-scale corruption has, cumulatively, a range of incredibly destructive effects:

Continue reading →

“Right to Information” or “Right to Intimidation”? The Unfulfilled Promise of India’s Right to Information Act (RTI)

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On July 18, 2017, Rajesh Savaliya, a 31-year-old activist, left his home in Surat, India to visit a friend’s construction site. The next day, he was found severely injured on the side of a highway, and doctors pronounced him dead later that day. Mr. Savaliya was murdered because of his attempts to expose corruption in his hometown schools, including the education mafia extracting money from students and schools operating without proper licenses and approval letters. As part of his campaign to expose this corruption, Mr. Savaliya had filed multiple requests for information about the local schools pursuant to India’s Right to Information Act (RTI). Sadly, Mr. Savaliya’s story is not unique: Since 2005, over 60 activists have been killed, and hundreds of others have been assaulted or harassed, for filing RTI requests.

Freedom of Information laws like India’s RTI Act can be a powerful pro-transparency tool for combating corruption and mismanagement in government. The RTI Act, which was adopted following a nationwide grassroots campaign, provides every Indian citizen the right to request information from a public authority—a right which is invoked by 4–6 million citizens each year. Yet the RTI Act is unlikely to be effective in exposing serious corruption—especially in cases where criminal elements have infiltrated or coopted state organs—unless those filing RTI requests are adequately protected and insulated from intimidation.

Not only are current protections for RTI requesters inadequate, but India seems, if anything to be moving in the wrong direction. Early this year, as a part of a package of proposed updates to the rules governing the RTI Act, India’s Department of Personnel and Training (DoPT) proposed a new rule (Rule 12), which would allow RTI requestors to withdraw their appeals of decisions refusing disclosure, and would also require all such appeals to terminate upon the death of the requestor. Proposed Rule 12 has been widely criticized (see here, here, and here), in part because these changes would further incentivize threats and violence against RTI requesters like Rajesh Savaliya. As the Human Rights Initiative noted, “Draft Rule 12 will only legitimize such attacks and embolden vested interests who wish to keep corruption and maladministration under wraps.”

Instead of adopting counterproductive measures like Draft Rule 12, the DoPT and Indian Parliament should instead amend the Act and governing rules to better promote the safety and security of RTI requesters. Here are three potential changes—in order of likelihood of success and impact—that would serve this objective:

Continue reading →

Dispatches from the UNCAC Conference of States Parties, Part 2: International Enforcement of Anticorruption Agreements

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Last month, the UN Convention Against Corruption (UNCAC) Conference of States Parties (COSP) was held in Vienna, Austria. In addition to the formal meetings of government representatives, the COSP also featured a number of panels, speeches, and other side events, at which leading experts discussed and debated a range of anticorruption topics. GAB is delighted that Northwestern Pritzker School of Law Professor Juliet Sorensen and her student Kobby Lartey, who attended the COSP, have offered to share highlights of some of the most interesting sessions in a series of guest posts. Today’s post is the second in that series.

The COSP panel on “Corruption and International Laws and Judgments” generated candid conversations about the role of international laws and judgments in the fight against corruption. Moderated by Bart Scheffers of the Open Society Foundation, the panel included one of us (Juliet Sorensen), along with Transparency International’s Gillian Dell; the Helsinki Committee’s Harry Hummel; and France Chain of the OECD. Continue reading →

Best Wishes for the New Year

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As the year ends I want to thank the 86, 826 individuals from 209 jurisdictions who visited GAB this year.  A special thanks to those who offered comments or clarified my often-feeble efforts to alert readers to new developments or alternative approaches to fighting the common enemy.

See you in 2018.

Dispatches from the UNCAC Conference of States Parties, Part 1: Revisiting the Jakarta Principles of Anti-Corruption Agencies

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Last month, the UN Convention Against Corruption (UNCAC) Conference of States Parties (COSP) was held in Vienna, Austria. In addition to the formal meetings of government representatives, the COSP also featured a number of panels, speeches, and other side events, at which leading experts discussed and debated a range of anticorruption topics. GAB is delighted that Northwestern Pritzker School of Law Professor Juliet Sorensen and her student Kobby Lartey, who attended the COSP, have offered to share highlights of some of the most interesting sessions in a series of guest posts. Today’s post is the first in that series.

Though specialized anticorruption agencies (ACAs) are dismissed by some as redundant or ineffective, last month’s COSP panel on “Revisiting the Jakarta Principles: Strengthening Anti-Corruption Agencies’ Independence and Effectiveness” made a strong case for ACA’s importance to the fight against corruption. (The Jakarta Principles are drawn from a 2012 statement drafted by anticorruption practitioners and experts from around the world; these broad, aspirational principles help anticorruption to protect themselves, and to offer inspiration for their work.) The panel, which included ACA commissioners from Indonesia, France, Romania, and Burkina Faso, as well as representatives from Transparency International, the UNODC, and UNDP, the panel highlighted the diverse struggles and successes of member states’ ACAs. Continue reading →

Preemptive FOIA Suits Chill Transparency Across the U.S.

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Freedom of Information Acts (FOIAs) have been strong anticorruption tools in the United States for decades. Though the federal government and the 50 state governments each have their own version of FOIA, the basics are similar across the board: these statutes require the publication of certain government documents and allow any citizen to request the disclosure of unreleased records, and the government must provide that information, subject to certain important exemptions (for example, exceptions related to national security, personal privacy, and internal government deliberations). If the government agency does not answer a FOIA request within a certain period of time, set by the statute, the requester can file a FOIA lawsuit to force the agency to respond.

At the federal level, FOIA requests were one of the tools used to uncover former Health and Human Services Secretary Tom Price’s use of private charter planes for government travel, leading both to his resignation and to increased scrutiny on travel by other Cabinet members. The federal FOIA also played a key role during the Clinton Administration in uncovering corruption at the Department of Agriculture. Though the state-level FOIA laws get less attention, they have also played an important role in exposing corruption and related misconduct. In Virginia, for example, requests under the state FOIA helped build the corruption case against former Governor Bob McDonnell. Similarly, Michigan’s FOIA statute helped reveal information that led to charges against Detroit’s mayor for misconduct and obstruction of justice.

However, a new threat has recently emerged to the effectiveness of these laws, particularly at the state level. State and local governments have begun responding to state FOIA requests by suing the requester to ask the court for a so-called “declaratory judgment” that the agency is not obligated to release the information requested. These preemptive FOIA suits put one of the most powerful anticorruption tools in the United States at risk.

Continue reading →

Fake News: An Emerging Threat to Anticorruption Activists

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The reputation of the Anti-Corruption Action Centre (ANTAC), a Ukrainian anticorruption NGO, was called into question in May 2017, when a video featuring a report from the American “News24” network appeared on YouTube; the video reported on investigations into the finances of Vitaliy Shabunin, the head of the ANTAC board. A few months later, in September 2017, Ukraine’s NewsOne featured a live broadcast of a sitting of the US Congressional Committee on Financial Issues in relation to alleged corruption in the National Bank of Ukraine (NBU). The hearing focused largely on the conduct of Valeriya Hontareva, who had championed reforms of the banking sector to prevent misuse of the system by business tycoons. The panelists suggested that Ms. Hontareva was herself corrupt and being investigated by the US Congress.

Reports that leading figures fighting for more integrity in Ukraine might themselves be corrupt are, of course, disturbing. What’s even more disturbing is the fact that both of these stories were completely fabricated. News24 does not exist. The news anchor who appeared in the purported News24 video was an American actor named Michael-John Wolfe, hired through the site Fiverr.com. As for the broadcast of the hearing before the “US Congressional Committee on Financial Issues”—there is no such committee. The so-called “hearing” was in fact a private event organized by lobbyists (including former congressman Connie Mack), held in a room in the basement of the US Capitol without the attendance of any current members of Congress. (Representative Ron Estes (R-KS) sponsored the room’s booking, apparently in violation House ethics guidelines.)

Although attempts to tarnish the reputations of activists and reformers are not new, the two incidents described above reveal that anti-anti-corruption forces are beginning to deploy the “fake news” tactics that garnered so much attention in recent elections, especially though not exclusively in the United States. And while in these incidents fake news was used as an offensive strategy, fake news has also been deployed defensively, for example by the wealthy and influential Gupta family in South Africa, to shake off allegations of corruption.

Although these efforts in Ukraine seem clumsy and easily exposed, it is likely that fake news will be an increasingly difficult challenge for anticorruption efforts in the years to come. The fake news phenomenon threatens to undermine anticorruption efforts in a variety of ways: Continue reading →

Anticorruption Bibliography–December 2017 Update

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An updated version of my anticorruption bibliography is available from my faculty webpage. A direct link to the pdf of the full bibliography is here, and a list of the new sources added in this update is here. As always, I welcome suggestions for other sources that are not yet included, including any papers GAB readers have written.