Brazil’s Anticorruption Backsliding

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In a recent post I discussed the positive legacy of Brazil’s Car Wash Operation and argued that this operation, for all its missteps, strengthened the country’s legal and institutional framework against corruption. The operation not only increased public awareness of corrupt practices but also inspired the development of effective tools for corruption prevention, investigations, and case resolution, significantly contributing to a more transparent, honest, and efficient business and political environment. Nevertheless, actions taken by Brazilian leaders in the past year have intensified concerns—already present under the previous Administration—about the government’s commitment to sustaining and expanding this legacy. Transparency International (TI) raised some of these concerns in its recent comment on Brazil’s worsening performance on TI’s Corruption Perception Index (CPI). Now, there are well-known reasons to be cautious about drawing strong conclusions from the CPI or other perception-based international indexes, but in Brazil’s case, there are good reasons to be alert. Senior leaders in both the political and judicial branches have made a series of worrisome decisions that seem likely—indeed, may be intended—to set back Brazil’s fight against high-level corruption. Among those setbacks, the following are the most serious and troubling: Continue reading →

Brazilian Supreme Court Justice Orders Investigation of Transparency International

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Six days after it reported in its annual survey of corruption perceptions that the fight against corruption in Brazil was losing steam, Transparency International was placed under investigation by Supreme Court Justice Dias Toffoli (here). The ostensible reason is that the internationally renowned corruption fighting organization, headquartered in Berlin with a Brazilian chapter, misused public funds.  According to the justice, the group is a “foreign” organization and thus funds received in Brazil for its anticorruption work should have been allocated to the national treasury.

TI immediately issued a statement denying all wrongdoing. In the statement it pointed not only to the close connection between release of the 2023 CPI and Justice Toffoli’s decision to open an investigation, but to the criticisms the international organization and its Brazilian chapter have levelled against Justice Toffoli’s continuing efforts to gut Lava Jato, the case where a cartel led by the Brazilian engineering and construction firm Odebrecht bribed some 415 politicians and 26 political parties in Brazil as well as dozens officials in ten Latin American and two African countries (here).

Last September the justice tore up 2017 cooperation agreement between prosecutors and Odebrecht, making it difficult if not impossible for prosecutors in other nations to pursue charges against the company and those it bribed in their countries (here). Last week, as the Financial Times reported in breaking the investigation story, Toffoli issued another ruling letting Odebrecht off the hook; this one suspends a multimillion-dollar fine the company had been ordered to pay.

Brazilian citizens, opposition parties, and Brazil’s friends in the international community have all begun to speak against this effort to undo one the largest — and for its faults (as rehearsed on this blog (latest post here)) — one of the most important steps forward in recent years in the fight against corruption. In Brazil, its neighbors, and indeed globally.  

Let’s hope Brazilian authorities hear them.

Should Officials’ Asset Declarations Be Public? Why I Changed My Mind About Sierra Leone

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Many countries have some form of asset declaration requirement for public officials, but there is substantial country-by-country variance as to the actual design of the process. There is especially wide variation with respect to the public accessibility of the disclosed information. In Sierra Leone, under current law, government officers’ asset declarations are kept confidential. Before I was appointed head of Sierra Leone’s Anti-Corruption Agency (ACA), I was part of a civil society consortium that called for making all of these declarations public. A few months after my appointment, I was asked if I would support changing the law to make asset declarations public, in line with what I had advocated as a member of civil society. In reflecting on this question, I found that I had changed my mind.

Part of the reason I did not advocate changing the law to make asset declarations public was simply that there was no way our Parliament would pass such an amendment in the short-to-medium term. It did not seem sensible to waste political capital on such a controversial proposal—especially since doing so might provoke a backlash and jeopardize other important reforms. But the reasons for my change of view were not merely pragmatic political calculations. I have also come to believe that, at Sierra Leone’s current stage of development, making asset declarations public could do more harm than good. Continue reading →

Does Congress Really Want to Relax Corruption Controls on U.S. Arms Sales?

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Today’s Guest Post is by Colby Goodman, a Senior Researcher with Transparency International US and Defence and Security. His research focuses on corruption risks within the international arms trade and other forms of defense sector corruption. 

That corruption permeates the international arms trade is no surprise to readers of Transparency International reports (here), business executives (here), or investigative reporters (here, here, and here). What is a surprise is that the U.S. House of Representatives is considering weakening the measures the U.S. government has put in place over the past decades to prevent U.S. companies from becoming entangled in corrupt dealings.

This Tuesday, February 6, the House Foreign Affairs Committee will discuss a bill to significantly decrease the number of proposed U.S. arms sales that would require congressional review before proceeding. The bill would increase the dollar threshold that require  the Defense and State Departments to notify Congress of a planned sale. It follows a US defense industry lobbying campaign to speed up the process in delivering U.S. weapons and so make their purchase more commercially attractive. But at the cost of weakening key U.S. government efforts to curb corruption in U.S. arms sales.

To its credit, in early 2023 the Biden Administration  updated the government’s Conventional Arms Transfer policy to “ensure that arms transfers do not fuel corruption or undermine good governance, while incentivizing effective, transparent, and accountable security sector governance.”  This policy followed its Countering Corruption Strategy, where  the U.S. government pledged to start “reviewing and re-evaluating criteria for government-to-government [security] assistance, including around transparency and accountability.”  These actions recognized the significant harm to U.S. national security that comes from pervasive corruption in partner countries and the need to mitigate corruption risks within the U.S. defense industry.  

Detailed below are four key critical corruption checks that would be undermined by the proposed bill.

Continue reading →

Moneyball: The Financial Entanglement Threatening the Integrity of Spanish Football

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The Spanish Professional Football League (La Liga) is the most popular and profitable sports league in Spain. (In the 2022-2023 season, La Liga had a record-setting revenue of 1.99 billion euros and more than 11 million spectators.) But the league has been beset by a string of corruption allegations. In an especially prominent recent case, one of La Liga’s most well-known teams, FC Barcelona, confirmed that between 2001 and 2018, the club had paid a total of 7.3 million euros to a consulting company owned by Jose Maria Enriquez Negreira, who during that time was the vice president of the Technical Committee of Referees (CTA) of the Royal Spanish Football Federation (RFEF), the national governing body of all football-related activities, including La Liga. Though FC Barcelona acknowledged the payments, the club insisted that the payments were solely for lawful consulting services unrelated to refereeing decisions. FC Barcelona further noted that such consulting arrangements are standard practice among La Liga clubs. (Indeed, a former police commissioner accused Real Madrid CF of paying Negreira as well.)

While the allegations against FC Barcelona are still under investigation, many outside observers would likely conclude that, even if there was no direct quid pro quo, this is a textbook case of a serious conflict of interest. The problem, though, is that it does not appear that there are any rules—under Spanish law, the RFEF Disciplinary Code, or the league’s own regulations—against such conflicts: Continue reading →

New Podcast Episode, Featuring Sankhitha Gunaratne

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In this episode, host Liz David-Barrett interviews Sankhitha Gunaratne, Deputy Executive Director of Transparency International Sri Lanka. Ms. Gunaratne emphasizes how the recent economic crisis in Sri Lanka has laid bare the extent to which kleptocratic actors have captured key pillars of the state, and she provides more detail on the methods that these actors have used to effectuate their state capture, including the suppression of accountability institutions and militarization of key government positions.Ms. Gunaratne then outlines the strategies TI Sri Lanka has employed to respond to this challenge, including the use of strategic litigation and leveraging the influence of international financial institutions. You can also find both this episode and an archive of prior episodes at the following locations: KickBack was originally founded as a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (ICRN). It is now hosted and managed by the University of Sussex’s Centre for the Study of Corruption. If you like it, please subscribe/follow, and tell all your friends!

Guest Post: How the Azerbaijani Government Corrupts Western Democracies with “Caviar Diplomacy”

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Today’s guest post is from Aram Simonyan, a Calouste Gulbenkian Foundation Scholar at the University of Sussex.

Artsakh, or Nagorno-Karabakh, is an autonomous region primarily populated by ethnic Armenians. (That the region is part of Azerbaijan rather than Armenia is due to a 1921 decision by the USSR central government.) In 2020 Azerbaijan, with outspoken support from Turkey, gained power over notable territory in Nagorno-Karabakh. Then, in December 2022, the Azerbaijani government closed the Lachin corridor (the only land route between Nagornon-Karabakh and Armenia), thereby cutting off 120,000 ethnic Christian Armenians in the contested enclave from the outside world—and from food, medicine, and other primary goods. And in September 2023 Azerbaijani military, with the apparent support of the Turkish president, forces swept into towns and villages, killing, shelling, and bombing civilians—evoking trauma of the Armenian Genocide among the population.

Yet the reaction from the West has been shockingly muted. It’s hard to ignore the striking contrast between the round-the-clock media coverage of the Gaza conflict and the scarcity of news on Nagorno-Karabakh even when Azerbaijan was bombing Armenian hospitals, schools and beheading people. Critics have also pointed out how European institutions and Western companies have continued to do business as usual with Azerbaijan, notwithstanding its aggression.

Part of the justification for this may be that Azerbaijan helps meet the EU’s need for natural gas. (In July 2022, European Commission President Ursula von der Leyen referred to Aliyev as a “trustworthy partner” for gas supply to the EU, though since Azerbaijan imports gas from Russia, it’s not at all clear why the EU wanted to involve the Azerbaijani government in the supply chain.) But another reason is that Azerbaijan has made use of what critics have dubbed “caviar diplomacy”: the use of strategic bribery (direct and indirect) to corrupt and curry favor with Western governments and institutions. Continue reading →

Why Is There No Zurichgrad? Protectionism in Swiss Real Estate

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Anonymous investments in foreign real estate markets have become a popular way to launder money and evade taxes. Opaque offshore structures now control a substantial share of high-end real estate in many major cities across the world. While the international sharing of financial data has made it harder to hide assets in offshore accounts, overseas property remains an easy target for illicit actors due to a lack of equivalent cross-border reporting. The city that has come to symbolize this problem is London—sometimes derisively referred to as “Londongrad” due to the extent to which Russian oligarchs own many of the city’s luxury homes.

Many might be surprised to learn that Switzerland, despite its longstanding reputation as a haven for illicit financial funds, has no major problem with money laundering in real estate. This is all the more surprising given that the Swiss property market would seem to be an exceptionally attractive target for dirty money in a number of ways. Swiss law affords extensive anonymity to individuals behind the corporate veil and does not require any licensing in the real estate sector. Furthermore, unlike many other countries, Switzerland still does not subject real estate agents, lawyers, or notaries – the key actors in property acquisition – to its anti-money laundering laws, as long as the property transaction in question does not involve a payment of more than the equivalent of about $110,000 in cash. At the same time, real estate prices in Switzerland are high and have risen dramatically in recent decades, especially in the cities and tourist areas. Illicit actors, who already roam financial centers such as Zurich, should thus have an easy time parking their assets in Swiss real estate. So why is there no “Zurichgrad”? Continue reading →

Breakthrough in the Use of Artificial Intelligence to Fight Corruption

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Whatever peril or promise the future of artificial intelligence holds, Brazilian, Colombian, and Italian researchers show it is a powerful tool for targeting corruption investigations.

Each year Colombia and Italy let thousands of contracts for goods, services, and public works, and each year some percentage is awarded thanks to bribery, conflict of interest, or other corrupt behavior. Each year Brazil’s central government transfers millions of dollars to the countries’ 5,500 plus municipal governments, and each year employees of some governments steal a portion.

Corruption is discovered through audits or whistleblowing, but a significant percentage goes undetected. The work done in Brazil, Colombia, and Italy shows how AI helps governments to deploy their investigative resources to boost the odds of finding a much larger percentage.

Continue reading →

Upcoming Symposium on Integrity in Climate Finance: Call for Contributions

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This coming May 9-10, the World Bank, Green Climate Fund, and Transparency International, together with several other partners, are jointly hosting a Symposium on Supranational Responses to Corruption: Integrity in Climate Finance and Action. The event will take place in London. The symposium theme is a timely one. At the most recent Global Conference of State Parties to the UN Framework Convention on Climate Change, states and financial institutions committed to record-breaking financing for climate solutions across sectors, and established the structure of the long-awaited Loss & Damage Fund to help developing countries. But corruption and fraud remain significant risks to public and private investments across developed and developing countries, and this means that the vast mounts of money that will be needed to address global climate change may be exposed to substantial integrity risks.

The conference organizers have recently published a call for contributions, and they are encouraging practitioners and scholars from all relevant areas (finance, law, economics, technology, sociology, etc.) and sectors (government, private sector, academia, financial community, non-profit, international organizations, etc.) to submit proposals. The organizers particularly encourage proposals that take an interdisciplinary or cross-sectoral approach.

Proposed contributions should be submitted to IntegritySymposium@worldbank.org by February 4, 2024–two weeks from today.

We hope that many of you will consider submitting proposals and join our efforts to support a creative, efficient, and coordinated evolution of integrity policies to tackle the specific challenges arising from climate finance and action, helping ensure that the deployed resources are going where they are sorely needed.