It’s Election Day in the United States. Please Vote (if you can).

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Today voters in the United States will go to the polls to elect the next President of the United States, as well as representatives in the legislature and other offices. For that reason, there doesn’t seem to be much point in publishing an ordinary post today.

This election is so obviously important–not just for the United States but for the whole world–that it might seem a bit forced to try to put an “anticorruption spin” on it. It’s nonetheless worth keeping in mind that, for all the U.S. government’s faults and mistakes–of which there are many–American leadership on anticorruption, both domestically and abroad, is vitally important. After we know the results of the election, I may try to write something up speculating about how those results might affect global anticorruption efforts. For now, I’ll just remind readers (who probably don’t need any such reminder) that Donald Trump and Hillary Clinton have starkly different histories and views regarding these issues (see here, here, here, here, here, and here). If you are a registered voter in the United States and have not already voted, please do so as soon as possible! If not, please cross your fingers, knock on wood, and pray.

The Road Ahead in Anti-Money-Laundering (AML): Can Blockchain Technology Turn the Tide?

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One of the most exciting developments in financial and information technology in the past decade is the emergence of so-called blockchain technology. A blockchain is a database of information distributed over a network of computers rather than located on a single or multiple servers. The first and most famous practical application of blockchain technology is the electronic currency Bitcoin. Bitcoin and similar cryptocurrencies using blockchain technologies offer users the equivalent of anonymous cash transactions, and have been linked to illicit transactions in drugs, weapons, and prostitution as they. It is therefore no wonder then that blockchain technology is sometimes viewed as a problem, or at least a challenge, for those interested in fighting financial crime and corruption.

But blockchain technologies have other uses, many of which could in fact aid in the fight against these crimes. In an earlier post on this blog, Jeanne Jeong discussed how blockchain technology could be used managing land records. Another use for blockchain that has occasionally been mentioned (see here and here), but not yet sufficiently pursued, is anti-money-laundering (AML). Currently, banks spend about US$10 billion per year on AML measures, yet money laundering continues to take place on a vast scale. The goal of laundering money is to “wash” illegally obtained money (e.g. through corruption) into “clean” money, making the origins of the money untraceable. Blockchain technologies have five features that could make AML efforts both more effective and less costly:

Continue reading

Why Does the Chinese Communist Party Tear a Hole in its Own Democracy Cloak?

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The People’s Republic of China recently uncovered the biggest vote-buying scandal since its founding in 1949. On September 13, 2016, the Standing Committee of the National People’s Congress (NPC), the national legislature, dismissed 45 of the 102 NPC representatives from Liaoning province for securing their seats in the NPC through vote buying. These NPC representatives had apparently bribed representatives to the Liaoning provincial Congress, which elects NPC representatives; 523 out of the 619 Liaoning provincial congress representatives were also implicated in this scandal, and have either resigned or been removed for election rigging, rendering the Liaoning provincial legislature inoperable. The central authorities stated that the “unprecedented” bribery scandal challenged the “bottom line” of China’s socialist system and the rule of the Chinese Communist Party (CCP).

For many observers, reports of this vote-buying scandal came as a surprise. Some commentators wondered why people would risk getting caught and punished for corruption, just to secure a seat in a legislature that has been derided as little more than a rubber stamp. The most plausible explanation is that a seat on the NPC facilitates access to the rich and powerful, and it is this consideration, rather than the mostly symbolic power of the legislature itself, that motivates candidates to buy votes in NPC elections. (See here, here and here). There is, however, a second puzzle about the recent vote-buying scandal—one that is in fact more puzzling and important, though it has not received as much attention: Why do CCP leaders care about electoral corruption in NPC elections, if the NPC merely rubber-stamps party decisions? True, the CCP under President Xi Jinping has made the fight against official corruption a top priority—but given the prevalence of corruption in so many areas of Chinese government, many of which have immediate practical consequences, why target electoral corruption in the NPC?

The question becomes even more interesting when one considers that calling attention to vote-buying in NPC elections—a form of corruption that might otherwise not attract much attention—poses certain risks to the CCP. First, even if the NPC is mostly a rubber stamp legislature, it represents the symbolic core of state power, and is central to the CCP’s “socialist democracy,” a model the Party has long used to resist the Western-style multi-party democracy. As one commentator put it has observed, the exposure of the NPC vote-buying scandal has torn a large hole in the country’s “democracy cloak.” Second, exposing widespread corrupt practices could also increase pressure for systemic reforms. So why did CCP leaders choose to crack down on corruption in the legislature so openly? Continue reading →

Guest Post: The US Needs To Show More Respect for Foreign Prosecutions

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GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

The principle that the state may not criminally prosecute the same defendant twice for the same conduct—known in most of the world as ne bis in idem (“not twice for the same thing”), and known in the United States as the prohibition on “double jeopardy”—is well-settled and uncontroversial, at least in Western democracies. Much more controversial is whether that principle protects a defendant prosecuted by one country from prosecution by a different country for the same (or closely related) conduct. This question is of particular importance in the context of transnational bribery, where the same conduct might violate the criminal laws of multiple governments. As I discussed in my last post, in Europe, a mix of domestic legislation, international treaties, and court decisions have established an international version of the ne bis in idem principle, providing companies with a reasonable assurance that if they are prosecuted in one European country, they are shielded from further prosecution in another. In contrast, in the United States the prohibition on double jeopardy has been consistently interpreted to prohibit only multiple prosecutions by the same sovereign. US laws thus offer no protection against re-prosecution in the United States after a prosecution abroad.

The power of US prosecutors to go after companies that have already been prosecuted in other countries is enhanced by other powers that European prosecutors can only dream about. As noted in an earlier post, a US prosecutor can pursue a corporation when anyone within that corporation can be shown to have committed a crime, giving the prosecutor considerable leverage. US prosecutors also have finely tuned procedural mechanisms, such as deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs), that are only tentatively being explored in other countries, such as the United Kingdom and France. The DOJ regularly asserts aggressive notions of its territorial powers, claiming, for example, that the use of dollars as the currency of an illegal transaction may subject the participants to US prosecution. US prosecutors have essentially unreviewable discretion their investigative decisions, because unlike many countries in Europe, criminal investigations (and, crucially, the decision to charge) are not supervised or reviewed by judges, as the DC Circuit has recently held.

Taken together, these circumstances risk causing two problems: Continue reading →

Suing Governments For Corruption Before International Tribunals: SERAP v. Nigeria

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Last week I reported that the Socio-Economic Rights and Accountability Project or SERAP , a Nigerian NGO, was being sued by the country’s former first lady for urging the authorities to investigate her for receiving “small gifts” ($15 million in total) while her husband served in government, first as Governor of the oil-rich state of Bayelsa, then as Vice-President and later President.  While the saga of the first lady and her “small gifts” recently took another unusual (bizarre?) legal twist, this week the focus is on SERAP and one its most creative approaches to combating corruption in Nigeria: the precedent setting suit it brought against the Government of Nigeria in the Court of Justice of the Economic Community of West African States  for corruption in education.

The ECOWAS Court is one of several regional international tribunals established to hear disputes between neighboring countries, in its case 15 states in West Africa.  The Court’s statute also grants it jurisdiction to entertain actions against a member state for human rights violations.  In 2007 SERAP took advantage of this provision to bring the Government of Nigeria before the bar of justice for its failure to curb massive corruption in the agency funding schools in disadvantaged areas of the country.  While SERAP’s argument was straightforward — Nigeria’s inability to curb corruption denied citizens’ their constitutionally guaranteed right to education – the SERAP suit appears to be a first: a human rights action based on a state’s failure to control corruption.

The Nigerian government lodged several objections in opposition: SERAP had to take its case first to Nigerian courts; the ECOWAS Court had no jurisdiction to hear the matter; SERAP had no standing to sue; the right to education was not justiciable.  But in its landmark decision in favor of SERAP the Court swept all of them aside, ruling that corruption in education could constitute a violation of the right to education if government did not make a serious effort to prosecute the corrupt officials and recover the stolen funds.  SERAP v. Nigeria stands as an important precedent for civil society groups in countries where governments are unwilling to address deeply-ingrained, high level corruption that denies citizens constitutionally guaranteed rights.  It also demonstrates how an energetic civil society group committed to fighting corruption can find a creative legal argument to unlock the courthouse door.

Details on the case are in this paper by Adetokunbo Mumuni, SERAP’s Executive Director and its lead counsel in the action.  The paper is the eighth in a series commissioned by the Open Society Justice Initiative on civil society and anticorruption litigation.  It follows earlier ones on i) standing by GAB editor-in-chief Matthew Stephenson, ii) civil society litigation in India by Vidhi Centre for Legal Policy Director Arghya Sengupta, iii) private suits for defrauding government by Houston Law School Professor David Kwok, iv) private prosecution in the U.K. by Tamlyn Edmonds and David Jugnarain, v) damages for bribery under American law by this writer, vi) public trust theory by Professor Elmarie van der Schyff, a professor of law at South Africa’s North-West University, and vii) private suits for corruption in public procurement by Abiola Makinwa, a lecturer in commercial law at the Hague University of Applied Sciences.  All papers are available here on the JI Web site.

On Theory, Data, and Academic Malpractice in Anticorruption Research

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I’m committed (probably self-servingly) to the idea that academic research is vital to both understanding and ameliorating corruption. I sometimes worry, though, that we in the research community don’t always live up to our highest ideals. Case in point: A little while back I recently asked my law school’s library to help me track down some research papers on corruption-related topics, including a working paper from a few years ago, co-authored by a very well-known and influential corruption/good-governance researcher. I’d seen the paper cited in other articles but couldn’t find it. The library staff couldn’t find it either, and emailed the authors directly to ask if a copy of the paper was available. Here is a verbatim reproduction of this famous professor’s response:

Thanks for your email. Unfortunately, we decided not to finish this paper since we could not get the data to fit our theory[.]

I have to say, I found this response a bit troubling.

Now, to be fair, maybe what this person (whose first language is not English) actually meant was that he and his coauthor were unable to locate the data that would allow a meaningful test of the theory. (In other words, perhaps the statement “We could not get the data to fit our theory” should be understood to mean: “We could not acquire the sort of data that would be necessary to test our theory.”) But boy, much as I want to be charitable, it sure sounds like what this person meant was that he and his coauthor had tried to slice and dice the data in lots of different ways to get a result that fit a predetermined theory (so-called “Procrustean data torturing”), and that when they couldn’t get nature to confess, they spiked the paper rather than publicizing the null findings (contributing to the so-called “file drawer problem”).

Now, again, maybe that latter reading is wrong and unfair. Maybe the more charitable interpretation is actually the correct one. But still, it’s worrying. Even if this case was not, in fact, itself an illustration of the data torturing and the file-drawer problem, I’m sure those things go on in anticorruption research, just as they do elsewhere. Lots of scholars (including the author of the above email) have their own pet theories about the best way to promote high-quality governance, and spend quite a bit of time advising governments and NGO reformers on the basis of these (allegedly) evidence-based theories. But for the results of academic research to be credible and useful, we all need to be very careful about how we go about producing our scholarship, and to be careful not to let our findings — or our decisions about what projects to pursue, publish, and publicize — be unduly determined by our preconceived notions.

Can U.S. Efforts To Fight Vote Buying Offer Lessons for Others?

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Vote buying—the practice of providing or promising cash, gifts, jobs, or other things of value to voters to induce them to support a candidate in an election—is illegal in 163 countries, yet it is a widespread and seemingly intractable problem in many parts of the developing world. In Ghana, for example, incumbents distribute outboard motors to fishermen and food to the rural electorate. In the Philippines, politicians distribute cash and plum short-term jobs. In 2015, Nigerian incumbents delivered bags of rice with images of the president ahead of the election. And Werner Herzog’s 2010 documentary film Happy People shows a politician cheerfully delivering dried goods along with musical entertainment to an utterly isolated village of trappers in Siberia (49 minutes into the film). Thus, recent instances of vote buying are more varied than the simple cash for vote exchange; they include awarding patronage jobs and purposefully targeting social spending as a reward for political support.

Vote buying not only distorts the outcomes of elections, but it also hurts the (usually poor) communities where this practice is rampant. It might be tempting to say that at least those who sell their votes receive something from their government, but in fact, once these citizens are bought off, their broader interests are left out of the government’s decision-making process, as the incentive to provide public goods to that group disappears. A study in the Philippines, for example, found that vote buying correlates with lower public investments in health and higher rates of malnourishment in children.

While some commentators occasionally (and condescendingly) suggest that vote buying is a product of non-Western political norms and expectations, this could not be further from the truth. Although wealthy democracies like the United States today experience very little crude vote buying, vote buying in the U.S. was once just as severe as anything we see today in the developing world. In fact, during George Washington’s first campaign for public office in 1758, he spent his entire campaign budget on alcohol in an effort to woo voters to the polls. By the 19th century, cash and food occasionally supplemented the booze, particularly in times of depression. Even as late as 1948, a future president won his senate campaign through vote buying and outright fraud.

Yet while U.S. politics today is certainly not corruption-free (see here, here, and here), it has managed to (mostly) solve the particular problem of vote buying. Does the relative success of certain U.S. efforts hold any lessons for younger democracies? One must always be cautious in drawing lessons from the historical experience of countries like the U.S. for modern postcolonial states, both because the contexts are quite different and because suggesting that other countries can learn from the U.S. experience can sometimes come off as patronizing. Nevertheless, certain aspects of the United States’ historical strategy to combat vote buying might be relevant to those countries struggling with the problem today. Let me highlight a few of them: Continue reading →

U.S. Voters Says that Corruption Is a Major Issue. Why Are Politicians Silent on It?

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If public opinion polls are any guide, corruption is one of the most important issues to U.S. voters. A 2012 Gallup survey by Gallup found that a full 87% of Americans deemed reducing corruption as either extremely important or very important—placing this issue second only to the economy/job creation, and ahead of the budget deficit, terrorism, and Social Security. More recent polls buttress these findings: A 2015 survey found that 58% of respondents were afraid or very afraid of corruption by government officials, the highest of any fear surveyed. This meant that corruption was a greater fear than large-scale disasters like terrorist attacks or economic collapse, as well personal events like identity theft, running out of money, or credit card fraud. Three-quarters of those surveyed in 2015 also believed that corruption was widespread in the government, a marked increase from 2007. And a 2016 survey found that 16% ranked corruption the single most important issue, which might sound low, but was the third highest issue in the polls.

Yet despite these poll numbers, U.S. politicians and parties do not seem to have made anticorruption a major policy priority; certainly this issue gets far less attention than terrorism and the budget deficit. True, U.S. politicians will sometimes attack their rivals as “corrupt,” a rhetorical tactic we have seen in the current election (see here and here). But although politicians use the term “corrupt” to malign their opponents, they do not seem to treat corruption as a genuine issue in need of fixing, and do not put forward an anticorruption policy agenda. Hillary Clinton has an extensive list of policy proposals on her campaign website, yet corruption and anticorruption are not mentioned. Although her website goes in depth about money in politics, it stops short of using the term “corruption” to describe this problem. Donald Trump did recently release a five-point ethics plan that used the term “corruption” once, but it is incredibly vague and appears to have been made out of desperation in the closing days of the campaign. In any event, his “Issues” page still does not mention corruption, nor do those of third-party candidates Gary Johnson, Jill Stein, or Evan McMullen.

What explains this disconnect? Huge numbers of Americans tell opinion pollsters that they believe that the government is corrupt and that this is one of the biggest problems facing the country. Yet political parties and politicians barely discuss “corruption” (except as invective) or lay out plans for solving it. This is a puzzle. Politicians, after all, have strong incentives to talk about the issues that voters care most about. Even if we doubt how seriously we should take politicians’ platforms and campaign rhetoric, one would think that it would make sense for politicians at least to pay lip service to the idea of fighting public corruption, if voters care so much about it. So why do we not see more focus on corruption and anticorruption in the platforms of U.S. presidential candidates?

Continue reading →

Guest Post: Behavioral Economics, Punishment, and Faith in the Fight Against Corruption

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The following guest post, by Roberto de Michele, Principal Specialist in the Institutional Capacity of the State Division at the Inter-American Development Bank (IDB), is a translated and slightly modified version of a post that Mr. de Michele originally published in Spanish on the IDB’s governance blog on August 29, 2016:

Last August, Hugo Alconada Mon, one of Argentina’s most prestigious investigative journalists, published an article (in Spanish) describing how road construction firms in Argentina created a cartel to fix public work contracts. Members of the cartel would meet in the board room of the sector chamber to conduct their business. The room has a statue of Our Lady of Luján, patroness of Argentina. Before commencing negotiations to fix contracts, assign “winners,” and distribute earnings, members of the cartel would turn around the image of Our Lady of Luján to face the wall, with her back to those gathered there. It was, as one of the sources candidly put it, “so that she doesn’t see what we were about to do.” This remark got me thinking about two possible explanations on why we break the law, cheat, and lie both to the government and to others. Continue reading →

Nigeria’s Former First Lady: Stop Attacking Me for Gifts I Received

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Ex-Nigerian First Lady Patience Jonathan’s patience is being tested by a campaign of calumny being waged against her.  Since her husband left office in 2015 she has been under constant attack merely because she recieved some small gifts from friends and well-wishers while her husband served in government.   The Nigerian NGO Socio-Economic Rights and Accountability Project is trying to force the authorities to open a criminal case against her and the Economic and Financial Crimes Commission, Nigeria’s anticorruption agency, wants to seize the gifts.

It is easy to see why the attacks are testing Patience’s patience.  The gifts were all small, some as little as $800, and altogether they total just $15 million.  Moreover, as she has repeatedly explained, she had nothing to do with the money being deposited into bank accounts in someone else’s name.  An assistant did that without telling her, and in any event why does it matter?  She was the only one authorized to write checks on the account.

Thankfully for the former first lady, members of the Union of Niger Delta Youth Organisation for Equity, Justice and Good Governance have come to her defense.  In a complaint filed in early October for themselves and Mrs. Jonathan the group asked the Federal High Court in Lagos to enjoin the NGO SERAP from “taking any further steps in further vilification, condemnation and conviction of the Former First Lady Mrs Dame Patience Jonathan . . . and in the use of the judicial process for that purpose by the extremely publicized pursuit of any application for the coercion of the Attorney General of the Federation to prosecute the Plaintiff/Applicant for owning legitimate private property . . . .”  The group’s complaint seeking the injunction against SERPA goes on to detail just how unjust the criticism of Dame Patience is – Continue reading →