Money in Politics: Can it be Controlled?

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The research consortium Money, Politics, and Transparency recently released Checkbook Elections, a summary of a two year, multi-million dollar project to examine the role of money in politics.  A principal aim of the study was to identify “what works, what fails, and why” when countries reform laws governing campaign and party finance.  To answers to these questions, researchers analyzed how and why governments regulate the financing of political campaigns and political parties, drawing on case studies of regulation in Brazil, Britain, India, Indonesia, Italy, Japan, Mexico, Russia, South Africa, Sweden, and the United States.

Checkbook Elections‘ authors tout the results, asserting the volume provides “several core findings” which offer “important lessons for policy makers both domestically and internationally wishing to support countries in their reform trajectories.” Unfortunately for those looking for ideas on what kinds of campaign and party finance reforms might help control corruption, this is hype.  The text offers but a few lessons.  None are new or terribly important or generalizable.  The study, however, does contain an important conclusion, one which the authors are candid enough to report even if they don’t feature it. Continue reading →

(Why) Is the Walmart Case Taking So Long?

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So this might not be the most important question in the world, but I’ve been wondering why the U.S. Government’s investigation into Walmart’s alleged violations of the Foreign Corrupt Practices Act (or, more accurately, FCPA violations committed by Wal-Mart’s Mexican subsidiary, Walmex) has yet to produce a final settlement.

A quick and somewhat simplified recap (for those among our readers who don’t obsessively follow every FCPA case in the pipeline): In April 2012, two New York Times reporters broke a blockbuster story about how Wal-Mex had been systematically paying bribes to scores of Mexican officials to get permits for new stores (often circumventing local environmental protection and historical preservation regulations in the process), and—perhaps even more damningly—about how Walmart’s senior leadership, upon learning of the bribery allegations from an internal whistleblower and preliminary internal investigation, had decided to cover up the problem and reject its own compliance department’s calls for a thorough investigation. (Walmart tried to get out in front of the story by including a disclosure of possible FCPA problems in its December 2011 FCPA filing, though that disclosure downplayed the seriousness of the issue.) The original New York Times story, along with a follow-up story published in April 2012, netted the two reporters a Pulitzer Prize. Those reports, along with Walmart’s December 2011 disclosure, prompted the Department of Justice Securities & Exchange Commission to begin investigating Walmart for FCPA violations.

That was back in April 2012. It’s now three and a half years later, and there’s still no resolution of the case; the investigation is still ongoing—something that has prompted grumbling in some quarters about both the length and cost of the investigation (see here and here). Why is this taking so long?

This is a question I’ve heard several people raise at various conferences and meetings. I don’t have any good answers, but I thought I’d throw out a few hypotheses: Continue reading →

Justice v. Corruption: Challenges to the Independence of the Judiciary in Cambodia

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Last month, the International Bar Association (IBA) Human Rights Institute issued a report entitled Justice versus Corruption: Challenges to the Independence of the Judiciary in Cambodia which paints a dark picture of the extent of political and financial corruption in the Cambodian judicial system. This report was prompted by the enactment of three controversial laws that enabled the Cambodian government to undermine the independence of the courts, but the IBA’s investigation went beyond these three laws to examine the judicial system as a whole, only to discover that, in addition to persistent problems of government interference with judicial independence, the entire Cambodian judicial system was riddled with both bribery and political corruption.

There are credible allegations that cases are often decided in favor of the party offering the larger bribe; Cambodian lawyers interviewed by the IBA researchers estimated that 90% of the cases heard by the courts involve bribes to judges or clerks, and that when no bribe is offered, judges often give no attention to the case, and court staff will refuse to release basic information, or give lawyers access to the case files. In addition, the report found that trainee judges are asked for large bribes to access to their professional trainings — meaning that what the report calls the “the culture of bribe giving and receiving” is taught to judges from the very beginning of their career. In addition to this widespread bribery, political corruption of the judiciary is also pervasive. The report notes suspicions of judges and clerks sometimes being given specific instructions from powerful politicians how to decide cases in which these politicians have a financial interest.

To address this widespread, systemic corruption, the IBA offers a series of recommendations. A few of the report’s recommendations are concrete and implementable. For example, report recommends that the IBA exercise influence on the Cambodian Bar Association (the BAKC) to reform itself if it wishes to remain a member of the IBA; such pressure may be help to end corrupt practices in the BAKC itself, and encourage the independence and protection of lawyers in Cambodia. Unfortunately, however, most of the report’s recommendations, while appealing in theory, are not terribly practical, at least in the context of Cambodia today. In emphasizing idealistic, aspirational recommendations, the report perhaps missed an opportunity to recommend some more concrete, practical goals that, while not fully addressing the problem, might at least have some chance of being adopted. Continue reading →

Is Dodd-Frank Coming to Kenya?

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Being a whistleblower in Kenya is a risky business. John Githongo and David Munyakei might be exhibits 1 and 1a in supporting that assertion. More recently, blogger David Mutai was arrested and had his blogs and Twitter account shutdown after exposing corruption at a public agency and in some county governments. More generally, according to Transparency International’s 2014 East Africa Bribery Index, Kenyans reported just 6% of the bribes they were aware of, and a common reason (noted by 10% of respondents) was fear of adverse consequences.

Against this backdrop, earlier this year Kenyan Attorney General Githu Muigai formed the Task Force on Review of Legal, Policy and Institutional Framework for Fighting Corruption. It is not clear how much work the Task Force has done or is doing (you can read the opening address from the June 2015 “Technical Retreat for Development of a Draft Report” here), but it was reported over the summer that the Task Force plans to propose a whistleblower reward system similar to Dodd-Frank’s whistleblower incentive provisions (which have been discussed previously on this blog here, here, and here). Specifically, the reported Kenyan proposal would reward “a person who reports corruption [with] at least 10 per cent of the value of any property recovered after investigations and conclusion of the matter through judicial or other dispute-resolution mechanisms.”

If the Task Force is still looking for ideas (as far as I can tell it has not released any draft legislation or white papers, and the latest news story I could find that mentioned the Task Force is this one from August), I have a few for how to make sure its whistleblower reward program is effective. Continue reading →

Guest Post: Promoting Ambient Accountability with Architecture and Design

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GAB is delighted to welcome back Dieter Zinnbauer, Programme Manager at Transparency International, who contributes the following guest post:

Corrupt transactions do not merely “take place” – they take place in a place, a specific place at a specific time: at customs authorities and land registrars, at hospital wards, police road-stops, school headmaster offices, or the offices of social benefits agencies. The fact that most form of corruption occur in physical locations may seem both obvious and unimportant, but in fact there may be some promising ways to modify the physical settings for government-citizen interactions that would make various kinds of corruption less likely to occur (or easier to detect and remedy). This possibility builds on the observation that many corrupt transactions are fragile forms of social exchange, often involving power asymmetries, established social roles, norms, and expectations. These social dynamics are critical to enabling the parties to engage in an illegal transaction that could get both of them into a lot of trouble. These complex social dynamics and expectations are affected by the physical environment; modifications to that environment can therefore disrupt or alter the social dynamics of a specific situation—creating feelings of empowerment for potential targets of extortion and feelings of uncertainty and anxiety for those who would propose corrupt exchanges.

We should therefore think about ways to use architecture and design to empower citizens to become more aware of their rights and entitlements, to better understand and assess the services they receive, and to register complaints and seek remedies more effectively. I call this concept “ambient accountability.” I have developed this idea more fully in two recent papers (here and here), but here are some concrete examples of how this sort of intervention might work in other contexts: Continue reading →

Why Hasn’t the Indian Parliament Plugged the Gaping Hole in the Nation’s Anticorruption Law?

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India’s leaders have taken numerous steps in recent years to curb the pervasive corruption that grips the country.  Right to information, whistleblower protection, and other preventive measures have been enacted; an anticorruption agency was created in 2013, and this past April the Cabinet recommended the legislature amend the anticorruption laws to stiffen the penalties for bribery.  But despite the enormous attention the drive to combat corruption has garnered, a September 2015 Supreme Court opinion again pointed to a gaping a hole in the Prevention of Corruption Act 1988, the nation’s basic anticorruption law, a hole that is easily repairable but that, until it is, makes convicting bribe-taking public servants far harder than it should be.

Why lawmakers have yet to seal the hole is a mystery. They have known about it since 2011, when the Supreme Court first exposed it.  It is an easy one to close, and until it is closed who knows how many civil servants will demand bribes with near impunity? Continue reading →

Impunity and Immunity: When (if Ever) Should We Sacrifice Accountability for Past Corruption Crimes?

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I’ve been meaning to write a bit more about last month’s International Anti-Corruption Conference (other than my snarky reflections about anticorruption conferences generally). The conference theme was “Ending Impunity,” and indeed most of the panels and speeches emphasized, in one way or another, the importance of ending the culture of impunity and holding corrupt actors (criminally) accountable for their actions. I couldn’t agree more about the importance of ending the culture of impunity. Indeed, I suspect few people would dispute that objective; the controversies, such as they are, involve questions of means. And as a general matter, I’m also all for accountability. Who wouldn’t be? But here my commitment is more qualified, and I think the issue is a bit more complicated then some of the rhetoric sometimes implies. In fact, in the context of corruption offenses, there may be sometimes be good, or at least plausible, reasons for sacrificing accountability in order to advance some other interest.

I recognize that statement may be controversial, perhaps even heretical. Is it really ever OK to insist on less than full accountability for past corruption crimes? If so, when? The first panel I attended at the IACC, entitled “Breaking the Cycle of Impunity: Why Truth Telling and Accountability for Past Economic Crimes Matters,” brought these difficult questions to the fore. The four excellent panelists (Hennie Van Vuunen, Osama Diab, Gladwell Otieno and Transparency International Chair Jose Ugaz) all came out (unsurprisingly) against impunity and in favor of accountability. But as the subsequent discussion revealed, the impulse to hold the corrupt (fully) accountable sometimes conflicts with other legitimate interests. Although everyone agrees that those who commit corruption offenses should never have impunity, there are reasonable arguments for sometimes granting them (full or partial) immunity. Consider a few possible scenarios in which one might be tempted to exchange (full) accountability for something else: Continue reading →

Should the TPP Address Corruption? If So, How?

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The Office of the U.S. Trade Representative (USTR) says it is trying to include anticorruption pledges in the proposed Trans-Pacific Partnership (TPP) trade deal. According to USTR, it not only wants “commitments to promote transparency, participation, and accountability” in trade issues (commitments USTR claims it has already had some success securing recently), but also more general “commitments discouraging corruption . . . among public officials.” It’s not entirely clear what USTR means, particularly with respect to this latter suggestion that it is going to push for more general anticorruption pledges in the TPP. Maybe it doesn’t mean much – it might just be feel-good rhetoric, with little connection to what’s actually going on in the closed-door TPP negotiations. But suppose that USTR is sincere, and that it genuinely hopes to include some sort of anticorruption language in the final TPP deal. Is this a good idea? If so, what sorts of anticorruption commitments would be appropriate in a mega-regional trade agreement like the TPP?

The idea of incorporating anticorruption measures into trade deals is hardly novel. (See this panel summary for some high-level background). Last year, Colette’s post on this blog recommended adopting Transparency International’s suggested anticorruption measures for the proposed Transatlantic Trade and Investment Partnership (the T-TIP), though she also opposed addressing corruption through the multilateral WTO regime. Other commentators and civil society groups have pressed for the incorporation of anticorruption measures in other regional free trade agreements (for example, see here and here). With respect to the TPP, these prior discussions suggest several considerations that USTR negotiators should keep in mind if they are serious about pushing for more anticorruption language in this agreement: Continue reading →

CICIG’s Success in Guatemala: Independence Is Not Enough

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Few contemporary developments in the struggle against impunity for high-level corruption are as extraordinary—and encouraging—as recent events in Guatemala, culminating last month in the resignation, and subsequent indictment, of President Otto Perez Molina in connection with a corruption ring in the customs service (known as the “La Linea” scheme). Perez, the first Guatemalan president ever to resign, has been on the impunity radar ever since the end of Guatemala’s 30-year civil war in 1996. These latest accusations against him are just a step, though perhaps the most successful step, in the sustained campaign to hold him accountable for various transgressions.

Before he was elected, Perez was the military general responsible for a remote region in Guatemala that saw some of the bloodiest massacres of the civil war. New evidence corroborates what many in Guatemala already strongly suspected – that he not only knew about but actually ordered the raids, murders, and torture that occurred under his watch. Perez—the military’s representative during negotiation of the 1996 Peace Accords—is also implicated in the murder of a Catholic bishop which occurred days after the Bishop published a report about the military’s culpability for genocidal war crimes.

Compared to these other alleged crimes, the customs fraud that triggered Perez’s resignation may seem, if not benign, then at least relatively mild. That is not to diminish the significance of the “La Linea” scheme: Hundreds of thousands of dollars (at least) that could have been spent to improve the welfare of Guatemalan citizens instead wound up in the pockets of corrupt leaders. But it does seem peculiar that a man who not only evaded prosecution but also became president amid allegations of genocide is now facing justice not for these violent crimes but rather for stealing money. (That said, additional charges related to his war crimes could and perhaps must still be filed against Perez. Yet it remains the case that it was the corruption scandal, not the war crimes allegations, that ultimately forced his resignation.) Why has this campaign to force Perez to answer for his crimes been successful, where past attempts have failed? Continue reading →

Guest Post: Why We Should Be Excited About SDG 16

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GAB is delighted to welcome back Daniel Dudis, Senior Policy Director at Transparency International-USA, who contributes the following guest post:

On September 25th, the United Nations adopted the Sustainable Development Goals (SDGs). The SDGs identify development priorities and set measurable targets for progress that are to be met by 2030. They also replace the Millennium Development Goals (MDGs), adopted in 2000 and set to expire at the end of this year. The MDGs were aimed primarily at improving living conditions in developing countries, and focused on reducing extreme poverty and improving health, education, sanitation, and nutrition. Unfortunately, progress towards achieving the MDGs has been uneven at best. Notably absent from the MDGs were any commitments on improving governance or reducing corruption. Given that in most countries, government is the primary service provider for healthcare, education, and sanitation, and that government provides nutrition assistance and sets economic policy, the absence of any commitments to improve governance or reduce corruption was a notable blind spot. Honest, accountable, efficient government is the foundation upon which economic development and improved service delivery are built.

Happily, goal 16 of the SDGs fills this lacuna. Goal 16, which seeks to promote just, peaceful, and inclusive societies, includes (among other governance-related targets) significant reductions in illicit financial flows, progress on the recovery and return of stolen assets, and substantial reductions in corruption and bribery.

It is easy to be skeptical about the utility of ambitious international agreements such as the SDGs. Indeed, Matthew’s post last week, which criticized the Goal 16’s anticorruption targets on the grounds that they are ill-suited to quantitative measurement of progress, and Rick’s post yesterday, exemplify that view. Such skepticism, however, is misplaced. The inclusion of these targets in Goal 16 of the SDGs is an important step forward as it represents a clear endorsement by the community of nations that good governance and the fight against corruption are integral parts of the global development agenda. Continue reading →