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 →

Sustainable Development Goal 16: Am I the Only One Who Thinks It Is a Major Setback in the Fight Against Corruption?

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Last week Matthew asked if he were the only one who wasn’t excited about Sustainable Development Goal 16.   At first glance it is hard to understand why he would ask such a question.  One of 17 goals approved September 25 by the United Nations General Assembly to end poverty by 2030, SDG 16 establishes an ambitious agenda for improving the way the nations of the world govern their citizens by, among other measures, requiring concerted global action to “substantially reduce corruption and bribery in all their forms.”  How could anyone, particularly one who works on corruption issues, not be ecstatic that the 193 member-states of the United Nations unanimously endorsed this objective? And indeed numerous anticorruption advocates have already celebrated its approval (click here for Transparency International’s enthusiastic endorsement).

Although the opening of Matthew’s post was low-key (am I the only one not excited?), readers quickly learned that he was in fact severely critical of SDG 16’s corruption and bribery target because of the way progress towards realizing it is to be measured: by changes in a nation’s score on Transparency International’s Corruption Perceptions Index.  Matthew nicely summarized why this is insane on technical grounds.  Here I explain why using the CPI to measure progress is not only insane but represents a major setback in the fight against corruption. Continue reading →

Should FCPA Enforcers Focus on Bribe-Paying Employees or Their Corporate Employers?

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These days most (though not all) resolutions in Foreign Corrupt Practices Act cases involve corporate defendants paying fines or other penalties to the government. Usually (again, not always) the government does not bother prosecuting the employees who paid the bribes. (While the government has recently made individual liability in corporate criminal cases more of a point of emphasis — as exemplified by the DOJ’s Yates Memo, which Danielle discussed in yesterday’s post — the targets in those cases are typically senior executives who orchestrated bribe-paying schemes, not the lower-level executives or employees who actually paid the bribes.) The government also uses various legal tools to encourage lower-level employees blow the whistle on their employers.

Do we have this backwards? Right now, the government focuses its enforcement efforts on the corporate employers, rather than the lower-level employees who pay the bribes. Should the government instead emphasize enforcement actions against the employees? Right now, the government tries to give employees incentives to uncover and disclose evidence of FCPA violations committed by their employers. Should the government instead focus on encouraging the employers to uncover and disclose FCPA violations committed by their employees?

This past summer, I was fortunate enough to attend the Third Annual Conference on Evidence-Based Anti-Corruption Policies in Bangkok, and the keynote speaker at that event, New York University Law Professor Jennifer Arlen, made a case along those lines. (Professor Arlen’s address was actually a much more wide-ranging discussion of corporate criminal liability; I’ve extracted, and possibly oversimplified or distorted, one thread of her argument. But it’s an interesting enough argument that I think it’s worth engaging, and I’ll focus on the simple version, even though her position is more nuanced.) The argument goes something like this: The DOJ should adopt a policy that any corporation that discovers FCPA violations by its employees, and then promptly (a) discloses the violation to the government, (b) provides the government with information, and (c) assists the government in prosecuting the employee, should be exempt from corporate criminal liability for the violation; the DOJ should instead vigorously prosecute the individual employees in this situation (using the evidence that the corporate employer has itself provided). If the corporation fails to promptly disclose such a violation, however, and the government subsequently finds out about it, the corporation should be held criminally liable for the FCPA violation, and penalized accordingly.

I think this proposal is interesting enough to take seriously, though in the end I remain unconvinced that this shift in emphasis would be a good idea. Let me first lay out the argument in favor of this change, and then explain why I ultimately disagree. Continue reading →

No Longer a Cost of Doing Business: The Yates Memo Signals DOJ Is Serious About Going After Individuals

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As many observers have noted, penalties for Foreign Corrupt Practices Act (FCPA) violations tend to fall on corporations, rather than individual wrongdoers. The individual employees responsible for the unlawful conduct rarely pay fines or go to prison. The FCPA is not unique in this regard; many U.S. Department of Justice (DOJ) settlements with corporate defendants shield executives and employees from personal liability so long as the corporation accepts institutional responsibility. Yet this enforcement posture has been unsatisfying, and critics argue that many corporations simply treat the fines as an accepted cost of doing business. In response to this concern, and after much foreshadowing, the DOJ formally released a new policy on individual liability last week—a policy that applies to all corporate prosecutions and settlements, including those involving the FCPA. Known as the “Yates Memo” (it was announced by Deputy Attorney General Sally Quillian Yates in her remarks at NYU School of Law on September 9th), this new policy statement—the first major policy announcement from the DOJ under Attorney General Loretta Lynch—signals that the “cost of doing business” model of corporate compliance is coming to a definitive end.

Continue reading →

Long Walks to Where? The Limits of Popular Protest as an Anticorruption Tool in South Africa

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Anticorruption popular protests seem to be having a moment.  From Brazil to Guatemala to Malaysia, citizens have taken to the streets in response to allegations of bribery and graft. Now, a group of South Africans is hoping to add their home to the list of countries where direct action has taken hold.  A loosely knit coalition of groups calling itself Unite Against Corruption has scheduled marches in Cape Town and Pretoria next week, on September 30.

The group has good reason to believe that South Africa is ready for this kind of popular movement, given the country’s many recent corruption scandals: despite the Public Protector’s best efforts and significant initial public outcry, the “security upgrades” at President Zuma’s home in Nkandla have been brushed off (though the Constitutional Court has agreed to take up the issue); a 1990s arms deal continues to have spillover effects; the Public Protector recently released a report highlighting widespread corruption and improper conduct at the nation’s rail agency.  The list could go on and on.

Nevertheless, even if high-profile events like these may have primed the general South African public to be open to a popular anticorruption movement, there are reasons to be doubtful that these marches will have meaningful long-term effects. The obstacles that Unite Against Corruption and its marches are likely to face are not necessarily unique to South Africa, but worth noting in an attempt to analyze this particular situation:

Continue reading →

Guest Post: Pro-Transparency Organizations Fail To Practice What They Preach

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Till Bruckner, freelance journalist and Advocacy Manager for Transparify (an initiative that rates the financial transparency of think tanks and advocacy groups), contributes the following guest post in a private capacity:

“Transparency” is the watchword of the international anticorruption movement, a fact perhaps best illustrated by Transparency International’s choice of name. And partly due to the efforts of TI and many other groups, the world has changed for the better: transparency has become the new norm. Yet many of the anticorruption groups themselves need to wake up to this reality, and become more transparent themselves. Indeed, those of us in the anticorruption community would do a lot better if we started to walk our transparency talk.

This fact was driven home to me in a recent exchange I had with Professor Peter Eigen, the living legend who helped found Transparency International, about his newest venture, the Fisheries Transparency Initiative (FiTI). FiTI aims to curb corruption in international fisheries, and if it works as planned, it could have a positive impact on many issues, including overfishing, food security, and public revenue in developing countries. Somewhat unconventionally, FiTI is financed by the government of Mauritania, whose controversial president, Mohamed Ould Abdel Aziz, first announced the initiative. (see my recent article in Foreign Policy for more background.) I asked Professor Eigen about Mauritania’s financial support for the FiTI; he explained that Mauritania was only sponsoring the initial conceptual phase of FiTI, and he persuasively argued that its government would have no undue influence, let alone control, over outcomes. I then asked Professor Eigen how much Mauritania was paying his organization (the Humboldt-Viadrina Governance Platform) in connection with its work on the FiTI project, but he told me he didn’t want to disclose the figure. He explained:

“This is a normal consulting arrangement of our not-for-profit organization with the [Mauritanian] government. We do not feel it would be proper for us to disclose details of contracts. If media or taxpayers want to find out how [the] Government spends its budget, they can ask the Government. This is for FiTI an unimportant side issue.”

Professor Eigen added two more points. First, his organization would at some later point account for the money on its website. Second, he himself would be working “pro bono.”

Summary: There’s no influence peddling; the use of taxpayer funds is a domestic issue; all money will be accounted for; and nobody is lining their pockets. So, everything is okay, right?

No, it’s not okay at all. Here’s why: Continue reading →