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.

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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:

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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 →

Will the Canadian Courts Wreck International Law Enforcement Cooperation on Corruption Cases?

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The answer to the question posed in the title depends upon how the Canadian Supreme Court rules in World Bank Group v. Kevin Wallace.  If the court rules that, despite laws providing it is not subject to the orders of domestic courts, the World Bank must obey a directive of the Ontario Superior Court, cooperation between the Bank and national law enforcement agencies is likely to end – or be severely weakened at the least.  The pleadings filed in the case, and just made available on the Supreme Court’s web site, describe how the court is poised to weaken transnational efforts to curb corruption. In summary . . . Continue reading →

Am I the Only One Who’s Not So Excited About SDG 16?

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This Friday, over 190 world leaders are scheduled to gather at the UN headquarters in New York City for the UN Sustainable Development Summit to endorse a new set of “Sustainable Development Goals” (SDGs) to be achieved over the next 15 years. The SDGs are a follow-up to the Millennium Development Goals (MDGs), but the SDGs are much more expansive and cover a wider range of topics. Most relevant to the anticorruption community is Goal 16 (“Promote Peaceful and Inclusive Societies for Sustainable Development, Provide Access to Justice for All and Build Effective, Accountable and Inclusive Institutions at all Levels”), and in particular SDG “Target” 16.5 (“substantially reduce corruption and bribery in all their forms”).

There seems to be a lot of excitement among anticorruption activists and reformers about Goal 16 and Target 16.5 (see here, here, and here)—but to be honest, I’m not sure why. Indeed, I tend to think that the formal endorsement of anticorruption as part of the SDGs will do little good, and the inclusion of Target 16.5 might, if anything, be counterproductive. Continue reading →

Anticorruption Bibliography–September 2015 Update

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An updated version of my anticorruption bibliography (now with over 4,000 sources!) 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.

Ridding the Courts of Corrupt Judges: Ghana Takes the First Step

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Last week Ghanaians awoke to depressing news.  A team of investigative reporters revealed they had 500 plus hours of video tapes showing High Court judges and lower court magistrates accepting payoffs to acquit defendants in cases ranging from robbery and murder to bribery itself.  (Click here, here, and here for news accounts.) For Ghana, this is bad news, very bad news: dangerous criminals remain at large; some innocent individuals may have been jailed because they didn’t pay off a judge; and whatever confidence citizens may have had in the courts has been shattered.

But the initial reports contain some very good news as well.  The government is taking forceful and responsible action to cleanse a critical state institution of corruption. In accordance with article 146 of the Ghanaian Constitution, Chief Justice Georgina Theodora Wood has established a committee to examine the allegations against each judge and advise Ghanaian President Mahama whether he should remove any of them from office per the constitutional test of “stated misbehavior.”  At the same time, the Attorney General has announced his intention to prosecute judges, magistrates, and their accomplices for bribery and related crimes.

The scandal is similar in many ways to the one that engulfed Chicago’s courts in the 1980s, recounted in a Foreign Policy article flagged here last week.  As in Ghana, the Chicago cases arose from secret tape recordings showing judges fixing cases for money.  Like the Chicago judges caught on tape, some of those implicated in the Ghanaian scandal claim the taping violated the sanctity of the judicial chambers and evidence from them should therefore not be heard in any legal proceeding.  And, as in Chicago, many in Ghana are urging that those who bribed their way out of a criminal case be re-tried before an honest judge.

As the Ghanaian scandal unfolds difference between it and the one in Chicago will emerge, but some issues will be the same, and it may help Ghanaian authorities and citizens to know about Chicago’s experience. Probably most useful is the reasoning American courts relied upon to overcome the defense of double jeopardy when prosecutors sought to retry those defendant who had paid a judge to acquit them. Continue reading →

UN Guide for National Anticorruption Strategies

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The United Nations Office of Drugs and Crime recently published National Anti-Corruption Strategies: A Practical Guide for Development and Implementation, designed to assist countries considering the drafting (or revision) of a “National Anticorruption Strategy” document as part of an effort to comply with their obligations under the UN Convention Against Corruption (UNCAC). (Although the Guide will be formally presented/unveiled at the upcoming UNCAC Conference of States Parties meeting in St. Petersburg, the online version is already available.)

Full disclosure: Both Rick and I were heavily involved in the drafting of this Guide (indeed, at the early stages of the process Rick used this blog to solicit — quite successfully — input on the project). For that reason, I’ll refrain from praising (or criticizing) this Guide. I will merely note that it exists, and that it may be of interest to some of our readers, particularly those who are currently either considering or actively working on the development of this sort of national anticorruption strategy document. I’ll also invite readers to share their criticisms of the Guide, in the hopes that frank, unsparing criticism will be helpful both to those working on these issues at the front lines, and to those of us who work on preparing guidance documents like this in the future.

Don’t Be Fooled: Bob McDonnell’s Supporters Want To Legalize Bribery of Senior Government Officials

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Last week, as many readers (at least those who follow corruption issues in the U.S.) are probably aware, the U.S. Supreme Court issued an order allowing former Virginia Governor Bob McDonnell to remain free on bail while his appeal is pending, a signal that the Supreme Court is likely to hear his case. As readers of the blog are also likely aware, I think that the appeals court that affirmed McDonnell’s bribery conviction decided correctly, meaning that the Supreme Court should either decline to hear the case, or should take it and affirm it. I really don’t think I have much more to say about the substance of the legal issues, and I wouldn’t bother posting about it again, except that an op-ed in last week’s Washington Post (by C. Boyden Gray, former White House counsel to President George H.W. Bush) got me so bloody angry that I just have to weigh in on this again, if only to point out the absurd consequences of the position advocated by Mr. Gray and others who argue that the conviction should be overturned.

The linchpin of Mr. Gray’s argument is that the alleged “official acts” that Governor McDonnell provided to private businessman Jonnie Williams (in exchange for lavish gifts, loans, and other tangible benefits) were “nothing more than speaking with aides and arranging a single meeting between an aide and [Mr. Williams],” and that criminalizing such routine conversations and meetings would be absurd. Described that way, McDonnell’s acts do indeed sound innocuous. But Mr. Gray’s characterization is so flagrantly misleading that there’s only one word to describe it, and it’s not a word I can use on a family blog. Continue reading →

Judges on the Take: How the FBI took on Chicago’s Crooked Courts

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FBI Special Agent Ken Misner was in Chicago on a critical mission: to get arrested for drunk driving. Yet each time the police pulled him over, he escaped with a warning – no matter how erratically he had driven, and no matter how well he had faked his drunkenness. It was 1980, and the Chicago police simply didn’t arrest middle-aged white guys for traffic offenses. When his act failed yet again, he finally decided it was time to resort to desperate measures. He jumped from his car, leaped onto the hood of the police cruiser, and started screaming obscenities. The officer promptly yanked him down and began writing a summons. At last, thought Misner, mission accomplished. But as he read what the cop had written, he saw he had caught another “break.” The charge was disorderly conduct, a minor offense that wouldn’t get him anywhere near traffic court. Misner never succeeded in becoming a traffic court defendant, but fellow FBI agent Woody Enderson did, realizing an important milestone in the federal undercover investigation into corruption in Chicago’s court system known as “Operation Greylord.”

Click here to read the rest of this article from Foreign Policy magazine.  It appears in the series, “Curbing Corruption: Ideas that Work,” DemLab Case Studies exploring successful approaches to fighting corruption.  Democracy Lab is Foreign Policy’s home for coverage of transitions to democracy, published in partnership with the Legatum Institute.