The Use of Social Media to Combat Corruption: The “I Paid a Bribe” Web Site in India

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The initial success of the Indian web site “I Paid a Bribe” fed hopes social media offered a way to curb petty corruption.  Launched in August 2010, the site invited citizens of Bangalore to file an online report if they were asked for a bribe, stating where the demander worked, the amount demanded, and whether they had paid or not.  The Bangalorese responded to this invitation with gusto.  One told of having to bribe a clerk 12,000 rupees, or about $200, to register a flat.  Another angrily recalled having to pay 700 rupees, around $10, to verify an address for a passport application: “When I asked him why should I pay for this, he ridiculed and threatened me that lot of details are missing and I won’t get my passport. The same happened to some of my friends.”   Within six months the site had received more than 5,000 reports of bribery and had become a media sensation, featured in stories the New York Times, the BBC, The Economist, The Wall Street Journal, and numerous Indian papers.

But two years after launch, web site traffic had fallen dramatically and site sponsors had begun questioning its utility.  One told authors of a Harvard Business School case study, “Not too many people are now coming on to our site, and whatever limited activity that occurs there is linked with fresh media reports. I think there is a feeling of ennui . . . at the moment.”  Transparency International’s Dieter Zinnbauer reports traffic has declined at similar web sites in Pakistan, Columbia, and elsewhere and that some have even folded.

While disappointing, these failures are not surprising given the hurdles such sites face to achieve results. Continue reading →

Invalid Instrumental Variables in Corruption Research: A Lament

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A while back, I posted a critical commentary on Paulo Mauro’s widely-cited paper purporting to show that corruption lowers foreign investment and growth. My criticisms focused on Mauro’s use of a statistical technique called “instrumental variables” (or “IV”) analysis, which — when done properly — can help figure out whether a hypothesized explanatory variable actually causes an outcome of interest, or whether instead the observed statistical correlation is due to the fact that the alleged outcome variable actually influences the proposed explanatory variable (“endogeneity” or “reverse causation”).  But an IV analysis requires making certain strong and untestable assumptions about the relationships between the variables.  If those assumptions are wrong, the conclusions one draws about causation will be unsound (not necessarily wrong, but not worthy of credence on the basis of the analysis).

This may seem like an issue that only stats nerds should care about, but I actually think it’s important that other researchers, activists, and policy advisers understand the basics of the technique and how it can go wrong (or be misused).  I say this because a surprisingly large amount of the research on the causes and consequences of corruption — research that is often cited, individually or collectively, in discussions of what to do about corruption — relies on this technique. And, I hate to say it, but much of that research uses IV analysis that is clearly inappropriate.

I’ve been thinking about this issue recently because I’ve been going through the literature on the relationship between democracy and corruption for a paper I’m writing, and this issue crops up a lot in that literature. But I’ve seen essentially the same problems in lots of other research on corruption’s causes and consequences, so I’m reasonably confident that this is not an isolated problem.

Let me say a bit more about the essence of the statistical problem, how IV analysis is supposed to solve it, and why much of the IV analysis I’ve seen (focusing on the democracy-corruption context) is not worthy of credence: Continue reading →

A Tale of Two Earthquakes: Different Types of Corruption in Nepal and Sichuan

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In the wake of the horrifying human toll taken by the earthquake in Nepal, attention has once again turned to the role of corruption in increasing the original death toll and in hampering the effectiveness of aid. Rick recently posted about it on the blog. Bribery of building inspectors enabled a great deal of new construction in Kathmandu that violated the building code, and it was these buildings that were the most likely to trap people when the earthquake hit. There is a feeling of deja vu about the allegations. After the 2008 earthquake in Sichuan province in China, corruption in the building of schools led to thousands of additional deaths when schools across the region came down on pupils. But not all corruption is created equal, and the corruption in building in Kathmandu may have been less harmful than that in Sichuan province.

Continue reading →

Uses and Abuses of Anticorruption Tactics in the Gambia

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The tiny African country of the Gambia rarely receives international media attention.  Perhaps once a year, shocking statements from its president, Yahya Jammeh, might win it a small news blurb, but even then, these stories tend to be treated in a perfunctory, “look at this wacko human rights abuser” manner: reporting something awful or absurd—like his declaration that LGBT people are “vermin”, or that he has developed a cure for AIDS—but doing so in a derisive or condescending tone. A headline like “Five Crazy Things About Gambia’s Jammeh” is fairly typical.  (The latest zaniness-oriented reporting has been centered on an incredibly poorly planned attempted coup by two Gambian-Americans against whom the U.S. Department of Justice just filed charges.)

However, such gawking, hit-and-run style reportage overlooks the very real, very sinister way that Jammeh has solidified his hold on power by co-opting the language of anticorruption as a rhetorical tool to justify his tenure, and by using purported anticorruption crackdowns as a weapon to eliminate his opponents.  By utilizing the language of anticorruption advocates, and selectively throwing certain members of the government to the wolves while perpetually tossing the (anticorruption) book at his political opponents, Jammeh has managed to create the myth that his administration is at least relatively committed to fighting corruption, and is the best hope for the Gambia to pursue economic development.

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Announcement: London Conference on Asset Recovery and Procurement Corruption

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As GAB readers are no doubt aware, two of the hottest topics in the anticorruption world — topics we’ve devoted a great deal of attention to on this blog — are stolen asset recovery (see here, here, here, here, and here) and fighting corruption in government procurement (see here, here, here, here, and here).

For those who are interested in these topics, I’ve recently learned that the London Centre of International Law Practice will be holding what looks to be a very interesting conference on both these subjects on June 22-23, in London. It looks like a very interesting set of speakers, with a lot of legal practitioners (but some good representation from TI-UK and other anticorruption NGOs as well). I regret I won’t be able to make it myself, but for those who are interested, you can find out more about the conference here.

Death by Corruption: The Nepal Earthquake

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Although press reports attribute the growing death toll in Nepal to the April 25 earthquake, earthquakes were in fact the proximate cause of very few fatalities.  Nepalese did not die from shaking ground but, as news footage shows, because they were crushed by falling buildings.  The link between earthquakes, collapsing buildings and fatalities has been known for centuries if not millennia as has the solution: codes setting standards that ensure all structures can withstand the shock of a quake.  Since 1994, Nepal’s building code has contained several provisions requiring buildings to be earthquake proof, but as the New Zealand consultant who helped develop the ’94 code told Bloomberg News, drafting a quakeproof code is easy, “the hard thing is to get implementation.”

That is where corruption makes its appearance.  Builders can find many ways to bribe around building codes, and judging from New York Times correspondent Chris Buckley’s May 1 story, Nepalese builders found them all.  The collapsed buildings in Katmandu “exposed not only flaky concrete and brittle pillars, but also a system of government enforcement rotted by corruption and indifference. . . . Residents and building experts say the corruption is an open secret . . . .  The developers and landlords who slap up the buildings . . . know they will rarely be punished by officials, who are often happy to look the other way for a price.”

The earthquake – corruption – death nexus is a predictable part of post-quake reporting.  Stories similar to Buckley’s appeared following the 2010 earthquake in Haiti, the 2008 one in China’s Sichuan province, the 2001 quake in the Indian state of Gujarat, and the 1999 one in the Marmara region of Turkey.  But as with the Nepal story, they were based on anecdotes and impressions.  Is corruption really why so many buildings become coffins once a quake strikes?  And if it is, what can be done to curb it? Continue reading →

Guest Post: Using Big Data to Detect Collusive Bidding in Public Procurement

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Bence Tóth and Mihály Fazekas of the Corruption Research Center Budapest (CRCB) contribute the following guest post:

As several earlier posts on this blog have discussed (see, for example, here, here, and here), collusion and corruption in public procurement is a significant problem, one that is extremely difficult to detect and combat. The nature of public procurement markets makes collusion easier to sustain, as pay-offs are higher (demand is often inelastic due to the auction mechanisms used), administrative costs increase entry barriers, and the transparency of procurement contract awards–often intended as an anticorruption device–can actually make it easier for cartel members to monitor one another and punish cheating. Law enforcement agencies have tried various techniques for breaking these cartels, for example by offering leniency to the first company that “defects” on the other cartel members by exposing the collusive arrangement. However, although leniency policies have sometimes proven to be an effective tool to fight coordinated company behavior, the efficacy of this approach is limited given the relative unlikelihood that the government will ever acquire convincing evidence of collusion absent such a defection by an insider. Hence, there is great need for alternative methods to identify collusive rings and guide tradition investigation.

In many markets, using quantitative indicators to detect collusion has not been feasible, as gathering meaningful tender-level data (or even market-level data) is too costly, or simply impossible. However, in the case of public procurement markets, there is a huge amount of publicly available data, which makes the use of “Big Data” techniques to pinpoint collusion-related irregularities more feasible. Indeed, in collaboration with our colleagues at CRCB, we have developed a simple, yet novel approach for detecting collusive behavior. Continue reading →

Williams-Yulee and Why It’s Time for America to Stop Electing Judges

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For casual news fans and avid U.S. Supreme Court junkies alike, the past week’s headlines have been dominated, not surprisingly, by stories about Obergefell v. Hodges, the same-sex marriage case.  But there’s another story that emerged from the Court this week that deserves special attention in this forum:  Williams-Yulee v. Florida Bar Association. In that case — issued the day after oral argument in Obergefell — the Court once again waded into America’s longstanding but peculiar experiment with judicial elections.

For more than 150 years, the United States has stood apart from most of the world in its practice of electing judges; today, 39 U.S. states elect at least some judges and 87% of state court judges will stand for an election at some point in their careers. Why this fascination with judicial elections? Well, it can be chalked up to the populist origins of the practice — as a measure for combating corrupt patronage networks in the mid-1800s — and the belief that elections render judges more democratically accountable.

But as states like Florida have learned, judicial elections never lived up to their populist promise. In fact, there was a time, not so long ago, when corruption ruled Florida’s judiciary. The stories abound: There was the judge in the late 1960s who required lawyers to contribute to his campaign before they could argue. Even more embarrassing were the three members of the Florida Supreme Court who resigned in the early 1970s after getting caught pressuring lower courts to rule in favor of the justices’ campaign donors, allowing an interested party to ghostwrite an opinion, and enjoying a gambling spree in Las Vegas courtesy of a dog track that was litigating a case before the court. The reason for this gap between theory and practice: the need to raise campaign funds undercuts judicial integrity and invites quid pro quo corruption.

Now, Williams-Yulee turned out to be a victory for anticorruption: the Court held that Florida could bar judicial candidates from personally soliciting campaign contributions. Unfortunately, though, the victory is small and fleeting: the Court’s reasoning focused on the extremely narrow nature of the Florida rule and impliedly rejected most campaign finance restrictions in judicial elections (beyond contribution limits). So even after Williams-Yulee, states still have little in their arsenal with which to combat the evils of judicial elections. Maybe then, in an era when more and more money is flowing into judicial campaigns, Williams-Yulee ought to be our wake-up call — a sign that its time for the United States to kick the “insanely and characteristically American” habit of electing judges.

Continue reading →

The FCPA Under Attorney General Loretta Lynch

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After the third longest wait for Senate confirmation in history, Loretta Lynch finally received approval to be the next Attorney General of the United States on April 23. When she assumes her position as the head of the U.S. Department of Justice, complex challenges related to cybersecurity and community-police relations will likely be at the top of her list of undertakings. But Lynch has also vowed to make continuing the DOJ’s commitment to fighting global corruption “a top priority.”

Indeed, Lynch has substantial FCPA experience – more than any previous Attorney General (unsurprising, given that it was her two predecessors, Eric Holder and John Ashcroft, who largely oversaw the ascendance of the FCPA regime). As the U.S. Attorney for the Eastern District of New York, Lynch collaborated with the DOJ’s Fraud Section to secure the Ralph Lauren and Comverse non-prosecution agreements. She as worked on the other side as well. As a partner at Hogan & Hartson, she conducted internal investigations, advised clients that had run afoul of the FCPA, and conducted continuing legal education classes on anticorruption. As lawyers, scholars, and business leaders debate the need for FCPA reform (see, for example, here and here), what might the new Attorney General mean for the enforcement regime?

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Guest Post: Typologies of (Anti-) Corruption — How Much More Boring Can It Get? Or Maybe Not…

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Dieter Zinnbauer, Senior Program Manager for Emerging Policy Issues at Transparency International, contributes the following guest post:

Remember that childhood game, you say a word over and over and it seems to lose its meaning and just dissolves into a melodic sound? I feel similarly about trying to slice up the umbrella concept of corruption and sort it into practical, reasonably comprehensive, and distinctive subcategories – an endeavor that usually gets out of hand, consumes disproportionate amounts of scarce thinking-time and energy, and eventually leaves the participants more confused and in disagreement than at the outset. Yet quite recently I have begun to change my mind a bit about the unproductiveness of typologizing (anti)corruption. In fact, I have begun to derive some surprising enjoyment and inspiration from playing around with different ways to look at and classify different types of (anti)corruption. Here three examples: Continue reading →