Disclosure Rules and Political Corruption: The Lessons of the Menendez Case

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On April 1, 2015, the United States Department of Justice issued a 68 page indictment charging U.S. Senator Robert Menendez and Dr. Salomon Melgen, a Florida ophthalmologist, with 22 separate violations of American federal criminal law arising from their long running relationship.  The Department alleges that Dr. Melgen provided Senator Menendez “domestic and international flights on private jets, first-class domestic airfare, use of a Caribbean villa, access to an exclusive Dominican resort, a stay at a luxury hotel in Paris, expensive meals, golf outings, and tens of thousands of dollars in contributions to a legal defense fund.” In return the Department claims that Senator Menendez used his position as a member of the U.S. Senate to advance Dr. Melgen’s personal and business interests.

If both Dr. Melgen and Senator Menendez stand by their initial responses to the indictment, prosecutors will find it very hard to prove that Melgen bribed Menendez.  The doctor and the Senator are not disputing the facts; what they say is that they are friends and what each did for the other was motivated by friendship.  To overcome this “gifts from a friend” defense, prosecutors must prove that what was in the minds of the two men when the gifts passed was not friendship but corruption.  Showing what was in a defendant’s mind is always difficult and is even more difficult when the defendant offers a plausible, benign alternative. So unless the Department intends to call a mind reader as a witness, proving the 21 charges of bribery or acts relating to bribery in the indictment will be a challenge.

That’s what makes the 22nd charge so important.

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Announcement: TRACE International Essay Contest on “How to Pay a Bribe”

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TRACE International, a private anti-bribery compliance support and consulting organization, is holding an essay competition that I think might be of interest to some GAB readers:

TRACE publishes biennial edited volume called How to Pay a Bribe: Thinking Like a Criminal to Thwart Bribery Schemes, which provides an informative collection of essays on the nitty gritty details on how firms and individuals pay and conceal unlawful bribes. (For information on the first two editions, from 2012 and 2014, see here and here.) For the next edition of this series, TRACE is soliciting submissions that describe real-world bribery schemes in international business. TRACE will select up to five submissions to be published in the third edition of How to Pay a Bribe, and the authors of the five winning submissions will receive a US$2,000 honorarium. The submission guidelines indicate that entries should be no more than 3,500 words, that all submissions must be original and not previously published, and that narratives and anecdotes are preferred over academic writing. The submission deadline is June 30, 2015. More information on the contest can be found on TRACE’s website here.

Big Data and Anticorruption: A Great Fit

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There is no shortage of buzz about Big Data in the anticorruption world. It’s everywhere — from public efforts like Transparency International’s public procurement analysis to cutting-edge private-sector FCPA compliance programs implemented by Ernst & Young. TI has blogged about Big Data and corruption, with titles like “Can Big Data Solve the World’s Problems, Including Corruption?” and “The Potential of Fighting Corruption Through Data Mining.” Ernst & Young’s conclusion is more definite: “Anti-Corruption Compliance Now Requires Big Data Analytics.”

In previous posts, contributors to this blog have written about how the anticorruption community was excited about social media-style apps (“crowdsourcing”) in anticorruption efforts. Apps like iPaidABribe allow citizens to report their encounters with corrupt officials, generating a fertile data set for anticorruption activists. Big Data is a related effort: activists can mine huge amounts of data for patterns that reveal corrupt activity, making it a powerful tool for transparency. However, as the name suggests, Big Data requires massive amounts of data in order to be useful.The anticorruption community should throw its weight behind proposals to open up data sets for Big Data analysis. As with crowdsourced anticorruption efforts, the excitement surrounding Big Data could quickly turn into disappointment unless this tool can be integrated into the broader anticorruption effort. Continue reading →

Buyer Beware: What Does President-Elect Muhammadu Buhari’s Anticorruption Record Actually Mean for Nigeria?

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In my last post, I tied the rampant corruption in the Nigerian armed forces to the military’s historically central role in the country’s politics. But on March 28 and 29, Nigerians went to the polls and voted against the status quo and corruption in the military. In doing so, they ousted President Goodluck Jonathan in favor of President-Elect Muhammadu Buhari, the candidate from the All Progressives Congress (APC) party. A number of factors – the threat of Boko Haram, plummeting oil prices, out-of-control corruption and, important in light of my last post, a fissure between current and retired army officers – aligned to bring about Nigeria’s first ruling party transition since the country’s adoption of multiparty democracy in 1999. It is a truly momentous time in the country’s history and many — from President Jonathan, to the Independent National Electoral Commission, to courageous voters in conflict areas — deserve recognition.

Although many see the recent election result as a blow Nigeria’s old guard, President-Elect Buhari is from an even older guard. A former major general in the Nigerian military, he acted as head of state from 1983 to 1985 after seizing power in a coup against the democratically elected leader, Shehu Shagari; Buhari himself was ousted by coup shortly thereafter. His track record during his brief prior presidency leaves one feeling decidedly ambivalent. He waged an infamous “War Against Indiscipline,” which aimed to instill order and integrity through public whippings, summary arrests and convictions, wildly disproportionate prison sentences, and humiliating penalties for minor infractions. He is also remembered for issuing draconian decrees curtailing press freedoms.

Yet Buhari has eschewed his authoritarian past, explaining “now I want to operate as a partisan politician in a multiparty setup. It’s a fundamental difference.” There is some evidence that this is more than just talk. He stood for election in the last three cycles and, despite accusations of incitement to violence, he accepted the unfavorable results each time. Additionally, President Buhari’s progressive party, the APC, will likely influence his agenda, as will Vice President-Elect, Yemi Osinbajo, the former Attorney General of Lagos State who is a staunch advocate for justice sector reform. It will also help that Nigeria has a mostly free press, robust civic engagement, and the attention of the world. A more positive aspect of Buhari’s record from his last stint as head of state is his regime’s reputation for honesty, dedication to the fight against corruption, and action against offending officials. In fact, the 1983 coup came about under conditions quite similar to those animating Buhari’s surge today – flagrant financial mismanagement by Shagari and depressed oil prices. Buhari’s short-lived regime imprisoned roughly 500 elite politicians and businessmen on corruption charges. Partly because of this legacy, there are now high expectations — perhaps unrealistically high — that President-Elect Buhari will be able to act effectively against corruption in Nigeria. After all, his campaign platform emphasized anticorruption (along with pledges to fight Boko Haram more effectively), and this theme had widespread appeal among voters. Given President-Elect Buhari’s record from his previous stint as Nigeria’s president in the early 1980s, many believe that he has the “political will” to fight corruption that President Jonathan sorely lacked.

Yet even if Buhari’s intentions are pure, and his will strong, there are a number of reasons not to get too excited too soon about what Buhari will be able to accomplish on this front. Indeed, the progress that Nigeria has made toward genuine multiparty democracy, exemplified by Buhari’s election, may — perhaps ironically or perversely — make it more difficult for him to pursue an anticorruption agenda now than it was the last time around.

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Should Governments Subsidize Corporate Compliance?

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Several months ago I did a couple of posts (here and here) on the Transparency International USA report from a couple months back on verification of corporate anti-corruption compliance programs. That report also got me thinking about a more general question: Should governments provide a subsidy (perhaps in the form of a tax credit) for businesses — particularly small and medium-sized enterprises — to support spending on the design, evaluation, and testing of their anti-bribery compliance programs?

I haven’t yet come across anything that advocates for something like this, so let me make a tentative case for why it might be a good idea:

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Fighting Corruption:  Lessons from Eastern Europe and Central Asia

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Over the last few years a number of studies have appeared analyzing the lessons learned from the first decade of anticorruption policies.  The most recent is  Why Corruption Matters: Understanding Causes, Effects and How to Address Them reviewed March 18 on this blog.  Others are: the U4 Anticorruption Resource Center’s Mapping Evidence Gaps in Anticorruption; Kennedy School Professor Rema Hanna and colleagues’ The Effectiveness of Anticorruption Policy: What has Worked, What Hasn’t, and What We Know; The Norwegian Aid Agency’s Joint Evaluation of Support to Anticorruption Efforts, 2002 – 2009; Contextual Choices in Fighting Corruption: Lessons Learned by Hertie School Professor Alina Mungiu-Pipidi and associates; the report by GRECO, or the Group of States against Corruption, Lessons Learnt from the Three Evaluation Rounds (2000 – 2010): Thematic Articles; and the analysis by the World Bank’s Independent Evaluation Group, A Review of World Bank Support for Accountability Institutions in the Context of Governance and Anticorruption. While each merits study, I thought it useful to highlight some of the important findings of each in a series of posts over the coming weeks.

Today’s entry summarizes a valuable contribution to this “lessons learned” literature by the Anticorruption Network for Eastern Europe and Central Asia, a regional outreach program of the OECD’s Working Group on Bribery whose members include the nations of Eastern Europe and Central Asia and OECD member states.  As part of the network’s activities eight countries – Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Ukraine, and Uzbekistan – volunteered to have their anticorruption policies judged by their peers against the standards in the United Nations Convention Against Corruption, other international conventions, and international best practice.  Anticorruption Reforms in Eastern Europe and Central Asia: Progress and Challenges, 2009 -2013 sums up the lessons from the latest round of review of these eight countries efforts to combat corruption. Continue reading →

Guest Post: Evaluations Can Reduce Corruption Costs–If You Let Them!

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Jesper Johnsøn, a Senior Adviser at the the U4 Anti-Corruption Resource Centre who leads the Centre’s “evaluation and measurement” theme, contributes the following guest post:

In development policy jargon, a “program evaluation” is a systematic and objective assessment of an ongoing or completed project or policy, including its design, implementation, and results. Very few aid agencies have incorporated corruption considerations into their standard program evaluations–despite the fact that these same agencies have focused heavily on corruption measurement (as a separate endeavor) since the mid-1990s. This is a mistake: A good evaluation should include consideration of corruption, given that program success can be threatened by waste, leakage, and outright theft of resources, and also that evaluations can be useful tools for corruption risk management, accountability, and learning about how to build better anticorruption mechanisms. Part of the explanation for the failure to integrate corruption considerations into program evaluation may be the difficulty of rigorously measuring corruption levels and impact, yet as I have argued elsewhere, this difficulty should not be used as an excuse for not evaluating anticorruption efforts systematically.

Aid organizations can and should incorporate corruption issues into their standard evaluation policies. But not all program evaluators are anticorruption experts, and so the anticorruption community needs to provide more guidance on how to integrate anticorruption analysis into program evaluation. This is one of the things we are trying to do at U4. Based on our work, and helpful discussions with other experts, here are some suggestions for how this can be achieved: Continue reading →

Anti-Corruption Education versus Pro-Corruption Culture

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For Indonesia, the eradication of systemic corruption is one of the country’s biggest challenges. A central part of Indonesia’s anticorruption strategy has been strengthening the country’s anticorruption institutions, most notably through the establishment of the Indonesian Corruption Commission (Komisi Pemberantasan Korupsi/, or  ”KPK”) in 2002. The KPK has been quite successful over the past decade, yet Indonesia is still perceived as corrupt. One reason for this may be Indonesia’s own pro-corruption culture. Public officials are not ashamed to ask for bribes, and the public and investors are not reluctant to pay them. Indeed, some Indonesian public servants do not even recognize their corrupt acts as illegal or wrongful. For example, when Indonesia’s Minister of Religion Suryadharma Ali was named as a suspect for embezzling money from the Hajj fund, he testified before the KPK that he did not know that his action was corrupt. The same line of argument was advanced by Jero Wacik, another minister named as a suspect in a corruption case by the KPK. These claims may seem absurd, but a person who lived in Indonesia can easily say that a lot of Indonesian people may indeed not know that certain wrongful behavior is (illegal) corruption. For example, giving petty cash to a public official as “gratitude” for expediting the issuance of a national identification card would not be considered as corrupt behavior by many Indonesians.

That a culture of corruption is embedded in Indonesia is not surprising. After all, it was only recently, under the reign of President Susilo Bambang Yudhoyono, that the government began to take significant steps to eradicate corruption. If Indonesia’s pro-corruption culture is part of the problem, as it seems to be, more steps have to be taken beyond “mere” legal reform, institutional reform, and more aggressive law enforcement. Indonesia needs to establish a new strategy and approach in eradicating the endemic corruption, one that takes culture into consideration and implements anticorruption education programs to change this culture. What kind of anticorruption education might effectively change Indonesia’s pro-corruption culture in the long run? Here are three proposals the Indonesian government might consider: Continue reading →

Automatic Government Retention of All Official Emails: An Easy Anticorruption Reform

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Former Secretary of State and presidential hopeful Hillary Clinton is currently under fire from Republican opponents and transparency advocates for her (alleged) circumvention of Federal recordkeeping laws. While this particular scandal (or pseudo-scandal) may soon pass, as have numerous other such scandals, the anticorruption community should take this opportunity to voice its support for a badly-needed reform to recordkeeping laws, to ensure that official emails sent by people in a position of public trust should be immutably preserved.

It seems almost too obvious, but “lost” and “misplaced” emails are often a major impediment in corruption investigations. At least three ongoing corruption investigations are touched by email deletions, to say nothing of past investigations:

  1. New York Governor Andrew Cuomo instructed his government to begin purging un-archived emails after 90 days, even as controversy and a Federal investigation swirls around his dismantling of the Moreland Commission. (He has now altered his policy somewhat)
  2. A Federal investigation into hundreds of millions of procurement dollars spent by the Delaware River Port Authority (DRPA) has been dragging on for years, crippled in part by missing emails that were “compromised” before the DRPA could turn them over to the U.S. Attorney. The DRPA (partly overseen by New Jersey Governor Chris Christie whose own history with deleted communications is muddled) lost 18 months worth of emails received by a single key official during a key period of time, due to a “software malfunction” with their in-house email system. DRPA’s Inspector General has since resigned in frustration.
  3. In a glimmer of hope, although recently-resigned Oregon Governor John Kitzhaber instructed members of his government to delete emails ahead of an FBI and IRS corruption probe, they refused to do so.

This is an absurd state of affairs, and entirely unnecessary. There is absolutely no compelling reason to not automatically preserve every email sent and received by civil servants. This is 2015: it is literally more expensive to take the time to actively delete emails than it is to simply keep them. Either governments haven’t realized this yet, or their claim that emails should be deleted for the sake of “efficiency” is in fact a red herring. I suggest the latter. The continued absence of appropriate email preservation rules for public servants, which would be incredibly easy to implement, will continue to frustrate anticorruption efforts. Continue reading →

Announcement: Upcoming Conference on Fighting Corruption in “Global Cities”

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Though most academic and policy discussion about anticorruption tends to focus on national or international level initiatives, there have been a number of interesting developments in recent years at the sub-national level, particularly in large urban areas. Fortunately, the fight against corruption at the municipal level is finally getting some more attention. Those who are interested in this topic, particularly those in the New York City area, may be particularly interested in a conference next month, organized by the Center for the Advancement of Public Integrity (CAPI) at Columbia Law School, on “Global Cities: Joining Forces Against Corruption.”  The conference, which will feature a keynote address by Mexico City Mayor Miguel Angel Mancera and Athens Mayor Giorgos Kaminis, will (according to the official conference blurb) “bring together high-level integrity officials from cities worldwide to discuss the challenges of fighting municipal corruption, strategize, and share best practices.” The conference will be held from April 23-25 at Columbia Law School, and it is free and open to the public. You can find more information (and register online) here.