Better Training for Anticorruption Investigators: Another Dull, Boring, Humdrum, Modest, Unimaginative Proposal to Combat Corruption?

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U.S. Federal Judge Mark Wolf’s proposal to create an international court for corruption crimes was recently the subject of a briefing organized by a commission of the U.S. House of Representatives.  The briefing was the latest example of the attention Judge Wolf’s recommendation for fighting corruption has garnered, attention that has included an appearance on public television where he extolled the merits of his proposal and an interview in a serious policy journal where he expanded on his idea for the court.

Given Matthew’s devastating critique of the court proposal, the attention the judge’s idea continues to attract is surprising to say the least.  What it no doubt reflects is the publicity value of an idea that, at least on its face, appears to be an innovative, imaginative, and “outside the box” way to fight corruption.  Given this media bias, it would do no good to point to further flaws in the judge’s idea (indeed one might write that it would be blogging a dead horse to do so).  What I intend here instead is to protest the media bias for headline grabbing ideas to combat corruption by advancing one that is dull, boring, humdrum, modest, and unimaginative.  The proposal is thus diametrically different in PR value from the judge’s.  It also differs in two substantive ways: it is 1) realistic and 2) will help reduce corruption if followed.

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Anticorruption Bibliography – November 2014 Update

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An updated version of my anticorruption bibliography is available from my faculty webpage.  A direct link to the pdf is here.  As always, I welcome suggestions for other sources that are not yet included, including any papers GAB readers have written.

Can a Private Right of Action Solve State Capture in the Philippines?: A Skeptical View

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Last month, as a part of the LIDS Global initiative (discussed here), a research team at the University of the Philippines (U.P.) put forth an ambitious legal proposal to combat corruption in the Philippines. The centerpiece of the proposal is a private right of action that would allow individual citizens to bring civil claims against public officials for violations of the Philippines’ Anti-Graft and Corrupt Practices Act. The proposal is designed to overcome the problem of “state capture”–the shaping of laws, rules, and regulations through illegal and non-transparent payments to public officials. Because state capture is so severe in the Philippines—reaching even high-ranking officials within the country’s own anticorruption agencies—citizens cannot “rely solely on the political will of government officials to prosecute their peers in the government.” The private cause of action is intended to address (or at least circumvent) this problem by enabling private citizens injured by corruption to go directly to court, without having to rely on public enforcers.

While I agree that state capture presents a huge problem for anticorruption efforts, I’m skeptical that the proposed private right of action will be effective–at least in the Philippines. The roots of my skepticism are threefold: Continue reading →

Upcoming UK Parliamentary Hearing on the ICAI Criticisms of DFID — Opportunity to Comment

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Last week, I discussed the brewing controversy over the most recent report from the UK’s Independent Commission for Aid Impact (ICAI), which sharply criticized the UK Department for International Development (DFID) approach to anticorruption in its aid programs. In addition to noting some of the critical commentary the report has already received, I added some criticisms of my own. It turns out that the report itself, and possibly also the critical commentary, has prompted the UK House of Commons’ International Development Committee to schedule a hearing on December 10. In connection with that hearing, the Committee has invited any interested party to submit written statements or evidence on the issues raised by the ICAI report; the online form for submitting comments is here, and the deadline for written submissions is November 28 (two weeks from today).

Although obviously of greatest interest to those in the UK or in countries that receive substantial DFID aid, the controversy and questions surrounding the ICAI report raise larger questions about the approach to anticorruption in development assistance, as well as questions about methodology and measurement. I hope that many GAB readers with interest in these matters will read the ICAI report and submit comments to the Parliamentary Committee. There is an opportunity here to raise some of these crucial issues in a much more public and prominent forum than is typical.

Guest Post: Hosting Proceeds Down Under — Australia and the G20 Anticorruption Agenda

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Professor Jason Sharman of Griffith University, Australia, contributes the following guest post:

On November 15th–two days from now–the latest G20 leaders’ summit kicks off in my home town of Brisbane, Australia, with anticorruption once again on the agenda. Though the G20 Anti-Corruption Working Group has made some important progress, many of the member states have been letting down the side. Specifically, Australia tends to receive less critical scrutiny than it should when it comes to international action against corruption, particularly in terms of hosting stolen assets from other countries in the region. And the G20 leaders’ summit is as good a time as any for the international community to press Australia for its many failures to deal with its status as a regional haven for money laundering in the Asia-Pacific. Continue reading →

Investment Arbitration as a Check on Corruption: The Yukos Award

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In a previous post on this blog, Sam raised the possibility that under the logic of World Duty Free v. Kenya, investment treaty arbitration rules might actually encourage state officials to engage in corruption, because corrupt acts by an investor (even when the state is also implicated) can be used to escape state liability in investment arbitration. Even if Sam’s point is true, however, it is important to acknowledge that investment arbitration can be a check on corruption in many instances. In fact, as the Yukos v. Russian Federation award issued against the Russian government this past summer demonstrates, Sam may be pointing out the exception, not the rule. Indeed, this $50 billion award – the largest international arbitration award in history – demonstrates the power of investment arbitration to bring corruption to light and act as an outside check on corrupt states. Continue reading →

Should Anticorruption Agencies Be Able to Veto Cabinet Appointments?: The Case of the Indonesian KPK

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Independent anticorruption agencies (ACAs) have become a vital component for many countries in combating corruption. Generally, these ACAs function like independent police or prosecutors, taking on one or both of those roles in settings where the ordinary law enforcement apparatus cannot be relied on to investigate, arrest, and prosecute corrupt officials. In addition to these prosecutorial responsibilities, ACAs sometimes oversee asset disclosures, and may also perform a public education function. But for the most part, ACAs do not play a direct role in selecting or vetting senior political officials. Should they?

This question is not merely hypothetical: Indonesia recently elected as its new president Joko Widodo, a reform-minded candidate who promised “zero-tolerance towards corruption” during his campaign (see a previous post discussing his election here). Last month, President-Elect Widodo took the unprecedented step of submitting his list of proposed nominees for cabinet positions to Indonesia’s powerful Corruption Eradication Commission (Komisi Pemberantasan Korupsi or “KPK”) for evaluation–and approval–before the list of nominees was finally made public. The KPK rejected eight of his submissions, with the result that President Widodo delayed the announcement of his cabinet compositions until he replaced these eight candidates with other nominees approved by KPK. Four days later, Widodo announced his cabinet composition, which presumably did not include the eight individuals to whom the KPK objected.

While the decision to give the KPK a de facto veto over cabinet appointments is in some ways an encouraging development–one that many Indonesians might appreciate as brave, progressive move, which enlarges the power of the popular KPK–it is troubling in certain respects, and should prompt more careful scrutiny and regulation. Continue reading →

Transparency International’s Laudable Campaign for Beneficial Ownership Transparency

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As many readers of this blog are likely aware, Transparency International–the leading worldwide anticorruption NGO–has made the corporate secrecy problem a centerpiece of its “Unmask the Corrupt” campaign. TI is focusing in particular on the problem of shell companies whose true (or “beneficial”) owners are unknown, and which can be used by corrupt officials and businesspeople to shelter and launder stolen public funds. The TI Secretariat, along with several of TI’s national chapters, have been pushing for action at both the national and international level, especially for reforms that would make transparent the beneficial owners of these companies. I wanted to use this post as an opportunity to call attention to two of TI’s recent efforts in this area, which might be of interest to GAB readers:

  • First, the TI Secretariat wants to use the G20 leaders’ summit this weekend in Brisbane, Australia as an opportunity to raise awareness of the issue and to put pressure on the G20 leaders to commit to take action on this issue. To this end, TI organized an open letter, signed by a number of prominent civil society activists and other public figures (including John Githongo, Desmond Tutu, and Richard Goldstone), calling on the G20 leaders to outlaw secret company ownership and mandate public registries of the true beneficial owners of all legal entities.
  • Second, as I noted last month, the US government is currently in the midst of a rulemaking process to strengthen due diligence and disclosure requirements on beneficial ownership. TI-USA submitted a set of supportive but critical comments on the rule, urging the US Treasury Department to expand the definition of “beneficial owner” to include individuals who control the entities through means other than a formal management position, to apply the new rules apply to existing accounts as well as new accounts, and to require financial institutions not only to verify the identity of the (alleged) beneficial owner, but to independently verify that the person listed as the beneficial owner is in fact the true beneficial owner.

TI’s efforts in this direction are most welcome, and I hope they have some impact on the G20 summit and the development of new rules in the US (and elsewhere). I’m happy to take this this opportunity to publicize TI’s efforts, and I hope some of our readers out there might be able to contribute to the push that TI and other organizations are making on this issue.

Learning from Disaster: Corruption and Environmental Catastrophe

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One year ago, Typhoon Haiyan (known locally as Yolanda) struck the Philippines, claiming over 6,000 lives. In the aftermath, numerous reports emerged regarding the failure of the Philippine government to properly manage relief efforts and get foreign aid to victims. This past September, the Philippine Commission on Audit (COA) released its comprehensive–and damning–Report on the Audit of Typhoon Yolanda Relief Operations. According to the report, of the $15 million available in the Office of Civil Defense (OCD) quick response fund, and the $1 million in donations received by the National Disaster Risk Reduction Management Council (NDRRMC), not one cent was spent on the basic subsistence needs of typhoon victims, in clear violation of the statutory mandate of Republic Act 10352.

Elizabeth’s recent post highlighted some of the challenges involved in fighting corruption in a conflict zone. While a natural disaster like Typhoon Haiyan poses similar issues, the challenges–and the opportunities for effective response–differ in some important respects. On the one hand, in a natural disaster–as in a conflict situation–the chaos and breakdown of oversight, coupled with the dependence of victims on the resources, coordination, and capabilities of those in a position to provide relief creates a power imbalance that increases opportunities for corrupt actors. At the same time, although any individual natural disaster is unpredictable, the fact that such disasters will periodically occur is predictable (at least in certain disaster-prone areas), and this creates opportunities–which perhaps don’t exist to the same degree in the context of armed conflicts–to plan ahead: to take steps that can redress the potential power imbalance before the crisis occurs. Continue reading →

The UK Aid Impact Commission’s Review of DFID Anticorruption Programs Is Dreadful

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Last week, the United Kingdom’s Independent Commission for Aid Impact (ICAI) released its report on the UK Department for International Development (DFID)’s efforts to fight corruption in poor countries. The report, which got a fair amount of press attention (see here, here, here, and here), was harshly critical of DFID. But the report itself has already been criticized in return, by a wide range of anticorruption experts. Heather Marquette, the director of the Developmental Leadership Program at the University of Birmingham, described the ICAI report as “simplistic,” “a mess,” and a “wasted opportunity” that “fails to understand the nature of corruption.” Mick Moore, head of the International Centre for Tax and Development at the Institute for Development Studies, said that the report was “disingenuous[]” and “oversimplif[ied],” and that it “threatens to push British aid policy in the wrong direction.” Charles Kenny, a senior fellow at the Center for Global Development, called the report a “wasted opportunity” that “has failed to significantly add to our evidence base,” largely because “ICAI’s attitude to what counts as evidence is so inconsistent between what it asks of DFID and what it accepts for itself.”

Harsh words. Are they justified? After reading the ICAI report myself, I regret to say the answer is yes. Though there are some useful observations scattered throughout the ICAI report, taken as a whole the report is just dreadful. Despite a few helpful suggestions on relatively minor points, neither the report’s condemnatory tone nor its primary recommendations are backed up with adequate evidence or cogent reasoning. It is, in most respects, a cautionary example of how incompetent execution can undermine a worthwhile project. Continue reading →