Guest Post: How a Social Movement Changed Spanish Attitudes Toward Corruption

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Today’s guest post is from Elisa Elliott Alonso, who works at the OECD Water Governance Program:

The graph below chronicles the percentage of Spanish Citizens who named the economy (grey line) and fraud/corruption (blue line) as one of the three most important problems facing the country, during the period leading up to and following the economic downturn of 2008. Unsurprisingly, after the Spanish economy crashed, some 50% of the citizens of Spain noted that the economy was one of the most important issue affecting them, and this concern remained predominant for the next three years, though it started to decline a bit after 2011. As for corruption and fraud, prior to the crash concerns about these issues hardly registered, except for a brief spike in 1993, an uptick came in the immediate aftermath of a slew of highly publicized corruption scandals, and dissipated quickly) Even after the 2008 crash, concern about corruption rose only slightly increased from 2008 to 2012. That big change came in 2013, when the news broke that important members of the conservative PP party were allegedly involved in the Gürtel case, one of the most serious recent corruption scandals to rock Spain. More interesting is the fact that Corruption has remained a top concern of Spanish citizens ever since. There’s been a bit of tapering off since concern over corruption reached its peak in late 2014, but more than 20% of Spanish citizens still list corruption as one of the country’s most serious problems, roughly the same number of name the economy.

Why is this? Or, to put the question more generally, what kind of changes need to take place within a collective society’s ethos in order to bring about engaged citizen awareness and opposition to corrupt activities? Continue reading →

Guest Post: Expert Interviews on Corruption Control in Latin America

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Today’s guest post is from Columbia University Professor Paul Lagunes, who this year is also a Visiting Fellow at Rice University’s Baker Institute for Public Policy:

Elections in Latin America are freer and fairer than they used to be, and, with rare exceptions, political power in the region is no longer monopolized by a single individual, junta, or party. From Chile to Mexico, legal reforms have promoted higher levels of government transparency and citizen participation. But in spite of these improvements, the region continues to grapple with systemic corruption. Not only are individuals asked to pay bribes by lower-level government officials, but scandals such as Lava Jato (“Car Wash”) in Brazil, La Estafa Maestra (“The Master Fraud”) in Mexico, and La Línea (“The Line”) in Guatemala have revealed grand corruption at the most senior levels, making the fight against corruption a top priority for the region.

Prompted by these concerns, I contributed to organizing a conference at Rice University’s Baker Institute for Public Policy on corruption control in Latin America, which has already been featured (with links to the conference videos) on this blog. Some of the conference panelists stayed long enough that we were able to interview them about their important work. Tony Payan, my colleague at the Baker Institute and an expert on U.S.-Mexico border issues, agreed to conduct the interviews.

The videos of these interviews are now publicly available, and are well worth viewing for those interested in hearing a diverse range of perspectives on the corruption challenges currently facing Latin America. In this post I will provide links to the interviews as well as a brief summary of their content. (There’s also an online website, where you can find all the interviews, here.) Continue reading →

Managing Anticorruption Compliance Under the EU’s General Data Protection Regulation

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Lawyers and businesses today are concerned with data privacy issues like never before—not only because of the mounting number of data privacy scandals, but also because of new regulations, most importantly the EU’s General Data Protection Regulation (GDPR). The GDPR, which was adopted in 2016 and became applicable in May 2018, reformed the entire personal data protection system in the EU by setting new rules of data protection and privacy. Moreover, the GDPR applies not only to entities that operate within the EU, but also to all entities established in the EU when operating outside the EU, as well as to entities established outside the EU when they are offering their goods and services inside the EU or monitoring individuals from the EU. The GDPR thus has global reach, as well as stringent penalties for violations.

The GDPR has implications for many different fields, and anticorruption is no exception. This is especially true for corporations conducting internal investigations of possible bribery by firm employees or agents, and when conducting due diligence on potential partners. Much of the data collected in these corporate investigations will include “personal data” as defined and regulated by the GDPR. For this reason, some commentators have warned that the effect of the GDPR on traditional corporate anticorruption investigations will amount to “a collision of galactic proportions.”

That may by hyperbole, but it is certainly the case that the GDPR will impose important new obligations that influence how companies handle anti-bribery compliance issues, both in the context of internal investigations and in the context of due diligence. Continue reading →

The Orban Effect, or Why the EU Needs to Take a Hard Line on Anticorruption Backsliding

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After Viktor Orban’s election to the Hungarian premiership in 2010, he set Hungary on a course to become an “illiberal democracy.” As part and parcel of that vision, Orban began to increase corruption in Hungary, building a new class of oligarchs (including his family and friends) dependent on crony capitalism. Indeed, Orban’s Hungary is now one of the most corrupt states in Europe (see here, here, and here), with government and EU funds regularly misappropriated, wasted, or flat-out stolen. And while one must always be careful about drawing strong conclusions from changes in a country’s Corruption Perception Index (CPI) score, it’s certainly notable that Hungary has dropped 10 spots on the CPI ranking since 2011, the first full year of Orban’s rule. These developments are not only worrisome in and of themselves, but many worry that Orban’s approach—not only his far-right politics, but the entrenched oligarchic corruption he has fostered—might become normalized not only in Hungary but throughout the region.

That worry is well-founded. Orban’s ideas have not been contained to Hungary. The spread of the “illiberal state” and of corrupt quasi-authoritarian oligarchy has precipitated a crisis across Europe. What should international actors—particularly the EU—do in response? Two things:

Continue reading →

Guest Post: An Austrian Political Corruption Scheme was Caught on Video–But Most Probably Aren’t

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Today’s guest post is from Jennifer Kartner, an anticorruption researcher who recently received her Ph.D. in political science from Arizona State University:

On Friday, May 17, 2019, the German newspapers Der Spiegel and the Die Sueddeutsche Zeitung released an explosive video showing two key politicians of the far-right Austrian Freedom Party (FPÖ), Heinz-Christian Strache and Johann Gudenus, scheming with a woman who claimed to be a wealthy Russian citizen. Their meeting took place in July 2017, a few months before the October 2017 Austrian parliamentary elections. In the video, Strache and Gudenus discuss how, with the help of the woman, they could ensure that the FPÖ wins the upcoming elections. The plan was that the Russian would buy 50% of the Austrian newspaper Die Kronen Zeitung—a newspaper reaching a third of all Austrian news consumers—before the elections, and then she would ensure that the already-populist newspaper would drum up more support for the FPÖ. (Mr. Strache estimates in the video that the newspaper takeover would help push the FPÖ’s expected vote share from 27 to 34 percent.) Once the FPÖ won the election, FPÖ elected officials would return the favor by helping the oligarch win contracts for public construction projects; all she had to do was to establish a construction company that could plausibly compete with the Austrian firm Strabag. The three meeting participants also talked about the possibility of privatizing the Austrian public broadcast station ORF, and Mr. Strache spoke of wanting to build a media landscape “just like Viktor Orbán built in Hungary.” But the deal never actually came together. Die Kronen Zeitung didn’t change owners, the FPÖ came in third in the parliamentary elections and ended up entering into a coalition government with the center-right ÖVP, and Strabag continues to win the majority of public construction contracts in Austria.

The political backlash in response to the publication of the video was swift and severe. An estimated 5,000 people came out to protest on the streets. A day after the publication, Mr. Strache resigned from his Vice-Chancellorship, as well as his other political and party positions, and issued a public apology, and a couple of days after that, all remaining FPÖ ministers in the government were fired or resigned in protest. While Austrian authorities are still debating whether they can charge Mr. Strache for any criminal activities, the public’s response shows that, regardless of the legal ramifications, ordinary citizens view this behavior as corrupt.

But perhaps one of the most disturbing things about this affair is that if the parties had gone through with their plan, and the secret video had never been leaked, neither the authorities nor the public would likely have ever had any reason to suspect a complex corruption scheme behind it. To see this, suppose for the moment that the scheme went ahead as planned. Would anyone have caught on? The answer is likely no: Continue reading →

Corruption Damages: Options UNCAC Offers Mozambique to Recover “Hidden Debt” Losses

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Mozambique continues to suffer from the “hidden debt” scandal, loans a U.S. indictment alleges employees of Credit Suisse, Lebanese shipbuilder Privinvest, and others foisted off on it for dodgy projects through bribery.  Damages include not only the several billion dollars that, thanks to accrued interest and penalties, the government now owes on the original loans of $2.2 billion, but the enormous harm caused by a halt in donors’ disbursements and the resulting slowdown in growth when the scandal was revealed. The whole sorry affair could cost the people of Mozambique upwards of $10 billion, a staggering sum for a country with a total GDP in 2017 of little more than $12 billion. 

Fortunately, Mozambique does not have to absorb the loss. As party to the United Nations Convention Against Corruption, the government can directly recover much if not all of it through article 53.  Article 53(a) requires the other 185 Convention parties to grant it the right to file a civil action to recover property acquired through the offences defined in the Convention.  Article 53(b) directs the other 185 to establish procedures permitting their courts “to order those who have committed offences [established in accordance with the Convention] to pay compensation or damage” to another party injured by the offence.  

Based on the allegations in the U.S. indictment, Mozambique could likely initiate or prompt proceedings to recover assets or recover damages in at least six nations, all parties to UNCAC: France, Lebanon, the Netherlands, Switzerland, the United Kingdom, and the United States. Indeed, thanks to a precedent setting decision by its highest court, Mozambique civil society might itself be able to recover damages in a French case independent of any action by the Mozambican government.  

These options were discussed at a May 14 conference sponsored by the Centro de Integridade Pública.  They are elaborated on in this follow up paper I prepared for CIP after the conference.   

New Podcast Episode, Featuring Frederik Obermaier

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A new episode of KickBack: The Global Anticorruption Podcast is now available. This week’s episode features an interview with Pulitzer Prize-winning investigative journalist Frederik Obermaier (of the German publication Süddeutsche Zeitung), best known for his work on the Panama Papers investigations, and more recently for the story on the secret videos that exposed leading figures in one of Austria’s major political parties engaging in corrupt negotiations with someone they thought was the relative of a Russian oligarch. In the interview, Frederik and I discuss both of these high-profile stories, as well as broader questions regarding the role of investigative journalism in the fight against corruption and some of the challenges facing the independent media today.

You can find this episode, along with links to previous podcast episodes, at the following locations:

KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.

Video: CAPI Panel on “Anti-Corruption Efforts in Latin America”

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Recent developments in the fight against corruption across Latin America seem to have prompted an increasing number of conferences, workshops, and similar events that focus on this issue. (I was able to participate in one such event at Rice University’s Baker Center a few months back.) Last month, Columbia University’s Center for the Advancement of Public Integrity (CAPI) held another, similar event that may be of interest to those who follow these developments (indeed, perhaps of even greater interest to those who haven’t been following them, but would like to get up to speed). The panel, entitled “Anti-Corruption Efforts in Latin America: Perspectives from Brazil, Argentina, Colombia, and Mexico,” was moderated by Daniel Alonso (Managing Director of Exiger), and featured four senior lawyers from the region: Eloy Rizzo Neto (Brazil), Gustavo Morales Oliver (Argentina), Diego Sierra (Mexico), and Daniel Rodriguez (Colombia). The video of the discussion can be found here. And here’s a quick overview of the discussion, with corresponding time markers for the video: Continue reading →

Why the WTO Should Tackle Border Corruption

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When a state systematically fails to suppress bribery in its customs service, should that be an actionable violation of international trade law? More broadly, to what extent do anticorruption provisions have a place in the law of the World Trade Organization? In a 2014 post on this blog, Colette van der Ven squarely addressed these questions and concluded that the answer is no: the WTO, in her view, is not well suited to handling complaints of corruption.

I disagree with Colette’s well-reasoned analysis. While she is right to point out substantial challenges to grappling with anticorruption through the WTO, these challenges are surmountable—and the importance of a WTO remedy counsels in favor of surmounting them. Continue reading →

Incorporating Anticorruption Measures in the African Continental Free Trade Agreement (AfCFTA)

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On April 2, 2019, The Gambia became the 22nd country to ratify the African Continental Free Trade Agreement (AfCFTA), which was the minimum threshold to approve the deal among the 55-member states of the African Union (AU). The AfCFTA aims to provide a single continental market for goods and services, as well as a customs union with free movement of capital and business travelers. Although the agreement will enter into force one week from tomorrow (on May 30, 2019), the negotiations for the Protocols and other important matters such as tariff schedules, rules of origin, and sector commitments are still being negotiated. However, once the treaty is fully in force, it is expected to cover a market of 1.2 billion people and combined gross domestic product of $2.5 trillion, which would make it the world’s largest free trade area since the creation of the World Trade Organization. This could be a game-changer for Africa. Indeed, the U.N. Economic Commission on Africa predicts that the AfCFTA could increase intra-African trade by as much as 52.3%, and that this percentage will double when tariff barriers are eliminated. The AfCFTA promises to provide substantial opportunities for industrialization, diversification, and high-skilled employment. And the AU’s larger goal is to utilize the AfCFTA to create a single common African market.

Yet there are a number of challenges that could thwart the effectiveness of this new treaty in promoting free trade and economic development. Corruption is one of those challenges. International indexes indicate that Sub-Saharan Africa is perceived as the most corrupt region in the world, with North Africa not much better. The current version of the treaty, however, does not address corruption directly. It should. Continue reading →