The Stream of Benefits Theory of Bribery Doesn’t Criminalize Ordinary Politics

Bribery of a public official can take one of at least two forms. In the most straightforward case, a public official accepts a one-off bribe in exchange for a particular official act. This kind of one-to-one exchange is illustrated by a recent case out of Puerto Rico, in which a territorial senator agreed to a direct trade: he would support legislation favorable to a local businessman’s security company, and in return he would receive an all-expenses-paid trip to Las Vegas. Things aren’t always so neat, however. Sometimes bribery involves a series of gifts to a public official in exchange for a series of official acts, and seldom do these gifts and official acts line up in a one-to-one fashion. An example of this kind of bribery can be seen in a recent case out of Texas, where, over an extended period of time, a local developer provided a town mayor cash, home renovations, hotel stays, airline upgrades, and even employment, and the mayor repeatedly voted for zoning changes that ultimately allowed a developer to build apartments.

Anticorruption officials in the United States prosecute the latter form of bribery under a “stream of benefits” theory of liability. Rather than requiring prosecutors to demonstrate tit-for-tat trades—in which a specific “thing of value” is offered or exchanged for a specific official act—under the stream of benefits theory unlawful bribery has also occurred when the prosecution can show a “course of conduct of favors and gifts flowing to a public official in exchange for a pattern of official actions favorable to the donor.” Some courts and commentators have described the idea as the briber regularly paying the public official to keep her “on retainer” with the expectation that she will help the briber out as opportunities arise. The stream of benefits theory recognizes that most bribes aren’t one-off trades of a thing of value for a particular official act. Instead, bribery often takes place in the context of a long-term, multifaceted relationship where there’s a general understanding along the lines of “I’ll scratch your back if you scratch mine.” Where gifts flow regularly to the official and the official occasionally acts for the benefit of the gift-giver, it would be difficult for prosecutors to prove that any particular gift instigated a particular official act. But as then-Judge Sonia Sotomayor once reasoned: “[A] reading of the [bribery] statute that excluded such schemes would legalize some of the most pervasive and entrenched corruption, and cannot be what Congress intended.” Accordingly, the stream of benefits theory has been approved by every federal circuit court that has ruled on the issue.

Yet despite the stream of benefits theory’s intuitive appeal, it has recently come under attack. Most prominently, a federal judge threatened to derail the trial of U.S. Senator Robert Menendez before it began by questioning the theory’s continued validity in light of the U.S. Supreme Court’s 2015 decision in the McDonnell case (which, as explained in more detail below, adopted a strict interpretation of what constitutes an “official act” under the U.S. bribery statute). Although the judge in the Menendez case ultimately determined that the stream of benefits theory was still good law, many commentators aren’t so sure. The Cato Institute, for one, speculates that McDonnell’s strict reading of the bribery statute requires the identification of a specific official act to be performed, rather than accepting as adequate the promise of future, undefined official acts in the briber’s favor. Others, like Professor Randall Eliason, argue that the Supreme Court already (albeit implicitly) rejected the stream of benefits theory on those grounds in a 1999 case called Sun-Diamond.

These attacks reflect a broader policy concern: fear that overly broad bribery statutes criminalize ordinary politics. Professor Albert Alschuler, for instance, asserts that the “principal danger” with the stream of benefits theory is that it “invites slippage” from a “quid pro quo requirement” to a “favoritism” standard. Favoritism, he argues, is endemic in politics––a politician will naturally favor allies and stakeholders who have supported him politically (and financially). Criminalizing favoritism is akin to criminalizing innocent political conduct, which, in turn, has far-reaching secondary effects, such as deterring good people from government service and giving prosecutors too much power to enforce the law selectively. The Supreme Court’s decision in McDonnell, though technically on a different issue, also expressed worries about how a “boundless interpretation of the federal bribery statute” could wind up criminalizing ordinary politics.

These fears are overblown. As other commentators have persuasively argued, the stream of benefits theory remains viable, and has not been expressly or implicitly repudiated by the Supreme Court in McDonnell, Sun-Diamond, or elsewhere. (See, for example, here and, on this blog, here.) I agree, but my main argument here concerns the detractors’ underlying policy concern. Put simply: the stream of benefits theory doesn’t criminalize ordinary politics.

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Why the WTO Should Tackle Border Corruption

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

A Cultural Defense to Bribery? The Solomon Islands’ Approach

Gift-giving usually has positive connotations as an expression of love, respect, friendship, gratitude, or celebration. However, when the recipient is a public official, there is always the concern that the “gift” is nothing but a thinly-veiled bribe. For this reason, countries around the world have placed restrictions on the character and value of gifts that public officials are allowed to accept. But in societies where giving gifts – including, perhaps especially, to powerful or influential figures – is an important part of the culture, treating all (sufficiently large) gifts as unlawful bribes is more than usually challenging. Indeed, a recurring question for anticorruption reformers is whether or how anti-bribery law should make allowances for local cultural norms and practices, especially those related to gift-giving. This question – often framed as one of “cultural relativism” – frequently comes up in the context of developing countries (such as Indonesia or various Pacific islands), though it is not exclusive to such countries (see, for example, discussion of this same issue in South Korea).

One country that has recently faced the challenge of regulating cultural gift-giving to and by public officials is the Solomon Islands – a small state in the Pacific Ocean consisting of over nine hundred islands, a population of about 600,000, and a rich and fascinating history. For years, the Solomon Islands has been dealing with pervasive corruption at all levels of government, most notably in natural resources management, which has had disastrous ramifications for the country’s economic development (see here, here, and here). Like other Pacific islands, the Solomon Islands is home to a practice of traditional gift-giving to and by public officials, which in many other jurisdictions could be viewed as legally problematic. According to a local custom (as explained in an official government document), public officials, as members of their community, are “expected to contribute to community events such as weddings, funerals, feasts or church gatherings” and are “obligated to reciprocate with gifts if and when they visit communities and are presented with gifts.”

In July 2018, as part of a comprehensive national anticorruption scheme, the Solomon Islands’ Parliament enacted the much anticipated Anti-Corruption Act (ACA). The ACA is especially notable, and unusual, in its approach towards customary gifts and bribery. Instead of capping the monetary value or limiting the type of gifts which public officials are allowed to accept, the ACA introduced a new cultural defense to the offence of bribery of public officials. According to this defense, a public official who accepts or solicits something of value, as well as the individual who offers or gives it, is not guilty of bribery if the defendants can prove that their respective acts were conducted: (1) “in accordance with custom,” (2) “openly, in the course of a traditional exchange of gifts,” and (3) “for the benefit of a community or group of people and not for an individual.” According to Prime Minister Rick Houenipwela, the ACA’s cultural defense is required as part of the government’s obligation “to respect our customs and traditional cultures” as “a multi-ethnic post conflict country.” However, the cultural defense has been criticized by many, including the Parliament’s Bills and Legislation Committee (see here and here) and Transparency Solomon Islands, which referred to this defense as “a good example of bad law.”

In this post, I do not attempt to answer the question whether the Solomon Islands’ customary gift giving should be criminalized. I do wish to argue, however, that even if we assume that local gift-giving customs are worth protecting, the ACA’s cultural defense to bribery in its current form is highly susceptible to misuse and may undermine the government’s anticorruption efforts. Both the Solomon Islands and other jurisdictions that might be considering a similar cultural defense should take heed of four significant problems with the defense as currently written: Continue reading

AMLO Cannot Put a “Final Period” in Mexico’s History of Corruption Without Addressing the Past

The trial and conviction of the notorious drug lord “El Chapo” has shed new light on the rampant corruption that exists at even the highest levels of the Mexican government. To take just a couple of the most startling examples: During the trial, a witness testified that Mexico’s former president Enrique Peña Nieto accepted a $100 million bribe from El Chapo, while another cartel member testified that he paid at least $3 million dollars to the Public Security Secretary of former president Felipe Calderon and at least $6 million dollars to President Calderon’s head of police. In other countries these accusations would have shaken citizens to their very core. But in Mexico, long perceived as one of the world’s most corrupt countries, citizens have sadly grown accustomed to allegations of this nature, and the revelations from the El Chapo trial were met with little more than a shrug.

That doesn’t mean that Mexicans don’t care about corruption. Quite the opposite. Indeed, frustration at this flagrant culture of corruption was one of the key factors that helped Mexico’s new president, Andrés Manuel López Obrador (AMLO), to capture his constituents’ faith and votes. AMLO has promised to eradicate corruption through a “Fourth Transformation” of Mexico (the previous three were Mexico’s independence from Spain, the liberal reforms of the 1850s, and the 1910-1917 revolution). Yet despite these sweeping promises, AMLO has decided not to investigate the allegations against his predecessors that have emerged in the El Chapo trial. In fact, AMLO’s stance has been not to prosecute any officials for corruption that took place in the past, before he took office. (AMLO has wavered on this position—though only slightly—after receiving backlash during his campaign; he has since stated he would prosecute past corruption offenses only if the administration has no choice due to “internal pressure” from citizens.) AMLO has justified his opposition to investigations and prosecutions of past corruption crimes by using the language suggesting the need for a fresh start. He speaks of a need to put a “final period” on Mexico’s history of corruption, and to “start over” by not focusing the past.

But how can one eradicate corruption by granting numerous “Get Out of Jail Free” cards? AMLO’s support of a de facto amnesty for corrupt ex-Mexican officials’ casts doubt on the seriousness of his pledge to eradicate corruption. Rather than simply saying that it’s time to turn over a new leaf, AMLO should demand accountability for grand corruption, and he should start by ordering a full independent investigation into the veracity of the corruption allegations that came to light during the El Chapo trial. Continue reading

India’s Futile Attempt to Root Out Sextortion Through Anticorruption Legislation

A recent series of brutal rape cases in India, which attracted international media coverage and provoked domestic protests, seems to have finally prompted India’s government to take more seriously the problem of sexual violence. For instance, India’s Parliament has created a number of new sex-related crimes—stalking, disrobing, voyeurism—and is now considering an executive order introducing the death penalty for rapists of children under the age of 12. Strikingly, even India’s new anticorruption legislation—the Prevention of Corruption (Amendment) Act, 2018 (Amendment)—tries to address the sexual violence problem as well. The Amendment, passed in July 2018, introduced a number of changes to the country’s thirty-year-old anticorruption legislation (the PCA), which criminalizes bribery involving public officials. Among the changes is an expansion of what corruption and bribery can entail, to include not just money or material goods, but also sexual favors. Previously, the PCA had defined bribery as providing a “financial or other advantage” to public officials, but in response to criticism that this language was too narrow, the Amendment replaced this phrase with the term “undue advantage,” and further specified that “undue advantage” is not restricted to those advantages that are “pecuniary” or “estimable in money.” This means that the law, while not explicitly mentioning sex, now apparently covers the offer, request, or extortion of sexual favors as something covered by the criminal prohibition on bribery of or by a public official.

On its face, expanding the scope of the anticorruption legislation to include corrupt sexual extortion, or “sextortion,” seems to be a move in the right direction. And indeed there’s a good case to be made that recognizing the extortion of sexual favors not only as a crime of sexual assault, but also as a form of public corruption, is compelling. But in fact, by implicitly treating sextortion as essentially the same as the extortion of monetary bribes, the Amendment will do little to combat sextortion as a form of corruption, and in fact is likely to do more harm than good. There are three interrelated reasons for this: Continue reading

2018: Five Great Reads on Corruption

 

Twenty eighteen produced many fine analyses of corruption and how to fight it. The five books pictured above, four by journalists and one by a former Nigerian Finance Minister, are among the best.  Combing in-depth reporting with thoughtful analyses, all merit a place on corruption fighters’ book shelf. Continue reading

Expediting Corruption: The Dangers of Expediters in Licensing Markets

The scheme was as simple as it was brazen, and as brazen as it was frightening. On April 24, 2018, a New York City jury convicted attorney John Chambers of bribing New York Police Department (NYPD) personnel in exchange for gun permits for his numerous clients. Calling himself a “gun license expediter,” Mr. Chambers acted as an intermediary for individuals hoping to pass the necessary background check and obtain the mandatory permit in order to legally own a firearm in the city. But in a decentralized scheme involving numerous individuals inside and outside the police department, NYPD officers approved hundreds of licenses while skipping background checks, shortening license suspensions, and waving through applications containing glaring red flags—including improperly approving licenses for individuals convicted of illegal weapons possession. In return, the officers received expensive gifts, tickets to sporting events, lavish vacations, envelopes stuffed with cash—and even free guns.

At the center of the web of bribery were so-called “gun license expediters” like Chambers, who advertised their ability to help clients navigate the demanding and complex process of obtaining, renewing, or retaining a handgun license in New York City. Several of the expediters indicted in the scandal were retired police officers who had served in the NYPD Licensing Division, bribing former colleagues after leaving the police force in order to open their own expediting businesses. Fees varied depending on the difficulty and timing of the requests, but clients were routinely charged thousands of dollars per license—on top of the hundreds of dollars in mandatory city-imposed application fees. By leveraging experience, relationships, and sometimes illegal gifts, expediters such as Chambers were able to not only expedite but also to influence the outcome of applications.

In response to the revelations, the NYPD announced substantial changes to its licensing program. First and foremost, the department barred any expediter from physically visiting the Licensing Division on behalf of a client—instead requiring that all applicants appear in person to submit their own paperwork. (Expediters, however, would presumably not be barred from contacting members of the Licensing Division or directing their clients whom to talk to when they arrive.) Second, the department mandated that all gun permit approvals could only be made by the top two officers in the unit. Despite these seemingly sweeping changes, the new policies sidestep the root causes of corruption in this instance—which reveal the danger of expediters in general. Continue reading