NGOs Call Italian Judiciary to Account for Not Enforcing the Antibribery Law

The Italian judiciary is threatening to upset the global norm against bribing officials of another nation.  As party to both the OECD Antibribery Convention and the UN Convention Against Corruption, Italy is obliged to sanction Italian companies and nationals that bribe the public servants of other nations.  Yet despite overwhelming evidence that oil and gas giant Eni S.p.A, the country’s largest company, bribed Nigerian officials to secure a lucrative oil block, a Milan trial court recently acquitted Eni and codefendant Royal Dutch (decision here.)

Acknowledging the prosecution had presented strong circumstantial evidence of bribery — what it termed “conduct implementing the agreement” to pay Nigerian officials in return for “the unlawful act of the public official” — the court nonetheless held this was not enough. Following earlier appeals court decisions in foreign bribery cases, it ruled the prosecution must also show an actual “agreement between clearly identified parties” Hence, it concluded, “even the proof of the bribe or the unlawfulness of the act committed by the official” is not enough to warrant conviction.

Officials from the U.S. Department of Justice and Germany’s Ministry of Justice will shortly review Italy’s compliance with its obligations under the OECD Antibribery Convention. The Italian NGO ReCommon, Nigeria’s Human and Environmental Agenda, and Corner House from the United Kingdom have prepared this thorough and damning critique of the decision in the ENI case and earlier ones where Italian courts have held that absent an express agreement to pay a bribe to a foreign official, defendants must be acquitted.

As the three NGOs explain in their analysis, those negotiating the OECD Convention recognized that requiring the prosecution to show an express agreement to bribe set an impossibly high hurdle. They settled instead on allowing courts to infer an agreement from the surrounding circumstances, circumstances such as those the prosecution presented in the ENI-Shell case. Indeed, American courts long ago recognized that requiring the prosecution to produce an express, written agreement to pay a bribe rendered the antibribery law a nullity.

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Italy: Safe Haven for Bribe Payers?

That a nation with the third-largest economy in the European Union and the eighth-largest in the world would be countenancing bribery in today’s world seems beyond the pale. Yet an analysis of recent case law and record of convictions shows just that.  Done by the Italian NGO ReCommon and submitted on a confidential basis to the OECD’s Working Group on Bribery, it concludes that it is “nigh on impossible to obtain a conviction in Italy for international corruption.”  

The group’s conclusion rests not only on Italy’s dismal record of convictions of Italian companies and nationals for bribing foreign public officials, but decisions in three recent cases. All raise a virtually insurmountable hurdle to a conviction for bribery. In any case. No matter whether the bribe-taker is an official of a foreign government or of the Italian government. In all three, courts have ruled that to prove bribery, the prosecution must show there was an express agreement to bribe.

In today’s world, just how many businesses send a letter to an official saying “I will pay you X in return for your providing the company Y”? As an American Supreme Court justice observed some 40 years ago, were the law to impose such a requirement, it could be easily frustrated “by knowing winks and nods.” Yet an express agreement to bribe is exactly what Italian judges now demand to convict bribe-takers and payors. Why has the Italian judiciary, historically one of the most renowned in the civil law world, decided to frustrate the prosecution of bribery cases?

Italy’s compliance with the OECD Antibribery Convention will shortly be reviewed by peer nations. It simply cannot be found in compliance so long as its courts require an express agreement to bribe to find defendants guilty. The OECD reviewers should follow ReCommon’s analysis, which in the public interest is revealed here, and condemn the recent turn in Italian law making the nation a safe haven for bribery.

Guest Post: Lessons from Athenians’ Efforts to Define Corruption

Gab readers have been treated to a lively and valuable debate in past weeks on precisely what we mean when we say that someone or some behavior is “corrupt.” Many readers have joined the discussion. Responding to my request for their views by offering comments and analyses of six real world cases where a court, ethics commission, or legislature has been asked to decide whether the conduct of a public official was corrupt.

I had promised to post “the right answers” to the six, or at least the answers the court, commission or legislature gave this week. I am putting it off to share the guest post below by classics scholar and American attorney Kellam Conover. Drawing on the dissertation that garnered him a PhD. in Classics from Princeton, he explains how citizens of ancient Athens decided when an official’s conduct was corrupt. What he takes from their method provides the only way I see for arriving at genuine right answers – not only to the six cases I presented but to the general issues of how to define corruption and how to measure our progress in overcoming it. Many thanks Kellam.

I have read with great interest the fascinating discussion that has unfolded recently among Bo Rothstein, Matthew Stephenson, Robert Barrington, Paul Heywood, and Michael Johnston.  The questions they raise about how to define corruption, how to link up theory with practice, and how to measure success are all ones I have grappled with since writing my dissertation on Bribery in Classical Athens

As a historian, I’ve spent far more time describing corruption than prescribing solutions.  But I hope a few observations from ancient Athens will be helpful to others.  First, in my view corruption defies definition because it is an inherently political claim that changes with different social and political contexts.  Second, and as a result, it may be fruitful to augment anti-corruption programs with institutions specifically designed for articulating, contesting, and legitimating evolving political norms.  Finally, I offer one potential metric of success:  i.e., whether patterns of corruption in a polity have grown less disruptive over time.

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Defining Corruption: What Do Readers Say?

Recent posts have treated readers to a discussion of what corruption means.  Professor Rothstein suggested coming at it from its opposite and offered “impartiality” so corruption would mean the absence of impartiality or bias. [Note: I had flubbed Prof. Rothstein’s view in the original text as per his comment below.] Professor Johnson argued that at its core corruption is about an imbalance of power and suggested tying the definition to notions of “justice.” Transparency International’s “abuse of entrusted power for private gain” was also examined.

I think it time for GAB readers to be heard. Rather than asking which one of these definitions they prefer, or whether they have another candidate, however, I thought it more interesting to see how a definition of corruption helps them judge actual conduct in the real world. 

Below are six cases where at least some have alleged corruption was afoot. What say, GAB readers? Do any of the cases described below involve corruption as you define it?

A yea or nay on each in a comment to this post will suffice. Extra credit for explaining how one of the definitions proffered helped you decide. Lifetime subscription to GAB at the current rate to the best entry or entries. How each played out in court and in the court of public opinion will be revealed in a future post.

Case 1. To defeat a motion of no confidence, Vanuatu’s Unity of Change government offered two MPs parliamentary appointments in return for withdrawing their support for the motion.  Another MP was offered the position of Minister of Health, and a fourth Parliamentary Secretary to the Minister of Fisheries. All four accepted the offers, and the government defeated the motion. Bribery?

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Implicit Corruption in the Chinese Consumer Debt Industry? A Close Look at Recent Evidence

While many country’s bribery laws require an express quid pro quo—an agreement to exchange a specific benefit for a specific exercise of government power—in practice many corrupt relationships involve implicit quid pro quos, in which the private party provides something of value to government officials, and the government officials use their power to help their private benefactors, but there is never any express agreement, or even any direct connection between any individual official act and a particular benefit conferred by the private party. The context in which such implicit quid pro quos are most widely suspected and discussed is perhaps campaign finance in democracies, but such implicit quid pro quos can occur in many other contexts as well. It is often very difficult—not only for law enforcement agencies, but also for empirical researchers—to find sufficiently clear evidence of an implicit corrupt deal. Yet quantitative empirical researchers have been making important strides in using available data to detect evidence of hidden or implicit wrongdoing—an approach sometimes dubbed “forensic economics.”

A fascinating recent paper by Sumit Agarwal, Wenlan Qian, Amit Seru, and Jian Zhang (forthcoming in the Journal of Financial Economics) illustrates both the potential and limitations of this approach. The paper, entitled “Disguised Corruption: Evidence from Consumer Credit in China,” presents quantitative evidence of an implicit quid pro quo between a large Chinese bank and government officials who wield regulatory authority over the bank. The paper finds that the bank offers unusually favorable lending terms to government employees (the “quid”) and that in those provinces where this practice is more widespread, the bank receives more favorable treatment from governments (the “quo”). While this evidence alone cannot establish that there was an implicit exchange (the “pro”), the authors suggest that this is the most plausible explanation of the data.

The data is certainly susceptible to that interpretation, but there are other, more benign possibilities. I’ll first say a bit more about the main evidence the paper offers for an implicit quid pro quo, and then suggest (though not necessarily urge) a possible alternative explanation.

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Where the Real Blame for Letting Bridgegate Defendants Off Lies: Part II — the Congress

Anticorruption advocates roundly condemned the Supreme Court for its May 7 Bridgegate decision overturning two New Jersey officials’ corruption convictions for conduct even their lawyer admits was wrong (examples here, here, and here).  But as explained in a previous post on Bridgegate, so named because the case involved closing bridge entry ramps to create traffic jams, the Court is not to blame for the result.  The immediate cause was Bridgegate prosecutors pushing beyond the limits the Court has ruled current law sets on their power to police state and local corruption.

It is Congress, though, that bears the lion’s share of the blame for the outcome. Congress needs to clarify when state and local officials can be prosecuted under federal law for corruption.  Until it does, more Bridgegates, cases where the Court rebuffs federal prosecutors’ expansive view of their power to prosecute state and local corruption, are in store.  As with Bridgegate, the result will be that corrupt officials get off scot free while the American public is left to question their government’s commitment to fighting corruption. Continue reading

The Bribery Trial of Sitting Israeli Prime Minister Netanyahu Poses Unprecedented Challenges

The criminal trial of Israeli Prime Minister Netanyahu, on multiple corruption charges, opened yesterday, only ten days after the formation of a new government, and after years of police investigations, indictment procedures, and three rounds of early general elections. The trial is an unprecedented event in Israel, and one of the few examples anywhere in the world where a sitting head of government has stood trial on criminal charges in his own country. This situation poses unique challenges. On the one hand, the court must ensure that Netanyahu’s rights, as a criminal defendant, are respected. That said, though, some adjustments will have to be made to secure both the fairness of the trial and the integrity of Israeli executive and judicial branches, given that as the trial unfolds, Netanyahu will continue to serve as Prime Minister.

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Where the Real Blame for Letting Bridgegate Defendants Off Lies: Part I

The Supreme Court continues to bear the blame for two political operatives getting off scot free for an admitted blatant abuse of power: creating nightmarish traffic jams for residents of a small New Jersey town because its mayor had not endorsed their boss’ reelection as governor.  Though the record showed the stunt endangered the lives of some and inconvenienced thousands and their lawyer admitted it was an abuse their power as state officials to cause the jams, the Court acquitted them on all charges.  Its decision in the Bridgegate case, so named because the traffic jams were created by blocking two lanes of the bridge the residents used to commute to New York City, is indeed the immediate reason defendants escaped sanction.

But that ruling was the inevitable consequence of earlier decisions by the other branches of government.  For decades Congress has ignored the Court’s warning that the hodgepodge of federal laws used to prosecute state and local officials for corruption is Constitutionally infirm.  And for decades, and despite some spectacular earlier reversals by the Court, the Executive branch has continued to rely on these statutes to prosecute state and local corruption.

Those genuinely interested in fighting corruption need to stop denouncing the Court and focus their energies instead on these two branches of government.  Below is what they should demand of the Executive.  Part II of this post will explain what they should demand of Congress. Continue reading

Don’t Believe the Spin on the Mozambican Acquittal

The jury in the federal criminal trial in Brooklyn of  Jean Boustani acquitted him December 2 of charges arising from a scheme to pay Mozambican officials tens of millions of dollars in bribes in return for the government borrowing hundreds of millions of dollars to pay for ships it could not afford. No sooner was the verdict announced than Privinvest — Boustani’s employer, the supplier of the ships, and a major beneficiary of the scheme — crowed it had been completely vindicated.  Despite evidence produced at the trial, charges pending in Mozambique, and allegations in a civil action in the United Kingdom, Privinvest lawyers are telling the press the acquittal proves the company had no part of the scheme.  That it did not pay bribes to win the business.

If it were true the company paid no bribes, three Credit Suisse executives would not have pled guilty to accepting bribes from it in the same court where Boustani was acquitted. Nor would they have named its CEO Iskander Safa, CFO Najib Allam, and Boustani as bribe payers (here). Nor would a trial witness have explained that Government Exhibit 2758, an April 2014 e-mail from Boustani to Allam, is a list of bribes the company paid Mozambican officials.  A list that includes President Filipe Jacinto Nyusi (“Nuy” in the e-mail), former Finance Minister Manuel Chang (“Chopstick”), and former intelligence chief António Carlos do Rosário (“Ros”). (Complete decoded list here.)

No, the verdict of acquittal does not exonerate Privinvest.  Nor anyone else for that matter.  What it shows is two things.

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Can A “Fudgy” Adverb Save Trump From Impeachment?

For weeks President Trump’s defenders have claimed he did not demand Ukraine investigate the Bidens in return for approving the delivery of weapons to Ukraine. In legal terms, the argument was that there was no exchange of one for the other, no quid pro quo, the cornerstone of the crime of bribery.  That defense has now collapsed (here and here). The evidence that Trump sought a “quo,” a personal favor in the form of an investigation of the Bidens, in return for a “quid,” weapons, is overwhelming (here).  His defenders have thus now fallen back to a secondary defensive line: there was a quid pro quo but it was merely an “inappropriate” one. It was not, defenders insist, an impeachable quid pro quo.

Whether this new defense will carry the day remains to be seen.  No American president has ever faced impeachment for soliciting a bribe.  There is thus no standard jurors in a Trump impeachment trial, the 100 members of the United States Senate, can consult in deciding whether Trump’s attempt to use the power of the presidency to obtain a personal benefit is impeachable. But as Senators construct a standard, they might consider the one a 12-person jury of lay people in a criminal trial must use when a public servant is accused of soliciting a bribe. Continue reading