Tag Archives: Hungary

When and Why Do Whistleblower Reward Programs Succeed?

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It is often difficult to expose and unravel corruption schemes without the cooperation of insiders. Yet would-be whistleblowers are frequently deterred from making disclosures due to the personal and professional risks of doing so. One increasingly popular way that countries are addressing this problem is through whistleblower reward programs. While such programs vary widely in their specifics, most operate under the same basic framework, offering a whistleblower who discloses material nonpublic information that leads to an enforcement action a monetary reward—typically, a percentage of the fines imposed on the liable parties—as an inducement to come forward.

In the United States, which pioneered this mechanism, whistleblower reward programs have seen broad success. Between 1986 and 2020, whistleblower cases under the False Claims Act (FCA) brought in $46.5 billion in penalties, with whistleblowers receiving $7.8 billion in rewards. And this is only under the FCA—other U.S. whistleblower reward programs have also led to the recovery of significant additional sums. For example, under the whistleblower program created by the Dodd-Frank Act, which was created in 2011, whistleblower tips have contributed to at least $2 billion in financial remedies for violations of the securities laws, with over $720 million awarded to whistleblowers. The success of whistleblower reward programs in the United States has inspired similar programs in several other countries, including South Korea, Canada, Nigeria, Ghana, Hungary, and Kenya. But not all of these programs have been similarly successful. For example, in Ghana, the first country in Africa to introduce a whistleblower reward program, no rewards are known to have been issued—in fact, few have made use of the Ghanaian Whistleblower Act’s provisions at all.

What factors help explain when a whistleblower reward program will work as intended? There is no easy or simple answer—the issue is complex, and the effect of any given program depends in part on details of the program’s design, including the prerequisites for receiving a reward and the scope of the program, as well as the country’s culture around whistleblowing. That said, two factors stand out as key indicators of whether a whistleblower reward program will succeed in encouraging substantial numbers of whistleblowers to come forward:

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New Podcast Episode, Featuring Mihaly Fazekas

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In the new episode, my ICRN colleagues Nils Kobis and Christopher Starke interview Mihaly Fazekas, Assistant Professor of Public Policy at the Central European University. Professor Fazekas explains how he became interested in the study of corruption and describes some of his lines of research, including his work on measurement of corruption, particularly in the context of public procurement, and the challenges of scaling up the best corruption measures. The interview also covers additional topics such as the role of investigative journalism in fighting corruption, and the anticorruption potential impact of new technologies, including big data analysis and artificial intelligence.

You can also find both this episode and an archive of prior episodes at the following locations:

A quick note: We will be going on summer break, so we will not be releasing any new episodes over the next six weeks, but KickBack will return with new episodes in September. KickBack is a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (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.

How Grand Corruption Threatens Liberal Democratic Institutions

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As regular readers may have noticed, GAB has been inactive for the past week (that is, until Rick’s post yesterday). Apologies for the lack of content – as I’m sure you can imagine, the U.S. presidential election has been consuming my attention and that of most of our regular contributors. But now that the election outcome is clear (notwithstanding President Trump’s baseless claims of election fraud and the craven complicity of his Republican Party enablers), it’s time to get back to blogging. I suspect that much (though not all) of our content over the next couple of weeks will be related to the outcome of the U.S. elections—both backward-looking evaluation of the impact of the Trump Presidency on corruption in the US and beyond, and forward-looking considerations about the anticorruption agenda under the incoming Biden Administration.

Today’s post isn’t about Trump per se, but it’s loosely inspired by both certain aspects of his presidency and his current refusal to acknowledge and accept the outcome of the election. I want to say a few words about the ways in which corruption, particularly grand corruption at the highest levels of the government, can threaten to undermine the institutions of liberal democracy (free and fair elections, formal and informal checks and balances, the rule of law, etc.). To be clear, I don’t have in mind principally the ways in which politicians might engage in corrupt conduct to help win elections (for example, vote-buying, acceptance of illegal campaign donations in exchange for favors, diverting public funds for partisan purposes, etc.), though these are of course serious and important problems. Nor do I have in mind the broader and more diffuse “institutional corruption” associated with the excessive influence of concentrated wealth, though this too is a grave concern. Rather, I want to consider how grand corruption in the highest levels of government may threaten to erode or subvert (explicitly or de facto) the basic institutional structures of liberal constitutional democracy.

Nothing of what I have to say on this topic is original; it’s all drawn from existing literature, and the arguments are likely familiar to many readers. Still, I thought it might be helpful to highlight three ways in which unchecked grand corruption may contribute to democratic backsliding: 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:

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Brazil’s Electoral Dilemma: Which Outcome Will Be Better for Anticorruption?

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My post last week expressed some dismay at the political situation in Brazil, and the role that understandable disgust at widespread corruption in the left-wing Worker’s Party (PT), which controlled the presidency from 2003 to 2016, seems to be playing in contributing to the astonishing electoral success of far-right candidate Jair Bolsonaro. Bolsonaro—whose extremist views, history of bigotry, violent rhetoric, and admiration for autocrats has led some to label him, with justification, as a quasi-fascist—was the top vote-getter in the first round of Brazilian’s two-round presidential election system, and he is favored to win the run-off against PT candidate Fernando Haddad on October 28. Though I’m no expert on Brazil or its politics, this situation—voter revulsion at the corruption of the mainstream parties leading to the rise of a tough-talking extremist—is distressingly familiar. It’s a pattern we’ve seen play out in several countries now, usually with quite unfortunate consequences. So, much as I believe that corruption is a serious problem, and tend to support aggressive anticorruption efforts—including the so-called Car Wash (Lava Jato) investigations in Brazil—I used my last post to express my dismay that anticorruption sentiments might propel someone like Bolsonaro to victory. Some things, I argued, are more important than corruption.

The post seems to have touched a nerve—I’ve gotten far more feedback on that post (some in the public comments section, some in private communications) than anything else I’ve written in the four and half years I’ve been blogging about corruption. While some of the comments have been the sort of substance-free invective one gets used to on the internet, a lot of people have provided useful, thoughtful, constructive criticism and pushback of various kinds. So I thought that perhaps it would be worth doing another post on this general topic, and connecting my thoughts about the current Brazilian political situation to some more general themes or problems that those of us who work on anticorruption need to confront, whether or not we have any particular interest in Brazil. Continue reading →

Some Things Are More Important Than Corruption (Brazilian Elections Edition)

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In the anticorruption community, it is fairly common to puzzle over—and bemoan—the fact that voters in many democracies seem to support candidates that are known or reputed to be corrupt. “Why,” we often ask, “do voters often elect or re-elect corrupt politicians, despite the fact that voters claim to despise corruption?” One of the common answers that we give to this question (an answer supported by some empirical research) is that even though voters dislike corruption, they care more about other things, and are often willing to overlook serious allegations of impropriety if a candidate or party is attractive for other reasons. We often make this observation ruefully, sometimes accompanied with the explicit or implicit wish that voters would make anticorruption a higher priority when casting their votes.

We should be careful what we wish for. Continue reading →

More on the 2017 Corruption Perceptions Index, and the Relationship Between Media/Civil Society Freedom and Corruption

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The rest of the anticorruption commentariat (and the mainstream media) may have already moved on from the publication of Transparency International’s 2017 Corruption Perception Index (CPI), but I wanted to follow up on my other posts from earlier this month (here and here) to discuss one other aspect of the new CPI. The general overview, press release, and other supporting materials that accompanied the latest CPI stress as their main theme the importance of a free press and a robust, independent civil society in the fight against corruption. As TI states succinctly in the overview page for the 2017 CPI, “[A]nalysis of the [CPI] results indicates that countries with the least protection for press and non-governmental organisations (NGOs) also tend to have the worst rates of corruption.” And from this observation, TI argues that in order to make progress in the fight against corruption, governments should “do more to encourage free speech, independent media, political dissent and an open an engaged civil society,” and should “minimize regulations on media … and ensure that journalists can work without fear of repression or violence.” (TI also suggests that international donors should consider press freedom relevant to development aid or access to international organizations, a provocative suggestion that deserves fuller exploration elsewhere.)

Speaking in broad terms, I agree with TI’s position, and I’m heartened to see TI making an effort to use the publicity associated with the release of the CPI to push for concrete improvements on a particular area of importance, rather than simply stressing the bad effects of corruption (such as the alleged adverse impacts on inequality and poverty), or devoting undue attention to (statistically meaningless) movements in country scores from previous years. Whether TI succeeded in leveraging the CPI’s publicity into more attention to the freedom of the media and civil society is another story, but the effort is commendable.

That said, I spent a bit of time digging into the supporting research documents that TI provided on this issue, and I find myself in the uncomfortable position of finding the proffered evidentiary basis for the link between a free press/civil society and progress in the fight against corruption problematic, to put it mildly—even though my own reading of the larger academic literature on the topic makes me think the ultimate conclusion is likely correct, at least in broad terms. That latter fact, coupled with my recognition that the materials I’m evaluating are advocacy documents rather than academic research papers, makes me reluctant to criticize too harshly. Nonetheless, on the logic that it’s important to hold even our friends and allies accountable, and that in the long term promoting more careful and rigorous analysis will produce both more suitable policy prescriptions and better advocacy, I’m going to lay out my main difficulties with TI’s data analysis on the press freedom-corruption connection: Continue reading →

How Corruption Politics Facilitated Hungary’s Response to the Refugee Crisis

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Politicians using xenophobia as a tool for their political benefit is unfortunately common; the past few years have seen populist, far-right parties across Europe take stances that involve stirring nationalist sentiments by portraying their countries as figuratively—and, in their eyes, sometimes literally—under attack by foreigners who have come to reside there. Still, even as those parties’ popularity increases, they have largely not yet succeeded in taking full control of government. Not so in Hungary, where Prime Minister Victor Orbán’s centralist, ultra-nationalist variant on the theme holds sway, and where the country’s escalating efforts to “keep Europe Christian” by excluding Syrian refugees (as well as many other predominantly Muslim migrants and refugees) are extreme even compared to its neighbors.

The reasons for Orbán’s rise to and maintain power are numerous and complex. What has largely gone overlooked in media reports so far, however, is the important role that corruption has played, first in helping Orbán to the premiership, and then in influencing his anti-refugee/migrant policy.

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Are Anticorruption Parties Doomed to Fail?: Purity, Pragmatism, and Reflections on India’s AAP

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In February, I wrote a post about India’s first official anticorruption party, the AAP (Aam Aadmi Party or Common Man Party) and its landslide victory in the Delhi elections that put its leader, Arvind Kejriwal at the helm of the capital’s government. In my earlier post, I was cautiously optimistic about the potential for the AAP’s electoral success to lead to a major breakthrough in the fight against corruption in India. My optimism was based on the palpable excitement among voters, the outpouring of support for Kejriwal, and the AAP’s zealous promises to deliver on its anticorruption platform.

It’s now been a hundred days since the election results were announced. I was hoping, at this point, to do a post reviewing the AAP’s progress in instituting meaningful anticorruption reform and pushing for more fundamental changes in Indian politics. Alas, although the AAP has been getting a lot of attention in its first few months in office, it’s not for the reasons that I (or most of the AAP’s supporters) had hoped: the party has been consumed by infighting, allegations of dirty politics, and a general perception of dysfunction. And while the AAP’s struggles have been particularly dispiriting, it turns out that the general pattern is not that unusual: many anticorruption parties (ACPs), or parties with primary anticorruption platforms, have emerged all around the world in the last decade or two; these parties often gain power through strong rhetoric and popular support, but very quickly stumble, splinter, and often fail to make any real headway. So was my early optimism (and that of millions of Delhi voters) misplaced? Are ACPs, the AAP included, ultimately destined to fail as governing parties? Continue reading →

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 →