Tag Archives: organized crime

Corruption’s Queer History: Stonewall’s Seedy Underside

Posted on by
Reply

A little after midnight on June 28, 1969, New York City police officers raided the Stonewall Inn, a seedy bar in Greenwich Village known for catering to a mostly LGBTQ crowd. Such raids were not uncommon—in fact, the Stonewall Inn had already been raided just four days prior to that now historic evening. But for some reason, that particular raid on that particular night had touched off violent clashes between police and Stonewall’s patrons, becoming a watershed moment for the LGBTQ civil rights movement in the United States. Indeed, the Stonewall Inn is now a national monument, and the anniversary of Stonewall is commemorated every year with Pride parades around the world.

In the days following the riots, however, the Stonewall Inn was in utter disarray: graffiti sprawled on its boarded-up windows read: “GAY PROHIBITION CORRUPT$ COP$ / FEED$ MAFIA.” That brief and blunt statement captures an important truth about Stonewall, one that is important for understanding both the historical context of the Stonewall uprising, as well as the intersection between anti-LGBTQ discrimination and corruption that persists today: The riots weren’t only about police discrimination—organized crime and corruption also played a fundamental role.

Continue reading →

New Podcast, Featuring Anastasia Kirilenko

Posted on by
Reply
A new episode of KickBack: The Global Anticorruption Podcast is now available. During the ongoing emergency in Ukraine, as Russia’s unprovoked military aggression throws the region and the world into crisis, my colleagues at the Interdisciplinary Corruption Research Network (ICRN) and I featuring on KickBack experts who can shed greater light on how issues related to corruption relate to the ongoing crisis. And rather than keeping to our usual schedule of releasing new episodes every two weeks, we will release new episodes as soon as they are available. In the new episode, my ICRN colleague Christopher Starke interviews Anastasia Kirilenko, an investigative journalist and the co-producer of Putin and the Mafia, a documentary about Vladimir Putin’s connections with organized crime. In their conversation, Christopher and Anastasia discuss the themes of this documentary, and also discuss the role of media and civil society in Russia, the role of oligarchs in Russian politics, and what the international anticorruption community could do to more effectively promote change within Russia. You can also find both this episode and an archive of prior episodes at the following locations: 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.

The Weaponization of Anticorruption Law: Why Italy’s Legge Severino Must Be Reformed

Posted on by
6

Back in 2012, the Italian legislature passed an anticorruption statute known as the Legge Severino. This law institutes a six year prohibition on holding elected office for politicians with felony convictions carrying sentences over two years. If convicted on an “abuse of power” charge, the prohibition on officeholding is extended to eight years. The law, which was enacted in part to effectuate Article Six of the United Nation’s Convention Against Corruption, was hailed at the time as a positive step on the road to a less corrupt Italy. (Famously, this provision initially barred Silvio Berlusconi from office after he was sentenced to four years in prison for tax evasion.) The logic behind passing laws of this sort (which also exist elsewhere) is fairly clear, especially in a country like Italy which has struggled with endemic political corruption: intuitively, those who have abused the public trust by committing serious criminal offenses should not be allowed to hold elected office.

But a recent case in Calabria, involving Domenico “Mimmo” Lucano, the former mayor of the town of Riace, highlights problems with the law—in particular, how the law can be weaponized to take down politicians who are fighting corruption and organized crime. Continue reading →

Why Italy Should Not Prioritize Anticorruption in Spending Covid Recovery Funds

Posted on by
9

The Covid-19 pandemic has been an economic disaster as well as a public health disaster, and massive public spending will be needed to promote recovery. In Europe, the EU is projected to spend up to €1.8 trillion on pandemic recovery. One of the biggest recipients of these EU funds will be Italy, the EU’s hardest-hit member state. Currently, Italy is poised to receive €123 billion in loans and €69 billion in grants between now and 2026. Provision of these funds has already started; the first tranche of €25 billion arrived this past June. This funding will support Italy’s Covid recovery plan, known as the Piano Nazionale di Ripresa e Resilienza (PNRR), which—in the name of territorial cohesion—will allocate 40% of the funds to the Italian south.

If history is any guide, a massive amount of that money will be misallocated, misspent, or outright stolen by corrupt public officials colluding with organized crime groups. The mafias have a long history of bribing Italian officials for lucrative public contracts. Between 2014 and 2020, Italy received €77 billion from the EU for use in structural and investment funds; 60% of those funds were “fraudulently requested or obtained,” often by organized crime, with the 85% of that fraud occurring in the South. Much of the fraud occurs when illegitimate companies request funds in the form of loans and grants; the companies either don’t exist or are liquidated upon receipt of the funds.  

But we needn’t look only to history: Italy’s three most powerful crime syndicates—Cosa Nostra in Sicily, the Camorra in Campania, and the ‘Ndrangheta in Calabria—are already bribing Covid response officials, winning fraudulent contracts, and plundering businesses in receipt of PNRR funds. As the EU money pours in, we can expect that these mafia groups will use their corrupt networks to siphon off a staggering percentage of the EU Covid relief funding.

What should European policymakers do in response? It’s tempting to insist—as anticorruption activists have in this and other contexts—that the EU and Prime Minister Mario Draghi’s government adopt enhanced oversight and transparency measures, to better ensure that funds are spent appropriately. But that would be a mistake. Right now, the priority must be on promoting a swift economic recovery. Attaching burdensome anticorruption requirements to the public spending needed to support that recovery will slow the process down too much. This is, I realize, a bitter pill to swallow. Many readers will instinctively resist the idea that the EU and the Italian government might bankroll Italy’s most powerful mafias (to the tune of up to €200 billion). But if Italy is to recover from the economic effects of the Covid-19 pandemic, the priority must be the swift delivery of recovery funds, even if this means that much of the money will be intercepted by the mafia.

Continue reading →

Major League Soccer: A Prime Target for Organized Crime Groups?

Posted on by
2

Sports corruption, though not a new problem, has been an ever-increasing source of concern and attention in both the sporting world and the anticorruption community. In the United States, much of the attention regarding this issue has focused on corruption scandals in the most popular U.S. sports, such as college football, college basketball, and professional basketball. But other less high-profile sports may be even more at risk of corruption. Indeed, in surveying the landscape of sports in America, the league that stands out as very high-risk for corruption is Major League Soccer (MLS).

This may seem surprising. Although soccer is considered to be the most corrupt sport in the world, there have not, to my knowledge, been any reports of significant corruption in MLS to date. Indeed, back in 2015 MLS commissioner Don Garber declared that MLS is “one hundred thousand percent” clean. But just because corruption hasn’t (yet) been uncovered doesn’t mean it isn’t there, or that it won’t arise in the future. My concerns for corruption in the MLS arises from my observation that MLS has several of the risk factors that investigations of sports corruption in other contexts have identified. Three such risk factors in particular stand out:

continue reading

eSports: A Playground for Corruption?

Posted on by
2

Video game tournaments—sometimes referred to as “eSports”—are relatively new but increasingly popular. In these tournaments, players compete for cash prizes. In certain U.S. states it is now legal to place bets on eSports tournaments, though in other states such betting is prohibited. The growing popularity of eSports and the rise of eSports betting unfortunately gives rise to the risks of the same sorts of corruption that we have seen in traditional sports, such as gamblers (including organized criminal betting syndicates) bribing players to fix matches. And this is not purely hypothetical: Recently the FBI obtained evidence that criminal betting syndicates were bribing a group of players to throw matches in certain eSports competitions.

Responding effectively to bribery-related corruption in eSports is complicated by the fact that, unlike traditional sporting leagues, eSports do not have a central governing body. Rather, each game publisher controls its own tournaments, and many tournament operators have not taken the steps necessary to implement effective mechanisms for identifying betting-related match-fixing activities and levying punishment on bad actors. In 2016, a group of eSports stakeholders tried to address this issue by establishing a nonprofit association called the Esports Integrity Commission (ESIC), which is tasked with investigating and disciplining individuals involved in corrupt eSports activities. But ESIC only has authority over competitions organized by its members, and players sanctioned for match-fixing activities within an ESIC member tournament can still compete in non-ESIC member competitions.

More effective measures are therefore needed to prevent the spread of corruption in eSports. In particular, those states that permit betting on eSports tournaments should require, as a condition for betting on such matches to be lawful, that the tournament and betting operators join an authorized eSports governing board equivalent to the ESIC. Authorized governing boards should have the following responsibilities and obligations:

Continue reading

Municipal Dissolution as a Means of Combatting Criminal Corruption

Posted on by
Reply

In December of 2019, the Italian government dissolved the municipal government of the Calabrian town of Africo, replacing it with a national governmentk commission that would run the city for the next 12 to 24 months. This drastic action, decried by (former) Africo city councilor Nicola Paris as “interrupting democracy,” was authorized by a special Italian law, adopted in 1991, that permits the national government to dissolve a local government if that local government has been infiltrated by the mafia. Since 1991, 341 such dissolution decrees have been issued (though 21 were cancelled by administrative courts), with 22 issued in 2019-2020 alone. Sixty-six communities have seen their local government dissolved more than once. (Africo’s city council, for example, has now been dissolved three times.) And the practice is spreading geographically. Between 1991 and 2011, the vast majority of city council dissolutions were in the three regions under the “traditional” sphere of mafia control (Campania, Calabria, and Sicily), with only three dissolutions outside of those regions. But since 2011, the Italian government has dissolved city councils in 21 municipalities outside of that traditional sphere.

The dissolution of city councils is a serious measure, and is strictly regulated. The process begins when concrete evidence emerges of links between town councilors and organized criminal elements that could bias political decision-making or affect public security. This evidence is submitted to the Prefecture, an administrative body responsible for implementing state functions at the local level. The Prefecture appoints a three-person Committee of Inquiry. After an investigation, which usually takes roughly 3-6 months, the Committee presents its findings to the Prefect, who presents them to the Minister of Interior within 45 days. The Minister of Interior, after deliberating with the Council of Ministers, then decides whether to issue a proposal of dissolution; a dissolution is only finalized when the President of the Republic issues a decree of resolution. The issuance of such a decree is judicially reviewable by the administrative courts (and, as noted above, 21 dissolution orders have been judicially nullified). When a municipal government is dissolved, the mayor, councilors, and members of the executive committee are removed from office, and a group of three individuals, known as the Extraordinary Commission, takes over all council activities for a period of up to two years. At the end of this time, new local elections are held.

Even with all of this process, dissolution of a local government is an extreme measure, but in Italy, where deeply-entrenched organized criminal groups are able to secure their control thorough corruption of local governments, such an extreme response is warranted. Indeed, other countries struggling with similar problems might consider adopting a similar mechanism. Continue reading →

The Global Community Must Take Further Steps to Combat Trade-Based Money Laundering

Posted on by
1

Global trade has quadrupled in the last 25 years, and with this growth has come the increased risk of trade-based money laundering. Criminals often use the legitimate flow of goods across borders—and the accompanying movement of funds—to relocate value from one jurisdiction to another without attracting the attention of law enforcement. As an example, imagine a criminal organization that wants to move dirty money from China to Canada, while disguising the illicit origins of that money. The organization colludes with (or sets up) an exporter in Canada and an importer in China. The exporter then contracts to ship $2 million worth of goods to China and bills the importer for the full $2 million, but, crucially, only ships goods worth $1 million. Once the bill is paid, $1 million has been transferred across borders and a paper trail makes the money seem legitimate. The process works in reverse as well: the Canadian exporter might ship $1 million worth of goods to the Chinese importer but only bill the importer $500,000. When those goods are sold on the open market, the additional $500,000 is deposited in an account in China for the benefit of the criminal organization. Besides these classic over- and under-invoicing techniques, there are other forms of trade-based money laundering, including invoicing the same shipment multiple times, shipping goods other than those invoiced, simply shipping nothing at all while issuing a fake invoice, or even more complicated schemes (see here and here for examples).

As governments have cracked down on traditional money-laundering schemes—such as cash smuggling and financial system manipulation—trade-based money laundering has become increasingly common. Indeed, the NGO Global Financial Integrity estimates that trade misinvoicing has become “the primary means for illicitly shifting funds between developing and advanced countries.” Unfortunately, trade-based money laundering is notoriously difficult to detect, in part because of the scale of global trade: it’s easy to hide millions of dollars in global trading flows worth trillions. (Catching trade-based money laundering has been likened to searching for a bad needle in a stack of needles.) Furthermore, the deceptions involved in trade-based money laundering can be quite subtle: shipping paperwork may be consistent with sales contracts and with the actual shipped goods, so the illicit value transfer will remain hidden unless investigators have a good idea of the true market value of the goods. Using hard-to-value goods, such as fashionable clothes or used cars, can make detection nearly impossible. Moreover, sophisticated criminals render these schemes even more slippery by commingling illicit and legitimate business ventures, shipping goods through third countries, routing payments through intermediaries, and taking advantage of lax customs regulations in certain jurisdictions, especially free trade zones (see here and here). In a world where few shipping containers are physically inspected (see here, here, and here), total failure to detect trade-based money laundering is “just a decimal point away.”

The international community can and should be doing more to combat trade-based money laundering, starting with the following steps:

Continue reading →

Mexico’s National Guard: The Wrong Response to Police Corruption

Posted on by
2

In September 2018, Mexican federal and state authorities disarmed the entire police force of the city of Acapulco because of suspicion that the police had been corrupted by drug cartels. Federal authorities certainly had reason to take action: partly due to the corruption of the police, murders in Acapulco surged to 2,316 in 2017, and police officers themselves were implicated in some of those murders. Yet rather than institute a plan to reform the local police to address this problem, the Mexican government had the military assume local police functions.

It now appears that Mexico’s popular new President, Andres Manuel Lopez Obrador (AMLO), is poised to adopt a similar solution for all of Mexico, in the form of proposed legislation that would create to create a 60,000-strong National Guard. This proposal, which has already been approved by Mexico’s congress and by a majority of the state legislatures, is not accompanied by any proposal for comprehensive police reform; rather, AMLO wants to simply replace the police by utilizing the National Guard to fight the war on crime. His justification for this approach is that the police force is simply too corrupt to do its job.

This argument is not without some merit, nor is it unprecedented. In fact, many governments around the world have opted to militarize domestic security when organized crime infiltrates the police, because of the military’s greater discipline, more hierarchal structure, and (supposed) lower susceptibility to corruption. (See here for an example from the Philippines.) AMLO has advanced similar arguments in favor of the National Guard. He has also emphasized additional safeguards: the top commander of the National Guard will report to a civilian boss, civil courts rather than military tribunals will have jurisdiction over National Guard members alleged to have violated the law, moving detainees to military installations is prohibited, and National Guard members will receive human rights training.

But despite all this, and despite the evident need to address the police corruption that contributes so much to the outrageous violence in Mexico, a National Guard is not the solution, for several reasons: Continue reading →

Defending Those Who Expose Corruption: Defamation Safe Harbor Legislation to Protect Investigative Journalists

Posted on by
3

In May 2017, Russian journalist Dmitry Popkov, who investigated corruption in local governments, was shot five times and found dead in his backyard. The perpetrators were never identified. In October 2017, a car bomb killed Maltese journalist Daphne Caruana Galizia, who had been investigating possible corruption by Maltese Prime Minister Joseph Muscat. Although three suspects were charged with carrying out the attack, the masterminds behind the plot were never found. And in February 2018, an unidentified hitman killed Slovak journalist Ján Kuciak and his fiancée, both 27, in the couple’s newly-purchased home. Kuciak was in the middle of an investigation of the Italian organized crime group ’Ndrangheta and its corrupt ties to Slovakia’s governing political party SMER. Slovak officials arrested seven suspects allegedly connected to the ’Ndrangheta and the murder, but did not find enough evidence to file charges and released them 48 hours later. Although weeks of mass demonstrations led to the resignation of the Slovak Prime Minister, the perpetrators of Kuciak’s murder were never held accountable.

Sadly, these are not the only such incidents. Reporters Without Borders states that last year 39 journalists were murdered because “their reporting threatened political, economic, or criminal interests.” And in many of these cases, despite government assurances of a thorough investigation—and despite a 2013 United Nations Resolution that urges Member States to conduct “impartial, speedy and effective investigations” of journalist murders—the perpetrators are never brought to justice. Perhaps this is not surprising. After all, these murders are often associated with sophisticated crime syndicates that leave few traces for investigators to follow, and an effective investigation would require significant resources and expertise beyond the capacity of many governments. (In some cases, such as Caruana Galizia’s murder, assistance from Dutch forensic experts and the FBI enabled local authorities to arrest suspects linked to the attack, but this is not regular practice.) Perhaps more importantly, resolving the murders of journalists who expose public corruption is not always in the interest of government officials, at least when doing so might provide further evidence of the government’s corrupt acts and expose officials implicated in the journalist’s work.

Given these weaknesses, many corrupt officials and associated criminal networks may conclude that killing a journalist before a story is published may be an effective way to eliminate it altogether. Sadly, this is indeed often the case. But not always: One of the striking things about the recent case in Slovakia is the decision of Kuciak’s employer, the news website Aktuality, to publish his unfinished article. And it appears that this decision to publish, not just the murders themselves, contributed to the massive public outcry and political backlash that has already forced the Prime Minister and several other high-level officials to resign.

Publishing a journalist’s unfinished article is not common practice for newspapers; it was likely done in the Kuciak case because the investigation was almost finished. Usually newspapers are hesitant to publish due to fear of defamation lawsuits, which are a drain on the publication’s resources and reputation. So-called SLAPPs (Strategic Lawsuits Against Public Participation) are filed in jurisdictions with strong defamation laws in order to intimidate journalists and media outlets, and prevent them from publishing certain articles. Some members of the European Parliament have been pushing the European Commission to protect investigative journalism by adopting anti-SLAPP measures.

Another reform measure, which hasn’t yet been part of the conversation, would be to create a special exception to defamation laws that would apply when a media outlet publishes a story, on a matter of public concern, by a journalist who was murdered before the story was complete. In other words, countries should enact a “safe harbor” from the ordinary operation of defamation laws in these special circumstances—one that would allow for the expedient dismissal of defamation suits against media outlets that publish the incomplete work of a murdered journalist.

Creating such a safe harbor would have a number of important advantages, and only very limited downsides:  Continue reading →