Guest Post: Sierra Leone’s Tenuous and Incomplete Anticorruption Campaign

Felix Marco Conteh, an independent research consultant based in Sierra Leone, contributes the following guest post:

Sierra Leone has a serious corruption problem. And while the importance of fighting corruption unites Sierra Leoneans—who tend to blame corruption for all the country’s socio-economic and political challenges—the citizens of this intensely polarized country remain divided on how to do so. The country seems to have fallen into a pattern in which each new administration pledges to tackle corruption, but adopts strategies that are aimed more at appealing to domestic and international constituencies in the short-term, rather than lay a foundation for longer-term success. The new administrations’ short-term strategies too often involve criminalizing politics in a way that appears to target the political opposition, contributing to deeper polarization and instability. Continue reading

The OECD Rightly Rejects Claims that U.S. FCPA Enforcement Is Improperly Politicized

Earlier this month, the OECD Working Group on Bribery released its Phase 4 Report on U.S. compliance with the OECD Anti-Bribery Convention. For those readers unfamiliar with the process, this report is part of the peer monitoring system that the OECD Convention establishes for promoting adherence to the Convention. (The Convention lacks “hard” sanctions, though in extreme cases it’s possible a country could be expelled. Rather, the Convention relies on “soft” peer pressure, facilitated through the extensive and detailed investigations and reports carried out by the Working Group.) The lengthy and detailed report, produced under the leadership of experts from the UK and Argentina, assesses U.S. performance on a range of issues related to the prevention and prosecution of foreign bribery. For purposes of this post, I want to zero in on one narrow but important issue, which gets just over a couple of pages in the report: whether U.S. enforcement of the Foreign Corrupt Practices Act (FCPA) is improperly influenced by national political or economic interests.

This question is important, both legally and politically. As a legal matter, Article 5 of the OECD Convention explicitly states that decisions regarding the investigation and prosecution of foreign bribery offenses “shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.” The OECD has in the past raised concerns about Article 5 violations by other member states, including the United Kingdom, and, more recently, Turkey and Canada. More broadly, as a political matter critics have alleged that the U.S. government’s enforcement of the FCPA is biased against foreign companies, and have sometimes gone so far as to accuse the U.S. of deliberately designing FCPA enforcement actions so as to secure economic advantages for U.S. companies at the expense of foreign rivals. A particularly sensationalistic version of the claim appeared in a book written by a French executive who was convicted and jailed on FCPA charges; that book became a best-seller in China, where the view that U.S. prosecutorial decisions are made to advance national economic interests is widespread. But the notion has been around for a while. (To give one personal example, last year I had a conversation with a journalist from a leading Brazilian news organization who asked for my views on the claim, which he’d apparently heard from several Brazilian sources, that the U.S. FCPA prosecution against Odebrecht was motivated by a desire to eliminate or cripple a company that competed with U.S. firms.) The U.S. government may have further contributed to this narrative in a 2018 press release on the Department of Justice’s “China Initiative”; that press release listed, as one component of the initiative, the “identif[ication of FCPA] cases involving Chinese companies that compete with American businesses.”

While it may be that the U.S. officials charged with enforcing the FCPA have their own biases and blind spots, the strong claim that the FCPA was some kind of a neo-mercantalist/neo-protectionist tool always struck me as far-fetched. (And this is true notwithstanding the FCPA passage in the China Initiative press release, which seemed more like something that got thrown in without much thought or vetting, rather than a substantive change in policy.) And it seems that the OECD Bribery Working Group’s review team came to the same conclusion. As the report states, “the lead examiners … have found no basis to consider that any FCPA decisions have been made for improper reasons.” Continue reading

The Incredible Shrinking Scandal? Further Reflections on the Lava Jato Leaks

Last week, I published a lengthy commentary on the recent explosive reports from the Intercept regarding the Lava Jato operation in Brazil—reports that were based primarily on text messages provided by a source who apparently hacked (or otherwise gained unauthorized access to) the cell phone of Deltan Dallagnol, the lead prosecutor in the case. Because I am unable to read Portuguese, my discussion was based exclusively on the two substantive English-language reports, here and here. (There are more reports in the series, but so far they’ve not been translated into English; if and when they are, I may update my commentary.) The Intercept’s reports argued that these leaked text messages indicate: (1) that Judge Moro engaged in unethical and possibly illegal coordinating with and coaching of the prosecutors; (2) that the prosecutors recognized that their case against former President Lula was without solid legal or evidentiary foundation; and (3) that the prosecutors were motivated by political/ideological bias against Lula and his party, the PT.

In last week’s commentary, based on my preliminary analysis of the Intercept stories, and what I knew about the background context, I reached the following tentative conclusions:

  • First, I thought that the evidence of extensive text communications between the lead prosecutor and the presiding judge was (or at least should be) per se impermissible. I used very strong language in making this point, describing the fact that the two were in regular text contact as “the height of impropriety,” and a “shocking and inexcusable breach of judicial ethics.”
  • Second, though, I thought that the specific text exchanges reported by the Intercept—the ones that allegedly showed the coaching and collaboration—were largely innocuous, and didn’t seem to contain much problematic material over and above the fact of the communications themselves.
  • Third, I did not think that the text messages reported by the Intercept provided any reason to call into question the legal and evidentiary basis for Lula’s conviction. That conviction was and remains controversial, but the leaked text messages don’t show anything other than a prosecutor preparing appropriately for his case.
  • Fourth, I concluded that although texts exchanged among prosecutors in late September 2018 did indeed indicate that the prosecutors did not want the PT candidate to win the election, this didn’t necessarily show that the prosecutors were biased against the PT back in 2015-2016 (when the decision to investigate and prosecute Lula took place), nor was there any evidence that the prosecutors had taken any concrete action that could be ascribed to partisan bias.

Much to my surprise, last week’s post seems to have attracted a lot of attention, particularly in Brazil. As a result, I’ve had the opportunity to engage in substantive exchanges with multiple Brazilian experts from across the political spectrum, who hold a wide range of views on Lava Jato, Lula, and related matters. Some of these exchanges can be found in the comment section of last week’s post, which I highly recommend that interested readers check out (particularly those who might have read that post the day it came out, before the comment thread included over 60 separate entries); others have communicated with my privately. (To be clear, though, I have not communicated about the post, publicly or privately, with Mr. Dallagnol or anyone else named or discussed in the Intercept story.)

Based on these conversations, and on further reflection, my views on the Intercept’s reporting have shifted somewhat, mainly in the direction of thinking that this “scandal” is considerably less scandalous than the Intercept reported, or that I’d originally believed. Continue reading

Just How Damning Are the Lava Jato Leaks? Some Preliminary Reflections on The Intercept’s Bombshell Story

[Note: My thinking on the issues discussed in this post has evolved somewhat. For the update, see here.]

Two days ago, The Intercept published a collection of dramatic reports (here, here, and here) regarding the long-running Brazilian investigation into high-level corruption. That investigation, known as the Lava Jato (Car Wash) operation, which began as in inquiry into money laundering and associated offenses at the Brazilian state-owned oil company Petrobras, has led to the prosecutions and convictions of scores of powerful business leaders and senior politicians—including, most notably, the conviction and imprisonment of former President Luiz Inacio Lula da Silva (known as Lula). That conviction prevented Lula from competing in the presidential election in 2018, an election that was one by far-right candidate Jair Bolsonaro. Anger on the Brazilian political left over Lula’s conviction, as well as the impeachment and removal of his successor Dilma Rouseff, has provoked accusations that the Lava Jato operation is really a right-wing conspiracy, and that the Lava Jato task force—the special team of prosecutors led by Deltan Dallagnol—and Sergio Moro, who presided over the most significant Lava Jato trials, including Lula’s, are politically biased enemies of the Left who are engineering a kind of coup d’etat through the judicial system. Many people, both in Brazil and internationally (me included), have pushed back against these accusations.

The Intercept’s recent reports assert that the critics were right all along. The evidence for this consists mainly of a huge quantity of data (texts, emails, and video and audio recordings) from a cell phone—almost certainly Mr. Dallagnol’s, based on the fact that all of the reported exchanges involve him. The Intercept has published a set of stories (some in English, some in Portuguese) based on a small portion of this material, mainly text message exchanges; the reporters emphasize that more is likely to emerge as they and other journalists review more of the leaked/hacked data. The big story here is that, according to the Intercept’s reporting, these text messages provide evidence of serious ethical breaches, particularly by then-Judge Moro, as well as evidence that the prosecutors knew their case against Lula was not strong, and, most damningly, that the task force prosecutors were motivated by partisan antipathy toward Lula and his party (the Worker’s Party, or PT), despite their claims to the contrary.

What to make of this? The news is clearly bad for the Lava Jato operation, the task force, and those of us who have supported the operation and defended it against various accusations and attacks. The question I want to address here is: Just how bad is it? My tentative answer is that, while the Intercept’s reports reveal some very upsetting, disappointing, and in some cases likely unethical conduct, the leaked text messages quoted in these first reports are not as damning as either the Intercept or other preliminary reports have made them appear. In this post (which will be longer than usual), I’ll try to work through the various allegations and associated texts and do my best to assess which revelations are most serious, which least so, and where we really need more evidence before making even a preliminary judgment. Continue reading

Guest Post: What To Make of Latin America’s Wave of Anticorruption Prosecutions?

Today’s guest post is from Professor Manuel Balan of the McGill University Political Science Department:

There seems to be a surge in corruption prosecutions of current or former presidents throughout in Latin America (see, for example, here, here, and here). In the last year we have seen sitting or former presidents prosecuted for corruption in Brazil, Guatemala, El Salvador, Honduras, Colombia, Costa Rica, Ecuador, and Panama. In Peru, Pedro Pablo Kuczynski resigned from the presidency amid corruption probes, and the last three former presidents are either facing trial or serving time for corruption. Argentina may soon join this list as a result of the so-called “Notebook Scandal,” which has triggered a fast-moving investigation that has already snared 11 businessmen and one public official, and is getting closer to former President, Cristina Fernández de Kirchner. (Argentina’s former vice-president Amado Boudou was also sentenced to almost six years in prison for corruption in a separate case.) Indeed, it now seems that Latin American presidents are almost certain to be prosecuted for corruption at some point after leaving office, if not before. My colleagues and I have documented the growing trend of prosecution of former chief executives in the region since democratization in the 1980s: Out of all presidents who started their terms in the 1980s, 30% were prosecuted for corruption. Of those that entered office in the 1990s, 52% were or are being currently prosecuted for corruption. In the group of presidents that began their terms in the 2000s, 61% underwent prosecution for corruption. And, remarkably, 10 out of the 11 presidents elected since 2010 who have finished their mandates either have been or are currently being prosecuted for corruption.

The explanation for this trend is not entirely clear. It’s probably not that Latin American presidents have become more corrupt. Some have suggested that the uptick in corruption prosecutions is a reaction, by the more conservative legal establishment, against Latin America’s “Left Turn.” But the trend towards increased prosecution is hardly limited to the region’s self-identified leftist leaders; in fact, left and non-left leaders are nearly equally likely to be prosecuted for corruption. Part of the explanation might have something to do with changes in prosecutorial and judicial institutions, media, or public expectations—the reasons are still unclear, and likely vary from country to country. Whatever the explanation, is this trend something to celebrate? Some observers say yes, arguing that the anticorruption wave sweeping Latin America is the result of Latin American citizens, fed up with corruption and taking to the streets in protest, putting pressure on institutions to investigate and punish corrupt politicians.

While I wish I could share this optimism, I think it’s likely misplaced. Continue reading

The South African Turnover: Anticorruption or Political Consolidation?

Last February, South African President Jacob Zuma—who has been dogged for years by credible allegations of corruption and other serious malfeasance in office—finally resigned under pressure.  In April, only a couple of months later, Zuma went on trial; he faces 16 counts of corruption, fraud, money laundering, and racketeering related to arms deals that took place in the 1990s (before his election as president). Zuma fought these charges for years, but now it seems as if his political cover has run out.

Yet the story behind Zuma’s corruption trial may go deeper than Zuma’s past bad behavior finally catching up with him. It’s important also to note the political context. Zuma’s resignation came at the urging of his party, the African National Congress (ANC), after Deputy President Cyril Ramaphosa secured the leadership of the ANC in December 2017, igniting a power struggle that led to a planned vote of no confidence, brokered by Ramaphosa. Zuma resigned in order to avoid a vote he was likely to lose, and Deputy President Ramaphosa immediately took over. In his first few months in office, Ramaphosa has been shaking up the political establishment, but is himself also the subject of multiple corruption allegations. This leads one to question: Should the retrial of Zuma be understood principally as part of Ramaphosa strategy for political consolidation? More generally, has South Africa’s recent political shakeup set the country on a course for a better, less corrupt future?

Many have expressed precisely this hope, but I’m more pessimistic. True, President Ramaphosa has acknowledged South Africa’s serious corruption problem and pledged to address it, and that is in some ways welcome news. But Ramaphosa is not an immaculate outsider with the capacity to reform from a position of moral authority. He is a deep insider, enmeshed in the corrupt system he has pledged to reform. He has profited heavily from the relationship between the ANC and the wealthy (mostly white) elites, and his rise to power came not from a landslide toward a new party, but from a successful destabilization of the ANC from within. Moreover, while Ramaphosa’s government is cracking down on corruption, its investigations seem carefully and narrowly targeted, focusing mainly on those who might be a political threat or rival. Therefore, I worry that Ramaphosa may prove to be equally corrupt, and the latest string of crackdowns may be nothing more than a way of securing his position as leader of South Africa for the many years to come.

Continue reading

New York State of Corruption: An Opportunity for Reform Amidst a Year of Reckoning

What do Joseph Percoco, George Maziarz, Edward Mangano, Sheldon Silver, Alain Kaloyeros, and Dean Skelos all have in common? Each of these New York public officials will go to trial on corruption charges over the next six months. The slew of trials kicks off today with the trial of Joseph Percoco, a former advisor to Governor Cuomo who is accused of taking over $300,000 from companies in a pay-to-play scheme for influence in the Cuomo administration. Next up, on February 5, George Maziarz goes to trial for filing false campaign expenditure reports in an attempt to conceal almost $100,000 in payments to a former Senate staff member who had quit amid sexual harassment allegations. March 12 brings the trial of Ed Mangano, the former Nassau County Executive charged with bribery, wire fraud, and extortion for receiving almost $500,000, free vacations, furniture, jewelry, home renovations, and other gifts as bribes and kickbacks. Sheldon Silver will be re-tried on April 16, after his conviction for obtaining nearly $4 million in bribes was vacated last year following the Supreme Court’s decision in McDonnell v. United States. In May, the former President of the SUNY Polytechnic Institute Alain Kaloyeros will stand trial for the same bribery scheme that ensnared Mr. Percoco. And finally, on June 18, Dean Skelos will be re-tried after his conviction on bribery charges was, like Mr. Silver’s, overturned in light of the Supreme Court’s McDonnell decision.

These six trials—all involving high-profile public officials, bribery and extortion charges, high stakes, and large sums of money—will receive considerable amounts of attention from the media and public, and will certainly provide much fodder for blogs like this one. While every month from January to June will bring a trial with its own drama and complexities, we can step back at the outset and consider what these trials collectively mean for corruption and ethics reform in New York. The trials will undeniably shake the public’s trust in public officials. Will these trials fuel cynicism that makes New Yorkers less likely to participate in the political process—or might these trials instead spark optimism that creates the political momentum for ethics reform?

Continue reading

The Promise and Perils of Cleaning House: Lessons from Italy

In countries beset by endemic corruption, efforts to expose and root out corrupt networks, and to punish the participants, can and should be celebrated. There are, of course, always legitimate concerns about the role that political power struggles may play in anticorruption crackdowns (think China and Saudi Arabia), an issue we’ve discussed on this blog before (see here and here), and that I may turn to again at some point. But in today’s post, I want to put those issues to one side to focus on something different. Suppose that some combination of government investigation, citizen reports, and media scrutiny exposes a major corruption network. Suppose that even though people always suspected that corruption was all too common, the investigation reveals that the rot runs much deeper, and goes much higher, than most people had imagined. Suppose further that, as a result of these revelations, law enforcement agencies take aggressive action, putting many people in jail and causing many others to lose their government positions. Again putting aside for the moment concerns about political bias, this is all to the good. But, what happens “the morning after,” as it were?

The hope, of course, is that by “cleaning house,” the state will be able to turn over a new leaf; the “vicious cycle” of self-perpetuating corruption may be broken, and those corrupt officials disgraced and removed from power will be replaced by a new generation of cleaner (though of course not perfect) leaders. Unfortunately, while that’s one possible scenario, it’s not the only one. In his presentation at last September’s Populist Plutocrats conference, the Italian political scientist Giovanni Orsina used the Italian “Clean Hands” (Mani Pulite) investigation into widespread political corruption, and the subsequent rise of Silvio Berlusconi, to illustrate how, under the wrong set of circumstances, a well-intentioned and widely-celebrated corruption cleanup could contribute to the rise of a populist—and deeply corrupt—demagogue.

I don’t know enough to have a firm opinion on the validity of Professor Orsina’s analysis, and I gather that other analysts have a different view of the long-term impact of Clean Hands, but his arguments strike me as plausible and sufficiently important that they’re worth considering, not only as potential explanations for developments in Italian politics, but perhaps more importantly for their potential applicability (mutatis mutandis) to other cases. In particular, Professor Orsina identifies two related but distinct mechanisms through which an aggressive and seemingly-effective anticorruption crackdown can contribute to the rise of a populist demagogue like Berlusconi. Continue reading

Prosecuting Public Officials for their Mistakes

In July 2011, Yingluck Shinawatra became Prime Minister of Thailand after her party (founded by her brother, former Prime Minister Thaksin Shinawatra) won a decisive electoral victory. One of her principal campaign promises was to establish a program to purchase rice from farmers at above-market prices then store the rice to reduce supply. The hope was that doing so would increase world prices—because of Thailand’s position as the leading global rice exporter—ultimately allowing the government to sell at a profit. Shortly after the election, Yingluck’s government implemented this program, and it worked well for a few months—until other global players increased their supply of rice, causing Thailand to lose billions of dollars in the process. This economic debacle was entirely predictable—and indeed was predicted by many experts. And the program itself was beset by allegations of fraud and corruption in its implementation.

But should the failure of the rice-buying program be the basis of a criminal charge of corruption and a prison sentence against Yingluck herself, in the absence of evidence that she was directly involved in any embezzlement, bribery, or other more conventional forms of graft? Section 157 of Thailand’s Penal Code allows for just such a prosecution, as this section makes it a crime for a public official to either dishonestly or “wrongfully discharge or omit to discharge a duty so as to expose any person to injury.” And last month, the Thai Supreme Court found Yingluck (out of power since she was deposed by a military coup in 2014) guilty and sentenced her to five years in prison. She fled the country before the verdict.

Thailand is not alone in adopting anticorruption laws that criminalize not only dishonest conduct (bribery, embezzlement, conflict of interest, etc.), but also negligence or incompetence. When India updated its anticorruption law in 1988, it added a new provision that makes it a criminal offense for a public official to “obtain for any person any valuable thing or pecuniary advantage without any public interest.” This broad offense was interpreted by a state High Court to not require any proof of dishonesty or criminal intent, and the Central Bureau of Investigation (India’s premier anticorruption agency) has routinely employed the provision in grand corruption cases to avoid the problem of having to prove corrupt intent. In perhaps the most high-profile such prosecution, the agency went after an ex-Prime Minister, Dr. Manmohan Singh. Dr. Singh was the Minister of Coal at a time when the Government decided to liberalize allocation of coal-blocks and to sell mining rights to private parties. In 2014, the Comptroller and Auditor General’s office reported the policy had caused losses worth billions of dollars because the rights had been sold for too little, through a process that was too ad hoc to be considered legal. Dr. Singh was subsequently charged under India’s broad law, though his trial has currently been stayed while his challenge to the constitutionality the law is pending before India’s Supreme Court. (There are clearly concerns in other quarters about the breadth of this statute: In 2016 a Select Committee of the Upper House of India’s Parliament submitted a report that suggested India eliminate this offense. Parliament hasn’t yet acted on this recommendation, but there are signs that it has some support.)

Is it appropriate to enact broad anticorruption laws that allow government officials to be convicted for dereliction of duty, acting in a manner contrary to the public interest, and the like? Anticorruption activists and prosecutors may find such statutes appealing: It is easier to secure convictions of elected officials who are suspected of corruption, but where it is too difficult to prove the specific intent necessary for traditional corruption offenses. But in fact these broad laws are likely to do more harm than good, and countries like Thailand and India would be better off without them. There are three main reasons for this: Continue reading

US Anticorruption Policy in a Trump Administration: A Cry of Despair from the Heart of Darkness

Like many people, both here in the US and across the world, I was shocked and dismayed by the outcome of the US Presidential election. To be honest, I’m still in such a state of numb disbelief, I’m not sure I’m in a position to think or write clearly. And I’m not even sure there’s much point to blogging about corruption. As I said in my post this past Tuesday (which now feels like a million years ago), the consequences of a Trump presidency are potentially so dire for such a broad range of issues–from health care to climate change to national security to immigration to the preservation of the fundamental ideals of the United States as an open and tolerant constitutional democracy–that even thinking about the implications of a Trump presidency for something as narrow and specific as anticorruption policy seems almost comically trivial. But blogging about corruption is one of the things I do, and to hold myself together and try to keep sane, I’m going to take a stab at writing a bit about the possible impact that President Trump will have on US anticorruption policy, at home and abroad. I think the impact is likely to be considerable, and uniformly bad: Continue reading