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

Fixing Everything But What’s Broken: Malaysia after the 1MDB Scandal

The Malaysian 1MDB scandal sparked the largest investigation in the history of the U.S. Department of Justice Kleptocracy Asset Recovery Initiative and has revealed serious problems with Malaysia’s anticorruption infrastructure. The DOJ has filed civil forfeiture claims for $1.7 billion in assets obtained with funds diverted from 1MDB, a sovereign wealth fund ostensibly intended to promote economic development in Malaysia. The money ended up in a stunning variety of locations around the globe. Nearly $700 million found its way into the Malaysian Prime Minister’s personal bank accounts. His stepson’s production company suddenly had the funds needed to back the Hollywood movie The Wolf of Wall Street. A financier with close ties to the government bought an Australian model jewels worth $8.1 million.

Meanwhile, the Malaysian government insists there is nothing to see here. The newly-installed Malaysian Attorney General cleared Prime Minister Najib Razak of all wrongdoing and put a stop to the investigation by the independent Malaysian Anti-Corruption Commission (MACC). As an earlier post explained, the previous Attorney General, who headed an inter-agency task force investigating the 1MDB scandal, resigned under suspicious circumstances, and Najib appointed his replacement. Najib also replaced several cabinet members who had called for investigations into 1MDB. The breakdown of justice in the 1MDB scandal may seem all the more surprising to outside observers, since Malaysia had appeared to be making strides in addressing its corruption problem, and the MACC—which was founded in 2009 and modeled on Hong Kong’s Independent Commission Against Corruption—had received fairly good reviews (see here, here, and here).

In the wake of the 1MDB scandal, there have been a variety of proposals for improving Malaysia’s anticorruption efforts. Most of these proposals, especially those emanating from the government, involve a flurry of activity and the creation of new anticorruption institutions. For example, the government has recently proposed creating a new National Integrity and Good Governance Department. The Malaysian Bar has called for the establishment of an Independent Anti-Corruption Commission (IACC) to provide oversight for MACC. The MACC itself, despite its inaction on 1MDB, is ramping up other anticorruption campaigns. This all fits an unfortunate pattern in Malaysia: creating lots of new agencies or new structures, or undertaking other actions that make the government “look busy,” but that don’t actually get to the heart of the main problem: the lack of a politically independent anticorruption prosecutor.  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

Guest Post: The Obiang Trial Suggests Innovative Approaches To Fighting International Corruption

GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris office of Debevoise & Plimpton, who contributes the following guest post:

Over the past two months, the French Tribunal de Grande Instance in Paris (the principal trial court) heard evidence in the case against Teodoro Nguema Obiang Mangue (known as Teodorin), on charges of corruption and money laundering, among other allegations. Teodorin is the son of Teodoro Obiang Nguema Mbasogo, the long-time – and notoriously corrupt – President of Equatorial Guinea, a resource-rich country that also has some of the most widespread poverty in the world. Yet Teodorin, who is currently Vice President , owns vast real estate in Paris, a private jet, a yacht, and a fleet of vintage and modern automobiles, among his other known assets. This case has been discussed extensively on this blog (see here, here, here, here, here, here, here, and here), but it’s useful to recap how the case came to trial in the first place:

The case against Teodorin was primarily the result of diligent efforts by NGOs, including the French anticorruption group Sherpa and the French chapter of Transparency International (TI). In 2007, Sherpa and others filed a complaint with the Public Prosecutor in Paris alleging that the ruling families of Equatorial Guinea, Angola, Burkina Faso and the Republic of the Congo held assets in France that were not the fruits of their official salaries. After a brief investigation, the Public Prosecutor dismissed the claims. Several of the NGOs, joined in some instances by citizens of the countries in question, then used a French procedure known as constitution de partie civile to cause a criminal investigation by an investigating magistrate (juge d’instruction). This effort was opposed by the Public Prosecutor. A Court of Appeals initially upheld the prosecutor’s position and dismissed TI’s intervention, but in an important 2010 ruling, the French Cour de Cassation (Supreme Court) ruled that TI was a proper partie civile authorized to instigate the criminal investigation. Ultimately Teodorin was bound over for trial, now with the support of the Public Prosecutor (as well as the continued active participation of TI and other NGOs). A decision is expected in October.

The procedures that brought Obiang to trial are interesting because they highlight four important differences between French and US criminal procedures, and more generally illustrate several legal deficiencies, in countries like the United States, that often hinder the worldwide fight against transnational corruption: Continue reading

Anticorruption Investigators and Prosecutors: Bookmark this Web Site!

The International Anticorruption Resource Center, a Washington-based group of American investigators and former prosecutors, has developed a first-class web site on how to investigate and prosecute corruption crimes that everyone in the business of investigating or prosecuting corruption crimes should bookmark.  Divided into three main sections – Detection, Proof, and Evidence – the site guides the reader through the entire process of developing and presenting a corruption case: from the first interview with a whistleblower through assembling the facts to proving them in a court of law.  While there are any number of Web sites with material useful for investigators and prosecutors (here and here for examples), this is the only I have found that pulls together in one place the basics that every anticorruption investigator or prosecutor needs.

Although clearly aimed at those in the early stages of their career, I recommend that even the most harden veterans peruse the site.  They will find it a valuable refresher and may well find some helpful tips.  Two pages I particularly liked were – Continue reading

Can Private Prosecution Fill the Corruption Enforcement Gap?

A common lament within the anticorruption community is that too few corrupt officials are prosecuted.  The reasons offered are several: a lack of resources, the want of expertise, political pressure.  Whatever the case, for countries struggling to combat corruption, stepping up prosecutions is essential, for deterrence theory teaches that until public officials face a real threat of prosecution for raiding the public purse, corruption levels will continue to remain unacceptably high.

Where corruption prosecutions are lagging, it is often assumed that the only remedy is to strengthen government prosecution agencies, but this is in fact not always the case.  In many countries the public prosecutor is not the only one with the right to prosecute those accused of a crime.  Thailand, Taiwan, certain American states, and virtually all 53 members of the British Commonwealth allow private citizens to prosecute offenders, and there is no reason other countries couldn’t allow private prosecution as well.

In “Private Prosecutions: A Potential Anticorruption Tool in English Law,” British lawyers Tamlyn Edmonds and David Jugnarain explain the role private prosecution has played in the enforcement of the criminal law in England and Wales and argue it is one way to boost  corruption prosecutions in these jurisdictions and perhaps in others as well.  The Edmonds and Jugnarain paper is the fourth in the series of papers commissioned by the Open Society Justice Initiative on civil society and anticorruption litigation.  It follows earlier ones on standing by GAB editor-in-chief Matthew Stephenson, on civil society litigation in India by Vidhi Centre for Legal Policy Director Arghya Sengupta, and on the American experience with the False Claims Act by Houston Law Center Professor David Kwok.  As with the papers by Matthew, Arghya, and David, Tamlyn and David’s contribution provides civil society activists and policymakers wanting to bolster the enforcement of anticorruption laws in their country much to consider.

Corruption By Another Name: The Conviction of a Rapist Cop

Former Oklahoma City police officer Daniel Holtzclaw was convicted earlier this month of sexually assaulting over a dozen women while on duty. Holtzclaw’s attacks were despicable. Several of his victims reported that he threatened to arrest them if they did not comply with his sexual demands. In some instances, he made clear that his victims had to provide him with sexual gratification to avoid arrest—an explicit quid pro quo exchange. In other cases, including the case that triggered the investigation into his conduct, Holtzclaw did not explicitly solicit a sexual bribe, but there was still an implicit quid pro quo – if the woman let him get away with the assault he indicated that he wouldn’t make trouble for her.

Holtzclaw is a rapist, but he is not only a rapist – he is also a dirty cop. The fact that he was a police officer is not incidental to his crimes: he was able to sexually assault women and get away with it for so long precisely because of his publicly entrusted power. That abuse of public power for private gain is the definition of corruption. As pointed out in a previous post, the currency of corruption can as easily be sex as money. When a police officer, soldier, immigration official, or judge demands sex in exchange for an official action, that is a type of quid pro quo sexual corruption (sometimes called “sextortion” ). When an official “steals” sex from a woman who is less able to resist the attack or to report it due to his publicly entrusted power, that is another type of sexual corruption. In addition to sexual assault, then, Holtzclaw should have also been charged with bribery and official misconduct.

Continue reading