Tag Archives: prosecution

Can Argentina Prosecute its Leaders Without Dragging Down its Democracy?

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Prosecuting a former leader for corruption is no easy task, but it is one that a lot of countries have had to undertake. In fact, since 1980, roughly half of the world’s nations have seen their former leaders jailed or prosecuted. The vast majority of those cases involved corruption charges.

Argentina has been in this situation quite a few times. Most recently, Cristina Fernández de Kirchner—the country’s ex-president and current vice-president—has been standing trial for having allegedly diverted state funds to a friend through fraudulent public works contracts. This seems like a victory for rule of law. But with the divisiveness and instability that the process has caused, it’s not clear whether the prosecution of Kirchner has done more good than harm. Because this is probably not the last corruption case that Argentinian authorities will bring against a former leader, enforcers should learn from the problems that have arisen from the Kirchner investigation.

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Cleaning up Corruption in Lebanon’s Central Bank

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Riad Salameh, the governor of Lebanon’s Central Bank (the Banque du Liban, or BdL), was once hailed as a “financial wizard” for his stewardship of the Lebanese banking system. But a flurry of recent investigations, led mainly by French and Swiss prosecutors, have implicated Salameh in a variety of corruption schemes. These investigations found, among other things, that Salameh illicitly moved over $300 million of public funds from the BdL into his brother’s company, Forry Associates, between 2002 and 2015 and that Salameh laundered millions in Europe through luxury real-estate purchases. And in March 2022, after Swiss prosecutors asked Lebanese authorities to carry out a separate investigation into embezzlement and money laundering by Salameh and his associates, a Lebanese district court judge charged Salameh and his brother with illegal enrichment and money laundering.

Though Salameh denies all allegations, many Lebanese citizens consider the accusations against him unsurprising. Indeed, if anything is surprising about the case against Salameh, it’s that he is being prosecuted in Lebanese courts. Government elites in Lebanon—including the BdL’s leaders—have long benefited from a culture of impunity. It is encouraging to see Lebanese prosecutors and courts taking steps to hold corrupt actors at the BdL accountable. But cleaning up the BdL, and ensuring that in the future cases like Salameh’s are detected early or prevented altogether, will also require more structural reforms to address the institutional and regulatory problems at the BdL that have enabled such corrupt practices. Three reforms to the BdL are especially important:

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

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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 →

New Working Paper on Anticorruption Reform in U.S. History

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Endemic public corruption in developing and transition countries often seems intractable. Yet most countries that are currently perceived as having relatively high levels of public integrity–places like Sweden, Denmark, the United Kingdom, and the United States–were, at an earlier point in their history, afflicted with pervasive corruption similar to what one finds throughout the developing world today. Considering the history these countries may therefore make a valuable contribution to modern debates about anticorruption reform—not so much by providing simple lessons about what policies to adopt, but by offering a broader sense of how the complex process of anticorruption reform unfolds over time, and by calling into question certain widely-held beliefs about this process.

A couple years back, after attending a fascinating presentation by Mariano-Florentino Cuellar (a Justice of the California Supreme Court who somehow manages to continue to hold down his former day job as a professor at Stanford Law School), I became particularly interested in the history of my own country, the United States, in the late nineteenth and early twentieth century. The challenges facing anticorruption reformers in the United States during this period bear a striking resemblance to the challenges facing reformers in modern-day democracies in the developing world. Indeed, the United States is a particularly interesting case study because, in contrast to most of the other Western democracies that are currently perceived as having low corruption, the United States established political democracy well before it embarked on significant “good government” reforms.

Justice Cuellar graciously agreed to collaborate with me, and we finally have a draft paper entitled “Taming Systemic Corruption: The American Experience and its Implications for Contemporary Debates.” The draft now available on SSRN here, and is also available as part of the University of Gothenburg Quality of Government (QoG) Institute’s working paper series. Our article, which focuses principally on the period between 1865 and 1941, does not purport to reach firm conclusions about the reasons that the U.S. struggle against systemic corruption ultimately succeeded—let alone to draw facile “lessons” about “what works.” But we do find that the U.S. experience calls into question a number of commonly-held views about the struggle against corruption in modern developing countries: Continue reading →

Canada’s SNC-Lavalin Scandal: Why Prime Minister Trudeau Was Wrong To Interfere, Even Though He Was Right on the Merits

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This past year, Canadian Prime Minister Justin Trudeau has been embroiled in allegations that he improperly intervened in one of Canada’s biggest-ever foreign bribery prosecutions. That prosecution, of the Canadian construction firm SNC-Lavalin, began back in 2015, when the Royal Canadian Mounted Police (RCMP) and the Public Prosecution Service of Canada (PPSC) announced they would be bringing charges against the firm for paying approximately CA$48 million in bribes to Libyan government officials to win contracts, and for related misconduct including the defrauding of Libyan companies. This past February, the Globe and Mail reported that Prime Minister Trudeau and his closest advisors had inappropriately attempted to influence the SNC-Lavalin prosecution, and a subsequent inquiry by the Ethics Commissioner found that Trudeau had indeed acted unethically in attempting to influence key prosecutorial decisions that are supposed to be made by the Attorney General. The scandal had political consequences: although Prime Minister Trudeau and his Liberal Party managed to hang on to a minority government in October’s elections, the Liberal Party lost 27 seats and the popular vote.

The specific prosecutorial decision that Prime Minister Trudeau attempted to influence concerned whether the government should negotiate a deferred prosecution agreement (DPA) with SNC-Lavalin. A DPA is a settlement in which the defendant agrees to penalties or other remedial measures, and in return the government agrees to suspend the prosecution, and eventually drop the charges if after an agreed period of time the defendant has complied with the terms of the agreement. A DPA is similar to a plea bargain, but it does not require the defendant to plead guilty, and so avoids imposing on the defendant the stigma and collateral consequences of a criminal conviction. The prosecutor who brought the charges denied SNC-Lavalin’s request for a DPA in late 2018, and the acting Attorney General, Jody Wilson-Raybould, declined to overrule that decision. The Attorney General’s decision is supposed to be final on such matters. Nonetheless, Ms. Wilson-Raybould claims she fielded ten phone calls from the Prime Minister’s office, and was invited in for ten in-person meetings with the Prime Minister and his advisors, regarding this decision—and that the Prime Minister was pushing her to pursue a DPA with SNC-Lavalin. Ms. Wilson-Raybould refused to reconsider her stance on the matter, and shortly afterwards she was removed from her position as Attorney General and named instead Head of Veteran Affairs. In the end, the interference was exposed, the pressure failed, and, unless there’s some other unexpected turn of events, SNC-Lavalin will be going to trial.

This affair raises two questions: First, was Prime Minister Trudeau correct that the prosecutors should negotiate a DPA in this case? Second, if the answer to the first question is yes, was it appropriate for the Prime Minister to press his Attorney General to pursue that approach? My answer is yes to the first question, but no to the second. On the one hand, Prime Minister Trudeau was correct, and Acting Attorney General Wilson-Raybould was incorrect, about the appropriateness of a DPA in this case. However, the principle of prosecutorial independence from political influence—especially in corruption cases—is far more important, and the Prime Minister should never have compromised this core value even if he was right on the merits of this individual decision. Continue reading →

Even “Tough on Corruption” Proponents Should Worry about “Zero Tolerance” Rules

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“Zero tolerance for corruption,” as Professor Stephenson suggested in a 2014 post, is an expression that can be construed in several different ways: from a general attitude that corruption should be considered “a high priority,” to an uncompromising policy mandating that “all feasible measures to minimize corruption must always be used.” In this post I will discuss another common, narrower understanding of “zero tolerance for corruption,” according to which corruption – at least in certain contexts – must always be addressed with a mandatory predetermined harsh sanction. A clear example of such a “zero tolerance” rule is the Colombian and Peruvian law demanding the instant termination of “any public contract tainted by corruption.” Another illustrative example is the EU’s directive mandating debarment from public contracting of any company convicted of offenses of corruption, fraud, or money laundering.

Granted, the potential deterrent value of mandatory harsh sanctions for corruption is substantial. A company aware that any conviction for corruption will inevitably incur severe penalties is more likely to be dissuaded from violating the law. Nevertheless, the costs of this “take no prisoners” approach to anticorruption may be much higher than the actual benefit. Thus, as Rick Messick recently showed, the law mandating termination of corruption-tainted public contracts has proven to have disastrous ramifications for the infrastructure in Peru and Colombia. As it turns out, not only has the nondiscretionary cancellation of corruption-tainted public contracts halted the advancement of existing infrastructure projects, but it has also deterred investors and developers from taking any part in such projects, for fear that they will be cancelled due to “the tiniest of infractions by anyone associated with the project.” Similarly, debarment is nothing less than “a death-sentence” for companies whose main business involves public contracts, and its mandatory imposition for even a relatively minor offense may be so draconian as to be counterproductive.

This kind of cost-benefit reasoning, though compelling to some, would not convince many proponents of an unequivocally “tough on corruption” stance. Many anticorruption hardliners believe in maximizing deterrence notwithstanding any associated costs. From this point of view, the end of deterring corruption justifies all necessary means. Yet even for those who take this view, it turns out that “zero tolerance” may not be the ideal approach. Supporters of “zero tolerance” rules assume that adoption of mandatory sanctions for corruption would guarantee that actors in the anticorruption system – judges, prosecutors, and legislators – will adhere to the “zero tolerance” ideal, and that such rules would be sustainable. But these decisionmakers in the anticorruption system may evade the application of “zero tolerance” rules where doing so would lead to sanctions perceived (rightly or wrongly) as patently absurd or unjust. In other words, a “zero tolerance” rule on the books does not guarantee that a “zero tolerance” policy would actually be implemented. Consider the various ways that actors in the anticorruption system may avoid triggering the mandatory sanctions for corruption:

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Where Should U.S. State Governments Put Their Anticorruption Agencies?

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As other contributors on this blog have argued, U.S. states should assume a greater role in investigating and prosecuting corruption crimes, rather than leaving anticorruption enforcement efforts entirely to the federal government. But the call for a greater state role in anticorruption naturally invites a follow-up question: which office or unit within the state government should have principal responsibility for anticorruption? For starters, should the state have a specialized unit dedicated to investigating or prosecuting corruption crimes? And if so, where within the state government should that unit be located?

There are a range of potential answers to these questions. A 50-state survey from the Center for the Advancement of Public Integrity (CAPI) finds that although the vast majority of states have some kind of anticorruption commission, roughly half have no specialized anticorruption unit dedicated to investigating or prosecuting corruption crimes. States that do have such units house them in one of three places: (1) the state attorney general’s office, (2) local prosecutors’ offices, or (3) the state police.

State Unit Dedicated to Prosecuting Corruption?

Source: Center for the Advancement of Public Integrity at Columbia Law School

Having a specialized unit to prosecute corruption promotes the development of the expertise critical to successfully prosecuting corruption cases. Maintaining specialized anticorruption units also ensures resources are dedicated specifically to combating corruption, fosters norms of (and a reputation for) impartiality, and enhances deterrence by increasing officials’ perception that they’ll get caught if they do something wrong. But where a specialized anticorruption unit is located within state government affects the degree to which these benefits will be realized. In this respect, the three models of current state practice, as discussed in the CAPI survey and illustrated in the above map, differ along two dimensions: (1) the level of government (state or local); and (2) the nature of the law enforcement agency (prosecutors or police). An examination of both dimensions indicates that state-level prosecutors—state attorneys general—are best-equipped to house specialized anticorruption units.

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AMLO Cannot Put a “Final Period” in Mexico’s History of Corruption Without Addressing the Past

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The trial and conviction of the notorious drug lord “El Chapo” has shed new light on the rampant corruption that exists at even the highest levels of the Mexican government. To take just a couple of the most startling examples: During the trial, a witness testified that Mexico’s former president Enrique Peña Nieto accepted a $100 million bribe from El Chapo, while another cartel member testified that he paid at least $3 million dollars to the Public Security Secretary of former president Felipe Calderon and at least $6 million dollars to President Calderon’s head of police. In other countries these accusations would have shaken citizens to their very core. But in Mexico, long perceived as one of the world’s most corrupt countries, citizens have sadly grown accustomed to allegations of this nature, and the revelations from the El Chapo trial were met with little more than a shrug.

That doesn’t mean that Mexicans don’t care about corruption. Quite the opposite. Indeed, frustration at this flagrant culture of corruption was one of the key factors that helped Mexico’s new president, Andrés Manuel López Obrador (AMLO), to capture his constituents’ faith and votes. AMLO has promised to eradicate corruption through a “Fourth Transformation” of Mexico (the previous three were Mexico’s independence from Spain, the liberal reforms of the 1850s, and the 1910-1917 revolution). Yet despite these sweeping promises, AMLO has decided not to investigate the allegations against his predecessors that have emerged in the El Chapo trial. In fact, AMLO’s stance has been not to prosecute any officials for corruption that took place in the past, before he took office. (AMLO has wavered on this position—though only slightly—after receiving backlash during his campaign; he has since stated he would prosecute past corruption offenses only if the administration has no choice due to “internal pressure” from citizens.) AMLO has justified his opposition to investigations and prosecutions of past corruption crimes by using the language suggesting the need for a fresh start. He speaks of a need to put a “final period” on Mexico’s history of corruption, and to “start over” by not focusing the past.

But how can one eradicate corruption by granting numerous “Get Out of Jail Free” cards? AMLO’s support of a de facto amnesty for corrupt ex-Mexican officials’ casts doubt on the seriousness of his pledge to eradicate corruption. Rather than simply saying that it’s time to turn over a new leaf, AMLO should demand accountability for grand corruption, and he should start by ordering a full independent investigation into the veracity of the corruption allegations that came to light during the El Chapo trial. Continue reading →

Reasons for Optimism About Latin America’s Wave of Anticorruption Prosecutions: A Response to Professor Balan

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What are we to make of the ongoing wave of corruption prosecutions sweeping Latin America in the wake of the Odebrecht scandal? Many are optimistic that these prosecutions, several of which have implicated very senior political figures, including current and former presidents, signal a turning point for the region. But in a guest post last September, Professor Manuel Balan suggested that this optimism may be misplaced, for three reasons. First, he argued that the enforcement patterns suggest that anticorruption prosecutions are becoming a weaponized—that these prosecutions are being used as a political tool used to bring down opponents, and consequently they lack credibility with much of the public. Second, Professor Balan questioned whether these prosecutions would ultimately be successful in holding powerful, popular wrongdoers accountable, and he argued that these prosecutions will just take down leaders whose positions have weakened for other reasons (such as Dilma Rousseff in Brazil). Third, Professor Balan worried that these prosecutions show that judicial power is increasing at the expense of citizens’ power—that they represent an erosion of “vertical accountability.”

I remain one of the optimists. Indeed, I think that Professor Balan is far too pessimistic about the role that the current anticorruption prosecutions in Latin American can play—and to some extent have already played—in addressing the region’s longstanding corruption and impunity problems. Yet his three objections are worth taking seriously and deserve a direct response. Here’s why I don’t find any of them sufficiently persuasive to share his pessimism:

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The UK Parliament Should Broaden and Sharpen the Legal Advice Privilege in Order to Encourage More Internal Investigations into Corruption

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On September 5, 2018, the compliance departments and outside counsel of large corporations operating in the UK breathed a collective sigh of relief. In a much anticipated ruling, the Court of Appeal of England and Wales overturned a trial judge’s order that would have compelled a London-based international mining company, Eurasian Natural Resources Corporation Limited (ENRC), to hand over documents to UK prosecutors investigating the enterprise for bribery in Kazakhstan and Africa. Those documents were the product of an investigation that ENRC’s outside legal counsel had conducted following an internal whistleblower report that surfaced in late 2010. In conducting that internal investigation, lawyers from the law firm interviewed witnesses, reviewed financial records, and advised ENRC’s management on the company’s possible criminal exposure. Though the company tried to keep everything quiet, the UK’s Serious Fraud Office (SFO) came knocking in mid-2011. The SFO agreed to let ENRC and its lawyers continue to investigate on their own, periodically updating the SFO on their progress. In 2013, ENRC’s legal counsel submitted its findings to the SFO in a report arguing that, on the basis of the facts presented, the company should not be charged. The SFO disagreed and launched a formal criminal investigation. But the SFO then also demanded that ENRC turn over all of the files and documents underpinning its report—including presentations given by the lawyers to ENRC’s management and the lawyers’ notes from their interviews with 184 potential witnesses.

ENRC refused to comply, claiming that these documents were covered by two legal privileges under UK law: the “litigation privilege,” which guarantees the confidentiality of documents created by lawyers for the “dominant purpose” of adversarial litigation (including prosecution) that is “in reasonable contemplation,” and the “legal advice privilege,” which protects communications between lawyers and clients exchanged for legal advice. The trial court rejected ENRC’s privilege claims, a decision that sent shockwaves through the English defense bar and spurred much criticism on legal and policy grounds. But the Court of Appeal reversed, holding that ENRC’s lawyers didn’t have to share the documents. The Court’s ruling relied on the litigation privilege, holding, first, that documents created to help avoid criminal prosecution counted as those created for the “dominant purpose” of litigation, and, second, that criminal legal proceedings were in “reasonable contemplation” for ENRC once the SFO contacted the company in 2011.

Many commentators have hailed the Appeal Court’s decision (which the SFO declined to appeal) as a “landmark ruling” and a “decisive victory” for defense lawyers. The reality is a bit more nuanced. The Court of Appeal’s fact-specific ruling was very conservative in its legal conclusions, and it’s unlikely that its holding regarding the litigation privilege is sufficient to create the right incentives for companies and their lawyers. It’s also unlikely that further judicial tinkering with the scope of the litigation privilege will resolve the problem promptly or satisfactorily. The better solution would involve a different institutional actor and a different privilege: Parliament should step in and expand the scope of the legal advice privilege to cover all communications between a company’s lawyers and the company’s current and former employees. Continue reading →