Tag Archives: prosecution

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 →

The Case for State-Level Anticorruption Prosecutions in the U.S.

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In the United States, the federal government’s Department of Justice (DOJ) plays a huge role in the prosecution of state-level public corruption: Over the past five years, federal prosecutors have obtained the convictions of approximately 1,700 corrupt state and local officials for corruption-related offenses. Examples range from prominent and powerful figures like Sheldon Silver, the former Speaker of the New York State Assembly, to low-level functionaries like Eloy Infante and Elpidio Yanez, Jr., two former members of the School Board of Donna, Texas.

The federal government’s primacy in prosecuting state and local corruption is no accident. One of the stories of American law enforcement in the 20th century, especially though not exclusively in the anticorruption context, is the expanding role of the federal government, an expansion that was in part a reaction to the perceived deficiencies of state law enforcement. Most states in the U.S. elect both prosecutors and judges, and concerns that these elected officials were under-resourced, incompetent, partisan, or captured by local influence-peddlers contributed to the rise of federal criminal law enforcement. The federal government’s role in prosecuting state and local corruption blossomed in the 1970s, with regional U.S. Attorney’s offices taking the lead, supported by a new DOJ Public Integrity Section in Washington, D.C. The U.S. Attorney’s offices were considered more independent and less vulnerable to capture than local law enforcement, were generally better resourced than their state and local counterparts, and were able to focus those resources on picked cases.

This system has worked well and achieved considerable success. Many argue—with justification—that the federal government’s central role in prosecuting state and local corruption was instrumental in breaking the stranglehold of corrupt political machines at the subnational level. But today, it’s important for state prosecutors to do more to supplement, and in some cases perhaps supplant, federal anticorruption prosecutions. If the story of the 20th century was a distrust of states to police their own politicians, the early 21st century story may be that we can no longer completely trust the feds to do it either. There are three main reasons why, going forward, we may need to rely increasingly on the states:

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Sometimes Motives Don’t Matter: The Establishment’s Impulse to Protect (Allegedly) Corrupt Politicians Can Create Opportunities for Criminal Justice Reform

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Since 2016, Israeli Prime Minister Benjamin Netanyahu has been investigated for a number of corruption allegations (see here and here). In apparent response, David Amsalem, a member of the Knesset (Israel’s parliament) from Netanyahu’s Likud Party, has proposed several bills which, if enacted, would help to protect the Prime Minister from these investigations (see here and here). Most recently, in June 2018 Amsalem presented a bill that would change Israel’s system of criminal appeals. Currently, the prosecution can appeal criminal verdicts, including acquittals; according to Amsalem’s so-called Appeal Bill, such appeals would require an appellate court’s permission, and this permission could only be given under special circumstances, and only for crimes punishable by ten or more years in prison. Amsalem, who denied that the Appeal Bill has anything to do with the investigations of Netanyahu, claimed that he proposed this bill because “[a] moral state doesn’t have to persecute a citizen who has received a sentence too light for its taste.” However, opposition Knesset members and commentators – many of whom usually support defendant-protective reforms to criminal procedure – have harshly attacked the Appeal Bill. The critics’ main (sometimes only) argument against the Appeal Bill has been that its purpose is to prevent the prosecution from appealing a possible acquittal of Netanyahu. As Tamar Zandberg, Chair of the opposition Meretz Party put it, “[t]his [government] coalition’s obsessive preoccupation with the legal authorities to protect a prime minister immersed in investigations is a mark of Cain for Israeli democracy.”

The hostility to bills that appear to be devised specifically to protect politicians from corruption prosecutions is definitely understandable, and the wide opposition in Israel to the Appeal Bill is therefore a natural reaction. Nevertheless, this impulse should be overcome when considering bills proposing criminal justice reforms with general application, and in particular bills strengthening individual rights in the criminal process. I do not claim that the Appeal Bill should be enacted into law, and I acknowledge that there may be some legitimate reasons to oppose limitations on prosecutorial appeals. However, generally speaking, we should not refrain from supporting criminal justice reforms just because their initiators may have had bad motives. Instead, every proposal of systemic reform should be considered on its merits, and, if found justified, be enthusiastically supported, despite its tainted origin. Continue reading →

South Africa Exhibits the Pitfalls of Private Prosecutions for Corruption

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In March 2018, after several years of investigation stemming from allegations of corruption and mismanagement, South Africa’s National Prosecuting Authority (NPA) announced that it would not pursue charges against former South African Revenue Service Commissioner Tom Moyane. But this was decision short lived. A few weeks later, the NPA abruptly reversed course, explaining that it had reopened its investigation into Moyane and was reconsidering its decision not to prosecute. In the interim, the South African civil rights group Corruption Watch had publicly requested from the NPA a certificate of nolle prosequi—a document formally affirming the NPA’s decision not to prosecute. Obtaining such a certificate was a preliminary and necessary legal step for Corruption Watch to launch its own private prosecution of Moyane—which, under South African Law, Corruption Watch would have been able to do if the NPA formally declined to prosecute. Corruption Watch was calling NPA’s bluff, saying, in effect, “prosecute Moyane or else we will.”

Corruption Watch’s implicit threat stems from Section 7 of South Africa’s Criminal Procedure Act (CPA), which permits a citizen to criminally prosecute another person or entity if the NPA formally declines to prosecute. These prosecutions are similar to civil suits but with all the trial rights and potential penalties associated with a state prosecution. Moreover, at any time during a private prosecution the NPA may request permission from the supervising court to step back in and take over the case. South Africa is not unique in this regard: There are provisions for private prosecutions in other countries—especially Commonwealth countries—including the UK, Canada, Australia, Zimbabwe, and Kenya, as well as in China and Israel.

Many commentators in the international community have been optimistic about the potential of private prosecutions, particularly in combating corruption (see here, here, and on this blog here). And forces inside South Africa have been especially enthusiastic; in 2017, the South African civil society organization AfriForum launched its own dedicated private prosecutions unit focused on prosecuting corrupt government officials, with other organizations expressing similar interest. Much of this optimism stems from sheer frustration with the current prosecution regime in South Africa, a country that has long been plagued by selective prosecution, especially in the area of corruption.

South Africa could certainly use more pressure on the NPA to act; the country would also benefit from more resources, whatever the source, devoted to investigating and prosecuting corruption cases. And the fact that the threat of private prosecution appears to have spurred the NPA to action in the Moyane case is encouraging. Nevertheless, South Africa’s recent flirtation with private prosecutions actually illustrates why countries—including and perhaps especially South Africa—should be cautious about embracing organized, comprehensive private prosecution regimes to supplement traditional state prosecution. Continue reading →

Giuliani’s Inappropriate Letter to Romania’s President Will Harm Anticorruption Efforts

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Romania has long been considered one of the most corrupt countries in the European Union, but in recent years it has been making a concerted effort to bolster its fight against graft. Since 2013, Romania’s National Anticorruption Directorate (DNA), with the support of the ruling political parties, has been convicting roughly 1,000 people on corruption-related charges each year. However, once these anticorruption efforts began ensnaring high-level politicians—including Liviu Dragnea, the head of the biggest party in the Romanian Parliament—the government began to criticize the DNA’s work as biased, overzealous, and unfair. This conflict has been escalating, most dramatically in late 2017, when hundreds of thousands of Romanians took to the streets to protest an overnight decree that pardoned those serving sentences of five years or less for corruption-related crimes, and also decriminalized government officials’ corruption offenses involving less than $47,000 (raised to $240,000 in a later draft bill). The protests led to violent clashes with the police, who used tear gas and water cannons to disperse the crowds.

Adding to the turmoil, Rudolph Giuliani, former Mayor of New York City and current personal attorney of U.S. President Trump, recently wrote a letter to Romanian president Klaus Iohannis, condemning the overreach of the DNA and supporting the government’s efforts to curtail the DNA’s enforcement of anticorruption laws. Giuliani was paid to write the letter by the Freeh Group, a private American firm whose overseas clients include a Romanian businessman convicted for fraud last year, and another Romanian businessman currently under investigation by the DNA for bribery. Giuliani’s letter raises two distinct corruption-related problems. Continue reading →

Guest Post: Is an International Anti-Corruption Court a Dream or a Distraction?

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My Harvard Law School colleague Professor Alex Whiting, who previously served in the Office of the Prosecutor at the International Criminal Court, as a Senior Trial Attorney at the International Criminal Tribunal for the Former Yugoslavia, and as a US federal prosecutor, contributes today’s guest post:

Since 2014, US Judge Mark Wolf has been vigorously advocating the creation of an International Anti-Corruption Court (IACC), modeled on the International Criminal Court (ICC), to combat grand corruption around the world. Some, including writers on this blog, have expressed skepticism, and have criticized Judge Wolf and other IACC supporters for not offering sufficient detail on how an IACC would work or how, as a political matter, it could be created. This past summer, in an article published in Daedalus, Judge Wolf laid out a more detailed case for the IACC. He again invoked the ICC as the model—both for how such a court could be created and how it would operate.

It is an enticing vision, to be sure: international prosecutors swooping in to collar high-level corrupt actors, further spurring on national leaders to clean up their own houses. It’s all the more enticing given that, as Judge Wolf persuasively argues, national governments have failed to adequately address grand corruption in their own jurisdictions, with significant adverse consequences for international security and prosperity. But the ICC experience suggests the limits rather than the promise of an IACC. Indeed, the ICC’s history demonstrates why it is so hard to see a feasible political path forward to creating an IACC. More fundamentally, an IACC would require a radical re-conceptualization of the ICC model, one that states have never shown a willingness to embrace. Continue reading →

Coordination of Corporate Resolution Penalties Is Unlikely to Address the “Piling On” Problem in FCPA Prosecutions

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Multinational companies that pay bribes may find themselves subject to prosecution by multiple jurisdictions. Some countries, including many in Europe, apply a double jeopardy bar (known there as ne bis in idem) that prevents one country from prosecuting an entity that has already been prosecuted elsewhere. Other countries, however—including the United States—have no such bar. US prosecutors may pursue those suspected of violating the Foreign Corrupt Practices Act (FCPA) even if the targets already have been, or are being, prosecuted in another country for the same bribe payments. Is this a problem? Some say no: the possibility of multiple prosecutions by different sovereigns might create a healthy “race to the top” and stronger deterrence. On the other hand, however, we might worry that multiple prosecutions risk over-punishing, thereby over-deterring risky but socially valuable conduct (like expanding into high-risk foreign markets). Companies also will not be sure when a matter is finally settled. In addition, there seems something arrogant about the US giving itself the power to evaluate whether a criminal prosecution in another country was adequate.

The US Department of Justice (DOJ), long a defender of its right to judge for itself whether to bring a parallel or follow-on prosecution in FCPA cases, recently signaled greater sympathy with those who take the latter side in this debate. Earlier this year, the DOJ unveiled a new policy meant to eliminate “unfair duplicative penalties” on corporate wrongdoers, including those participating in foreign bribery, and set out a number of factors that the DOJ can use to evaluate whether imposing multiple penalties serves “the interests of justice.” Describing the impetus for the policy update, Deputy Attorney General Rod Rosenstein echoed common complaints from the corporate community about how the “piling on” of multiple penalties for the same misconduct, from different regulatory and enforcement agencies, deprives the company and its stakeholders of the “the benefits of certainty and finality ordinarily available through a full and final settlement.”

It’s not clear, though, whether—at least with respect to FCPA cases—the new policy differs much from the approach that the DOJ’s FCPA Unit has been taking to joint and parallel investigations for many years. While formalizing the approach may seem to provide some relief to corporations, the new policy actually does little to address the “piling on” problem in the foreign bribery context: Continue reading →

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

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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 →

Laura Kovesi’s Statement Upon Being Fired As Romania’s Chief Anticorruption Prosecutor

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Romanian President Klaus Iohannis yesterday fired the National Anticorruption Directorate’s chief prosecutor Laura Codruţa Kovesi under intense, unrelenting pressure from the parliamentary majority.  Although article 133 of the Romanian Constitution protects public prosecutors from parliamentary whims, in a head-scratching decision May 30 Romania’s Constitutional Court ruled that the president must heed a directive by the Justice Minister ordering him to fire Kovesi.  Iohanis had initially resisted, but the parliamentary majority demanded he obey the Justice Minister’s directive — even after citizens demonstrated in Kovesi’s favor and the European Union signaled its support for her.  Indeed, in recent days the majority made it clear that if Iohannis refused to obey the order, it would impeach him.  Iohanis relented early Monday morning, July 9, signing a decree terminating Codruţa Kovesi.

 Codruţa Kovesi issued a statement later in the day defending her agency’s record combating corruption, voicing the concerns of many that her dismissal will undermine the fight against corruption by subordinating prosecutors to parliament, and urging all Romanians not to give up the struggle against corruption.  The full text of her remarks (her own English version) are below.

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