For the Love of Money: Capitalizing on Corrupt Officials’ Opulent Spending Habits to Fight Corruption

Corruption is notoriously difficult to track and discover, not least because both sides in a corrupt exchange have strong incentives to avoid getting caught. So how can enforcement officials, journalists, and anticorruption activists catch corrupt actors? Pay close attention to flagrant and excessive spending by public officials. After all, most people who benefit from corruption, whether they are officials receiving bribes or industrialists benefitting from the government action they purchased, do it for the money. And what’s the point of taking on so much personal risk to make more money if you can’t spend it on nice things? This is why you’ll see Chinese officials wearing wristwatches worth four times their annual salary and presidents spending millions on designer clothes and shoes and other luxury goods. The additional risk of being caught seems to be outweighed by the perceived social benefits of public displays of wealth. Throwing lavish weddings and banquets seems to be a particularly common trap that captures this phenomenon. The very public nature of these events, the massive guest lists, and the attendance of well known figures all but guarantee public scrutiny. But current and former government officials just can’t seem to help themselves. For example, in the middle of India’s recent anticorruption crackdown a former government minister held a lavish wedding for his daughter at a cost of over $75 million. This is in a country where a former state chief minister and potential prime minister was recently sentenced to four years in prison, banned from politics for a decade, and fined $16 million after an investigation sparked by an astonishingly opulent wedding she hosted.

Over the past decade, the spending habits of dozens of high-ranking officials have produced a number of viral news stories and have, in some cases, led to effective enforcement actions. The fact that people are willing to spend their corruptly acquired wealth so publicly, in spite of the risks involved, provides enforcement officials and anticorruption advocates with a unique and important opportunity in three respects:

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If Voters Hate Corruption, Why Do Elected Politicians Resist Anticorruption Reform? Lessons from South Dakota

If U.S. voters dislike corruption so much, why don’t U.S. politicians see anticorruption as a winning issue—or at the very least feel more pressure to act aggressively against the corruption that voters claim to hate? This question, which has been explored on this blog before, is interesting to consider in the context of recent developments in South Dakota. South Dakota is considered to be one of the most corrupt states in the U.S., and in recent years has suffered through several major public corruption scandals, including massive misappropriations after the state privatized its EB-5 visa program, and the theft of over a million dollars earmarked for scholastic grants for the state’s American Indian population. In the past, although some Democratic state representatives had introduced bills to crack down on corruption, these measures failed in largely party-line votes in South Dakota’s Republican-dominated state legislature. Yet South Dakota, like many U.S. states, has a ballot initiative process that empowers voters to approve new laws by popular referendum. Last November, South Dakota voters used this process to approve Initiated Measure 22 (IM-22), also known as the “South Dakota Anti-Corruption Act.” While IM-22, despite its title, is not a direct anticorruption bill—its focus was on reforming campaign finance and lobbying—the message from the South Dakota voters was clear: they saw corruption as a problem and wanted to take measures to combat it.

Yet after the referendum passed, Republican lawmakers immediately took steps to halt the new rule. Within two weeks, 25 Republican South Dakota lawmakers brought suit against the state, arguing that the ethics commission created by the referendum violated the state’s constitution, and they succeeded in getting a temporary injunction against the new rules. Ultimately, the South Dakota State Senate struck down the law, using a provision of state law that allows the state legislature that repeals a referendum. Thus elected stood in direct opposition to an attempt to combat corruption enacted through a popular democratic initiative. Moreover, events in South Dakota reveal that some of the more conventional explanations that have been offered—including by previous analyses on this blog—are at best incomplete.

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Guest Post: When It Comes To Attitudes Toward Corruption, Russians Are More Like Americans Than You Think

Today’s guest post is from Marina Zaloznaya, Assistant Professor of Sociology at the University of Iowa and author of, The Politics of Bureaucratic Corruption in Post-Transitional Eastern Europe:

Russia and corruption have been dominating the news recently – with the reporting from Washington and Moscow converging in an unusual way. Ongoing accusations against Trump Administration officials resonate even more strongly when linked to Russia, a country most Americans view as rife with corruption. Indeed, many Americans think that Russian citizens are perfectly comfortable with the systematic corruption of political and business elites.

This is a myth. Yes, it is true beyond doubt that corruption is common in Russia – much more so than in the United States – affecting hundreds of thousands of people. But this is not because Russians are systematically more tolerant of corruption than are Americans. Continue reading

Do People Care More About Corruption Than They Used To? Evidence from the US and Germany

Sometimes it feels like corruption has become the topic of the year: We’ve heard repeatedly that it is (the perception of) corrupt elites that has fueled the rise of populists, nationalists, and new socialist parties and politicians. The most prominently of these, though not the only one, is Donald Trump, who promised in his campaign to take back power from the corrupt elites (see here and here).

But has the topic of corruption actually become increasingly prominent in popular and media discourse over the last two years? To investigate this question, I did a simple search on the Factiva database within the eight most widely-circulated American newspapers (USA Today, the New York Times, the Wall Street Journal, the Los Angeles Times, the New York Post, the Chicago Tribune, the Washington Post, and Newsday) for the term “corruption.” I did a similar search for Germany, using the term “Korruption” and the eight most widely-circulated German newspapers (BILD, BILD am Sonntag, Süddeutsche Zeitung, Frankfurter Allgemeine Zeitung, Die Zeit, Westdeutsche Allgemeine Zeitung, Rheinische Post, Welt am Sonntag and Rheinische Post). Surprisingly (at least to me), over the last two years there was no growth in U.S. newspaper reporting on corruption. As the following graph shows, reporting on corruption in the U.S. has been rather stable over this period, with between 500 and 750 articles a month. A slightly different picture emerges for Germany, where newspaper reports on corruption, which were substantially less frequent than in the U.S. to begin with, have actually declined over the past two years. (A side note, though perhaps an interesting one: The most reported corruption topic in both countries, with about 2.5 times more stories than the next-most-mentioned topic, was FIFA.): Continue reading

CREW’s Long-Shot Emoluments Clause Lawsuit Against Trump: Calculated Risk or Reckless Gamble?

After the events of the last ten days, worrying about the potential conflicts of interest created by the Trump organization’s business dealings with foreign governments seems almost quaint. It appears that under the Trump Administration, constitutional crises don’t get resolved, they just get overshadowed by bigger constitutional crises; such are the strange times in which we live. But I did want to return to the topic I wrote about a couple of weeks ago, concerning the pending lawsuit brought by the Citizens for Responsibility & Ethics in Washington (CREW) alleging that the Trump Organization’s business relationships with foreign governments violate the Constitution’s Foreign Emoluments Clause. In my post a couple of weeks ago, I predicted that U.S. courts are likely to toss the suit out on jurisdictional grounds, without reaching the merits of the claim. That assessment appears to be shared by the overwhelming majority of legal experts who have weighed in (see here, here, here, here, here, and here), though the consensus is not quite universal.

Several people have suggested to me that even if the suit has little chance of success, it was good that CREW filed it. They’ve offered two arguments for this assessment: First, even if there’s only a very small chance of success, the costs of bringing the suit are relatively low, and the benefits if the suit does end up succeeding are enormous—so what’s the harm in trying? Second, the mere act of filing the suit, even if it’s ultimately dismissed on jurisdictional grounds, will generate attention to the underlying constitutional and ethical issues, and help both educate and mobilize the citizenry. My colleague Larry Tribe, who is one of the parties who filed the CREW brief, laid out this position clearly and succinctly in an interview shortly after the brief was filed:

Litigation can help bring important principles to light… It helps me teach my students, and it performs an educational function vis-à-vis the public. Of course, I don’t take on causes that I feel confident I will lose purely for educational purposes. But win or lose, we’re going to help educate the public on something that’s very important.

Much as I wish those arguments were true, and much as I wish the CREW lawsuit had some chance of succeeding, I respectfully and reluctantly disagree. I hope that events will prove me wrong, but at the moment I fear that CREW’s decision to file this lawsuit was not only a long shot, but was a serious tactical blunder that will probably hurt the cause overall. Continue reading

U.S. Voters Says that Corruption Is a Major Issue. Why Are Politicians Silent on It?

If public opinion polls are any guide, corruption is one of the most important issues to U.S. voters. A 2012 Gallup survey by Gallup found that a full 87% of Americans deemed reducing corruption as either extremely important or very important—placing this issue second only to the economy/job creation, and ahead of the budget deficit, terrorism, and Social Security. More recent polls buttress these findings: A 2015 survey found that 58% of respondents were afraid or very afraid of corruption by government officials, the highest of any fear surveyed. This meant that corruption was a greater fear than large-scale disasters like terrorist attacks or economic collapse, as well personal events like identity theft, running out of money, or credit card fraud. Three-quarters of those surveyed in 2015 also believed that corruption was widespread in the government, a marked increase from 2007. And a 2016 survey found that 16% ranked corruption the single most important issue, which might sound low, but was the third highest issue in the polls.

Yet despite these poll numbers, U.S. politicians and parties do not seem to have made anticorruption a major policy priority; certainly this issue gets far less attention than terrorism and the budget deficit. True, U.S. politicians will sometimes attack their rivals as “corrupt,” a rhetorical tactic we have seen in the current election (see here and here). But although politicians use the term “corrupt” to malign their opponents, they do not seem to treat corruption as a genuine issue in need of fixing, and do not put forward an anticorruption policy agenda. Hillary Clinton has an extensive list of policy proposals on her campaign website, yet corruption and anticorruption are not mentioned. Although her website goes in depth about money in politics, it stops short of using the term “corruption” to describe this problem. Donald Trump did recently release a five-point ethics plan that used the term “corruption” once, but it is incredibly vague and appears to have been made out of desperation in the closing days of the campaign. In any event, his “Issues” page still does not mention corruption, nor do those of third-party candidates Gary Johnson, Jill Stein, or Evan McMullen.

What explains this disconnect? Huge numbers of Americans tell opinion pollsters that they believe that the government is corrupt and that this is one of the biggest problems facing the country. Yet political parties and politicians barely discuss “corruption” (except as invective) or lay out plans for solving it. This is a puzzle. Politicians, after all, have strong incentives to talk about the issues that voters care most about. Even if we doubt how seriously we should take politicians’ platforms and campaign rhetoric, one would think that it would make sense for politicians at least to pay lip service to the idea of fighting public corruption, if voters care so much about it. So why do we not see more focus on corruption and anticorruption in the platforms of U.S. presidential candidates?

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Guest Post: Why We Should Be Excited About SDG 16

GAB is delighted to welcome back Daniel Dudis, Senior Policy Director at Transparency International-USA, who contributes the following guest post:

On September 25th, the United Nations adopted the Sustainable Development Goals (SDGs). The SDGs identify development priorities and set measurable targets for progress that are to be met by 2030. They also replace the Millennium Development Goals (MDGs), adopted in 2000 and set to expire at the end of this year. The MDGs were aimed primarily at improving living conditions in developing countries, and focused on reducing extreme poverty and improving health, education, sanitation, and nutrition. Unfortunately, progress towards achieving the MDGs has been uneven at best. Notably absent from the MDGs were any commitments on improving governance or reducing corruption. Given that in most countries, government is the primary service provider for healthcare, education, and sanitation, and that government provides nutrition assistance and sets economic policy, the absence of any commitments to improve governance or reduce corruption was a notable blind spot. Honest, accountable, efficient government is the foundation upon which economic development and improved service delivery are built.

Happily, goal 16 of the SDGs fills this lacuna. Goal 16, which seeks to promote just, peaceful, and inclusive societies, includes (among other governance-related targets) significant reductions in illicit financial flows, progress on the recovery and return of stolen assets, and substantial reductions in corruption and bribery.

It is easy to be skeptical about the utility of ambitious international agreements such as the SDGs. Indeed, Matthew’s post last week, which criticized the Goal 16’s anticorruption targets on the grounds that they are ill-suited to quantitative measurement of progress, and Rick’s post yesterday, exemplify that view. Such skepticism, however, is misplaced. The inclusion of these targets in Goal 16 of the SDGs is an important step forward as it represents a clear endorsement by the community of nations that good governance and the fight against corruption are integral parts of the global development agenda. Continue reading