The Australian Government Shows Us How Not To Create an Anticorruption Agency

Two recent polls of the Australian public make two things quite clear: the Australian people have little trust in their federal politicians, and they want a federal anticorruption agency to investigate misuse of public office. This is perhaps not surprising given the string of scandals that have come to light in the past few years (see, for example, here, here, and here). And ordinary citizens are not alone: a survey of government workers found that thousands believed they had witnessed acts of corrupt behavior, particularly cronyism and nepotism. And a group of 34 former Australian Judges, including a former Chief Justice of the High Court, have published an open letter to Prime Minister Scott Morrison stating that Australian trust in federal politics is at an all-time low due to perceptions of corruption, and that a federal anticorruption agency is the necessary response. 

It is therefore unsurprising that the proposed creation of a federal anticorruption agency has emerged as a salient issue in the upcoming federal elections, to be held on May 18 (one week from tomorrow). The Morrison government initially dismissed the idea, but in December 2018 changed its tune and announced that, if the Liberal Party (Morrison’s party) wins the election, the government would create a Commonwealth Integrity Commission with two separate divisions: a law enforcement integrity division and a public sector integrity division. The former would have the power to investigate police officers and other law enforcement personnel, while the latter would have the power to investigate politicians.

Unfortunately, while a federal anticorruption agency is an idea whose time has come, the Morrison government’s proposal suffers from four key shortcomings: Continue reading

Regulatory Discretion and Corruption in the FDA

In the United States, the regulatory agency responsible for ensuring safe food and medicine, the Food and Drug Administration (FDA), has been marred by numerous scandals – from a 2016 insider trading prosecution to a 2009 politicized medical device approval to a 2013 ProPublica investigation that found the FDA overlooked fraudulent research and let potentially unsafe drugs stay on the market. These scandals have, understandably, undermined public confidence in the FDA. What’s the explanation for these problems? Why is there such a large public perception of corruption, and so many questionable incidents, at the FDA?

Much of the explanation has to do with institutional design: Corruption blooms where transparency and accountability are lacking, yet the FDA has vast discretion over the regulations it sets, incredibly loose restrictions on the money it can receive from industry, and little public accountability. The following steps can be taken to reform the FDA, in the interest of rooting out corruption and restoring public confidence in the agency:

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Guest Post: Living in a Kleptocracy–What to Expect Under President Trump

Bonnie J. Palifka, Assistant Professor of Economics at Mexico’s Tecnológico de Monterrey (ITESM) contributes today’s guest post:

The news regarding President Donald Trump appointments and nominations, and the increase in foreign governments’ business at Trump properties, has caused considerable concern regarding possible conflicts of interest, nepotism, insider trading, and other types of grand corruption. Many are worried about what this means—if President Trump’s tendencies toward crony capitalism, or quasi-kleptocracy, are as serious as his critics fear, what can we expect will happen over the next four or eight years?

While grand corruption among the political elite may be new for US citizens, this challenge is all too familiar in many other parts of the world. As a long-time resident of Mexico and corruption scholar, I have some insight regarding life in a relatively corrupt environment, which might be relevant to what the US is about to face: Continue reading

Conflict of Interest and Democratic Theory: Lessons from Bruce Cain’s Democracy More or Less

Although written for Americans worried about what ails their democracy, non-Americans will profit from a close study of Stanford Professor Bruce Cain’s new book Democracy More or Less: America’s Political Reform Quandary as wellCain’s thesis is that different views about the role of citizen participation, representative institutions, interest groups, and apolitical experts in governing the United States produce sharply different prescriptions for reforming its political system.  Non-Americans will recognize that these same views inform reform in their countries, from community driven-development programs that bypass representative institutions to the replacement of elected governments with a cabinet of technocrats.  What makes Cain’s book so valuable, to Americans and non-Americans alike, is that he shows when and why reforms inspired by these competing views improve governance and when and why they make matters worse.

GAB readers will find particularly instructive his analysis of how different theories of government influence the ongoing effort in the United States to police conflicts of interest by elected officials, civil servants, and judges

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Corruption and the Revolving Door: Recent Discussions and Further Reflections

So-called “revolving doors” between government and the private sector raise the specter of potential corruption (if not in the strict legal sense, then in the broader sense), and some anticorruption advocates have called for much more aggressive restrictions on former government officials’ ability to work for the sectors they used to regulate. (See, for example, here, here, and here.) Though the concerns are legitimate, I argued in a post a little while back that the issue is much more complex: many of the concerns about the harms of the revolving door may be overblown, and revolving doors might in some cases have beneficial effects.

I thought I’d revisit the issue in light of two very interesting recent contributions on this topic: a blog post last week by Transparency International Programme Manager Dieter Zinnbauer on the pros and cons of the revolving door (along with a companion post on measurement issues), and an article by Wharton School Professor David Zaring. Mr. Zinnbauer concludes that the weight of the evidence suggests that the revolving door is indeed a serious problem, and that for the most part the costs outweigh the benefits; Professor Zaring reaches more or less the opposite conclusion.

Although I think the first half of Mr. Zinnbauer’s post is an excellent, succinct, evenhanded summary of the main issues, I respectfully disagree with the inferences that he draws from the existing evidence. That’s not to say that his conclusions are wrong, or that revolving doors are nothing to worry about. But when Mr. Zinnbauer says that “a much larger body of new evidence comes down quite distinctively on the negative impact of the revolving door,” I think he’s overstating his case. Here’s why: Continue reading

Revolving Doors and Corruption

I recently came across a couple of interesting blog posts about corruption and the “revolving door” in the U.S. government (the cycling of individuals from the private sector to government and back again—often as representatives of the same industries they used to regulate while in government).

First, last month Chandu Krishnan (who served as Executive Director of Transparency International UK from 2004-2012) published an insightful post on the Safra Center’s blog, noting how the revolving door—and in particular the promise of lucrative post-government employment—may lead government officials to make laws that reflect the preferences of “industry lobbies” rather than the “will of the people.” Mr. Krishnan adds his voice to the chorus of calls for reform; in particular, he recommends lengthening the legally-required “cooling off” period (during which former government officials are prohibited from lobbying) from one to three years (or longer for positions involving especially high risk, such as procurement).

Around the same time, Mike Koehler, who runs the FCPA Professor Blog, posted a comment on Charles Duross’s recent departure from his position as head of the DOJ’s FCPA enforcement division to take up a position at the law firm Morrison & Foerster. In this post, Professor Koehler reiterated his earlier calls for extending and expanding the “cooling off” period, so that former government FCPA lawyers could not provide any FCPA defense or compliance services for five years after leaving government service.

What struck me about reading these two posts in rapid succession was the fact that although Mr. Krishnan and Prof. Koehler seem in agreement on the problem and the solution, in fact their hypotheses about the effect of the revolving door on government officials’ incentives are not only different, but polar opposites. Mr. Krishnan worries that the prospect of future employment at private sector firms will cause government officials to go too easy on those firms—leading to overly passive or timid enforcement of U.S. law. (He views this as a kind of “institutional corruption.”) Prof. Koehler worries that the prospect of future private sector employment causes government officials to be too aggressive in their enforcement of the law—creating or augmenting the demand for the defense & compliance services these ex-government officials then provide.

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