Tag Archives: Transparency International

Policing Private Parties: How to Get Kleptocrats’ Seized Assets to their Citizens

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As Rick has pointed out, it is exciting to see the successful forfeiture of U.S.-based assets owned by sitting Vice President of Equatorial Guinea, kleptocrat and international playboy Teodoro Nguema Obiang Mangue (“Obiang”). The Department of Justice estimates that the assets are worth an estimated $30 million. Also encouraging is the fact that the bulk of the settlement funds will be returned to the people of Equatorial Guinea. This is the first case in which the assets of a current leader’s cronies will be seized and repatriated to the country of origin by the U.S. Disbursing millions of dollars transparently in country that ranks 163/177 on Transparency International’s Corruption Perception Index will be challenging.

In stolen asset repatriation cases, the debate over disbursement typically boils down to whether to channel reclaimed cash through the government or through private actors. In Equatorial Guinea, returning the money directly to the government is a non-starter: the Obiang family has an extensive record of human rights and corruption abuses and a tight grip on power. The DOJ settlement accordingly cuts the government and its henchmen out of the forfeiture proceeds and channels repatriated funds through a private charity. But simply relying on private actors will not eliminate corruption challenges; there are pitfalls in channeling aid through private NGOs as well.

The DOJ should keep the following risks in mind as works out a disbursement plan for the Obiang settlement funds: Continue reading →

Transparency International Makes Its Data Less Transparent: Why TI Should Be Ashamed of Its 2014 CPI Report

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For all its flaws, I’ve long been of the view that Transparency International’s annual Corruption Perceptions Index (CPI) has, on balance, made a positive contribution to our understanding of corruption, and the fight against it. (A couple of my sympathetic treatments can be found here and here.) Although some in the media (and, depressingly, some in academic and policy circles) misuse the index, TI has generally been quite clear about what the CPI numbers do and do not tell us.  And to its great credit, TI has proven remarkably receptive to criticism: each year TI’s annual CPI report has become better, clearer, more nuanced, and more transparent in its limitations.

Until this year. The 2014 CPI came out yesterday, and I’m disappointed at how TI has taken a big step backward, making the meaning of its scores less transparent, and choosing to play for catchy headlines rather than to deepen understanding. Continue reading →

More on CPI Changes Over Time (or Not)

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OK, in my post from a few weeks back, I asserted that year-to-year changes in a country’s Corruption Perceptions Index (CPI) score are not meaningful, even after the thoughtful and welcome changes that Transparency International made to its methodology in 2012. My concern was — and remains — that the underlying data sources that TI uses to create the index are themselves not likely to be comparable across years, which means that the CPI inherits the problem. But for purposes of this post, I’m going to completely disregard my own warning in that earlier post, and take a look at whether there have been fact been any notable changes in individual countries’ perceived corruption between 2012 and 2013.  Based on a very quick scan of the data, the answer appears to be (mostly) no.

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Transparency International’s Laudable Campaign for Beneficial Ownership Transparency

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As many readers of this blog are likely aware, Transparency International–the leading worldwide anticorruption NGO–has made the corporate secrecy problem a centerpiece of its “Unmask the Corrupt” campaign. TI is focusing in particular on the problem of shell companies whose true (or “beneficial”) owners are unknown, and which can be used by corrupt officials and businesspeople to shelter and launder stolen public funds. The TI Secretariat, along with several of TI’s national chapters, have been pushing for action at both the national and international level, especially for reforms that would make transparent the beneficial owners of these companies. I wanted to use this post as an opportunity to call attention to two of TI’s recent efforts in this area, which might be of interest to GAB readers:

  • First, the TI Secretariat wants to use the G20 leaders’ summit this weekend in Brisbane, Australia as an opportunity to raise awareness of the issue and to put pressure on the G20 leaders to commit to take action on this issue. To this end, TI organized an open letter, signed by a number of prominent civil society activists and other public figures (including John Githongo, Desmond Tutu, and Richard Goldstone), calling on the G20 leaders to outlaw secret company ownership and mandate public registries of the true beneficial owners of all legal entities.
  • Second, as I noted last month, the US government is currently in the midst of a rulemaking process to strengthen due diligence and disclosure requirements on beneficial ownership. TI-USA submitted a set of supportive but critical comments on the rule, urging the US Treasury Department to expand the definition of “beneficial owner” to include individuals who control the entities through means other than a formal management position, to apply the new rules apply to existing accounts as well as new accounts, and to require financial institutions not only to verify the identity of the (alleged) beneficial owner, but to independently verify that the person listed as the beneficial owner is in fact the true beneficial owner.

TI’s efforts in this direction are most welcome, and I hope they have some impact on the G20 summit and the development of new rules in the US (and elsewhere). I’m happy to take this this opportunity to publicize TI’s efforts, and I hope some of our readers out there might be able to contribute to the push that TI and other organizations are making on this issue.

Corruption in Crisis Situations: Why Should We Care? What Can We Do?

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A Deloitte audit published a few weeks ago revealed that the Assistance Coordination Unit (ACU), the aid management branch of the Syrian National Coalition (SNC), could not account for $1 million in expenditures in 2013. The misappropriation of $1 million, out of $60 million in total spending, may not seem like a lot, but it could be a warning sign about just how much of the $3.1 billion in Syria relief coordinated by the UN in 2013 actually reached its intended targets, and how much was lost to corruption. This concern — which applies not only to Syria, but to humanitarian aid in other conflict zones like Iraq, Somalia, and Afghanistan — is closely related to the issue Rick’s earlier post raised about the scandal of corruption in development aid, which should not be written off simply as “leakage,” but which can undermine rather than promote development. A parallel argument applies to corruption in humanitarian assistance to conflict zones: it undermines security. Indeed, although corruption in aid destined for insecure areas raises similar problems to corruption in development aid more generally, there are three factors that make corruption in conflict zones a particularly challenging and high-stakes concern. Continue reading →

Post-2012 CPI Scores Can’t Be Compared Across Time, Either

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In post last week, I emphasized what lots of others have already tried (without much apparent success) to point out: Prior to 2012, Transparency International’s Corruption Perception Index (CPI) scores are not comparable over time.  The fact that a country’s score from one year to the next goes up or down might reflect an actual change in perceived corruption, but might be due to a whole host of other factors (changing aggregation methodology, changing scope of country coverage, change in perceived corruption of other countries, etc.), such that simple year-to-year comparisons are unreliable.  In making this point, I was not criticizing TI itself, which has been quite clear that the pre-2012 CPI scores cannot be compared across years.

But what about 2012 and after?  In 2012, TI announced, with much fanfare, that starting with the 2012 CPI and henceforth, scores across years would be comparable, due to changes in methodology (described here).

Is this right?  If it were, it would be a huge benefit both to scholars and policy reformers who want to evaluate changes over time–and the impact of various interventions.  Alas, after reading through TI’s discussion of the revised methodology, I regret to say the answer is probably no.

Continue reading →

Civil Society Combats Corruption: A Review of Shaazka Beyerle’s Curtailing Corruption: People Power for Accountability & Justice

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The now worldwide anticorruption movement remains a creature of its origins:  civil society.  It was Transparency International, a nongovernmental organization, that first gave voice to citizen demands for honest government,  and it is thousands of national and local groups that have put their own “boots on the ground” to demand public officials do something.  Now comes Shaazka Beyerle, Visiting Scholar at Johns Hopkins Center for Transatlantic Relations, to recount in fascinating and colorful detail some of the recent victories these warriors for an accountable and just government have achieved. Continue reading →

Pre-2012 CPI Scores CANNOT Be Compared Across Time–So Please Stop Doing It!

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OK, I know (as Rick pointed out in a recent post) that a lot — maybe too much — of the content on this blog has focused on measurement issues, so I apologize for yet another post on that topic, but this has really been bugging me:

Transparency International has been publishing its well-known and widely-used Corruption Perceptions Index (CPI) since 1995.  The index has its pros and cons, several of which have been discussed on this blog (see here, here, here, here, and here).  But putting other debates about the CPI’s validity and utility to the side, one thing should be perfectly clear: At least prior to 2012 (when TI changed its method and scoring system for the CPI), a country’s CPI scores CANNOT be compared across years.  The fact that Country X scores, say, a 4.4 in 2002, and scores a 4.9 in 2005, does NOT mean that (perceived) corruption has declined in country X.  Maybe it did, but it might have stayed the same, or gotten worse.  At most, the pre-2012 CPI provides information about country’s ranking relative to other countries, within a single year, with respect to corruption perceptions.

TI itself could not be more explicit about this, stating bluntly “CPI scores before 2012 are not comparable over time.”  Yet I keep coming across sources — news articles, presentations by leading international organizations, academic papers — that use year-to-year CPI comparisons to make claims about how corruption in a particular country or region is improving or worsening, or about whether a particular policy intervention is working or not.  YOU CAN’T DO THIS!  PLEASE STOP!!

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Are Less Corrupt Countries More Faithful Enforcers of the OECD Anti-Bribery Convention?

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The failure of many signatories to the OECD Anti-Bribery Convention to enforce their new laws against the bribery of foreign public officials has been widely noted, including on this blog. There is no single factor that explains this lack of enforcement across the 30 or so countries (out of 41 total signatories) that have not yet seriously begun enforcing their anti-bribery laws. However, there is a fair amount of descriptive evidence about the extent to which signatories actually do so: Transparency International (TI) has, for the last nine years, released annual reports on progress, which provide a good deal of information on this level.

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TI Report on Verification of Corporate Anticorruption Compliance Programs

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Last week Transparency International-USA released a new report entitled Verification of Anti-Corruption Compliance Programs. The report is available for download on TI-USA’s website (the link there opens the document as a pdf, so I can’t do a direct link). It’s a helpful document on an important but surprisingly neglected topic: although there’s a ton of material out there about how to design a corporate compliance program (for anti-bribery and related matters), there’s much less out there on how to go about assessing these programs to ensure they’re actually working as they’re supposed to.

I won’t bother summarizing the document here. Shruti Shah, the TI-USA Senior Policy Director who was one of the driving forces behind the report, has a nice succinct summary over at the FCPA Blog. I’ll try to do a more substantive post within the next week or two on my reactions to the report and the more general issues it raises, but for now I just wanted to bring this document to the attention of GAB readers.