Do Mandatory Asset Declarations Reduce Corruption? And If So, How?

The United Nations Convention Against Corruption (UNCAC) calls on States Parties to adopt asset declaration and financial disclosure regimes for their public officials (see Article 8, paragraph 5 and Article 52, paragraph 5), and most states have complied with this commitment in one form or another. Indeed, according to a report by the Stolen Asset Recovery Initiative, there is a continuous upward trend in the number of states that have enacted financial disclosure laws (see Figure 1.1 at page 8). Yet the near-universal popularity of mandatory asset declarations does not mean that this tool is actually effective. True, there have been a few high-profile cases where asset declarations played an important role in anticorruption efforts, such as the impeachment of the Chief Justices of the Philippines and Sri Lanka, as well as the resignation of the Vice Rectors of a prestigious university in Thailand and the top brass of a state bank in Portugal. But such high-profile cases are rare and may not be representative of the larger picture. In a previous post on this blog, Rick Messick expressed some skepticism about the extent to which asset declarations and other forms of mandatory financial disclosures actually contribute to anticorruption efforts, and criticized what he saw as extravagant and unrealistic claims about the effectiveness of such disclosures as anticorruption tools.

So what does the existing research actually say about the effectiveness of asset declarations on anticorruption efforts? While there are only a few studies on this topic, the evidence they supply nevertheless offers valuable insights.

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Lessons from the “Isolated Capital” Effect for the Fight Against Public Corruption

As numerous commentators have written on this blog and elsewhere, the New York state legislature suffers from a serious corruption problem (see, for example, here and here), with six corruption convictions of government leaders in eleven years, and suspicions that the rot runs much deeper. Would things be any better if New York’s capital were in New York City rather than in Albany? While it’s impossible to say for sure, research suggests—perhaps surprisingly—that the answer might be yes. In an influential paper, Filipe Campante and Qhoc-Anh Do found that, on average, corruption (as measured by federal corruption-related crime convictions per capita) is higher in states where the state capital is more “isolated”—that is, farther from the state’s major population centers. (States with relatively isolated capitals include not just New York (Albany), but also Illinois (Springfield), South Carolina (Columbia), Nevada (Carson City), and Florida (Tallahassee), among others.)

Of course, states are very unlikely to relocate their capitals, but understanding the likely mechanisms that explain Campante and Do’s surprising finding may help us better understand the sorts of policy levers that might help reduce corruption in state government. So why might it be the case that states with more isolated capital cities might have more corruption? Continue reading

“Right to Information” or “Right to Intimidation”? The Unfulfilled Promise of India’s Right to Information Act (RTI)

On July 18, 2017, Rajesh Savaliya, a 31-year-old activist, left his home in Surat, India to visit a friend’s construction site. The next day, he was found severely injured on the side of a highway, and doctors pronounced him dead later that day. Mr. Savaliya was murdered because of his attempts to expose corruption in his hometown schools, including the education mafia extracting money from students and schools operating without proper licenses and approval letters. As part of his campaign to expose this corruption, Mr. Savaliya had filed multiple requests for information about the local schools pursuant to India’s Right to Information Act (RTI). Sadly, Mr. Savaliya’s story is not unique: Since 2005, over 60 activists have been killed, and hundreds of others have been assaulted or harassed, for filing RTI requests.

Freedom of Information laws like India’s RTI Act can be a powerful pro-transparency tool for combating corruption and mismanagement in government. The RTI Act, which was adopted following a nationwide grassroots campaign, provides every Indian citizen the right to request information from a public authority—a right which is invoked by 4–6 million citizens each year. Yet the RTI Act is unlikely to be effective in exposing serious corruption—especially in cases where criminal elements have infiltrated or coopted state organs—unless those filing RTI requests are adequately protected and insulated from intimidation.

Not only are current protections for RTI requesters inadequate, but India seems, if anything to be moving in the wrong direction. Early this year, as a part of a package of proposed updates to the rules governing the RTI Act, India’s Department of Personnel and Training (DoPT) proposed a new rule (Rule 12), which would allow RTI requestors to withdraw their appeals of decisions refusing disclosure, and would also require all such appeals to terminate upon the death of the requestor. Proposed Rule 12 has been widely criticized (see here, here, and here), in part because these changes would further incentivize threats and violence against RTI requesters like Rajesh Savaliya. As the Human Rights Initiative noted, “Draft Rule 12 will only legitimize such attacks and embolden vested interests who wish to keep corruption and maladministration under wraps.”

Instead of adopting counterproductive measures like Draft Rule 12, the DoPT and Indian Parliament should instead amend the Act and governing rules to better promote the safety and security of RTI requesters. Here are three potential changes—in order of likelihood of success and impact—that would serve this objective:

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How Transparent Should Prosecutors Be About Investigations Into High-Level Corruption?

Today’s post is going to be one of those ones where I raise a question that I’ve been puzzling over, without having much to offer in the way of good answers.

Here’s the question: How open and transparent with the public should the officials investigating serious allegations of high-level corruption be about the progress of their investigations?

To be sure, no competent investigator or prosecutor would or should be completely transparent, as doing so might well tip off the targets of the investigation to what the investigators know, their investigative and legal strategies, and so forth. But even with that constraint, there’s a fairly broad range of options. Investigators could be absolutely tight-lipped about everything. Or they could hold regular press conferences covering significant developments in the case (and perhaps even going further to comment on the larger issues that the investigation implicates). Or something in between.

I was prompted to think more about this question in part by an exchange I had with Jose Ugaz at last month’s Harvard conference on Populist Plutocrats. I was asking Mr. Ugaz about his experience serving as Peru’s Ad Hoc State Attorney investigating and prosecuting high-level corruption in the Fujimori regime, and in particular how he dealt with concerns that his investigation might be perceived as politicized. Those who are interested can watch the video of our exchange (which starts around 7:15:55), but the key part of Mr. Ugaz’s response (slightly edited for clarity) ran as follows: 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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Improper Payments and American Financial Mismanagement

Sound government fiscal management requires, among other things, ensuring that government payments are made accurately—to the right payee, in the correct amount, and with sufficient documentation. Failure to implement effective systems to prevent improper payments leaves the government checkbook at risk of fraud, corruption, and other forms of abuse. Alas, the magnitude of improper payments in the United States is astounding: in 2016, the US reported $144 billion in improper payments—nearly the double the budget for the Department of Education. Improper payments for Medicaid alone are more than ten times the total size of the Community Development Block Grants that the Trump Administration intends to cut – allegedly to save money, even though eliminating this program would have disastrous consequences for programs such as Meals on Wheels.

While improper payments in other contexts are part of corruption schemes, such as the “ghost soldiers” in Afghanistan that Sarah his discussed in this post, improper payments under domestic U.S. programs like Medicaid are more likely to be the result of fraud or simple mismanagement than public corruption. That said, we have no idea how much corruption contributes to the massive improper payments problem. In either case, the most effective policy responses are largely similar, regardless of the underlying cause of the problem.  However, the U.S. response to the improper payments problem has so far been inadequate.

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The Swahili Word for Transparency, and the Fallacies of Linguistic Determinism

I recently attended a workshop where participants were debating, among other things, why reform initiatives to promote government transparency and other anticorruption measures in places like sub-Saharan Africa had such a (seemingly) poor track record. In the course of the conversation, a well-known tenured professor declared – as evidence for the proposition that cultural incompatibility explains much of this apparent failure – that “there isn’t even a Swahili word for ‘transparency.’”

I was flummoxed and expressed some confused skepticism, but this professor (who, by the way, is a white Englishman whose CV does not indicate that he speaks Swahili or has ever done any research in a Swahili-speaking country) insisted that this was not only true, but was strong evidence that government transparency was an alien concept in Swahili-speaking societies.

It wasn’t a terribly important part of the discussion — more of an aside — and the conversation swiftly moved on. But the assertion that this linguistic lacuna demonstrates a significant cultural gap–one with important policy implications–has been bugging me ever since, not least because it reminded me of Ronald Reagan’s absurd claim that “in the Russian language there isn’t even a word for freedom.” (There is, by the way: svoboda.) So just in case this specific claim about Swahili, or linguistic arguments like this more generally, are an emerging meme in the anticorruption commentariat, I thought it would be worth a quick post to try to nip this nonsense in the bud.

So, what’s wrong with the claim that there’s no Swahili word for transparency? Three things: Continue reading