Tag Archives: UN Convention Against Corruption

Guest Post: Is UNCAC Article 35 a “Dead Letter” in the United States?

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Today’s Guest Post is by Craig R. Arndt, an international lawyer living in Bangkok. In the course of a long career, he advised multinational clients on a range of corruption-related matters and has represented those injured by corruption in actions to recover damages.

The drafters of the United Nations Convention Against Corruption recognized that corruption was a transnational disease. And that accordingly, no country could fight it on its own. Hence, in its very first article the Convention makes it clear that states ratifying it are obliged to “promote, facilitate, and support international cooperation and technical assistance in the prevention of and fight against corruption.”  

Article 35 of the Convention sets forth one of the ways states are required to work together to curb cooperation. It provides that each party must “ensure that entities or persons who have suffered damage as a result of an act of corruption have the right to initiate legal proceedings against those responsible . . . to obtain compensation.”

Rick has documented the sorry state of civil recoveries by bribery victims in transnational cases (here, here, here, here, here, here, here and here). That state is now even sorrier thanks to two recent decisions by American federal courts of appeal. In the words of one commentator, the two “gut” article 35.

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Guest Post: A Response to Commentary on the FACTI Panel Report and Recommendations

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Today’s guest post is from Bolaji Owasanoye, the Chair of Nigeria’s Independent Corrupt Practices and Other Related Offenses Commission, and a member of the UN High-Level Panel on International Financial Accountability, Transparency and Integrity (the FACTI Panel).

A few weeks ago, Professor Matthew Stephenson published two posts on this blog (see here and here) that offered some reactions to the report and recommendations of the UN High-Level Panel on International Financial Accountability, Transparency and Integrity (the FACTI Panel), on which I served as a member. I want to first thank Professor Stephenson for his serious discussion of the report. Critical engagement on the Panel’s recommendations is very welcome, and indeed Panel members are keen to continue engagement with researchers, policymakers, and the wider public in order to accomplish our shared purpose: strengthened systems for financial integrity. Now isn’t the time for the lowest common denominator approach but instead for governments to be ambitious and thus unlock the large resources currently being drained aggressively from public finances.

Professor Stephenson generously concluded that “the FACTI Panel has done us all a useful service by providing a document that can serve as the focus for discussion and debate over this vitally important topic.” That said, on a few recommendations he called for more detail, and on an even smaller number he found what he considered as faults with the recommendations. It is on only some of these final few, and within my own area of expertise, that I want to respond to points Professor Stephenson raised. In particular, I want to explain my understanding of the Panel’s thinking in three areas: standards for settlement in bribery cases, strengthening asset recovery, and the use of escrow accounts.

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Commentary on the FACTI Panel’s Report and Recommendations (Part 2)

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This post is the second in a two-part series on the report and recommendations of the UN’s High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (the FACTI Panel). In its report, published this past February, the Panel issued 35 recommendations (grouped into 14 categories) for addressing the problem of illicit financial flows. Of those 35 recommendations, 8 principally concerned tax matters, but the other 27 are directly relevant to corruption—especially though not exclusively grand corruption, which often involves cross-border flows of illicit money. I decided that it might helpfully contribute to the conversation about these topics to respond directly with a bit of commentary on each of those 27 recommendations. My last post covered the first 13, and this post will cover the remaining 14. With that prologue out of the way, let’s dive in. Continue reading →

Guest Post: An Anticorruption Agenda for the Biden Administration

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Today’s guest post is from Lucinda A. Low and Shruti Shah, respectively Acting Chair and President of the Coalition for Integrity, a U.S. based non-governmental organization focused on fighting corruption. The opinions expressed here are those of the authors, and should not be attributed to the organization..  

The United States has a long history, across administrations of both parties, of showing leadership internationally in the fight against corruption. The passage and enforcement of the Foreign Corrupt Practices Act (FCPA) has served as an example for other countries to adopt their own transnational anti-bribery laws. Additionally, the United States has championed international anti-bribery efforts in multilateral organizations and worked to build coalitions to root out all types of corruption. For the last several years, however, U.S. has faltered. In order to reestablish the U.S. as a global leader against corruption, and to get its own house in order, the Biden Administration and the new Congress should embrace an ambitious agenda that includes the following elements: Continue reading →

Guest Post: Time for UNCAC Mark II?

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GAB welcomes back international anticorruption consultant Alan Doig, who contributes the following guest post:

The United Nations Convention against Corruption (UNCAC), which came into force in 2005 and has been ratified by 187 countries, is the oldest and most comprehensive Convention solely devoted to the prevention, detection, and investigation of corruption. Yet today UNCAC, for all of its importance, is not serving as an effective blueprint or framework for promoting innovative and effective responses to corruption. There are four main reasons for this:

  • First, perhaps due to UNCAC’s genesis in the UN Convention against Transnational Organized Crime, UNCAC is skewed too heavily toward the criminal justice aspects of anticorruption, as demonstrated by the fact that nearly 80% of UNCAC’s substantive Articles relate to law enforcement, asset recovery, and related issues.
  • Second, UNCAC left too many key terms undefined or underspecified, allowing for significant interpretation (or misinterpretation) of the Articles, and some 40% of UNCAC’s substantive Articles are non-mandatory; these factors tend to undermine the efficacy of the Convention.
  • Third, UNCAC’s review mechanism is too slow and fragmented, and fails to employ a sufficiently holistic framework that assesses performance and progress in implementation and impact.
  • Fourth, and most significant, UNCAC is not amenable to updating. This has meant that issues which were only emerging back in 2005, such as political-party funding or beneficial ownership transparency, only received limited attention. Issues that were once addressed, if at all, through ad hoc references scattered throughout the Convention are assuming more importance. The difficulty of updating the Convention derives in part from the insistence of the UN Office of Drugs and Crime (UNODC) that UNCAC may be used as a legal document suitable for treaty purposes—even though other international instruments serve similar purposes and its value as a treaty has been limited (as demonstrated by, among other things, the fact that UNCAC has been used for mutual legal assistance only 17 times in over a decade).

So, with a reboot of the existing Convention unlikely, maybe it’s time for a new Convention—an UNCAC Mark II. An UNCAC Mark II— which we might perhaps call the UN Convention on the Prevention of Corruption (UNCPC)—could provide a framework that promotes innovative, flexible, and forward-looking means to address corruption challenges, going beyond technical and compliance approaches.

The main focus of the proposed UNCPC, as the name implies, should be on mainstreaming prevention of corruption, both for its own sake and as a means toward wider objectives, such as trust in public institutions, good governance, and the rule of law. Chapters of such a convention could address, for example: risk assessment, developing strategic approaches, promoting public integrity, transparency and accountability, managing the political and partisan dimensions of public life, preventing profiting from corruption, prioritizing citizen-facing public services, and developing measurable progress and performance. In particular, and largely missing from the current Convention, a UNCPC should address the roles and expectations of a wide range of named in-country public and private sector organizations, as well as in civil society, to collectively mainstream the Convention as part of their work.

Such a Convention needn’t start from scratch. Its contents and coherence would come from synthesizing and integrating the wide range of the corruption prevention initiatives, most of which post-date UNCAC. These include, for example, the Kuala Lumpur Statement on Anti-Corruption Strategies, the international standard on anti-bribery management systems (ISO 37001), the Council of Europe’s work on public ethics, the extractive industries and other transparency initiatives, and the work of organizations like the UN Global Compact and the UNCAC Civil Society Coalition. The contents of a new Convention could also draw on the empirical evidence from GRECO reviews and Transparency International National Integrity Studies. Engaging with all these organizations, who have a stake in prevention, will foster a collective sense of ownership, and they can also take a leading role in monitoring and reviewing implementation of the Convention.

In contrast to UNCAC, this proposed new Convention should not seek global membership. Rather, the UNCPC should require both serious substantive commitments and acceptance of a rigorous whole-Convention peer-review system focused on demonstrable performance and progress. At the same time, evidence from practice on the ground will inform an equally rigorous review and revision of the Convention to ensure its relevance. The overall goal is a more comprehensive and dynamic Convention that provides a collective, mutually-supportive approach to anticorruption, one that seeks to achieve meaningful results within realistic timeframes.

Incorporating Anticorruption Measures in the African Continental Free Trade Agreement (AfCFTA)

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On April 2, 2019, The Gambia became the 22nd country to ratify the African Continental Free Trade Agreement (AfCFTA), which was the minimum threshold to approve the deal among the 55-member states of the African Union (AU). The AfCFTA aims to provide a single continental market for goods and services, as well as a customs union with free movement of capital and business travelers. Although the agreement will enter into force one week from tomorrow (on May 30, 2019), the negotiations for the Protocols and other important matters such as tariff schedules, rules of origin, and sector commitments are still being negotiated. However, once the treaty is fully in force, it is expected to cover a market of 1.2 billion people and combined gross domestic product of $2.5 trillion, which would make it the world’s largest free trade area since the creation of the World Trade Organization. This could be a game-changer for Africa. Indeed, the U.N. Economic Commission on Africa predicts that the AfCFTA could increase intra-African trade by as much as 52.3%, and that this percentage will double when tariff barriers are eliminated. The AfCFTA promises to provide substantial opportunities for industrialization, diversification, and high-skilled employment. And the AU’s larger goal is to utilize the AfCFTA to create a single common African market.

Yet there are a number of challenges that could thwart the effectiveness of this new treaty in promoting free trade and economic development. Corruption is one of those challenges. International indexes indicate that Sub-Saharan Africa is perceived as the most corrupt region in the world, with North Africa not much better. The current version of the treaty, however, does not address corruption directly. It should. Continue reading →

G7 Hypocrisy on Illicit Enrichment Crimes

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Last month, I saw a news report about the international reaction to the Ukrainian Constitutional Court’s decision striking down Ukraine’s criminal offense of “illicit enrichment” as unconstitutional. For those unfamiliar with this topic, the crime of “illicit enrichment” makes it a criminal offense for a public official to realize a significant increase in his or her assets that the public official cannot reasonably explain. The crime of illicit enrichment is related to, but distinct from, civil asset forfeiture systems under which the government may seize—as presumptively the proceeds of unlawful activity—assets that the owner cannot reasonably explain. The main difference is that a civil forfeiture order results in the loss of assets, while a criminal offense can result in fines or incarceration, as well as the other collateral consequences of a criminal conviction. Some anticorruption activists support the criminalization of illicit enrichment on the grounds that it is often difficult or impossible to prove the underlying corruption offenses, but a substantial unexplained increase in a public official’s wealth is sufficient to prove that the official is corrupt. Critics warn that criminalizing illicit enrichment is incompatible with traditional notions of the presumption of innocence. (The UN Convention Against Corruption (UNCAC), perhaps unsurprisingly, fudges the issue, with UNCAC Article 20 calling on States Parties to “consider” adopting an illicit enrichment offense, “[s]ubject to [that country’s] constitution and the fundamental principles of its legal system.”)

In its decision last February 26, Ukraine’s Constitutional Court went with the critics, holding that the criminalization of illicit enrichment a criminal offense was an unconstitutional infringement on the presumption of innocence. This decision met with swift condemnation from the G7, which issued a joint statement with the World Bank declaring that the “recent elimination of the illicit enrichment offence from [Ukraine’s] criminal code is a serious setback in the fight against corruption” that has “weakened the impact of the whole anti-corruption architecture.” Illicit enrichment, the G7 and World Bank admonished, “is not a new offence. In 2010 there were more than 40 countries that criminalized illicit enrichment,” and “[c]ourts around the world have recognized that the criminalization of illicit enrichment is a powerful tool in the fight against corruption, while at the same time respecting fundamental human rights and constitutional principles such as [the] presumption of innocence[.]” The G7-World Bank joint statement closed by calling on Ukrainian authorities to “reinstat[e] criminal liability for illicit enrichment in line with UN, OECD, and [European Court of Human Rights] principles.”

Now, as a policy matter, I tend to agree with the G7-World Bank position here. I think that appropriately tailored and cabined illicit enrichment offenses can be useful tools, and (as others have also pointed out), it’s not true that such offenses have any inherent conflict with the presumption of innocence. Nonetheless, I found the letter an exercise in outrageous, condescending hypocrisy, one that the G7 countries in particular should be ashamed to have written. Continue reading →

Guest Post: An International Anticorruption Court Is Not a Utopian Dream or a Distraction

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Today’s guest post is from Richard Goldstone, a former Justice of the Constitutional Court of South Africa who also served as the first chief prosecutor of the United Nations International Criminal Tribunals for the former Yugoslavia and Rwanda, and Robert Rotberg, the President Emeritus of the World Peace Foundation and former professor at the Harvard Kennedy School of Government.

In a 2018 Daedalus article, Senior United States District Judge Mark L. Wolf explained that “The World Needs an International Anticorruption Court (IACC)” and charted a course for its creation. In a recent post on this blog, Professor Alex Whiting characterized the IACC as a “utopian” dream and possibly “a distraction from more effective responses to the worldwide scourge of grand corruption.” Notably absent from the post is a description of what the other effective responses to combating grand corruption might be.

In contrast to Professor Whiting, we found Judge Wolf’s original proposal for an IACC compelling. Therefore, we joined him in establishing Integrity Initiatives International (III). Continue reading →

Guest Post: The UK’s Compensation Principles in Overseas Corruption Cases–A New Standard for Aiding Victims of Corruption?

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GAB is delighted to welcome back Susan Hawley, Policy Director at Corruption Watch, to contribute today’s guest post:

The issue of whether money from foreign bribery settlements should go back to the people of affected countries has generated a fair amount of heat over the years. Back in 2013, the World Bank’s Stolen Asset Recovery Initiative (StAR) asked whether countries whose people were most harmed by corrupt practices were being left out of the bargain in foreign bribery settlements. According to the StAR study, out of the $6 billion in monetary sanctions imposed for foreign bribery in 395 settlements between 1999 and 2012, only 3.3%, or $197 million, had been returned to the countries where the bribes were paid. Those statistics have provoked considerable controversy, as has the question whether the UN Convention Against Corruption (UNCAC) requires states parties to share money from foreign bribery settlements with affected countries. Yet the fact remains that when the huge fines paid by US and European companies for bribing officials in developing countries go into the treasuries of the US and Europe, while the people of those countries affected by that bribery get nothing, this creates a serious credibility and legitimacy problem for the international anticorruption regime.

For that reason, the UK enforcement bodies’ publication, this past June 1st, of joint principles to compensate overseas victims of economic crime is a welcome development, and provides another opportunity to think again about what is possible and what is desirable in terms of compensating the people of affected countries when companies get sanctioned for paying bribes. The UK Compensation Principles were first mooted and drafted at the 2016 London Anti-Corruption Summit; that Summit’s Joint Communique recognized that “compensation payments and financial settlements … can be an important method to support those who have suffered from corruption,” and led nine countries (though only four from the OECD) to commit to develop common principles for compensation payments to be made “safely, fairly and in a transparent manner to the countries affected.” The UK’s new principles are an effort to fulfill that Summit commitment. They commit the UK’s enforcement bodies to:

  • Consider compensation in all relevant cases;
  • Use whatever legal means to achieve it;
  • Work cross-government to identify victims, assess the case and obtain evidence for compensation, and identify a means by which compensation can be paid in a transparent, accountable and fair way that avoids risk of further corruption; and
  • Proactively engage where possible with law enforcement in affected states.

Interestingly, these principles have been in informal operation since late 2015, which helps shed some light on how these principles are likely to operate in practice. Continue reading →

It’s Time for China to Show Its Foreign Bribery Law is Not a Paper Tiger

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In May 2011, China criminalized the bribery of foreign public officials. More specifically, the 8th Amendment to China’s Criminal Law, among other things, added Article 164(2), which prohibits both natural persons and units (i.e. companies and other organizations) under Chinese criminal jurisdiction from giving “property to any foreign public official or official of an international public organization for the purpose of seeking illegitimate commercial benefit.” This legislative action, intended in part to fulfill China’s obligations as a State Party to the United Nations Convention Against Corruption, was considered an accomplishment given the under-criminalization of foreign bribery in Asia Pacific at the time. Many commentators devoted substantial attention to questions about the law’s meaning, including the definition of almost every term in the provision (“property,” “foreign public official,” “international public organization,” “illegitimate commercial benefit,” etc.—for a sampling, see here, here, here, here, here, or just search for “China Criminal Law 164” using any search engine).

However, almost seven years have passed, and nothing substantial has happened, except for some minor movements related to the law as observed by the media and commentators in some official and unofficial statements (see, for example, here, here, and here). Not a single enforcement action has been brought (or at least publicized) under Article 164(2). Even after President Xi Jinping launched in 2013 the most extensive anti-graft campaign China has ever seen, there have been no foreign anti-bribery enforcement actions.

There are several possible explanations for China’s non-enforcement of 164(2). One possibility, discussed previously on this blog, is that China’s traditional “non-interference” foreign policy might make China reluctant to go after transnational bribery; more generally, China might not be interested in devoting resources to fighting forms of corruption that don’t have domestic effects. Some have also suggested that China has little incentive to enforce its foreign anti-bribery law because bribery of foreign officials gives Chinese firms a competitive advantage in certain jurisdictions. It’s also possible that simple inertia is part of the story: It’s worth keeping in mind that although the U.S. Foreign Corrupt Practices Act (FCPA) was enacted in 1977, almost 80% of the FCPA enforcement actions (amounting to 95% of the total FCPA sanctions) occurred after 2007. Similarly, the UK Bribery Act came into force in 2011, but the first foreign bribery case under that act wasn’t resolved until 2014. South Korea enacted its foreign bribery law in 1999 but didn’t prosecute its first case until 2003, while Japan took even longer, enacting a foreign bribery law in 1998 but not bringing its first case until nine years later, in 2007. In fact, Transparency International observed in 2015 that about half of the then-42 countries taking part in the OECD Convention on Combating Foreign Bribery (to which China is not a party) have not yet prosecuted a single foreign bribery case since the Convention came into force in 1999. So China’s inertia is hardly unique.

Yet regardless of the reasons why China has not enforced its foreign bribery law, and regardless of whether this inaction renders China unusual or typical, it is now high time for China to start enforcing this law aggressively. Doing so is in China’s long-term strategic interests, for three reasons: Continue reading →