We are facing an unprecedented crisis, and governments around the world have responded with unprecedented actions. In the United States, Congress has responded to the economic disruption caused by the COVID-19 crisis with the $2 trillion CARES Act and the subsequent $484 billion replenishment; still more legislation, allocating even more money for crisis response, is under discussion. When this much money is in play, oversight and fraud prevention are essential. There are already reports of PPP loans meant for small businesses going to larger companies, scammers targeting small business owners, stimulus checks being sent to deceased people, and several other COVID 19 scams. But the current safeguards for preventing fraud, corruption, and abuse in COVID-19 relief spending are woefully insufficient. As negotiations over further relief packages continue, those in Congress who care about government integrity—and the effectiveness of these trillion-dollar programs in achieving their objectives—should insist on correcting these deficiencies. In particular, here are five crucial steps that Congress can and should take to ensure that COVID-19 relief spending helps its intended beneficiaries rather than lining the pockets of grifters and grafters: Continue reading
Today’s guest post is from Nedim Hogic, a PhD candidate at the Sant’Anna School of Advanced Studies in Pisa, Italy, and Arolda Elbasani, Visiting Scholar at New York University. The research on which this post is based was sponsored by Kosovo Open Society Foundation.
In Kosovo, as in the rest of the Balkans region more generally, anticorruption initiatives and institutional solutions have typically been top-down efforts based on templates recommended by international actors and hastily approved by a circle of local political allies. Few of those international initiatives have proved successful, often because the new laws provided enough discretion for political interests to thwart effective implementation. Hence, Kosovo, like much of the rest of the Balkans, seems trapped in a continuous yet futile cycle of international-sponsored institutional- and capacity-building measures, which have not delivered.
The 2018 amendments to Kosovo’s law on the protection of whistleblowers suggests a more promising model of legislative drafting. The amended law stands out for its collaborative and open mode of drafting, involving various international, governmental, and civil society actors, a welcome contrast to the more prevalent pattern of top-down, and largely futile, approach to legal and institutional reform. Continue reading
Last February, Massachusetts Congressman Stephen Lynch introduced the Kleptocracy Asset Recovery Rewards Act (KARRA), which seeks to improve detection of stolen assets housed in American financial institutions by paying whistleblowers for reports that lead to the identification and seizure of these assets. The logic of paying rewards to whistleblowers is straightforward, and nicely summarized in the draft KARRA itself:
The individuals who come forward to expose foreign governmental corruption and kleptocracy often do so at great risk to their own safety and that of their immediate family members and face retaliation from persons who exercise foreign political or governmental power. Monetary rewards and the potential award of asylum can provide a necessary incentive to expose such corruption and provide a financial means to provide for their well-being and avoid retribution.
Paying whistleblowers for information is a sound economic idea. But in light of the cogent explanation for these rewards, the original draft of the KARRA legislation doesn’t go nearly far enough. Indeed, this original proposal provides much weaker incentives and protections for whistleblowers than several other existing US whistleblower rewards programs. It is unlikely that this bill has a real chance of being enacted in the current Congress, but if its introduction this year is a harbinger of a more sustained effort to enact legislation of this kind—and I hope it is—then I also hope that the next time around KARRA supporters will introduce a more ambitious bill, one that provides much higher potential rewards, fewer limitations on which whistleblowers are eligible for rewards, and more robust anti-retaliation protections.
There are many ways to design a whistleblowing program, as demonstrated by the spectrum of existing programs that use whistleblowing to tackle fraud in other domains. We can examine the effectiveness of the proposed legislation through comparison to existing whistleblowing programs:
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:
Michael Petkov, Programme Officer for Transparency International’s Pharmaceuticals & Healthcare Programme, contributes the following guest post:
It will come as no surprise to readers of this blog that the pharmaceutical sector has extensive corruption risks: the sector is extremely complex, with multiple actors, high-value products, large-volume contracts, and a high degree of information asymmetry. But despite these well-known risk factors many actors in the pharma sector are failing to produce and enforce adequate anticorruption policies. Key decision-makers in the pharma sector frequently do not perceive corruption as an important issue and often do not display a genuine commitment to anticorruption efforts.
A recent paper published by Transparency International and the Leslie Dan Faculty of Pharmacy at the University of Toronto identifies several overarching challenges that are hampering efforts to minimize corruption in the pharma sector, and posits key areas for action including the importance of harnessing technology to minimize corruption vulnerabilities and of increasing the monitoring, enforcement, and sanctions of actors. Because of the complexity of the sector, collaboration is essential to making progress on all of these fronts. After all, a key difficulty for tackling corruption in the pharmaceutical sector is the fact that the medicine chain stretches across national borders. It is encouraging that governments came together at the London Anti-Corruption Summit and recognized the need for national institutions to share relevant information with their peers in other countries. Similarly, multi-stakeholder initiatives such as the European Healthcare Fraud and Corruption Network are excellent opportunities for all types of actors to come together, share information, and collaborate with others to take action.
There are two other ways in which greater collaboration is critical for making progress on the fight against corruption in the pharma sector: Continue reading
In spring 2015, at the behest of Kenyan President Uhuru Kenyatta, Kenyan Attorney General Githu Muiagai formed the Task Force on Review of Legal, Policy and Institutional Framework for Fighting Corruption. The group’s goal was to assess the existing framework for combatting corruption in Kenya and to recommend reforms that would promote ethics and integrity while making it easier to fight corruption going forward. Yet for months, very little seemed to be happening, aside from meetings, a speech by President Obama to the Kenyan people on the subject, and some discussion of purported proposals in the press. (I examined one such proposal related to whistleblowers in an earlier post.)
The Task Force released its final report in October 2015 and President Kenyatta received the report the following month, the same week seventy-two government officials were arraigned on corruption charges. In general, the Task Force found (not surprisingly) a high correlation between discretionary power exercised by state actors and corruption. The Task Force said the fight against corruption was more about increasing enforcement of existing laws (although it did not recommend combining the investigative and prosecutorial roles as proposed legislation discussed in Rick’s earlier post would). But the report also proposed three major new legal frameworks, which mirror provisions in U.S. law, that the Taskforce report said would help reduce corruption in the country: Continue reading
In my two posts last week (here and here), I attempted to go through all of the 41 country statements submitted by the participants in the London Anticorruption Summit held earlier this month, to see what those statements had to say about four specific issue areas highlighted by the Summit’s joint Communique: (1) accessibility (and possibly transparency) of beneficial ownership information for companies and other legal entities, (2) public procurement transparency, (3) independence, effectiveness, and transparency of national audit institutions, and (4) whistleblower protection (and encouragement). I didn’t originally intend to say much more about this, other than putting the information out there for others to examine, but on writing up the summaries, I was struck by the following observation:
Of the four issue areas I picked out–all of which, again, were prominently featured in the Communique–I would characterize two (beneficial ownership and, to a somewhat lesser extent, procurement transparency) as relatively “new” topics that have generated a lot of excitement. (This is clearly the case for beneficial ownership; public procurement transparency has been on the agenda for much longer, though I put it in this category because a lot of the focus of discussion in this area has been on relatively new initiatives like e-procurement and the Open Contracting Data Standard.) The other two issues I chose to highlight–independent and competent audits of government programs, and adequate protection of (and, preferably, affirmative encouragement for) whistleblowers–have been part of the conversation for considerably longer, though that doesn’t mean we’ve yet seen anywhere near as much movement on either of those issues as we’d like. And, compared to the newness and (relative) sexiness of topics like beneficial ownership registries and e-procurement initiatives, whistleblower protection and audits seem a bit humdrum. (Audits especially. Even I get bored when I hear the word “audit,” and I happen to think they’re really important.)
The thing that struck me, when going through the country statements, was the dramatic lopsidedness of the attention lavished on beneficial ownership and procurement transparency (to say nothing of other topics I didn’t cover, like corruption in sports and improved asset recovery mechanisms), compared to the relative neglect of country commitments in the areas of improving national audit institutions and whistleblower protections. Continue reading
This post is the second half of my attempt to summarize the commitments (or lack thereof) in the country statements of the 41 countries that attended last week’s London Anticorruption Summit, in four areas highlighted by the Summit’s final Communique:
- Increasing access to information on the true beneficial owners of companies, and possibly other legal entities, perhaps through central registers;
- Increasing transparency in public procurement;
- Strengthening the independence and capacity of national audit institutions, and publicizing audit results (and, more generally, increasing fiscal transparency in other ways); and
- Encouraging whistleblowers, strengthening their protection from various forms or retaliation, and developing systems to ensure that law enforcement takes prompt action in response to whistleblower complaints.
These are not the only subjects covered by the Communique and discussed in the country statements. (Other topics include improving asset recovery mechanisms, facilitating more international cooperation and information sharing, joining new initiatives to fight corruption in sports, improving transparency in the extractive sector through initiatives like the Extractive Industries Transparency Initiative, additional measures to fight tax evasion, and several others.) I chose these four partly because they seemed to me of particular importance, and partly because the Communique’s discussion of these four areas seemed particularly focused on prompting substantive legal changes, rather than general improvements in existing mechanisms.
Plenty of others have already provided useful comprehensive assessments of what the country commitments did and did not achieve. My hope is that presenting the results of the rather tedious exercise of going through each country statement one by one for the language on these four issues, and presenting the results in summary form, will be helpful to others out there who want to try to get a sense of how the individual country commitments do or don’t match up against the recommendations in the Communique. My last post covered Afghanistan–Malta; today’s post covers the remaining country statements, Mexico–United States: Continue reading
Over a century ago, the tales of squalid meat production in Upton Sinclair’s famous novel The Jungle shocked the United States, contributing to a public outcry that ultimately led to regulations requiring a government inspector to examine every single meat carcass intended for human consumption. The U.S. Department of Agriculture’s FSIS (Food Safety Inspection Service) is responsible for the inspection regime. The established assessment program requires multiple FSIS inspectors to be on-site, performing a process of continual, carcass-by-carcass inspection during slaughter. The system is far from perfect and has never been a stranger to scandal (see here, here, and here). Yet it has been seen as vital to safeguarding public health from foodborne illnesses, including e.coli and salmonella outbreaks. It is also backed by a robust legal regime designed to insulate the inspectors from bribery and other forms of improper influence.
Unfortunately, throughout its history, FSIS has faced pressure to favor in-house inspectors over government inspectors in the name of creating a “flexible, more efficient” system. The most recent experiment with limiting the role of FSIS inspectors is HIMP (Hazard Analysis and Critical Control Point-Based Inspection Management Program), a program being piloted in a handful of pork plants and set to be proposed as a final regulation soon. (The related New Poultry Inspection System is being phased in now despite legal challenges.) HIMP uses in-house staff to conduct most of the inspections, particularly early on. A limited number of FSIS personnel do paperwork oversight and spot checks at particular points on the line.
However one chooses to balance competing calls for efficiency and safety, this is a short-sighted idea. Government inspectors and regulatory personnel are not perfect, but they are covered by anti-bribery laws and whistleblower protections that in-house inspectors are not, making them a safer bet for the safety of the meat supply. Filth and disease garner headlines, but civil society should continue to fight for an active role for government inspectors for another reason—public corruption is easier to fight than private influence. Even if one agrees that government inspectors are less efficient (a questionable proposition, despite how often it’s repeated), there are a number of laws and regulations in place designed to prevent (or expose) the corruption of these inspectors by the meat industry; there is no comparable regulatory regime in place to prevent equivalent corruption, or other forms of more subtle improper influence, from distorting the decisions of in-house private inspectors. Consider a few key areas of separation:
As I discussed in an earlier post, Mexico enacted a series of constitutional anticorruption reforms last spring. I praised those reforms for their comprehensiveness and their potential to resolve problems of corruption at the state and local levels. However, I also noted that they required secondary enabling laws to actually go into effect. Until recently, the likelihood of enacting those laws on time looked slim, as the late-May deadline approached with considerable foot-dragging by the legislature. But Mexican civil society has risen to the challenge in an exciting way. Thanks to a 2012 constitutional reform that allows citizens to introduce bills to the legislature with 120,000 signatures (or 1.3 percent the voter rolls), an anticorruption bill has now been delivered to and is being debated by the Mexican Senate.
Called Ley 3de3, the initiative is an extraordinary example of civic engagement. Leading civil society groups have spearheaded the campaign, and universities and even for-profit businesses have gotten involved (see here and here). When the law was first delivered to the Mexican Senate on March 17th, it had over 300,000 signatures. A second installment of almost 325,000 more signatures was delivered nineteen days later. The legislation works to fill a number of important holes in the Mexican anticorruption landscape. For example, it requires public servants to disclose their assets, private interests, and tax returns (the 3-out-of-3 which gives the law its title) and proposes protection for whistleblowers who report corruption. The law faces a number of obstacles before it is passed, and other laws will be necessary to fully enact the National Anticorruption System promised by the constitutional reforms. However, the Ley 3de3 effort should be cause for, at least tempered, optimism. Continue reading