Abstract
This chapter explores the causes and consequences of corruption from the perspective of how it impedes and often threatens the entire development equation. This discussion will examine corruption in light of the inter-linkages of a vicious circle of transnational organized crime, financing international terrorism, particularly Islamic-based terrorism, and the corruption of officials within the host government and in the private sector banking industry.
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Notes
- 1.
“Helping Countries Combat Corruption: The Role of the World Bank,” World Bank, Section 2 (September 1997).
- 2.
Id.
- 3.
Id.
- 4.
The following passages were first published in Sarkar (2013), pp. 38–39, 43.
- 5.
See e.g., UK Department for International Development, CRISE Working Paper No. 51 (January 1, 2009), at 3–4; see also USAID , “The Fragile States Strategy,” at 4, (PD-ACA-999) (January 2005).
- 6.
Rotberg (January 7, 2010), p. 87.
- 7.
Id. at 90.
- 8.
See e.g., Adam (1995), pp. 70–76, for a discussion on the collapse of Somalia.
- 9.
In the interest of full disclosure, the author was formerly an attorney with the Office of the General Counsel, USAID, Washington, DC.
- 10.
USAID , “Fragile States Strategy,” supra, at 1.
- 11.
Hamre and Sullivan (2002), p. 85.
- 12.
Rotberg (2010), pp. 95, 96.
- 13.
Dunlop (2004), p. 453.
- 14.
Id. at 87–89.
- 15.
Id.
- 16.
See Fund for Peace, “2018 Fragile States Index,” at 7. Commenting generally on the Index, it was noted that, “[a]mong the other most -worsened countries for 2018, it probably comes as little surprise that Yemen and Syria, both mired in prolonged civil conflicts, continue to worsen. Both countries are now firmly entrenched among the top four countries of the Index, along with Somalia and South Sudan who have also been witness to long periods of conflict. Rounding out the most worsened countries, Venezuela ranks as the third most-worsened country in 2018 as the country spirals into chaos under the epic mismanagement of Nicolas Maduro’s government that is equally further tightening its grip on power, closing civil space and silencing political opposition. Venezuela now boasts the unfortunate distinction of being the second-most fragile country in the Western Hemisphere, behind Haiti. Two other countries under the leadership of increasingly authoritarian presidents, namely Recep Tayyap Erdogan in Turkey and Rodrigo Duterte in the Philippines, also continue to worsen significantly.” Id., J.J. Messner, “Issues of Fragility Touch the World’s Richest and Most Developed Countries in 2018,” at 9. Messner also sounds a cautionary note in terms of adopting illiberal policies and eroding democratic institutions such as currently found in Hungary and Poland as a harbinger of state fragility. Id.
- 17.
Willette (1999), p. 19.
- 18.
Id. at 27.
- 19.
See e.g., OECD, Background Brief, “The rationale for fighting corruption.” (2014).
- 20.
Id., see also Hannah Aulby and Rod Campbell, “The cost of corruption: The growing perception of corruption and its cost to GDP,” Australian Insti. (January 2018). Transparency International publishes an international Corruption Perceptions Index (CPI) every year. The CPI provides a measure of the perception of business people and country experts of the level of corruption in the public sector. It provides an index and ranking for 176 countries, based on data from 13 sources including the African Development Bank, the World Bank and the World Economic Forum. The CPI produces both a score and a rank. The scores are on a scale of 0–100, and countries are then ranked from 1 to 176. Countries with the same score are given equal ranking. Id., at 4.
- 21.
OECD, Background Brief, “The rationale for fighting corruption,” supra, at 4.
- 22.
Julia Barton and Misha Friedman, “Ukraine’s Museum of Corruption,” Pulitzer Center (July 26, 2016).
- 23.
“Ukraine president rolls out special court to try corruption cases,” Reuters (April 11, 2019). See also Andrew Higgins, “Ukraine Approves Anticorruption Court in Bid to Unblock Foreign Aid,” New York Times (June 7, 2018).
- 24.
Konstantin Ash and Miroslav Shapovalov, “How Ukraine’s new president broke down a historic divide,” Wash. Post (May 1, 2019).
- 25.
As of 2018, human trafficking has become a US$3.1 billion business in Africa with illegal migration to Mediterranean countries leaving persons (and children) vulnerable to trafficking and other exploitative practices. The U.S. State Department tracks compliance with the Trafficking Victims Protection Act (TVPA) of 2000 (Public Law 106-386), the Trafficking Victims Protection Reauthorization Acts of 2003 (P.L.108-193), and 2005 (P.L.109-164), respectively. The U.S. State Department’s 2018 Trafficking in Persons Report found that no African country fully meets the TVPA’s minimum standards. See “Africa Lags in Protections against Human Trafficking,” Africa Center for Strategic Stud., Spotlight (July 27, 2018).
- 26.
A few examples of international TOC organizations operating globally include, but certainly are not limited to: the Medellin cocaine drug cartel; the Sicilian mob, the Russian mafia, La Cos Nostra (Italy); Mexican drug cartels; NARC, Yazuka (Japan), Los Zatas, Camorra, Triads (China and the U.S.), and Jao Pho (China).
- 27.
United Nations Convention against Transnational Organized Crime, Annex I, art. 2(a), General Assembly Res. A/RES/55/25 (January 8, 2001).
- 28.
U.S. Department of Justice, “International Organized Crime,” Organized Crime and Gang Section (OCGS), 2018. See generally, Susan Rice, “The New National Security Strategy: Focus on Failed States, Brookings (February 19, 2003), for a summation and analysis of the factors underlying failed and failing states.
- 29.
The U.S. State Department lists “Foreign Terrorist Organizations (as well as those organizations that have been “de-listed”) along with state sponsors of terrorism. As of this writing, the state sponsors listed were: the Democratic People’s Republic of Korea (North Korea), Iran, Sudan and Syria. The listing specifically states: “Countries determined by the Secretary of State to have repeatedly provided support for acts of international terrorism are designated pursuant to three laws: section 6(j) of the Export Administration Act, section 40 of the Arms Export Control Act, and section 620A of the Foreign Assistance Act. Taken together, the four main categories of sanctions resulting from designation under these authorities include restrictions on U.S. foreign assistance; a ban on defense exports and sales; certain controls over exports of dual use items; and miscellaneous financial and other restrictions.
- 30.
The following passages were first published in Sarkar (2013), pp. 63–66.
- 31.
Guilain Denoeux and Lynn Carter, “Draft Guide to the Drivers of Violent Extremism,” prepared for USAID (February 2009), at 51.
- 32.
Id. at vii–ix.
- 33.
In some limited cases, terrorism as a means to establish a new country does succeed. For example, The Saharan Arab Democratic Republic (SADR), was declared to be a state by the Polisario Front in 1976, and is now recognized by many governments and is a full member of the African Union. (See e.g., Safaa Kasroul, “US State Dept Labels Polisario ‘Separatists’ in 2017 Human Rights Report,” Morocco World News (April 23, 2018). Also, after years of using terror as a strategic tool against its ostensible supporters in southern Sudan, the Sudan People’s Liberation Army (SPLA) helped lay the groundwork for South Sudan’s 2011 independence referendum and secession. See e.g., Metelits (2004), p. 65. While Palestine is a very problematic example, its tactics have been viewed as “terrorism,” although it does have nominal international status waiting for full membership as an independent state.
- 34.
See Kilcullen (2009), p. 258. See Michael Scheuer, “The Accidental Guerrilla and the Deliberate Interventionist,” Anti-war.com (April 15, 2009). which states: “The title, The Accidental Guerrilla, refers to those locals living in an insurgent environment who pick up weapons and fight counterinsurgent forces because of tribal mores, because they like to fight, because the West has invaded, or because they are intimidated by what Kilcullen claims to be the limited number of dedicated insurgents or jihadists, in the case of Iraq, Afghanistan, or other Muslim locales.”
- 35.
Kilcullen (2009), p. 14.
- 36.
Id. 15–16.
- 37.
Fanon (2004), p. 94.
- 38.
- 39.
Chayes (2015), p. 9.
- 40.
Id. at 75.
- 41.
Id.
- 42.
Id., at 171.
- 43.
Id. at 148. It may also be noted that this first view roughly corresponds to the political thinking of John Locke (and modern-day U.S. Democrats) while the second view tends to mirror the thinking of Thomas Hobbes (and modern-day U.S. Republicans).
- 44.
Aslan (2010), p. 11.
- 45.
Id.
- 46.
Id. at 5–6.
- 47.
Id. at 12.
- 48.
Sumaya Almajdoub, “Transitional Justice in Tunisia: Challenges and Opportunities,” Maydan (May 29, 2017).
- 49.
Amna Guellali, “Tunisia: Transitional justice in the crosshairs,” Opendemocracy.com (September 8, 2015). See also Human Right Council, “Report of the Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of human rights, particularly economic, social and cultural rights on his mission to Tunisia,” A//HRC/37/54/Add.1 (February 20, 2018), whereby the Independent Expert was directed to pay “particular attention to illicit financial flows, the effects of foreign debt and the policies adopted to address them on the full enjoyment of all human rights,” and to study “the challenges that the Tunisian Government is encountering in the recovery of stolen assets from foreign jurisdictions and its efforts to prevent illicit financial outflows, tax evasion and corruption.” Id. at 3.
- 50.
Elissa Miller and Katherine Wolffe, “Will Tunisia’s Economic Reconciliation Law ‘Turn the Page’?” Atlantic Council (September 29, 2015).
- 51.
“Anger as Tunisia grants amnesty to officials accused of corruption,” The Guardian (September 15, 2017); see also Amna Guellali, “The Law That Could be the Final Blow to Tunisia’s Transition,” Hum. Rts. Watch (May 23, 2017).
- 52.
Amna Guellali, “The Law That Could be the Final Blow to Tunisia’s Transition,” supra.
- 53.
- 54.
Makarenko (2004), pp. 136–137. For example, the Medellin and Mexican drug cartels may support the activities of the FARC of Colombia. Similarly, the Afghan drug mafia may lend financial and logistical support to Al Qaeda and Lash e-Taiba in Pakistan, and the Thai crime network may support the Abu Sayyaf in the Philippines or extremists and radicals in Aceh, Sulawesi and Maluku provinces in Indonesia.
- 55.
See e.g., Ed Vulliamy, “How a tiny West African country became the world's first narco state,” The Guardian (March 9, 2008). Guinea-Bissau is fighting back, however. The West African Coast Initiative, a joint project between UN agencies, Interpol and the regional bloc ECOWAS, began in 2009 to fight drug smuggling, organized crime and drug use in Guinea-Bissau, Guinea, Liberia, Sierra Leone and Ivory Coast. Consequently, drug smuggling in Guinea-Bissau has dropped. See Anthony Lowenstein, “Guinea-Bissau struggles to end its role in global drugs trade,” The Guardian (January 7, 2016).
- 56.
For a fuller discussion of this approach, see Sarkar (2013).
- 57.
The United Nations Global Counter-Terrorism Strategy (A/RES/60/288, September 20, 2006) was adopted by Member States on September 8, 2006. The strategy, in the form of a resolution and an annexed Plan of Action was a unique global instrument designed to enhance national, regional and international efforts to counter terrorism, and resolving to take practical steps individually and collectively to prevent and combat terrorism.
The UN Security Council also took steps to actively prohibit trade with Islamic-based terrorist groups. See e.g., UN Res. 2199 (2015), that was unanimously adopted by the UN Security Council and which condemned any trade with the Islamic State in Iraq and the Levant (ISIL, also known as Daesh), the Al-Nusrah Front and other entities designated to be associated with Al-Qaida under resolutions 1267 (1999) and 1989 (2011). Moreover, this UN Resolution threatened possible further listings for targeted sanctions under those resolutions. This UN Resolution also, inter alia, urged that member countries ensure that their nationals and those in their territories not make assets or economic resources available to ISIL and related terrorist groups. Further, the resolution urged States to prevent the terrorist groups from gaining access to international financial institutions and reaffirmed States’ obligations to prevent the groups from acquiring arms and related materiel, and called to enhance coordination at the national, regional and international levels.
- 58.
For a general overview of extradition treaties, see Kimberly Prost, “Breaking Down the Barriers: Inter-National [sic] Cooperation in Combating Transnational Crime, OAS (2007).
- 59.
See U.S. State Department, Bureau of International Law Enforcement and Law Enforcement Affairs, “2012 International Control Strategy Report (March 7, 2012), which lists the countries that have MLATs with the U.S. The United States also enters into Mutual Legal Assistance Agreements (MLAAs) with China and others. The MLAT and a letter rogatory may be used to gather evidence in a criminal case. (For a civil case, only a letter rogatory is available.) See generally T. Marcus Funk, “Mutual Legal Assistance Treaties and Letters Rogatory: A Guide for Judges,” Fed. Jud. Center (2014).
- 60.
United Nations General Assembly Resolution 54/109 (December 9, 1999); hereinafter referred to as the “International Convention for the Suppression of the Financing of Terrorism (1999)”.
- 61.
See United Nations General Assembly Resolution S/RES/2178 (September 24, 2014).
- 62.
International Convention for the Suppression of the Financing of Terrorism (1999), arts. 4–9. This convention was actually enacted before the 9/11 attacks took place.
- 63.
See “The Global Regime for Terrorism,” Council For. Rels. (August 31, 2011), which states: “The FATF—created in 1989 at a G-7 summit consisting of 36 members to combat money laundering and tasked with countering terrorist financing following September 11—has resulted in countries cleaning up their financing practices to quell or limit terrorist financing within their borders.”
- 64.
See FATF, “Terrorist Financing: FATF’ strategy on combating terrorist financing,” (2018).
- 65.
FATF , “Report to G20 Finance Ministers and Central Bank Governors,” (March 2018).
- 66.
Id.
- 67.
FATF Guidance, “Criminalising Terrorist Financing, Recommendation 5 (October 2016), at 5.
- 68.
Pub. L. No. 107–56, 115 Stat. 272 (2001).
- 69.
Id., at § 302(b)(1).
- 70.
Suppression of the Financing of Terrorism Convention Implementation Act of 2002, Pub. L. No. 107–197, § 202,116 Stat. 724.
- 71.
18 U.S.C. § 2339C.
- 72.
Id. § 2339B.
- 73.
18 U.S.C. § 2333. See generally, Lakatos and Blöchliger (2009), p. 344.
- 74.
Lakatos and Blöchliger (2009), p. 347.
- 75.
See generally, OFAC regulations as set forth in 31 C.F.R. 501, et seq. (2018).
- 76.
Lakatos and Blöchliger (2009), p. 348.
- 77.
ISIS was also referred to as “Daesh” which, “[a]ccording to Arabic translator Alice Guthrie, “D.A.E.SH is a transliteration of the Arabic acronym formed of the same words that make up I.S.I.S in English: ‘Islamic State in Iraq and Syria’, or ‘al-dowla al-islaamiyya fii-il-i’raaq wa-ash-shaam’. It is a term that most Arab states and many European governments use to refer to the Islamic State or ISIS.” However, it is a term that was not approved of by ISIS members themselves as “[d]epending on how it is conjugated in Arabic, the word can mean “to trample down and crush.” But it can also mean “a bigot.” ISIS has reportedly threatened to cut out the tongues of anyone it hears using the term.” See Patrick Garrity, “Paris Attacks: What Does ‘Daesh’ Mean and Why Does ISIS Hate It?” NBC News (November 14, 2015).
- 78.
In 2015, a year after declaring it “caliphate,” ISIS released an anniversary video in which it claimed that 16 of the 35 “provinces” of its state were located outside Iraq and Syria, including one in the Philippines. Hannah Beech and Jason Gutierrez, “ISIS Bombing of Cathedral in Philippines Shows Group’s Reach Into Asia, New York Times (January 28, 2019).
- 79.
“Mapping Militant Organizations: The Islamic State,” Stanford Uni. (October 23, 2017).
- 80.
See Ana Swanson, “How the Islamic State makes its money,” Wash. Post (November 18, 2015). This news report gives a detailed break down of different sources of financing for ISIS.
- 81.
Id.
- 82.
Rukmini Callimachi, “The Case of the Purloined Poultry: How ISIS Prosecuted Petty Crime, New York Times (July 1, 2018).
- 83.
The military dimension of destroying streams of financing for ISIS though bombing campaigns, drone strikes, etc., falls outside the scope of this discussion, but one commentator duly noted that, “[s]ince Operation Inherent Resolve, the military operation against ISIS, began on August 8, 2014, the United States has spent [US] $11.9 billion, or [US] $12.8 million per day as of February 28, 2017, on military operations to defeat ISIS. (Citation omitted.) Although military operations do not typically play a prominent role, nor are they usually the first resort, in countering terrorist financing, they can be effective at destroying the physical infrastructure that undergirds terrorist financing operations.” See Ellie Maruyama and Kelsey Hallahan, “Following the Money: A Primer on Terrorist Financing,” CNAS (June 9, 2017). See generally, Sarkar (2013).
- 84.
UN Security Council Res. 2011 (S/RES/2199) (2015), adopted on February 12, 2015. See also the accompanying UN Press Release dated February 12, 2015.
- 85.
See UN Security Council Res. S/RES/2253 (2015), and the accompanying UN Press Release dated December 17, 2015.
- 86.
Ellie Maruyama and Kelsey Hallahan, “Following the Money: A Primer on Terrorist Financing,” CNAS (June 9, 2017). Additionally, the Obama Administration founded the Counter-ISIL Finance Group (CIFG) in March 2015, and had 36 member states and five observer states dedicated to disrupting ISIS’s fundraising methods. Id.
- 87.
Id.
- 88.
Jason Burke, “Rise and fall of Isis: its dream of a caliphate is over, so what now?” The Guardian (October 21, 2017).
- 89.
Id.
- 90.
Id.
- 91.
Sidney Jones, “How ISIS Has Changed Terrorism in Indonesia,” New York Times (May 22, 2018).
- 92.
Id.
- 93.
Malcolm Cook, “Unexpected Benefits from a Battle Against ISIS,” New York Times (November 5, 2017).
- 94.
Sidney Jones, “How ISIS Got a Foothold in the Philippines,” New York Times (June 4, 2017).
- 95.
Id.
- 96.
Id.
- 97.
Malcolm Cook, “Unexpected Benefits from a Battle Against ISIS,” New York Times (November 5, 2017).
- 98.
Hannah Beech and Jason Gutierrez, “ISIS Bombing of Cathedral in Philippines Shows Group’s Reach Into Asia,” New York Times (January 28, 2019).
- 99.
Charlie Winter and Aymenn al-Tamimi, “ISIS Relaunches a Global Platform: The Sri Lanka bombings were a preview of the Islamic State’s future,” The Atlantic (April 27, 2019).
- 100.
See Joanna Slater and Pamela Constable, “Before the Sri Lanka attacks, much of South Asia seemed resistant to ISIS. Now, it’s reassessing the risks,” Wash. Post (May 3, 2019).
- 101.
Bribery Act 2010, c. 23.
- 102.
15 U.S.C. § 78dd-1 (1977), as amended.
- 103.
UN General Assembly A/RES/55/25 (November 15, 2000).
- 104.
See homepage of United Nations Office on Drugs and Crime (2018).
- 105.
Id.
- 106.
UNCTOC , arts. 5, 6, 7, 8.
- 107.
UN General Assembly A/RES/55/25, supra.
- 108.
General Assembly Resolution A/RES/55/25, entered into force on December 25, 2003.
- 109.
General Assembly Resolution A/RES/55/25, entered into force on January 28, 2004.
- 110.
General Assembly Resolution A/RES/55/255 (May 31, 2001) entered into force on July 3, 2005.
- 111.
“The Global Regime for Transnational Crime,” Council For. Rels. (June 25, 2013).
- 112.
Id. For a detailed assessment of various TOC crimes, and an examination of the value and dynamics of the transnational market, and how it impacts developing countries, see Channing May, “Transnational Crime and the Developing World,” Global Fin. Integrity (March 2017).
- 113.
“The Global Regime for Transnational Crime,” Council For. Rels., supra.
- 114.
The United States of America was one of only 7 nations (joining China, Iraq, Libya, Yemen, Qatar and Israel) to vote against the Rome Statute of the International Criminal Court in 1998. See “The United States and the ICC,” Hum. Rts. Watch (2018). See also David Davenport, “Will The International Criminal Court Prosecute Americans Over Afghanistan?” Forbes (March 26, 2018), where the prosecutor for the ICC, Fatou Bensouda, has reportedly sought permission from a three-judge panel to “investigate alleged crimes committed by all parties—the Taliban, ISIS, Afghan security forces, warlords, the US-led coalition and others—in the lengthy war in Afghanistan.” If she is allowed to proceed, “this will be the first time that Americans—presumably soldiers, perhaps CIA operatives—would face the real possibility of prosecution before the ICC. Even though the US is not a member of the Court, the ICC claims to have jurisdiction over crimes committed on the territory of a member nation such as Afghanistan. Adding to the drama, the prosecutor also seeks permission to investigate related crimes in Poland, Romania and Lithuania, which would raise questions of detention and torture in the interrogation of prisoners there.” It should be noted, however, that “the American Service-Members Protection Act of 2002—sometimes referred to as The Hague Invasion Act—actually prohibits the US from cooperating with the ICC. Beyond that, however, there is also an important jurisdictional question since Afghanistan signed a bilateral Status of Forces Agreement with the US in which it agreed not to turn over American soldiers to the ICC. The US could argue that this agreement precludes action against US soldiers before the Court.” Id.
However, as of April 5, 2019, the ICC prosecutor’s visa was revoked by the U.S. State Department, thus calling the efficacy of her future attempts at prosecuting these matters into question. See “U.S. Revokes Visa of I.C.C. Prosecutor Pursuing Afghan War Crimes,” New York Times (April 5, 2019). However, this story took an unexpected turn when the ICC ruled that its chief prosecutor, Fatou Bensouda, can open a wide-ranging investigation into possible war crimes committed by U.S. troops, Afghan armed forces and the Taliban in Afghanistan. This ruling came on the heels of the U.S. signing a peace treaty with the Taliban initiating, in principle, the withdrawal of U.S. troops from Afghanistan within the next 14 months. See e.g., Susannah George, “International Criminal Court approves investigation of possible war crimes in Afghanistan involving U.S. troops,” Wash. Post (March 5, 2020).
Further, the ICC at its formation in 2002 asserted jurisdiction over “international crimes” such as war crimes, crimes against humanity and genocide. It left open the idea of exercising its jurisdiction over “transnational crimes” such as terrorism, arms dealing and human trafficking. In cases where there is no extradition treaty or the transnational crimes are committed by rogue actors or states, asserting criminal jurisdiction by the ICC may establish a judicial forum in which to prosecute such crimes. See e.g., Clark (2016).
- 115.
UN Gen. Ass. Res. 58/4 (October 31, 2003), entered into force on December 14, 2005.
- 116.
See UNCAC, homepage.
- 117.
Hannes Hechler, “UNCAC in a nutshell: A quick guide to the United Nations Convention against Corruption for embassy and donor agency staff,” U4 Anti-Corruption Resource Centre (Updated, May 2017), at 4.
- 118.
Id., at 5.
- 119.
OECD DAC Revised Principles for Donor Action in Anti-Corruption,” DCD/DAC/GOVNET/RD(2005)1/RD2 (April 2005), at 2.
- 120.
Jonathan Glennie, “Yes, the Paris declaration on aid has problems but it’s still the best we have,” The Guardian (November 18, 2011).
- 121.
See UNCAC, at its “Money Laundering” webpage.
- 122.
Sanders and Sanders (2004), pp. 51–52.
- 123.
“Indonesia’s Anticorruption Measures Under Review by United Nations,” Jakarta Globe (October 9. 2017). See UNCAC, “Review of implementation of the United Nations Convention against Corruption,” CAC/COSP/IRG/2018/CRP.5 (April 25, 2018), at 7–8 on money laundering. See generally, Sulhan et al. (June 2011), p. 384, for a detailed study of the relationship between money laundering and corruption in Indonesia.
- 124.
“Indonesia seeks to limit cash transactions to fight bribery,” Reuters (April 18, 2018).
- 125.
Foreign Corrupt Practices Act of 1977, Pub. L. No. 95-213, 91 Stat. 1494, codified at 15 U.S.C. § 78dd-1, et seq.
- 126.
See “OECD Convention Combating Bribery of Foreign Public Officials in International Business Transactions,” 37 I.L.M. 1 (December 17, 1997).
- 127.
Pub. L. No. 105-366, 112 Stat. 3302 (1998) (codified at 15 U.S.C. §§ 78dd-1 to -3, 78ff). See generally, Alstine (2012), p. 1321.
- 128.
Id. at 1327.
- 129.
15 U.S.C. § 78dd-3(a) (2006).
- 130.
15 U.S.C. § 78dd-2(i)(2) (2006).
- 131.
See 15 U.S.C. § 78dd-2(i)(1) (2006).
- 132.
Nathan M. Jensen and Edmund J. Malesky, “This is what helps stop big corporations from bribing politicians,” Wash. Post (March 7, 2018).
- 133.
Id.
- 134.
See Press Release, The World Bank, “Corruption is ‘Public Enemy Number One’ in Developing Countries, says World Bank Group President Kim,” (December 19, 2013).
- 135.
See Press Release, The World Bank, “World Bank Launches Voluntary Disclosure Program,” (August 15, 2006). The World Bank also broadly cites the entry into force of the U.N. Convention Against Corruption (UNCAC) and the OECD Anti-Corruption Convention as creating a legal environment making corrupt and non-transparent practices more vulnerable to prosecution. See World Bank, “Frequently Asked Questions About the VDP,” at the World Bank Voluntary Disclosure Program website.
- 136.
The scope of the VDP also includes firms, other entities, or individuals who have entered into, been a party to, or were involved in the procurement and selection process for contracts related to projects financed or supported by the International Development Association (IDA ), International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). See World Bank, “Frequently Asked Questions About the VDP,” at the World Bank Voluntary Disclosure Program website.
- 137.
World Bank Sanctions Procedures, Appendix.
- 138.
Roberts et al. (2015), p. 7.
- 139.
VDP Guidelines for Participants, § 4. See also Roberts et al. (2015), p. 10.
- 140.
See World Bank, “Frequently Asked Questions About the VDP,” at the World Bank Voluntary Disclosure Program website.
- 141.
Id.
- 142.
Roberts et al. (2015), p. 6.
- 143.
Id., at 6–7.
- 144.
Id., at 7.
- 145.
48 C.F.R. § 9.402(b).
- 146.
48 C.F.R. § 9.406-1(a).
- 147.
Roberts et al. (2015), p. 7.
- 148.
48 C.F.R. § 9.406-1(a).
- 149.
World Bank Sanctioning Guidelines, art. 5 (Mitigating factors); see also World Bank Sanctions Procedures, § 9.02, (Jan 1, 2011).
- 150.
World Bank Sanctioning Guidelines, art. 4 (Aggravating Factors).
- 151.
Agreement for Mutual Enforcement of Debarment Decisions, (April 9, 2010).
- 152.
Roberts et al. (2015), p. 9.
- 153.
See Yukins (2013), p. 223 and at footnotes 24, 25. Footnote 25 states: “Exec. Order No. 12,689, 3 C.F.R. 235 (1989) (“[T]he debarment, suspension, or other exclusion of a participant in a procurement activity under the Federal Acquisition Regulation, or in a nonprocurement activity under regulations issued pursuant to Executive Order No. 12549, shall have government-wide effect. No agency shall allow a party to participate in any procurement or nonprocurement activity if any agency has debarred, suspended, or otherwise excluded (to the extent specified in the exclusion agreement) that party from participation in a procurement or nonprocurement activity.”).
- 154.
VDP Guidelines for Participants, § 7.
- 155.
Id., § 5.8.
- 156.
Bribery Act 2010 c. 23.
- 157.
The Bribery Act 2010, Guidance (March 2011), § 9, at 8.
- 158.
Id., § 10, at 8.
- 159.
Geoffrey Gauci, Jessica Fisher-Bristows, “The UK Bribery Act and the US FCPA: the Key Differences,” Ass’n Corp. Counsel (June 1, 2011).
- 160.
Id.
- 161.
The Bribery Act 2010, Guidance (March 2011), § 13, at 9.
- 162.
Geoffrey Gauci, Jessica Fisher-Bristows, “The UK Bribery Act and the US FCPA: the Key Differences,” Ass’n Corp. Counsel, supra.
- 163.
Id. See also Bribery Act 2010, Guidance (March 2011), § 36, at 15–16.
- 164.
The Bribery Act 2010, Guidance (March 2011), § 16, at 9.
- 165.
Id., § 22. See also § 21.
- 166.
Serious Fraud Office, “Sweett Group PLC sentenced and ordered to pay [UK] £2.25 million after Bribery Act conviction,” News Release (February 19, 2016).
- 167.
Walker Morris, Legal Update—May 2016, “First ever corporate conviction under the UK Bribery Act,” (May 5, 2016).
- 168.
Id.
- 169.
Id.
- 170.
Allen and Overy, Publications, “Lessons from the first s7 UK Bribery Act case,” (April 14, 2016).
- 171.
Marcel Gade, “Home Sweett Home? Sweett Group and the UK Bribery Act,” Col. J. Eur. L. (Blog) (April 16, 2016).
- 172.
Id.
- 173.
Baker McKenzie, Global Compliance News, “UK: “Adequate procedures” and self reporting under the spotlight as jury rejects Section 7 defense,” (May 14, 2018).
- 174.
Id. See also, Burges Salmon, “First case on Bribery Act’s ‘adequate procedures’ defense: five things you need to know,” (March 20, 2018); see generally, “Bribery Act 2010: Joint Prosecution Guidance of The Director of the Serious Fraud Office and The Director of Public Prosecutions,” (2018).
- 175.
Bribery Act 2010 c. 23, Sec. 1.
- 176.
Id., § 5(1), the so-called “Expectation Test.”
- 177.
Id., §§ 1 and 2, respectively.
- 178.
See Geoffrey Gauci, Jessica Fisher-Bristows, “The UK Bribery Act and the US FCPA: the Key Differences,” Ass’n Corp. Counsel, supra.
- 179.
See 15 U.S.C. § 78dd-1(b) and (c)(2) (2006). Section 78dd-1(b) specifically provides an exemption for “routine governmental action” with respect to “any facilitating or expediting payment to a foreign official, political party, or party official the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official, political party, or party official.” Section 78dd-1(c)(2)(A) and (B), respectively provide an affirmative defense of the payment, gift, offer, or promise of anything of value that was made, was a reasonable and bona fide expenditure, such as travel and lodging expenses, incurred by or on behalf of a foreign official, party, party official, or candidate and was directly related to— (A) the promotion, demonstration, or explanation of products or services; or (B) the execution or performance of a contract with a foreign government or agency thereof.” There is an increasingly more policy resistance to this FCPA exception, see generally, Strauss (2013), p. 235.
- 180.
See Geoffrey Gauci, Jessica Fisher-Bristows, “The UK Bribery Act and the US FCPA: the Key Differences,” Ass’n Corp. Counsel, supra.
- 181.
Id.
- 182.
On November 8, 2016, the French Parliament passed a law targeting transparency, and anti-corruption, known as the “Sapin II Law.” This law entered into force on June 1, 2017, and mirrors the UK and U.S. approaches to anti-corruption measures. The law requires companies to establish an anti-corruption program to identify and mitigate corruption risks, and renders any legal or natural person criminally liable for offering a donation, gift or reward, with the intent to induce a foreign public official to abuse his/her position or influence to obtain an undue advantage. Most notably, the Sapin II law gives expanded extraterritorial effect to French criminal law, whereby prosecution of corruption may take place in French courts regardless of whether an official denunciation is made by the state in which the alleged breach occurred or whether any complaint is filed by the alleged victims of the crime. See “Anti-Corruption Legislation: Sapin II,” GAN Business Anti-Corruption Portal (2018).
- 183.
15 U.S.C. §§ 78dd-1, 78dd-2, 78dd-3m (1977), as amended.
- 184.
See generally, Treinski (2013), p. 1201; Demas (2011), p. 315; George and Lacey (2000), p. 547; Dunderdale (2015), p. 261. See also Solomon (2013), p. 901, who states, inter alia: “Settlement agreements also pose a concern that an entire area of law may develop with a lack of judicial review because such review over settlement agreements is limited. Like the United States and the United Kingdom, India is a common law country, and it will suffer from any detriment to the development of an FCPA judicial body of law resulting from the use of settlements.... India might address the concern by establishing some sort of independent oversight body that would approve of cases. Alternatively, Indian courts may play a more active oversight role agreements than U.S. courts play in FCPA enforcement. In fact, there are indications that U.K. enforcement authorities intend to address the shortcomings of DPA [deferred prosecution agreement] and other settlement agreements by adopting a more judicial oversight. Additionally, Indian enforcement authorities may consider tracking implementation of settlement agreements through some sort of performance measures.” Id. at 950. Another approach to consider is to enter into a consent decree or its equivalent. “A consent decree is a settlement that is contained in a court order. The court orders injunctive relief against the defendant and agrees to maintain jurisdiction over the case to ensure that the settlement is followed. (Injunctive relief is a remedy imposed by a court in which a party is instructed to do or not do something. Failure to obey the order may lead the court to find the party in contempt and to impose other penalties.) Plaintiffs in lawsuits generally prefer consent decrees because they have the power of the court behind the agreements; defendants who wish to avoid publicity also tend to prefer such agreements because they limit the exposure of damaging details.” See legal-dictionary.com, definition of consent decree.
- 185.
Anecdotally, over 68% of 85 alleged violations of the FCPA (circa 2010) occurred in emerging markets, as defined by S&P. See Spalding (2010), p. 375.
- 186.
15 U.S.C. § 78dd-3(a), See generally, “FCPA: A Resource Guide to the U.S. Foreign Corrupt Practices Act,” Criminal Div. US Dep’t of Justice & Enforcement Div., U.S. Securities & Exchange Comm’n (November 14, 2012), at 11.
- 187.
Id. at 11.
- 188.
“For example, a “foreign official” has been interpreted to include employees and officers of state-owned companies and sovereign wealth funds. Additionally, the statute has been interpreted as applying to cases of bribery by non-U.S. companies abroad if the scheme’s primary connection to the U.S. is a financial transfer through a bank in the U.S. Moreover, the FCPA has been interpreted as applying to parent companies and entities that were not directly involved in the corrupt conduct but had an ownership interest in or control over the FCPA violator. The FCPA further imposes liability on individuals who may not have had direct knowledge of the bribery scheme, but were “willfully blind” to it or consciously avoided acquiring knowledge of the scheme.” See “The FCPA, the Financial Industry and the Money Laundering Laws,” Ethisphere (September 24, 2013).
- 189.
This discussion will not focus on the civil liability that may be incurred for aiding, abetting and causing FCPA violations, nor will the text discuss the accounting provisions of the Act in the interest of streamlining and clarifying the discussion. Moreover, please bear in mind that the FCPA is only one of several interlocking U.S. laws that may be deployed by federal prosecutors, including, but not limited to, the Racketeering Influenced Corrupt Organizations (RICO) Act, 18 U.S.C. § 1961, et seq., (1970); the Asset Forfeiture and Money Laundering Act, 18 U.S.C. § 1956 (1986); and, the Electronic Communications Privacy Act, 18 U.S.C. § 2510 (1986).
- 190.
15 U.S.C. §§ 78dd-1, 78dd-2, 78dd-3m (1977), as amended. Under the FCPA, the DOJ and the SEC have jurisdiction over several categories of U.S. and non-U.S. entities and individuals. First, U.S.- and foreign-based issuers, as well as U.S. citizens, nationals, residents, and U.S.-based entities, are subject to FCPA jurisdiction if they “use... the mails or any means or instrumentality of interstate commerce” “in furtherance of” a proscribed foreign bribery offense. 15 U.S.C. §§ 78dd-1(a), 78dd-2(a). Under this theory of “territorial” jurisdiction, in order for jurisdiction to attach, a corrupt act must have a nexus to the territory of the United States. Second, foreign entities (other than issuers) and individuals also are subject to “territorial” jurisdiction if they “corruptly... make use of the mails or any means or instrumentality of interstate commerce,” or if they “commit any other act in furtherance of” a corrupt payment, “while in the territory of the United States.” Id. § 78dd-3(a). Third, U.S.-based issuers as well as U.S. citizens, nationals, residents, and U.S.-based entities are subject to jurisdiction for corrupt payments, or acts in furtherance of such payments, committed anywhere in the world. Id. §§ 78dd-1(g), 78dd-2(i). Under this “nationality” jurisdiction, the United States can assert jurisdiction by virtue of an entity’s organization under U.S. laws, or an individual’s U.S. nationality, citizenship, or residency.
- 191.
Elkan Abramowitz and Jonathan Sack, “How the FCPA Applies to Private Companies,” 257 NY Law J. (May 9, 2017). Since 2006, 78% of the individuals charged with FCPA violations were employees of private business organizations, and 77% prosecutions were brought against publicly traded corporations. Id.
- 192.
“FCPA: A Resource Guide to the U.S. Foreign Corrupt Practices Act,” Criminal Div. US Dep’t of Justice and Enforcement Div., U.S. Securities & Exchange Comm’n (November 14, 2012), at 68.
- 193.
Id. See also 15 U.S.C. §§ 78dd-2(g)(1)(A), 78dd-3(e)(1)(A), 78ff(c)(1)(A).
- 194.
Id. at 14.
- 195.
William V. Roppolo and Joseph Mamounas, “Are Money Laundering Laws DOJ’s Tools in Expanding Reach of FCPA?” Corp. Counsel (November 19, 2012.) Cf. Mann and McLean (April 3, 2017), pp. 553 at 2–3, for a discussion on whether employees of foreign sovereign wealth funds may be considered “foreign officials” under the FCPA.
- 196.
See e.g., 18 U.S.C. §§ 1956, 1957.
- 197.
See U.S. Department of Justice, Press Release, “Five Former Venezuelan Government Officials Charged in Money Laundering Scheme Involving Foreign Bribery,” (February 12, 2018).
- 198.
Id.
- 199.
Evan Krick, “DOJ Employs Money Laundering Statute to Prosecute Venezuelan Oilmen for Foreign Bribery,” Money Laundering Watch (February 14, 2018).
- 200.
Id.
- 201.
See U.S. Department of Justice, Press Release, “Former Armenian Ambassador and a Russian National Charged in Foreign Bribery and Money Laundering Scheme,” (May 24, 2018).
- 202.
Id.
- 203.
Id.
- 204.
Id.
- 205.
See U.S. Department of Justice, Press Release, “UK Solicitor Pleads Guilty for Role in Bribing Nigerian Government Officials as Part of KBR Joint Venture Scheme, (March 11, 2011).
- 206.
Id.
- 207.
See e.g., Chris Baltimore, “Ex-KBR CEO gets 30 months for Nigeria scheme,” Reuters (February 23, 2012). In an extraordinary exchange with the U.S. district judge, Mr. Tesler stated, in part: “I turned a blind eye to what was happening and I am guilty of the offenses charged. In hindsight, I should have withdrawn immediately from the actions which I undertook and rejected the terms that were offered to me by the TSKJ joint venture to facilitate bribes to high-ranking Nigerian officials, although it would not have been easy to extricate myself without risking the lives of myself and my family. I have had a lot of time to reflect and there is no day when I do not regret my weakness of character and being caught up in a violent military culture with customs that are harmful to the social fabric and breach of laws.” See Richard Cassin, “Jeffrey Tesler: ‘I have nothing to live for except to seek forgiveness,’” FCPA Blog (September 11, 2012).
- 208.
50 U.S.C §§1701-1707 (1977).
- 209.
50 U.S.C. App. §§ 1—44.
- 210.
See e.g., On October 14, 2016, President Obama issued a Presidential Policy Directive (not an EO) on Cuba which stated in relevant part: “The United States Government will seek to expand opportunities for US companies to engage with Cuba. The embargo is outdated and should be lifted. My administration has repeatedly called upon the Congress to lift the embargo, and we will continue to work toward that goal. While the embargo remains in place, our role will be to pursue policies that enable authorized US private sector engagement with Cuba’s emerging private sector and with state-owned enterprises that provide goods and services to the Cuban people.” See Presidential Policy Directive—United States-Cuba Normalization, Sec. V.3 (October 14, 2016).
- 211.
See generally, “Legal Bases for Iran Sanctions, Cuba Sanctions, and NAFTA,” Lexology (January 4, 2017). EOs may, of course, be challenged in court, typically on the grounds that the order deviates from “congressional intent” or exceeds the president’s constitutional powers.
- 212.
Id.
- 213.
Id.
- 214.
See generally, U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) website (2018).
- 215.
See generally, White & Case, “Global investigations: reading the signals,” at 14–16 (October 15, 2014).
- 216.
See U.S. Department of Justice, Press Release, “Crédit Agricole Corporate and Investment Bank Admits to Sanctions Violations, Agrees to Forfeit [US] $312 Million,” (October 20, 2015).
- 217.
Id.
- 218.
See E.O. 13288 (March 6, 2003).
- 219.
See U.S. Department of Justice, Press Release, “Chicago Man Sentenced to 15 Months in Prison for Violating U.S. Sanctions Against Zimbabwe President Mugabe and Others,” (January 20, 2015).
- 220.
Jason Meisner, “Chicagoan sentenced to prison for illegally lobbying for Zimbabwe,” Chicago TRI. (January 20, 2015). On August 8, 2018, President Trump signed the Zimbabwe Democracy and Economic Recovery Amendment Act of 2018 (S 2779) into law, which amends the Zimbabwe Democracy and Economic Recovery Act of 2001. The law extends U.S. sanctions against Zimbabwe which were first imposed in 2001, and effectively sanctions President Emmerson Mnangagwa’s government following post-election violence where seven lives were lost after soldiers fired upon civilians in the crowded streets in Harare, the nation’s capital. See Everson Mushava, “Trump renews Zim sanctions,” Newsday (August 10, 2018). See also U.S. Department of State, “U.S. Relations With Zimbabwe,” (July 20, 2018); Michael O’Kane, “EU renews Zimbabwe sanctions until 20 February 2019,” as pursuant to EU Council Decisions (CFSP) 2018/224. This decision to keep sanctions in place was taken so that the situation in Zimbabwe (given the change in leadership in December 2017) could become clearer.
- 221.
James Ludden, “Your Guide to the World Cup’s Corruption Scandals,” Bloomberg (June 13, 2018).
- 222.
See U.S. Department of Justice, Press Release, “Nine FIFA Officials and Five Corporate Executives Indicted for Racketeering Conspiracy and Corruption,” (May 27, 2015).
- 223.
Id.
- 224.
See e.g., “Swiss prosecutor appeals for cooperation on FIFA case file,” USA Today (April 20, 2018).
- 225.
See U.S. Department of Justice, Press Release, “Nine FIFA Officials and Five Corporate Executives Indicted for Racketeering Conspiracy and Corruption,” supra.
- 226.
See U.S. Department of Justice, Press Release, “Sixteen Additional FIFA Officials Indicted for Racketeering Conspiracy and Corruption,” (December 3, 2015).
- 227.
Graham Dunbar, “FIFA finances show loss of [US] $369 million US last year,” CBC (April 7, 2017).
- 228.
Andrew Hughes, “The World Cup has become such a toxic brand that Western companies are choosing not to advertise with it,” Independent (June 18, 2018).
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Sarkar, R. (2020). Corruption and Its Consequences. In: International Development Law. Springer, Cham. https://doi.org/10.1007/978-3-030-40071-2_8
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