Understanding Peru’s New Compliance Program Reform of Law

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Photo Credit: Radio Nacional

By Facundo Galeano, a Legal Fellow with CIPE’s Anti-Corruption and Governance Center

On July 1, 2017, Peruvian law n. 30.424 came into effect. It regulates the administrative responsibility of legal entities for the offence of transnational active bribery. In article 17.1, the law establishes that legal entities can be exempt from liability of the crimes if, prior to the commission of the crime, a compliance program is adopted and implemented in the organization. This new law is intended to help businesses reduce corruption related risks.

According to the new law, a compliance program must appropriately fit an organization’s nature, risks, needs, and characteristics, consisting of appropriate surveillance and control measures to prevent such crimes or to significantly reduce the risk of their commission. Article 17.2 lists all the minimum requirements needed for compliance programs and states that the requirements of the compliance program will be developed in the law’s regulationRead More...

Colombia’s Corruption Conundrum

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Photo Credit: Omar Vera

By Victoria Tellechea-Rotta, a Program Assistant with CIPE’s Latin America and the Caribbean team. 

Across Latin America in the past few years, governments, politicians, and businesses have been implicated corruption scandals. These scandals range from local to multinational, from kickbacks to embezzlement and fraud. Corruption and how to best mitigate it, became a central issue in the wave of executive and legislative elections in Latin America in 2018. Colombia’s recent presidential elections were no exception. Colombia ranks 96th (out of 180) in transparency in Transparency International’s Corruption Perception Index, and scores a 37 (out of 100) in their perceived level of public corruption. On the campaign trail, candidates touted their proposals to eradicate corruption. The eventual winner of the election, President Ivan Duque, ran on a platform of campaign finance reform and budget transparency.

Despite his campaign promises, Duque’s credibility when it comes to combating corruption in Colombia, which recently experienced one of the bloodiest civil wars in Latin America, has been put into question.  Read More...

Corrosive Capital and Strong Economies: The Case of Israel

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Source: CIPE

By Liad Roytfarb, a fellow with CIPE’s Anti-Corruption and Governance Center

In September 2018, a CIPE conference highlighted the growing concern over corrosive capital. Corrosive capital is state-driven capital transmitted from authoritarian countries to different parts of the world that can have negative effects on democratic institutions and private enterprise. CIPE and the international community are mainly concerned about the effect of corrosive capital on developing and emerging countries. These countries are more susceptible to corrosive capital because they need financing and often have fragile democratic institutions and governance gaps. The growing desire of China and Russia for geopolitical power and the fragility of democratic institutions worldwide make it important for individual countries and international organizations to think strategically about the influences of foreign capital. They should scope the problem, understand the risks associated with different capital flows, and work to ensure that proper safeguards are implemented to mitigate the negative effects of corrosive capital.  Read More...

Almaty: Transparency and Corruption Risks in the Urban Environment

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Tselinniy back in the day. Photo Credit: Central State Archive of Film and Photo Documents and Audio Recordings of the Republic of Kazakhstan.

By Caroline Elkin, a Program Assistant with CIPE’s Europe and Eurasia Team

Last week, a court in Almaty, Kazakhstan sentenced the city’s former akim (mayor or governor) Viktor Khrapunov, his wife, stepson, and others on a litany of corruption charges, including fraud, bribe-taking, abuse of power, and illegal privatization of swathes of city property that netted the Khrapunovs $300 million. They also face lawsuits in the U.S. and U.K.

Almaty is in much better hands today than twenty years ago. Bauyrzhan Baibek, akim since August 2015, has poured resources into urban improvements such as pedestrian streets and bike lanes. In keeping with the 100 Concrete Steps program, which outlines Kazakhstan’s reform program in areas such as creating a transparent and accountable state, Almaty launched an online service center and is developing an open data resourceRead More...

Highlighting “Open Contracting for Oil, Gas and Mineral Rights: Shining a Light on Good Practice”

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Photo Credit: Open Contracting Partnership and the Natural Resource Governance Institute

By Peter Glover, an Assistant Program Officer with CIPE’s Anti-Corruption and Governance Center

The Open Contracting Partnership and the Natural Resource Governance Institute jointly released a report called “Open Contracting for Oil, Gas, and Mineral Rights: Shining a Light on Good Practice.” The report is the result of collaborative research on good practices that governments can use to make the allocation and management of oil, gas, and mineral rights more transparent. The report finds that although deals in the oil, gas, and mining sectors amount to billions of dollars over decades, there is little systematic guidance for ensuring transparency in those deals and the processes around them.

Many of the report’s examples of good practices are pulled from OECD countries, but there are also examples from emerging markets like Lebanon, Sierra Leone, and the Philippines. Sierra Leone, for example, discloses the exploration and exploitation contracts between it and industry.  Read More...

Historic UN Bid to Stem Corruption in Guatemala under Dire Threat

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Photo Credit: Eric Walter, Wikimedia Commons

By Frank Brown, the Director of CIPE’s Anti-Corruption and Governance Center

Heads of state, especially from small countries, often wait all year for a chance to take the world stage at the annual September United Nations General Assembly. Presidents, prime ministers, and supreme leaders speak on issues ranging from global climate change to conflict and poverty. This year, Guatemala’s president Jimmy Morales chose to use half of his allotted time in the spotlight to address just one topic: an anti-corruption agency called the International Commission Against Impunity in Guatemala (CICIG). In a broad attack on the agency, Morales accused the UN sponsored CICIG of violating human rights, causing fatalities, and abusing its mandate. He concluded that CICIG had “become a threat to peace in Guatemala.”

President Morales’ statement focused the world’s attention on an issue that has consumed the global anti-corruption community since August, when Morales moved to ban CICIG’s commissioner from returning to the country, and then moved to shut down CICIG completely.  Read More...

Anti-Corruption Protests in Peru and the Evolving Path Forward

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Photo Credit: Associated Press

By Jeanne Cook, a Program Officer with CIPE’s Anti-Corruption and Governance Center

In July 2018, Peruvian citizens marched in the streets of Lima to protest Peru’s latest judicial corruption scandal. Only six months before, former President Pedro Pablo Kuczynski resigned amid allegations that he accepted bribes from Brazilian Construction firm Odebrecht. Faced with the frustration of Peruvian people fed up with the corruption plaguing the government, the current Peruvian President Martín Vizcarra created a new cabinet position, appointing Ms. Susana Silva Hasembank as the Secretary of Public Integrity.

Ms. Silva’s prior experiences make her a strong candidate for the position. She is the former General Coordinator for the High-Level Commission on Anti-Corruption (CAN). Ms. Silva represented Peru in the OECD Anti-bribery working group, and before in the OAS. She worked in various capacities in government, university, and NGO sectors, and she holds an LLM from Warwick University in England as well as a law degree from the Pontificate Catholic University of Peru.  Read More...

The Forum on China-Africa Cooperation and the Importance of Public Procurement Systems

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Photo Credit: Reuters/Noor Khamis

The week of Sept. 3, incredibly, 49 out of 55 heads of African states attended the Forum on China-Africa Cooperation (FOCAC) in Beijing. At this year’s FOCAC, China committed to provide $60 billion in loans, foreign aid, special funds, and private investment to help African states develop over the next three years (read Deborah Brautigam’s breakdown of the types of funding mechanisms). While these commitments represent a tremendous opportunity for African states, they also underline the need to strengthen the procurement and project management capacity of African governments.

The news of China’s continued high-dollar commitment to African states raised concerns of a growing debt trap for African states, or even that China’s investment strategy is a new form of Neocolonialism. Experts worry about the performance and cost of Chinese funded infrastructure projects, as well as the opportunities for corruption. For example, back in August, Kenya arrested two top officials involved with the massive $3+ billion Nairobi-Mombasa railway financed by China.  Read More...

Russian Entrepreneurs on the Red List

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Photo Credit: Taylor & Francis Group

“In contemporary Russia, entrepreneurs might be considered an endangered species,” writes former CIPE intern and current research scholar at George Mason University Yulia Krylova in her new book, Corruption and the Russian Economy: How Administrative Corruption Undermines Entrepreneurship and Economic Opportunities. Just as endangered animals are threatened by poachers and environmental conditions, Russian entrepreneurs face asset seizure and a hostile business climate.

The issues Krylova describes are not new or unique to Russia. Krylova’s research supports existing literature about the relationships between corruption and entrepreneurship, regulatory agencies, gender, and Russia’s recent past. She also builds on research that focuses not on bribe-takers but rather bribe-payers, who are not culturally predisposed to want to pay bribes to get ahead, but rather must pay bribes to ensure their basic property rights. Krylova’s scholarly contribution is an overview of Russian entrepreneurs’ corruption problems.

Two chapters are devoted to how public officials grab assets from business people.  Read More...

Armenia is Due a New Due Diligence Report

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Photo Credit: PanARMENIAN

“In Armenia there is now no corruption,” boldly declared newly elected Prime Minister Nikol Pashinyan. While this is an exaggeration, early, anecdotal evidence shows that corruption in Armenia has decreased since Pashinyan’s Velvet Revolution this spring. This means investment in Armenia may be less financially and legally risky from corruption. Western companies may want to take a fresh look at potential Armenian partners and business opportunities in the country.

Major corruption indexes have not yet quantified these changes. Data from 2017 and 2018 show that corruption in Armenia posed a significant problem to businesses. Nearly a quarter of survey respondents admitted to paying a bribe in 2017, on par with the world average. For years, multiple corruption ratings for Armenia have stagnated close to the average for Eurasia. Observers should watch these indexes over the next year to see if evidence of reduced corruption emerges.

Over the last decade Armenia enacted modest reforms, improving its anti-corruption laws and limiting citizen and business contact with government, which theoretically decreased the risk of corruption.  Read More...