Zero Tolerance = Mission Impossible? Rethinking AB/C strategies in high risk economies

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Photo Credit: Wikimedia 

A recent Foreign Affairs article by Chris Miller highlighted how “the three-pronged strategy of Putinomics” has worked to keep the current resident of the Kremlin in power:

“First, it focused on macroeconomic stability—keeping debt levels and inflation low—above all else. Second, it prevented popular discontent by guaranteeing low unemployment and steady pensions, even at the expense of higher wages or economic growth. Third, it let the private sector improve efficiency, but only where it did not conflict with political goals.”

Those in the field of anti-corruption should pay close attention to this playbook, especially the third-prong, and consider how it could be used by other autocratic states to appease the population while resisting efforts to hold the corrupt accountable.

This disturbing trend of repressive statecraft should give pause to groups working to make their governments more transparent and accountable, particularly here in Asia, where governments are more and more leaning towards “guardianship” states or worse mimicking the heavy handed styles of Russia and China.  Read More...

Corruption Case Highlights Growing Political Divide in Bangladesh

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Photo Credit: Derek Blackadder via Flickr

On Thursday, February 8th, a Bangladeshi judge convicted Khaleda Zia, the head of the opposition Bangladesh Nationalist Party (BNP) of embezzlement and corruption, sentencing her to five years in prison. Zia has been charged in 37 different incidents over the course of the three decades she’s been in politics, including her two stints as Prime Minister of the country, from 1991-96 and 2001-06. This most recent case is very significant – a sentence of five years could potentially render her ineligible for running for office, as the Bangladeshi Constitution prohibits anyone sentenced to over two years of jail from participating in elections.

While the ruling Awami League Party has proclaimed this case as a victory for the justice system, Zia and other BNP representatives have suggested this trial is politically motivated. International human rights organizations and other political analysts have expressed concerns that this case may just be another move in the battle for political power between Zia and her opponent, current Prime Minister and head of the Awami League, Sheikh Hasina.  Read More...

Corruption in the Nigerian Judiciary – Should Umar’s Arrest Sow Optimism?

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Photo Credit: Feather Project

The fight against corruption in Nigeria has hit a major roadblock as Danladi Umar, the chief judge in Nigeria’s Code of Conduct Tribunal, the counter-corruption court, has been charged with soliciting bribes in exchange for leniency in a ruling in 2012. Umar hurled himself into the media spotlight in June 2017 when he acquitted the Nigerian Senate President Bukola Saraki of 18 charges, 15 of which related to not declaring assets appropriately while state governor and three pertaining to the acquisition of two houses in Lagos. The Economic and Financial Crimes Commission (EFCC) later appealed the ruling and the Court of Appeal ordered a retrial.

High profile arrests like these do not help counter Nigeria’s reputation as a country that suffers from deep-rooted systemic corruption. Nigeria would be prudent to quickly determine the truth behind these allegations to signal to its citizens, its neighbors, and foreign investors that the government does not tolerate corruption.  Read More...

CG Fund: New Investment Tool to Boost Governance Standard

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Most people now accept that good governance is a basis for long-term business success and sustainability. When it comes to investing in stocks, firms with good governance should be seen as relatively safe bets. Wouldn’t it be great if there were funds that handpicked stocks with such desirable qualifications for you?

Thailand’s investment community took a proactive role by introducing mutual funds that limit its investment portfolio to stocks of companies with proven track records of high governance standards and established internal graft-prevention mechanisms.

Some 11 asset management companies, controlling over 90% of the domestic market share, made a joint announcement in August 2017 that they will separately introduce the so-called corporate governance or “CG funds.” So far, 10 funds have been set up, raising over THB 4 billion orUS$125 million from investors.

One unique element of the Thai CG funds is that all 11 asset management companies agreed to contribute 40% of their fund management fees to organizations that promote corporate governance and anti-corruption.  Read More...

Albanian Ponzi Schemes as an Extreme Case for Strong Corporate Governance

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Photo Credit: Robert Nagle, Vlore, Money Lenders,1997

At their height in November 1996, a series of Albanian “Ponzi” schemes held money equal to almost half of the country’s total GDP. The schemes were fronted by a series of companies and charitable foundations that sprung up in newly capitalist Albania and offered monthly interest rates on deposits. Over half of the population rushed to invest in the schemes, some of which promised to triple an investor’s money in three months. The government itself ran advertisements for the schemes on state-run television. According to one observer, the country smelled and sounded like a slaughterhouse because of all the farmers selling off their livestock to invest in the schemes. It seemed as if everybody could get rich quick.

The collapse was predictably swift. On November 19th, 1996, the first scheme collapsed when it could no longer bring in enough deposits to pay previous depositors.  Read More...

Can We Make Anti-Corruption Sustainable?

Photo Credit: CIPE

On December 8th, 2017, the Center for International Private Enterprise (CIPE) and the Partnership for Transparency co-hosted an event that asks, “Can We Make Anti-Corruption Sustainable?” Following a brief introduction by Frank Vogl, Co-Founder of the Partnership for Transparency and Transparency International, Dr. Delia Matilde Ferreira Rubio gave her first speech in the United States following her recent election to Chair of the International Board of Directors of Transparency International. Dr. Rubio discussed her vision and strategy regarding the challenges in the fight against corruption. Dr. Rubio’s speech was followed by a panel discussion moderated by CIPE’s Managing Director Andrew Wilson featuring Dr. Rubio, CIPE Senior Program Officer Frank Brown and Alina Mungiu-Pippidi, Professor of Democracy Studies at the Hertie School of Governance in Berlin.

The full video of the event is below:

The full CIPE Democracy that Delivers podcast featuring Dr. Delia Ferreira Rubio is below:

 

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How Countries Can Overcome Challenges to Enforcing Anti-Corruption Laws

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Photo Credit: CIPE

This podcast was originally posted on CIPE’s Development Blog

OECD’s Drago Kos says passing anti-corruption laws is much easier than enforcing them in most countries. Kos, who chairs the OECD’s Working Group on Bribery, was the guest of CIPE’s “Democracy That Delivers” podcast on January 2, where he discussed the difficulties many nations face when implementing anti-corruption measures. He candidly confirms that it is fairly obvious which OECD countries neglect to enforce anti-bribery conventions, especially abroad. Governments may refuse to act but it’s hardly believable that those country’s companies have never once bribed a foreign public official. Kos shares new details about groundbreaking work the OECD is doing to help foreign governments implement anti-corruption policies, fight poverty, and restore confidence in local markets. The OECD is short for Organisation for Economic Co-operation and Development, has 35 member countries worldwide and works closely with international businesses.

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Will 2018 be the year Mexico starts to tackle its corruption problem?

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Photo credit: GINNETTE RIQUELME / REUTERS

Mexico’s economy did not do particularly well in 2017. In fact, the economic slowdown raises important questions about what politicians throughout the country should be promising in the upcoming July elections and to whom they should feel most accountable. Like much of the Americas this year, corruption will be a major deciding factor at the polls in Mexico. The recent article in Foreign Policy, Corruption is Mexico’s Original Sin written by Luis Rubio not only describes a deeply embedded patronage system of corruption but offers little hope for reform, save for a massive judicial overhaul.

Rubio suggests that despite impressive efforts by anti-corruption activists, Mexican civil society is unlikely to witness Brazil inspired upheaval in their political system; for many years Mexico focused on growing its economy, while Brazil took time to reform its judiciary. Outgoing President Pena Nieto, of longtime ruling party PRI, has earned low approval ratings and widespread contempt due to rampant corruption at the federal and local levels, malfeasance by him and his wife, allegations of espionage, and extreme negligence – particularly in regards to the murder rate of civilians and members of the mediaRead More...

Happy Birthday to the FCPA and OECD Anti-Bribery Convention

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Photo Credit: http://riadzany.blogspot.com/2013_08_01_archive.html

Forty years ago, President Jimmy Carter signed into law a novel statute called the U.S. Foreign Corrupt Practices Act (FCPA). It was the first-ever such statute in the world to govern business conduct abroad and address corruption violations involving bribery of foreign government officials. While the enforcement was initially slow, over time the FCPA gained prominence and became one of the most powerful forces to shape the new global norm: corruption is no longer an acceptable part of doing business.

The landmark corruption case against Siemens brought under the FCPA in 2008 resulted in a record-setting $1.6 billion in fines in the U.S. and Germany. Siemens has since cleaned up its act and put in place an impressive compliance program that not only encompasses the company’s employees but also extends to its suppliers and business partners around the world. This case clearly demonstrated that the key value of the FCPA enforcement is not just penalizing companies for past wrongdoings but incentivizing them to better prevent and detect corruption going forward.  Read More...

The Dilemma of Corporate Governance and Business Ethics in Sudan

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Photo Credit: CIPE

Decades of conflict, civil war, and the secession of South Sudan in 2011, combined with the slump in global oil prices, have had a profound effect on Sudan’s economy and developmental progress. As the country attempts to emerge from conflict and integrate into the global economy following the lifting of sanctions, it must continue to navigate institutional challenges and steady itself in the aftermath of multiple economic shocks. With reduced international investment and a private sector that faces complex obstacles, fighting corruption is paramount to a successful transition and an imperative for future growth.

To this end, CIPE and its local partner, Al Oula, launched an anti-corruption initiative to support the private sector in mitigating corruption at the firm level while engaging in advocacy to promote transparency and limit opportunities for illicit behavior. Dirdeiry M. Ahmed, Ph.D., a passionate advocate for effective, sustainable development in Sudan, delivered a speech at the initiative’s inaugural summit to call attention to the challenges facing the business community in Sudan.  Read More...