The Role of Academia in Anti-Corruption Collective Action Reply

Last week TRACE joined leading anti-corruption experts and academics from all over the world in Vienna, Austria to discuss effective teaching and pedagogy in anti-corruption studies within institutions of higher learning. The workshop, which was organized by the United Nations Office of Drugs and Crime (UNODC) and formed part of the Anti-Corruption Academic Initiative (ACAD), facilitated the exchange of academic expertise between professors with experience in the delivery of anti-corruption education and those who wish to introduce anti-corruption courses in their institutions.

During the three-day workshop, academics, government officials and anti-corruption professionals with diverse backgrounds, perspectives and experiences shared stories, challenges, resources and teaching methodologies. A major theme that reverberated throughout the seminar was that academics have an increasingly important role to play in advancing the global anti-corruption agenda and that a deeper level of change can result when academics engage in collective action and collaborate with business and government.

Unfortunately, however, anti-corruption studies and research remain in their infancy due to the present lack of inter-disciplinary anti-corruption materials and funding at the donor level. The ACAD, a collective action project formed in 2012 between UNODC, Northeastern University in Boston, the Organization for Economic Co-operation and Development (OECD) and the International Bar Association (IBA), seeks to address these issues mainly by 1) providing the academic community with a comprehensive anti-corruption academic support tool and 2) encouraging the teaching of anti-corruption issues as part of courses such as law, business, criminology and political science. Still, more needs to be done to include academics and researchers in the global fight against corruption. Here’s why:

This post was originally published on the International Centre for Collective Action (ICCA) Blog. Continue reading here.

World Bank Hosts Panel to Discuss Demand-Side Corruption Reply

546px-World-bank-logoOn Monday, June 17, the World Bank hosted a panel discussion on demand-side corruption with Mark Pieth, Chairman of the Organization for Economic Co-operation and Development (OECD) Working Group on Bribery and Nicola Bonucci, the OECD’s Director for Legal Affairs. The panel was moderated by Pascale Dubois, the Sanctions Evaluation and Suspension Officer (EO) for the World Bank.

In introducing demand-side corruption Pieth said that it was an area of anti-bribery that has largely been ignored until recently.  Yet “solicitation of bribes or extortion are an everyday reality in many parts of the world,” Pieth remarked.  One solution to this problem is a joint initiative by the OECD and the Basel Institute of Governance called “the High Level Reporting Mechanism” (HLRM).

The initiative is currently taking the form of a proposal for countries to institute a kind of national ombudsman who would have authority to act on allegations of improper demands by government officials for bribes.  “The idea is to build a second channel next to law enforcement that would inform the government that ‘something is wrong,’” said Pieth.  The concept is based on collective action principles, whereby both the private sector and government, working together, would address allegations of solicitation of bribes.  Pieth remarked that the program was not meant to replace traditional law enforcement roles, but was rather meant to be a type of preventative tool of last resort for companies facing bribery demands.

There are already two pilot programs for the plan being introduced in Colombia and Ukraine.  In an address by the President of Colombia, Juan Manuel Santos, last April, the President introduced Colombia’s High-Level Whistleblowing Mechanism, remarking that the program would work as “a preventive mechanism that could issue early warnings in public procurement procedures” and would be aimed at “gain[ing] in transparency without sacrificing efficiency.”

Although these pilot programs show promise for creatively tackling the issue of demand-side corruption, Pieth admitted that many practical questions remained when trying to implement such a mechanism.  In Ukraine, for example, he said that stakeholders were still trying to figure out whether to make the ombudsman public or private, how to fund the mechanism, and whether it could be applicable to all issues in procurement, such as unfair business practices.  Still, he was hopeful that the mechanism, when ultimately in place, would be a major step in addressing demand-side corruption problems in that country as well.

A few days earlier, at the G8 Plenary Session, World Bank Managing Director Caroline Anstey gave closing remarks on what efforts the Bank is taking to encourage transparency.  Anstey told listeners that the Bank supported implementation of the Extractive Industries Transparency Initiative (EITI) standards, paying particular attention to beneficial ownership information.  “Transparency around beneficial ownership is crucial to halting illicit financial flows, promoting anti-corruption, recovering stolen assets, and combating terrorism financing, tax evasion and other financial crimes,” she said.  Anstey also announced that the World Bank was launching an “Open Contracting Partnership” to increase disclosure and participation in public contracting as well as an “Open and Collaborative Private Sector Initiative” to leverage corporate data and to incentivize governments to increase transparency of their corporate registries.  Anstey also stated that, starting on July 1, 2013, the Bank would begin publishing all contract awards of World Bank Group-executed contracts above $250,000.  Her full remarks can be found here.

5 Ways to Fight Off Anti-bribery Compliance Fatigue Reply

Compliance Fatigue  

2012 Survey conducted by Ernst & Young this past summer indicates that a large portion of Chief Financial Officers are experiencing “a certain degree of fatigue about anti-corruption and compliance initiatives.”  This is not entirely surprising given the fact that companies are currently spending tens of millions of dollars on internal corruption investigations and anti-bribery compliance measures.

Compliance fatigue can, however, be avoided.  Just as one of the best ways to fight off the common flu is simply to practice every day good hygiene like remembering to wash your hands, so too can companies make life easier for themselves by practicing easy, every day compliance solutions.  The key is to streamline the compliance process and adopt cost-effective solutions.  We’ve listed below five ways compliance officers are doing just that and warding off compliance fatigue in their companies:

1.      Remember, perfection is neither possible nor necessary.  When devising a compliance plan, More…

Top 12 of 2012: A look back at the biggest anti-bribery stories from last year 1

Guest blogger Severin Wirz, an attorney specializing in compliance with the Foreign Corrupt Practices Act, reflects back on the most noteworthy anti-bribery developments of 2012.

By Severin Wirz

Snowflake 2013With 2012 behind us, it seems a perfect opportunity to pause and reflect back on the anti-bribery developments of the last twelve months.  So here are TRACE’s “Top 12 of 2012” – all the biggest trends, breakthroughs and scandals of 2012, composed neatly in list form:

12.   Whistleblowers favored – The US government showed just how serious it is about encouraging whistleblowing when the IRS agreed to pay jailed banker Bradley Birkenfeld $104 million in September for information he provided against his former employer UBS.  The payout followed on the heels of the DOJ’s announcement in early August of the creation of an Office of Inspector General Whistleblower Ombudsperson and the SEC’s first whistleblower payout later that month.

11.   Barclays’ woes worsen – It’s been a difficult year for international banking giant Barclays plc.  Four months after settling a $160 million fine over interest rate manipulation, Barclays announced that it was also being investigated by both British and US authorities for potential acts of bribery in Qatar.

10.   UK adopts deferred prosecution agreements –  In October, Britain’s Ministry of Justice declared that it would begin using deferred prosecution agreements (DPAs).  Widely used in the United States, DPAs are expected to encourage more self-reporting and greater certainty for corporations in negotiating settlements with the UK Serious Fraud Office.

9.      Ongoing FCPA sweep of the medical industry – The SEC and DOJ brought no less than 10 separate FCPA-related actions in 2012 against companies in the healthcare sector, including suits against Pfizer, Wyeth, Biomet, Smith & Nephew and Orthofix.  Read more about these cases in the TRACE Compendium.

8.      Twilight of the facilitation payment exception –  Only 6 OECD countries continue to uphold the facilitation payments exception.  Among those is Australia, which this year proposed getting rid of the defense altogether.  TRACE’s 2012 Anti-Bribery Benchmarking Survey indicates that even when legal, companies are increasingly choosing to prohibit employees from making so-called “grease” payments abroad.

7.      Wal-Mart bribery scandal in Mexico – Reminding us of the power of journalism as an anti-corruption tool, the New York Times published a investigative exposé in April revealing that Wal-Mart sought to cover-up millions of dollars in bribes to agents and government officials in Mexico.  The article has since led to a growing probe of Wal-Mart’s activities in other countries as well as a formal investigation by Congress.

6.      DOJ’s FCPA unit suffers trial losses– Prosecutors at the DOJ suffered several surprising FCPA losses this year, including defendant John O’Shea’s acquittal in January, the dismissal of all charges against the African sting defendants in March and the end of the DOJ’s appeal in the Lindsay Manufacturing case in May.  And while the stinging setbacks won’t stop future FCPA prosecutions, it may well embolden more pushback from defense lawyers who now perceive cracks in the DOJ’s enforcement facade.

5.      SEC implements widening net of Dodd-Frank rules – The SEC issued several new rules this past year mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, including disclosure requirements concerning the use of conflict minerals as well as payments made in the extractives industry to foreign governments.  Along with new federal regulations against human trafficking, companies are becoming ever more vigilant against compliance problems that may arise during the course of overseas dealings.

4.      New collective action tools alleviate costs of anti-bribery compliance –Speaking of compliance, for many the two biggest buzzwords of 2012 were “collective action.”  Online platforms such as TRACE’s TRAC tool now allow companies to conduct broader baseline due diligence at a lower cost.  It should come as little surprise, then, that the Basel Institute on Governance launched the International Center for Collective Action (ICCA) in October to serve as a resource hub for companies looking to improve their anti-corruption programs.

3.      Anti-Corruption efforts rev-up in “BRIC” countries – There’s been an undeniable increase in the attention paid to anti-bribery concerns within BRIC countries (Brazil, Russia, India and China) recently.  Over the past year, Brazil’s former presidential chief-of-staff was sentenced to over 10 years in prison in a vote-buying scandal there, Russia entered into the OECD anti-bribery convention, the grassroots anti-bribery movement in India continued to pick up steam, and China’s new leader Xi Jinping voiced renewed resolve to launch an offensive against corruption in his country as well.

2.      Morgan Stanley’s Declination– The DOJ and SEC declined to initiate an enforcement action against Morgan Stanley for violations committed by a “rogue employee.” Not only is the value of a robust compliance program and frequent training confirmed, a true breakthrough in the history of the FCPA, the seldom accepted “rogue employee” defense prevails.

1.      DOJ and SEC publish long-awaited FCPA Guidelines – The hype surrounding the much-anticipated FCPA Guidelines finally proved real when, in mid-November, the DOJ and SEC released their 120-page compilation of information about the FCPA.  And while the Guidelines are by no means game-changing, they have been roundly applauded for providing needed insight into such lingering questions as the definition of a foreign official, what makes for a good compliance program, and what constitutes a facilitation payment.