Tag Archives: combating corruption

New Banditry, New Solutions

Kennan Institute event

Faced with a corrupt judicial system, what strategies do Russian businesses employ to resolve business disputes?  Lately, less murder and more litigation.

Faced with multinational firms who are liable under U.S. and U.K. laws for their Russian partners’ corrupt practices, how do Russian businesses gain access to international partners? Start putting in place anti-corruption compliance programs.

Those were some of the answers that came from experts from Russia and the U.S. had some answers at a recent panel discussion co-hosted by CIPE and the Kennan Institute, “Corruption and Business in Russian: National Problem, Regional Solutions.” Jordan Gans-Morse, an assistant professor of political science at Northwestern University, presented the results of his innovative research on how non-oligarchic firms are surviving in an atmosphere of endemic corruption. Against this backdrop, CIPE Moscow Program Officer Natalya L. Titova, joined by CIPE partners from St. Petersburg, Chelyabinsk, and Kaliningrad, spoke about a CIPE program in Russia that is helping regional businesses to meet international anti-corruption standards in order to join global value chains.


Helping Afghanistan’s Provincial Councils Fight Corruption and Improve Governance

Kunar PC 2 Jan 22 2014

To improve local governance in Afghanistan, CIPE conducts training seminars for the Provincial Councils in Afghanistan on democratic governance and market economics, including topics like advocacy, corruption, and the informal economy. Using the knowledge gained from the seminars, many of the Provincial Councils have taken on issues affecting their communities.

CIPE recently discussed the efforts of the Kunar Provincial Council with Chairperson Haji Mia Hassan. After discussing corruption issues with local government officials, the Kunar Provincial Council filed corruption cases against several officials with the prosecutor’s office, including the director of the Customs Department and the Director of Haj and Endowments.


Current Trends in the Relationship Between Boards and Compliance Officers

boardrelationshipBy Hyeji Kim

Any corporate compliance program needs a strong relationship between the board of directors and the compliance and ethics officer in order to be effective. In 2010, the Society of Corporate Compliance and Ethics (SCCE) and the Health Care Compliance Association (HCCA) conducted a study which showed that the relationship between the Chief Ethics and Compliance Officers (CECOs) and boards of directors was much weaker than it should be. In 2013, SCCE conducted the study again to see if there were any changes.

The recently published 2013 study, based on over 600 responses from compliance and ethic professionals in the SCCE and HCCA database, seems to be on a much brighter note with generally positive findings.


How Brazil’s Clean Companies Act will Affect Emerging Markets


As my colleague Anna Nadgrodkiewicz recently discussed on this blog, corruption is a preeminent threat to developing countries.  In Brazil, corruption has been estimated to cost somewhere around $53 billion (approximately 2.3 percent of GDP) in 2013 alone.  Because this loss has a corrosive effect on democratic governance and the country’s ability to deliver continued improvement, Brazilians took to the streets in massive protests.  As a result the government of Brazil passed the “Clean Companies Act” which began being enforced on January 29.

The new law, like similar legislation in other countries, establishes corporate liability for corrupt practices committed by Brazilian companies as well as foreign companies that have branches or affiliates within the country.  Under the act, companies that bribe public officials (foreign or domestic) can be subjected to civil and administrative sanctions including heavy fines, prohibition on receiving state funds, and even dissolution of the firm.  The fact that Brazilian president Dilma Rouseff exercised her line-item veto power to make the law more strict than originally drafted seems to signal to the world that Brazil is serious about reining in corruption.

In the wake of the passage of the Clean Companies Act, much talk erupted over the implications for international trade.  Since the law closely resembles existing anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the UK Bribery Act, experts have warned that companies operating in the region can expect Brazilian authorities to cooperate more closely with their counterparts in the US during investigations.

More general discussion has involved the importance of solid compliance programs in multi-national companies (MNCs) if they are to avoid any run-ins with the law.  However, such commentary ignores a large audience that should take note of this development: developing countries.


Can Protests Change Society?


On Monday, Americans honored the life and legacy of Dr. Martin Luther King, Jr., whose nonviolent activism helped achieve the promise of civil rights for millions of black Americans.

Today, a new generation of activists around the world are using similar nonviolent tactics to try to achieve their own form of social change. In 2013, massive street protests erupted in Ukraine, Mexico, Turkey, Brazil, and elsewhere — all with the common goal of ending deep-seating corruption.

But the protests we see on the news are just one manifestation of a growing awareness of the “cancer of corruption” — just as King’s March On Washington For Jobs And Freedom made visible and urgent something that many Americans already knew, deep down, needed to change. And, like the struggle for civil rights in America, this change will not come all at once, but as a result of many small battles fought at different levels of government and society.


Cash for Corn


“When we entered the room where the President received us, he put the briefcase by the wall and left it there. After the meeting we collected the briefcase from where we had left it. On the departing journey I looked in the briefcase and saw that the money had been replaced with fresh corn.”

Nasir Ibraham Ali, the chief executive officer of World Duty Free, told the International Centre for the Settlement of Investment Disputes (ICSID) how, in 1989, a representative of former Kenyan President Daniel arap Moi explained to him that protocol in Kenya required that he make a “personal donation” to the president in order to establish duty free shops at the Nairobi and Mombasa airports. Ali understood “that this was payment for doing business with the Government of Kenya.” The price of this contract: $2 million.

Three years later, after spending $27 million to construct and equip his shops, Ali found himself in the middle of the infamous Goldenberg scandal. President Moi’s emissaries fabricated documents purporting to export gold and diamonds to World Duty Free. Moi’s emissaries then illicitly funneled the money they received in export compensation to Moi’s re-election campaign. The price of this fraud: estimated at a minimum of $438 million.

After World Duty Free claimed it was unwittingly part of the fraud, the government took over the shares and assets of the company to stop Ali from cooperating with the prosecution. When he responded by making statements to the press, he was arrested and then deported to the United Arab Emirates. Ali never recovered his assets, and Kenya never held any officials accountable in connection with the Goldenberg scandal.

Although these events occurred more than two decades ago, Kenya continues to fare poorly on Transparency International’s Corruption Index: 139 out of 176. It ranks in the 19th percentile for control of corruption, despite initiatives such as the restoration of the Ethics and Anti-Corruption Commission (EACC). However, some new initiatives are seeking to reinvigorate the fight against corruption. The private sector, led by the Kenya Private Sector Alliance and the Kenya Association of Manufacturers, established the UN Global Compact Network in 2005, which now has 83 companies that voluntarily adhere to the principles, including a commitment not to engage in corruption.


Cartoonists Tackle Corruption

Cartoons demonstrate the ways in which visuals transcend language barriers, expressing ideas in a way that words often can’t. For the second year in a row, the U.S. Department of State’s electronic journal (EJ |USA) has featured winning cartoons from CIPE’s  Global Editorial Cartoon Competition.

Last year, EJ |USA featured semi-finalists from the corruption category in its Partnerships Against Corruption issue (shown below). As we celebrate the United Nation’s eighth International Anti-Corruption Day, we are reminded how cartoons show the ways in which combating corruption is universal – regardless of language, culture, or nationality.