Controlling Corruption Problems, Approaches and Best Practices

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Controlling CorruptionProblems, Approaches and
Best Practices

• Hans-Joerg Albrecht

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Content

• Introduction The phenomenon of corruption
• International anti-corruption policies
• Best Practices
• Summary

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The Phenomenon of Corruption
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The phenomenon of corruption

• Forms of corruption
• administrative/bureaucratic corruption
• an advantage, to act or refrain from acting in
  accordance with his duty or in the exercise of
  his functions in breach of his official duties
  ...
• political corruption
• CoE Recommendation (2003) on common rules against
  corruption in the funding of political parties
  and electoral campaigns
• commercial corruption
• promising, offering or giving directly or through
  an intermediary to a person who in any capacity
  directs or works for a private sector entity, an
  undue advantage of any kind, for that person or
  for a third party in order that that person
  should perform or refrain from performing any act
  in breach of that person's duties
• Forms of corruption interact with
• Petty or grand corruption
• Structural (systemic/endemic) and situational
  corruption
• Local and transborder/international corruption

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Corruption as a Social and Legal Problem

• Corruption is viewed as a major social problem
• a threat to the social fabric
• a particular threat for developing countries
• an obstacle to good governance
• an instrument of organized crime groups
• Corruption is Part of Global Bads
  Transnational crime, organized crime, money
  laundering

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Transparency International Survey 2010
The TIS is a composite index, drawing on
corruption-related data in expert surveys carried
out by a variety of reputable institutions. It
reflects the views of business people and
analysts from around the world, including experts
who are resident in the countries evaluated.
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Consequences (threats) of Corruption

• Economic consequences
• Increasing (transaction) costs
• Parallel economies
• Dislocation of public and private funds
• Reciprocity and vulnerability
• Social/political consequences
• Distrust (vertical and horizontal)
• Uncontrolled political, administrative and
  economic power
• Weakening the state and governance

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Correlates (causes) of corruption

• Corruption refers to rent seeking decisions
• Vast administrative and political discretion and
  little control
• Subsystems of mutual trust (old boys networks)
• Extent of the states involvement in the private
  sector/economy
• Freedom of the press and transparency
• Independence of public prosecution and the
  judiciary
• Civil service professionalism and civil service
  pay
• Quality of democratic structures and the
  dependency of political elites and political
  parties from the public
• A culture of generalized negotiation
• Reluctant/weak political and law enforcement
  response to corruption

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International Anti-Corruption Policies
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An international consensus on repressive
anti-corruption policies

• Corruption (administrative and commercial) is
  recognized as a high priority national and
  international political issue
• Political corruption does not fall under
  international corruption conventions
• Substantive criminal law should cover public
  sector and commercial corruption as well as
  transborder/international corruption
• Corporate liability
• Forfeiture and mutual judicial assistance in
  forfeiture cases, including the return of
  illicitly acquired assets
• Reporting of corruption cases to be encouraged in
  order to compensate for the lack of victims
  interested in criminal complaints (witness and
  whistleblower protection, anonymity)
• Collection of criminal evidence to be facilitated
  through proactive investigation and special
  investigative measures

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Consensus on the need for prevention

• Repressive criminal law based approaches to
  corruption control should be backed up by
  comprehensive systems of (primary) prevention
• Monitoring to be strengthened through external
  and internal audits
• Adopting and implementing local, regional and
  national anti-corruption policies
• Self control to be strengthened through codes of
  ethics and other internal compliance enhancing
  mechanisms (ombudsmen)

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International instruments against corruption

• OECD
• Convention on Combating Bribery of Foreign Public
  Officials in International Business Transactions
  1997
• European Union
• Convention on the fight against corruption
  involving officials of the European Communities
  or officials of the member states of the European
  Union of 1997
• Joint Action on Corruption in the private sector
  1998
• Council Framework Decision 2003/568/JHA of 22
  July 2003 on combating corruption in the private
  sector
• Council of Europe
• Civil and Criminal Conventions Against Corruption
  (1999)
• Resolution (97) 24 on the twenty guiding
  principles for the fight against corruption
• United Nations
• Convention against Corruption 2003

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A Four Pillar Approach

• Prevention
• Criminalization
• International Cooperation (Mutual Legal Aid)
• Asset Recovery

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Implementation of international instruments

• Activation of peer pressure and support
• GRECO (Groupe d états contre la corruption)
• OECD Working Group on Bribery in International
  Business Transactions
• Implementation of legal instruments must be
  backed up through financial and other assistance
  to developing countries and peer evaluation of
  national implementation of anti-corruption
  policies and laws

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1st Pillar Prevention
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Anti-Corruption Policy Development

• UNCAC and other international and regional anti
  corruption instruments request development of
• Anti-corruption policies
• Adjusted to the national legal etc. framework
• Rule of law, transparency, accountability,
  protection of public resources
• Effective practices
• Monitoring and evaluation
• International collaboration on best practices

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Organizational/Corporate Culture

• Establishing a culture of professional/business
  ethics averse to bribery/corruption
• Involvement of senior management
• Code of conduct/ethic rules
• In particular with respect to gifts, hospitality,
  entertainement

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Risk Control Process

• Identification of risks (coming with specific
  administrative or commercial activities,
  professional roles)
• Risk assessment
• Follow up and monitoring

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Measures to Control Risks

• Compliance and internal audits
• Due diligence and third party risks
• Public procurement, tenders etc.
• Transparency, public, clear rules, appeal
  possibilities
• Clear procedures to establish public budgets
• Public access to information

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Anti-Corruption Commissions

• UNCAC Art. 6
• Each country shall establish Anti-Corruption
  bodies
• To implement anti-corruption policies
• Independent
• Adequate resources

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Whistleblowing

• What is whistleblowing?
• Insider disclosure of evidence
• Of illegal conduct (or other serious risks)
• Best practices
• Clear rules to be established
• Internally and/or externally? Outside disclosure
  should be limited to ineffective internal
  practice
• Confidentiality
• Protection against retaliation (immunity)
• ECHR No 28274/08, Judgment 21. July 2011
  (Heinisch v. Germany)
• Internal follow up procedure

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2nd PillarCriminalization
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Criminalization Corruption

• Relevant for Mutual Legal Aid
• Dual criminality
• Harmonization, approximation, mutual recognition
• Standards of defining corruption/bribery
• Elements
• offering, promising, giving (no
  agreement/acceptance needed endangerment)
• Requesting, soliciting, accepting
• Undue advantage
• Acting or refraining to act
• National or foreign official (including
  international bodies)

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Criminalization Trading in Influence

• Elements (like corruption offence)
• Anyone who asserts/confirms that he/she is able
• To exert improper influence on national/foreign
  public official

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Other Criminal Offences

• Embezzlement
• Abuse of authority
• Money laundering (corruption, influence trade as
  predicate offences)
• Obstruction of justice

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Criminal Sanctions

• Effective, proportionate, dissuasive sanctions
• Significant differences between countries (and
  practices)
• Removal from office, interdiction of professional
  activities
• Forfeiture of illicit assets
• Non criminal, not conviction based forfeiture (in
  rem)

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Other Issues

• Statutes of limitation
• Immunity from prosecution
• Crown-witnesses
• Liability of legal entities

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3rd PillarInternational Cooperation
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Main Pillars of International Cooperation

• Extradition
• Mutual legal assistance

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Conditions of Cooperation

• Dual criminality
• Treaty
• (UNCAC serves as a statutory basis where a
  bilateral treaty does not exist)
• Ordre public

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Obligations Under UNCAC

• Corruption
• To be made an extraditable offence
• Not to be declared a political offence
• In case nationals are not extradited
• Prosecution shall take place in the country where
  the suspect resides

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Mutual Legal Assistance

• In case of non-coercive measures and lack of dual
  criminality
• MLA shall always be granted (UNCAC)
• Coercive measures
• Dual criminality principle can be waived
• Bank secrecy shall be no ground to refuse mutual
  legal assistance

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4th PillarAsset Recovery
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Asset Recovery and Return

• Confiscation, forfeiture rules have to be in
  place
• Including freezing assets
• Implementation of a confiscation order in a
  foreign country
• Assisting a foreign country to freeze and
  confiscate assets
• Which law applies in case of MLA?

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Return of Assets and Asset Sharing

• UNCAC provides for full return of assets aquired
  through corruption
• Other instruments provide for asset sharing
  between requesting and requested country (TOCC)
• Expenses for freezing and confiscating may be
  deducted from the assets

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5th PillarImplementation
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Implementation of international instruments

• Activation of peer pressure and support
• GRECO (Groupe d états contre la corruption)
• OECD Working Group on Bribery in International
  Business Transactions
• Implementation of legal instruments must be
  backed up through financial and other assistance
  to developing countries and peer evaluation of
  national implementation of anti-corruption
  policies and laws
• Peer review of implementation of legislation
  against corruption and compliance with the
  Council of Europes Convention against Corruption

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Conclusions
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Anti Corruption Resources

• UNOCD Instruments, tools, model codes
• http//www.unodc.org/unodc/en/corruption/publicati
  ons.html
• http//www.track.unodc.org/Pages/home.aspx
• UNODC (database covering 175 legal systems)
  www.track.unodc.org/LegalLibrary/Pages/home.aspx?c
  hapter5
• Stolen Asset Recovery (STAR) Initiative
  (Worldbank, UNODC) http//star.worldbank.org/corru
  ption-cases/arwcases

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Conclusions

• Corruption is associated with a range of problems
  
• An internationally formed system of corruption
  control has emerged which requires specialized
  legal knowledge
• The system is based on five pillars
• Prevention, criminalization, international
  cooperation, asset recovery and effective
  implementation
• The pillars are interrelated and reinforce each
  other
• Most important will it be to develop an system of
  mutual recognition