Sri Lanka: sliding into state capture

Originally used to describe late 1990s Russia, where a few oligarchs gained excessive control over the institutions of the state, ‘state capture’ is now used to describe the way that political elites in some countries systematically expand their control and consolidate their power. In this post, CSC Director Liz David-Barrett describes how one family in Sri Lanka is following the state capture playbook.

As a club that claims to stand up for democratic values, the European Union is getting some harsh and deserved criticism for failing to arrest democratic backsliding among its own members, Hungary and Poland, as well as being a bystander while neighbouring Turkey and Serbia also succumb to state capture.

But the European Parliament (EP) is now urging the Commission to take a stand on these issues further afield. Most recently in Sri Lanka but also, in the past year, in the Philippines and Pakistan, the EP is seeking to use the leverage that flows from the Union’s trade policy to call out assaults on the rule of law and human rights. In all three cases, EP resolutions have invited the European Commission to consider withdrawing the countries’ access to the Generalised Scheme of Preferences Plus (GSP+).

Events in Sri Lanka are following the pattern of ‘state capture’ seen elsewhere fairly closely. The playbook has three parts. First, change the rules of the game, by influencing the formation of laws, policies and institutions, for example through constitutional reform. Second, stuff state-owned enterprises and the bureaucracy with loyal appointees, to facilitate day-to-day stealing through public procurement or privatisations. Third, disable and undermine any checks and balances on power, including by intimidating and abusing the human rights of journalists and civil society groups.

In today’s Sri Lanka, a fairly fragile state that emerged from a 26-year civil war only in 2009, this concerted power grab is driven by one family, the Rajapaksas, who are now seeking to leverage their role in ending the war to capture the state for themselves.

Sri Lanka has a presidential system, with the prime minister serving as the president’s deputy as long as they are from the same party. Hence when Gotabaya Rajapaksa was elected president in late 2019, former Prime Minister Ranil Wickremesinghe resigned. The new president promptly appointed his own brother, Mahinda, as premier, and made him Finance Minister for good measure. More recently he relieved Mahinda of the latter role, but replaced him with another brother. A fourth brother meanwhile is Minister of Irrigation, state minister for Disaster Management and state minister for Home Affairs. Mahinda’s son runs another two ministries.

All in all, one family controls not only the allocation of funds across government, but most of the big-spending ministries through which most state funds flow. As of March, it was estimated that the family controlled 24% of the state budget. In addition to the President, six Members of Parliament are from the Rajapaksa family.  

Nepotism of this kind is not new for the Rajapaksas, although it has become more extreme since they were last in power in 2005-15. At that time Gotabaya served as defence secretary, while Mahinda was president, and the family also scooped up the roles of Finance Minister, Minister of Economic Development and Speaker of Parliament.  

Now back in office after a spell in opposition, the Rajapaksas seem desperate to make sure that they don’t lose power again. The three-part playbook is very evident.

Step one: Change the rules of the game

For any group that wishes to entrench its control over the state, a key early move is to change the constitution. The constitution sets out the rules of the game, so if the captor changes the rules, it can make sure that it always wins.

Hence it was no big surprise that the Rajapaksas’ dynastical government used its two-thirds parliamentary majority to push through a 20^th amendment to the constitution in October 2020. The amendment weakened Sri Lanka’s anti-corruption agency, the Bribery Commission, removing the status that comes from being recognised in the constitution, as well as taking away its power to initiate investigations. The amendment also abolished the national procurement commission and the audit service commission.

The government also uses its majority in parliament to minimise parliamentary scrutiny of new laws. In April, the government introduced a bill on the Colombo Port Economic Commission, a controversial economic development project which has seen a Chinese state-owned company invest USD1.4 billion. Bills normally receive six days of scrutiny by the elected chamber. But, in an extreme version of the “taking out the trash” tactic for burying bad news while nobody is paying attention, the government announced this bill on Friday 9^th April, in the knowledge that the following week held four days of state holidays. The government suddenly declared the intervening Monday a holiday too.

In this instance, the citizens fought back, taking 19 petitions to the Supreme Court. The Court – still fairly independent, despite a recent stuffing following the 20^th amendment – ruled that several provisions should be subject to a two-thirds majority and a referendum. In doing so, it forced the government to water down the bill. Following the Determination of the Supreme Court, the Bill was still only debated for two days in Parliament before being rushed through, leaving no space for proper parliamentary scrutiny.

Step two: Use patronage power to expand control over state resources

In another textbook state capture move, the Rajapaksas have extended their reach over the implementation of policy by appointing a number of allies to leadership roles in state-owned enterprises, including more distant family connections, such as the in-laws of two of Mahinda’s sons. State-owned enterprises give out a large share of government contracts and do so with barely any transparency.

President Rajapaksa is a military man, and he has given out some other high-ranking government jobs to former military personnel, including the head of the Covid taskforce and the Minister of Public Security. Criminal justice reform is rumoured to have been entrusted to a former army commander. And former military officers have been appointed to the disciplinary task force for the public service, potentially changing the culture and autonomy of the bureaucracy.

Step three: Undermine checks on power

Civil society is a residual bastion of scrutiny, but it is under huge pressure. One lawyer who was a critic of the Prevention of Terrorism Act and an advocate for constitutional governance has been in custody since April 2020. Another activist, Asela Sampath, was abducted from his house, allegedly assaulted, and released on bail. Others who have merely written critical comments on Facebook have been arrested and detained for months on end.

Meanwhile civil society organisations receive unannounced visits from military intelligence, or are told that they need to inform the administration before applying for grants. Those working in the sector know that surveillance is widely used, and are having conversations with their families about how to respond if they go missing.

The state is intimidating journalists too, and the freedom of the press is threatened by the way that media industry owners are becoming cosy with the Rajapaksas. The president recently pardoned convicted murderer Duminda Silva, for example, and there are rumours that this may have been a quid pro quo in exchange for favourable coverage from the extensive television and radio empire owned by Silva’s brother. The owner of a large media group is believed to have played a key role in the successful campaign of President Rajapaksa. This media group which includes TV stations, a PR arm and an advertising arm is believed to have played an important role in moulding the psyche of the people towards supporting Gotabaya Rajapaksa. Sri Lanka has no rules on party finance, hence there is nothing to stop machine politics.

Sri Lanka is sliding into illiberal authoritarianism before our eyes and at an alarming pace. Yet another democracy is being dismantled, creating openings for superpowers in the region to expand their influence and raising the risk of a return to conflict in this fragile state. The EP move is a laudable effort to stand up for democratic values, but in a world where so many authoritarian leaders are working from the state capture playbook, democracy needs many more defenders.

A shorter version of this piece was published on the Global Anticorruption Blog here.

Gifts and hospitality loophole in new ‘model’ local government Code of Conduct

Recently, the Local Government Association published a ‘model’ Code of Conduct, which it advises the approximately 21,000 elected Council representatives in England and Wales to follow. Guest blogger and Independent Councillor Paul Millar argues that, rather than setting a ‘gold standard’ for conduct in local authorities, the Code is less strict than many councils’ existing codes and includes a significant loophole.

The Local Government Association, the representative body of Councils in England and Wales, in December 2020 published a ‘model’ Code of Conduct. It includes some really progressive changes such as promoting equalities and not discriminating unlawfully against any person. This is welcome: too many Councils still offer no maternity pay protection for Councillors in senior positions.

But the new advised codes regulating gifts and hospitality do not go nearly far enough.

Do new technologies help us curb or facilitate corruption? Call for Papers

The everyday use of new technologies entangles with both corruption practices and anti-corruption efforts. One strand of research argues that new technologies help us curb corruption, for example by empowering citizens’ monitoring capacity and facilitating grassroots anti-corruption initiatives. Another strand of research shows that digital media can support corruption and related illegal activities by facilitating the expansion of fake news and propaganda, the misuse of personal data by tech giants or the use of cryptocurrencies for money laundering activities. CSC Lecturer in Corruption Analysis Dr Roxana Bratu explains how these issues will be explored in an upcoming ECPR joint session.

In the contemporary context of rapidly changing technological environment there is a distinct need to understand what corruption means, how it is manifested and practiced by various actors and what are the best policies to tackle it. We explore this issue in an ECPR joint session: Digital Media, Machine Learning, and Corruption: How the Newest Technological Development Facilitate and Curb Corruption Practices Across the World held online 25-28 May 2021. The workshop is chaired by Dr Alice Mattoni (University of Bologna) and Dr Roxana Bratu (University of Sussex).

This workshop aims to develop a nuanced understanding of how digital media, machine learning, and other types of recent technological developments can simultaneously support anti-corruption efforts and corruption practices. We bring together two strands of research (one regarding how technology can support and the other regarding how technology can subvert anti-corruption policies and practices) and invite papers linked (but not limited) to one or more of the following questions:    

• Which are the methodological challenges of studying digital media, machine learning, and other types of recent technological developments in the framework of corruption and anti-corruption?   
• What are the challenges anti-corruption activists face when developing their own digital media platforms, machine learning algorithms, and other technological supports to counter corruption?  
• Which types of new challenges civil society actors, governmental agencies, and international organizations face due to the emergent forms of technologically mediated corruption?  
• Which are the technological imaginaries that anti-corruption activists, governmental agencies, and international organizations develop about digital media, machine learning, and other types of recent technological developments?   
• How do the most recent technological developments change their role according to the specific anti-corruption and/or corruption country context in which they are employed?  
• How the use of digital media, machine learning, and other types of recent technological developments can change patterns of corruption and/or anti-corruption efforts?   
• How can digital media employment, machine learning, and other types of recent technological developments in the framework of anti-corruption actions foster reactions in the world of corruption, bringing new developments in corruption practices?  

We invite papers that employ qualitative, quantitative, or mixed-methods research designs. We welcome papers based on empirical research and are open to submissions based on solid theoretical and methodological reflections on the overall workshop’s topic as well as policy-based contributions.  

For additional details on the workshop outline in the ECPR Joint Sessions webpage.

Papers must be submitted via the ECPR submission platform by February the 8^th 2021.

It’s time to recognise the success of the UK confiscation regime: In praise of the Law Commission

The confiscation of criminal proceeds is a key global weapon against corruption, intended to ‘take the profit’ out of the crime – with the aim of returning that money to the public and, hopefully, deterring future corruption. The UK confiscation regime has been criticised, but in this blog post, Tristram Hicks argues that the criticism is misplaced and in fact the UK sets a global example of how to use this tool in the fight against corruption and other crime.

In December 2020, the Law Commission of England & Wales finished a consultation on the post-conviction confiscation regime. They described this as a “once in a generation”, “root and branch” review. The project started in November 2018, the consultation had over a hundred questions, arising from a report of over 700 pages. It is a detailed and thorough piece of work.

The background to their review is the ground-breaking Proceeds of Crime Act, 2002, which transformed the ability of the UK justice system to confiscate the proceeds of crime. By any sensible measure POCA has been a world-beating success. The average annual revenue reaped by virtue of the Act increased more than eight times, from £15m to £130m per year, in the two decades before and after 2002. It was a transformational change:

Total value of receipts in England & Wales and Northern Ireland

Average in the 10 years pre-POCA 1992-2002:                      £15m   p.a.

Average in the 10 years post-POCA 2003-2012:                    £130m p.a.

Average in the 5 years 2013-2017:                                        £206m p.a.

(Source: FOIA response from the Home Office)

In addition, the number of people who have been deprived of criminal assets under the Act was transformed from a few hundred each year to an annual average of somewhere between 5,000 and 10,000. (The Home Office does not publish this information regularly, so this is the author’s estimate, based on ten years’ service on the UK Criminal Justice Board).

In 2018, just as the Law Commission started its project, the Financial Action Task Force, the global standard setter for Anti-Money Laundering, reviewed the United Kingdom. It conferred on the UK the highest aggregate grading for any jurisdiction at the time. For the specific immediate outcome of “Confiscation” the UK was evaluated at a “Substantial level of operational effectiveness”, meaning that the “Immediate Outcome is achieved to a large extent.” Only 20% of jurisdictions achieve this level of success (out of just over 100 evaluated).

It is surprising, then, that the Law Commission found that the confiscation regime was perceived as ineffective. It explained that “The perception that the confiscation regime was ineffective took hold from various media reports and the NAO report of 2013 which drew attention to the high value of unpaid orders”.

Yet the conclusions of the NAO Report contrasted starkly with the record of ten consecutive record-breaking years of asset recovery since POCA was first enacted. The NAO concluded that “the process was not working well enough and did not provide value for money”, whilst simultaneously finding that the regime generated £133m, comfortably exceeding the £100m cost of administering the regime (in 2012/2013). In other words, unlike any other aspect of the criminal justice system, it not only generated a substantial amount of money but actually turned a tidy profit.

The key focus of criticism has been the supposedly high value of unpaid orders. This was first reported in the press around 2005 and has been almost the exclusive focus of media reports on the confiscation regime every year since. But the reality is that almost all these unpaid orders are uncollectable, they are an artefact of the system.

A significant part of the uncollected amount is the value of “hidden assets”. Hidden assets are typically criminal assets abroad that have been found by British financial investigators. Their recovery is not possible because the equivalent confiscation regimes do not exist in the relevant jurisdictions which host the assets. Some success over the years has been achieved through British technical assistance to these regimes, although this could be more strategically directed to benefit the UK and the international effort against corruption and crime.

The fact that these amounts are uncollectable is not disputed. This was confirmed by the National Audit Office itself in 2013, finding that 81% was uncollectable[1], and by the latest Law Commission Review, which found that this proportion had increased to 92%.

The nature of the uncollected backlog is fully explained in an excellent paper by Helena Wood of the Royal United Services Institute, who concludes: “In sum, to judge the success of the system on the uncollected total is to misrepresent the results”.

And yet, the obsession with these unpaid amounts continues to feed into other reports which use this as evidence that the system is failing. The NAO Report directly triggered a Public Accounts Committee review of the regime and a concurrent Home Office Committee review of the same topic. The current Law Commission review is itself driven by the perception of failure created by the NAO.

The Law Commission is aware of this problem. It quotes the NAO report at some length, making clear that its headlines have contributed to the adverse perception of the UK confiscation regime. The Commission states that the NAO Report “has influenced strongly the continuing debate about POCA’s effectiveness to the present day” and further find that it “included eye-catching data which appeared to demonstrate that the regime was not working” – strong words when set against a convention that UK government bodies do not criticise one another.

The Law Commission consultation has finally found a solution to this problem that had escaped the NAO, the Public Accounts Committee and the Home Affairs Committee. They are to be commended for proposing, in Question 77: “We provisionally propose that the court should be able to direct that enforcement be placed in abeyance where it is satisfied that an order cannot be enforced.”

In other words, the simplest solution would be to administratively write off these uncollectable amounts, to avoid misleading the public and undermining public confidence in the system.

If this simple solution is adopted, the undeserved and misleading publicity surrounding the UK’s confiscation regime might finally be laid to rest. The UK has an excellent system which is rightly applauded by the FATF and emulated by experts all over the world. It is high time it was recognised at home and actively promoted abroad.

The author is a former Detective Superintendent in the Metropolitan Police Service, who spent ten years on the UK Criminal Finance Board, responsible for implementing the Proceeds of Crime Act. He is now an independent international consultant on criminal asset recovery. A version of this post is also published on his blog.

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[1] In 2012/13 the uncollected amount was £311m of £1.61bn, in 2018/19 it was £161m out of £2bn according to the relevant HMCTS Trust Statements.

UK reform of confiscation should prioritise bribery, not omit it

The confiscation of criminal proceeds is a key global weapon against corruption, intended to ‘take the profit’ out of the crime – with the aim of returning that money to the public and, hopefully, deterring future corruption. But legal regimes around confiscation vary in the extent to which they embrace corruption, bribery and fraud as appropriate crimes that can trigger confiscation. In this blog post, Tristram Hicks argues that the UK is missing an opportunity to use this tool in the fight against corruption.

The definition of ‘being a criminal’ is currently part of a wider review of post-conviction confiscation by the Law Commission, the public consultation for which has just finished (in December 2020). A key question is whether “corruptors” should be subject to enhanced confiscation measures.

Section 75 of the UK Proceeds of Crime Act, 2002 was originally written to define “being a criminal” in a way that an ordinary member of the public would understand the term. It describes someone like Norman Stanley Fletcher (from legendary TV series Porridge) or Bill Sykes (from Oliver Twist) or even Keyser Söze (from The Usual Suspects). These would all meet the definition in Section 75. It’s a clever piece of law. To qualify as a criminal under Section 75 it’s necessary to be convicted of any listed habitual or occupational crime, such as counterfeiting, drug or human trafficking; or any offence that takes six months or more to commit; or a collection of offences that together produce a serious financial gain.

If a person is convicted under Section 75, the criminal court is allowed to assume that all their assets are the proceeds of crime and confiscate them. There are multiple safeguards, of course, because this is intentionally draconian legislation.

Since 2004 all these convicted criminals, investigated by any agency, such as the Police, Revenue & Customs, NHS Fraud, local authority, Environment Agency or Trading Standards, have all been listed on one database, held at the National Crime Agency.

The Law Commission consultation is therefore important to criminal justice policy makers, legal practitioners, criminal investigators, Chief Officers and Police and Crime Commissioners.

For legal experts reading this post, when I describe “being a criminal”, I am referring to the “criminal lifestyle” provisions of POCA which trigger the “confiscation assumptions”. It is one of the tragedies of legal drafting that this clever statutory definition of “being a criminal” was misnamed “having a criminal lifestyle”, which is not the same thing at all. As a result of this misleading terminology, significant policy benefits have been missed.

This comprehensive list of criminals is part of the Joint Asset Recovery Database held at the NCA. The people listed have had their qualifying status clearly defined and then validated by the rigour of the Crown Court. If your agency’s mission is tackling habitual criminals such as fraudsters, smugglers, corruptors, illicit traders, counterfeiters, money launderers or any criminal motivated by money it’s a really useful list. This could have been used for policy, performance and strategic purposes by multiple agencies, but this opportunity has not been taken up.

The Law Commission say that stakeholders in their pre-consultation raised bribery and corruption as potential candidates for inclusion in Schedule 2. The consultation itself asked for views about Section 75, but proposed that “bribery” and “fraud” should not be included in the list of offences that trigger enhanced confiscation.

This is an odd decision. Including bribery and fraud would make the court’s ability to confiscate much easier and strengthen the toolkit against corruption. You might think that these offences are very definitely the kind of offences committed by habitual or occupational criminals and that they should be on the list; that was certainly the view of the Metropolitan Police Fraud Squad detectives who wrote the early drafts.

The Law Commission argument is that bribery might qualify for enhanced confiscation anyway, if there were multiple offences or a single offence that took a long time to commit. This is a valid argument, but also true of other offences which are included on Schedule 2. It seems that this is really a matter of priority. They are basing their thinking on the handful of cases of bribery overseas under the Bribery Act, 2010, and seem to assume that deferred prosecution agreements rather than real enforcement are the answer.

The consultation report also omits corruption within the UK, perhaps because of the dearth of casework. In fairness the Commission does not have much to go on, in terms of ready information about domestic corruption. The UK has no criminal investigation team dedicated to domestic corruption, nor is there a specialist prosecution office. (The Law Commission has recently reviewed the misconduct in public office common law offence).

The Law Commission effort to modernise legislation is to be applauded, but this particular proposal seems to be a missed opportunity to strengthen an important weapon in the fight against corruption at home and abroad.

The author is a former Detective Superintendent in the Metropolitan Police Service, who spent ten years on the UK Criminal Finance Board, responsible for implementing the Proceeds of Crime Act. He is now an independent international consultant on criminal asset recovery.

An earlier version of this post appeared on the author’s website.

Let’s make sure corruption does not de-rail the vaccine rollout!

At every turn, and all around the world, the covid-19 crisis has created new corruption risks. As we enter a new phase of vaccine roll-out, CSC Director Liz Dávid-Barrett looks at how corrupt and criminal actors are likely to exploit this and how can we head them off.

Photo by Daniel Schludi on Unsplash

Looking around the world, many individuals have exploited the covid-19 crisis for corrupt and criminal ends. News emerged early on of dictators abusing emergency powers to clamp down on civil society. Countless contracts for Personal Protective Equipment for healthcare workers have been awarded to political cronies, often meaning that PPE was substandard, late or never arrived. And even where PPE was delivered to healthcare providers, some of it was siphoned off and sold on the black market.

The vaccine rollout is likely to see similar behaviours, which threatens to undermine the vaccine’s ability to curb the spread of the virus and allow economic recovery to start. If vaccines do not reach healthcare workers, that will make it harder for them to provide care. If vaccines get siphoned off and sold on the black market, many vulnerable people will be unable to access them, and the much-needed herd immunity will not be achieved.

But equally, if people start to worry that the vaccines they receive might be substandard or counterfeit, that could undermine trust and feed the ‘anti-vaxxer’ rhetoric. That would also have very detrimental consequences.

So, how can we get a step ahead and prevent these corruption risks occurring?

First, many countries are creating special commissions for vaccines at national level, which invest in research and development of vaccines or make deals with vaccine providers. While it may make sense to centralise power from an efficiency point of view, it is important that such commissions are staffed by high-integrity figures appointed through meritocratic procedures, and that their decisions are transparent and open to scrutiny. Any special vaccine commission should also have a mandate to reduce corruption risks in the supply and distribution of vaccines as one of its key performance indicators.

Second, the vaccine rollout is going to involve a lot of public procurement – a key risk area for corruption. It is not just vaccines that will need to be procured, but also services for bringing them to a country and distributing them. Planning is the key to good procurement. These contracts should be given out through established framework agreements or streamlined open competitions. And bidders should be vetted to check that they are not receiving advantages as a result of links with politicians or public officials. Contracts should be published, to allow the public to scrutinise the prices.

Third, the government should protect vaccine distribution networks.  They should ensure that there are sufficient storage facilities to keep vaccines at appropriate temperatures and prevent degradation. But they should also provide security for the delivery companies. Criminals will be keen to intercept vaccine deliveries and steal supplies so that they can sell them on the black market. Steps must be taken to prevent this.

Fourth, clinics that are vaccinating patients should be required to keep records about which patients have received a vaccination. These should be regularly audited to ensure that medicines are reaching the intended beneficiaries.

Fifth, governments should invest in communicating clearly about who is entitled to a vaccine and how to access it. This will empower individuals to ask questions should they be denied access, and will make it clear that black-market providers are not part of the regulated system. Buying on the black market brings risks that you might be buying a substandard product, and should be discouraged.

The vaccine has the potential to bring an end to the tragedy and disruption caused by covid-19. Let’s make sure that corruption does not snuff out the light at the end of the tunnel!

NB. Liz discussed many of these issues in a conversation with Onyi Ough, Executive Director of Step Up Nigeria, earlier this week. The podcast is available here.

Reforming UK procurement: the government’s post-Brexit Green Paper

Professor Robert Barrington of the Centre for the Study of Corruption and member of the government’s Procurement Transformation Advisory Panel, looks at the UK’s new proposals for post-Brexit procurement reform – and concludes that, if they are implemented, the UK will have a world-class system

The UK Government has this morning published a Green Paper (ideas for what a new law could include) on how it will reform public procurement post-Brexit.  Leaving the EU has created a once-in-a-generation opportunity to reform procurement laws, and the Covid crisis has demonstrated how badly things can go wrong if good rules are not in place.

The UK spends £292 billion each year on buying goods and services; the Financial Times has noted that granting access to this pot of government money is one of the few significant cards the UK holds in striking new trade deals.  Moreover, in a recovering economy, there will rightly be pressure to strike the correct balance between bureaucracy, efficiency, value for money and anti-fraud and corruption safeguards.
The good news is that other countries have already made progress in this field, notably South Korea and Ukraine – both of which were represented on the government’s procurement Transformation Advisory Panel, along with the OECD, which monitors and promotes best practice in this field.

So what does the Green Paper actually propose?  My focus is naturally on corruption, and it is genuinely encouraging that this is incorporated into the paper, acknowledged as a risk, and addressed as such.  I am not an expert in public procurement, so my analysis should be taken with a pinch of salt until the real experts have had a look.  But at first glance, pretty much all the boxes I would have wanted to see ticked are there.  These include:

Transparency by default (para 6) – a key principle that needs to underpin any genuine exercise of this nature

Beneficial Ownership Transparency (para 112) – ‘a new mandatory exclusion ground relating to the non-disclosure of beneficial ownership meaning that bidders who do not state their beneficial owner(s) will be automatically excluded’

Open contracting (Chapter 6) – and specifically the adoption of the Open Contracting Data Standard (OCDS) advocated by the Open Contracting Partnership

Debarment (para 116) – a bundle of reforms that will reward greater scrutiny, but at first glance look like a step-change from where we are today, including a recognition that companies under Deferred Prosecutions Agreements (DPAs) can be debarred

Social value (para 101) – ‘including social value as part of the quality assessment’ – in other words, not always awarding contracts to the lowest bidder when that might have negative social consequences.  This will need some checks and balances to ensure it is not ‘gamed’ but is a very sound principle.

Three areas that need more work:
Tax: it is there – a search reveals 11 matches – but does not resolve the critical tension…should companies that do not pay into the public purse be allowed to take out from it?  Much of the paper follows the thread of being fair on SMEs: but how is it fair if they are paying tax, and a giant supplier like Amazon is (allegedly) not paying its fair share?

Emergency response: the paper asks the right questions but will almost certainly need to do more to cover off all the loopholes exposed by the Covid procurement.

Freedom of information: companies often retreat into secrecy by default, arguing that almost everything they do is commercially sensitive. But if they are delivering public services, there is a legitimate expectation that they should operate under – and not block or evade – Freedom of Information rules.   This is acknowledged in the paper, but as far as I can tell the paper does not make a proposal to apply FoI fully to the private sector when providing or operating public services.

There is lots more to digest- not least the proposal for a new independent monitoring arrangement, which also looks a very positive development, except perhaps in its non-receptiveness to corruption complaints that are at contract level and not at systemic level.  

My conclusion – and again, I may stand to be corrected once the experts have had a look: it is big, and bold, and would give the UK a world class system.  There is a risk that the best parts will be watered down in the consultation; and, as we have seen with Covid procurement, there is a risk that even if the rules are good they will not be followed.  But whether you are for or against Brexit, my take is that – if implemented – these reforms will deliver some of the things that have been long promised for a post-Brexit Britain.  The civil servants and minister responsible, while hoping that the inevitable backlash from vested interests can be seen off, should be quietly patting themselves on the back.

Happy New Anticorruption Year! Five reasons to be cheerful about Anti-Corruption

Fighting corruption is a tough gig. It requires fighting on many fronts simultaneously, against opponents who often don’t play fair, and it takes a long time. But, on the occasion of International Anti-Corruption Day, CSC Director Liz David-Barrett argues that there are at least five reasons for anti-corruption activists to be cheerful:

1. The Biden administration promises to put global leadership back into the fight against corruption.  Biden’s victory brings an end to four excruciating years in which President Trump rode roughshod over democratic norms, undermining the global fight against corruption by providing cover for kleptocrats and authoritarianism elsewhere. Biden promises to reinvigorate democracy globally and, at home, is taking on the critical area of campaign finance. He also plans to end the practice of anonymous shell companies, a huge step that will make it much harder for kleptocrats to hide their ill-gotten gains.
2. Investigative journalism is back with a vengeance. A few years ago it looked like journalism was dying out: everyone was making their own news on twitter and nobody wanted to pay for the long-term research needed to uncover misconduct. But recent years have seen the emergence of a new form of global governance institution – the informal networks of investigative journalists (the International Consortium of Investigative Journalists, the Organised Crime and Corruption Reporting Project, the Bureau of Investigative Journalism, Finance Uncovered) that brought us the Panama Papers, the Paradise Papers, and many other exposés of misconduct and kleptocracy. Despite scanty resources, this group has consistently collected and analysed a vast body of evidence that has helped to hold leaders and industry to account all over the world.
3. Law enforcement is cooperating like never before. Corruption is a transnational crime and tackling it requires cross-border cooperation among anti-corruption agencies and law enforcement bodies. That is working better than ever, with initiatives like the International Anti-Corruption Coordination Centre in London, donors ploughing major funds into building capacity in this area all over the world, and the recently announced Riyadh Initiative set to fill in some gaps and speed up learning among anti-corruption agencies.
4. Corruption has become a topic in pop culture. This is partly a consequence of the proliferation of scandals, but it has brought debate about corruption into popular culture and got everybody talking. TV series and movies about corruption abound (a couple of my recent faves are Line of Duty and Spotlight). They increasingly tell nuanced stories about how anti-corruption tools can themselves be infiltrated or misused as weapons to discredit opponents and undermine accountability, and they also highlight the courage of those who work to uncover and expose corruption. If anti-corruption professionals are showing up on tv and in the movies as glamorous heroes, that is a sure sign that norms are changing.
5. The global network of anti-corruption professionals is growing fast. There are swelling cadres of anti-corruption professionals in the public and private sector of many countries, with in-depth expertise about how to tackle complex problems. Some people snipe that anti-corruption should not be its own ‘industry’ like aid or human rights, and as a relative newcomer we should certainly learn lessons about the need for contextualisation. But the presence of a community is especially important to anti-corruption work, because knowing that you are not alone in the fight is critical to overcoming the collective action problem. We see this with our own students on the CSC’s MA programmes and our PhD researchers: our alumni support each other around the world and swap ideas on what works in fighting corruption. That is a big reason to be cheerful!

A post-Nolan future for Brexit Britain: our letter to the Financial Times

Three Professors at the Centre for the Study of Corruption have collaborated with a group of eighteen professors of governance, corruption and public integrity from across the UK, to publish a letter in the Financial Times.  CSC Professor of Anti-Corruption Practice Robert Barrington looks at their concerns.

Why do a group of professors get together to write a letter to the FT?  It’s simple: we can discern a very clear decline in UK standards and adherence to the Nolan Principles, illustrated by the Prime Minister’s failure to follow the Ministerial Code, the Covid-19 procurement ‘chumocracy’ and multiple other examples.

The list of run-ins with the Nolan Principles and Ministerial Code over the past year is too long to put in full: legislating to break international law in ‘limited and specific ways’; the resignation of the Prime Minister’s adviser on Ministerial Standards over the Priti Patel bullying; multiple sleaze allegations relating to Robert Jenrick; the threats to the judiciary, the media – notably the BBC – and of a ‘hard rain’ falling on the independent civil service; the political capture of the notionally objective public appointments process; and much, much  more.

Many of these cases and government attitudes have precedents.  What is new is the number of cases and the apparent lack of concern by the government and individuals over what would formerly have been scandals or resignation offences

The eighteen professors who have signed the letter, all experts at major UK universities, are sounding the alarm bell for the UK – a decline in governance standards results in negative impacts for the economy, for national security, for democracy and for a fair society – levelling down not levelling up.  And it does not stop there.  The damage extends to the UK’s international reputation, and therefore its influence in the wider world.

Here is the letter in full:

Letter: It’s time the UK recommits to the Nolan rules
From Professor Elizabeth David-Barrett and othersFinancial Times 08/12/2020
As a group of scholars who specialise in the areas of governance, public sector integrity and corruption, we are writing ahead of tomorrow’s UN International Anti-Corruption Day to express our concern at the apparent reluctance of the current UK government to uphold the Nolan Principles, the seven principles of public life established in 1995: selflessness, integrity, objectivity, accountability, openness, honesty and leadership.

We have studied this subject throughout the world, and what is happening in the UK today has alarming similarities with what we have witnessed elsewhere.

The pattern of ignoring standards of openness, attacking key accountability institutions and subverting governance norms is often the forerunner to a rapid rise of corruption and the self-enrichment of those who hold power.

The UK is by no means immune to this, especially if formal and informal checks and balances in the system, such as the independence of the judiciary and civil service, are compromised or undermined.

Studies elsewhere have shown that diminishing governance standards result in negative impacts for the economy, for national security, for democracy and for a fair society. Rather than “levelling up”, evidence tells us that it leads to “levelling down” with consequences that can span generations.

The chair of the committee on standards in public life recently noted that public standards make the UK a more attractive commercial environment, yet the rating agency Moody’s has cited “the weakening in institutions and governance” as a factor in its recent downgrade of the UK.

With multiple reports of potential conflicts of interest and unaddressed breaches of the ministerial code (Report, November 21), we too feel it is important to sound a warning bell for the UK.

Professor Elizabeth David-Barrett Professor of Governance & Integrity, Director of the Centre for the Study of Corruption, University of Sussex Professor

Paul Heywood Sir Francis Hill Professor of European Politics, School of Politics and International Relations, University of Nottingham

Professor Mushtaq Khan Professor of Economics, Department of Economics, School of African and Oriental Studies

Professor Heather Marquette Professor of Development Politics, International Development Department, University of Birmingham

Professor Jason Sharman Sir Patrick Sheehy Professor of International Relations, Department of Politics and International Studies, University of Cambridge

Professor Robert Barrington Professor of Anti-Corruption Practice, Centre for the Study of Corruption, University of Sussex

Professor Martin Bull Professor of Politics, School of Arts & Media, University of Salford

Professor Nic Cheeseman Professor of Democracy, International Development Department, University of Birmingham

Professor Amrita Dhillon Professor of Political Economy, Department of Political Economy, Kings College London

Professor John Heathershaw College of Social Sciences & International Studies, University of Exeter

Professor Sam Hickey Professor of Politics & Development, Global Development Institute, University of Manchester

Professor Dan Hough, Professor of Politics, School of Law, Politics & Sociology, University of Sussex

Professor Alena Ledeneva Professor of Politics & Society, School of Slavonic & Eastern European Studies, University College London

Professor Nicholas Lord Professor of Criminology, Centre for Criminology & Criminal Justice, University of Manchester

Professor Jan-Hinrik Meyer-Sahling Professor of Political Science, School of Politics & International Relations, University of Nottingham

Professor Mick Moore Professorial Fellow, Institute of Development Studies

Professor Christian Schuster Professor of Public Management, Department of Political Science, University College London

Professor Dominik Zaum Pro-Vice Chancellor (Research & Innovation) and Professor of Governance, Conflict & Security, Department of Politics & International Relations, University of Reading

Regime change and the rule of law: Serbia’s lessons to Montenegro

Montenegro’s new government was voted in on 4 December, heralding regime change after almost three decades (although former prime minister Milo Đukanović remains president). Tena Prelec, Research Fellow at the Department of Politics and International Relations at the University of Oxford (and former CSC PhD Researcher), analyses the corruption-related challenges facing the new cabinet.

In autumn 2000, as a man on an excavator became the symbol of the revolt set to dig out the roots of Slobodan Milošević’s authoritarian regime, the ruling elite in Montenegro was just about to enter a new phase of consolidation. Then Montenegrin President Milo Đukanović had recently performed another of his multiple chameleon-like transformations. From Sloba’s ally and long-standing supporter of Yugoslav unity, Milo was about to set the course of a new era for his country: its independence. In doing so, he assumed the mantle of the champion of the Montenegrin nation, garnering support from both Western and Eastern allies.

Twenty years on, the chameleonic good fortune of Milo Đukanović seems to have run its course. An unlikely coalition of opponents, ranging from Serbian nationalists (backed by the powerful bishop Amfilohije, head of the Serbian Orthodox Church in Montenegro, who won this battle but later lost the one with Covid-19) to green civic parties, and passing through a range of inbetween options, defeated Đukanović’s Democratic Party of Socialists (DPS) without resorting to blood-soaked revolutions. To the surprise of many (yours truly included), on 30 August 2020 democratic change in state-captured Montenegro took place through the ballot box. And a little more than three months later, on 4 December, the Montenegrin parliament approved its first ever DPS-less government.

The change of a corrupt government is, of course, no guarantee that a new era of transparency and fuller democracy is to follow. The rise to power of Silvio Berlusconi in Italy (following the Tangentopoli scandal, which seemed to have wiped out the entrenched corruption of Italy’s ‘First Republic’) and that of Jair Bolsonaro in Brasil (after the Car Wash trials, hailed by some as a positive example of judicial activism) are but two recent examples. On the other hand, there are examples of countries where a ‘clean sheet’ did work out: Estonia is one of them.

This Baltic charm, alas, did not quite work in Serbia. The legacy of the two decades since 5 October 2000 is notoriously contested. During my PhD fieldwork, which sought to explain the morphing corruption practices in the energy sector in the post-Yugoslav space from the 1980s to the 2010s, I came across many examples of such disillusion with the new Serbian elite. I was particularly struck by the testimony of a former anti-Milošević activist, who said:

“People were expecting that Serbia would change, they were expecting democratic changes, and did not get anything in return. Their hopes were crushed. I was on the streets with OTPOR. But when you see that everything is done in the same way, that the party officers from the new government are getting hold of petrol when they want, that they are trafficking, that everything is done in the same way as it was done before… this leads to devastation.”

Turns out, manning an excavator in front of the parliament is not enough to uproot the dirt within it. The Serbia of 2000 and the Montenegro of 2020 differ in many respects, not only because of the time distance: while Milošević was soon handed over to the International Criminal Tribunal for the former Yugoslavia, Đukanović still wields considerable power as the President of Montenegro. However, parallels among the two ‘novel’ coalitions run aplenty. Similarly to the political forces about to take power in Montenegro, the Democratic Opposition of Serbia (DOS) was a broad church of progressive and conservative (some of them: nationalist) forces, united by the common aim to bring down a strongman. With time, their differences started to matter more, while corruption scandals engulfed the credibility of key members of the coalition.

If the 4 December experiment is to work, or for it to be a constructive interludium while conditions for fuller democratic pluralism are being built, it is essential that Montenegrins take note from their neighbours. There are several lessons that those interested in real change in Montenegro should heed – starting from the below.

1. Anti-corruption: set the expectations straight…

A country whose state capture has been perfected over the course of three decades can’t be free of it immediately. Rather than overpromising and underdelivering, the new coalition would be better advised to underpromise and overdeliver. Easier said than done, for sure: but the message that a wholesome change in tack in a short time is an almost impossible feat needs to be articulated very clearly. Setting clear and achievable goals should be a priority.

2. …but practice what you preach.

But even more than on the form, it is imperative that the new coalition delivers on the substance: the promised change of tone needs to be underpinned by setting the right example. In this sense, an experience at the local level in the administration of the coastal city of Budva is a cautionary tale. Local elections in Budva in 2016 returned a result that allowed a change of power from the  DPS to a composite majority in the city council, similar in composition to the one now taking power at the national level. From a governance perspective, that experience developed in an alarming way: Democratic Front (DF) politician Marko Carević (who assumed the office of mayor of Budva in 2018) personally profited from public procurement to the tune of €1.9 million. Replicated at national level, this road would lead to secure ruin, as it would prove, in the eyes of the public, that ‘all politicians are the same’ – as summed up in the words of the Serbian activist quoted above.

3. Take particular care to free captured institutions…

A change of blood among the people running the State’s institutions will be crucial for reformatting the country. The new team of ministers was announced as an ‘expert government’: let that statement of purpose not be mere window-dressing, but truly set the tone. The guiding principles of the professionalisation of the institutions, the rationalisation of spending, and the drastic curbing of clientelism should be followed through. Promptly depoliticising key institutions such as the Anti-Corruption Agency would give a strong signal.

4. …but strive towards creating a ‘consensual elite’.

Perhaps counterintuitively, however, the new political leaders must not fall in the trap of purging the state apparatus of any sign of the previous guard: installing the same obedient type of civil servants will do Montenegrin democracy no good. In Serbia, the decision to substitute all the people in charge at state-owned companies created, in certain cases, a gaping hole and “catastrophic lack of professionalism”, as a Serbian energy expert characterised the change of the guard at the electricity utility, EPS, in the early 2000s, which exposed it to even greater rent-seeking practices. An important signal of the changing tide would be to keep in charge figures who stood out for their high-quality work, regardless of their political affiliation.

This course of action has good grounding in theory. Elite circulation (incorporating some elements of the old while allowing space for the new) is said to be characteristic of a consensual elite, which is present in a consolidated democracy. Elite reproduction, which stifles the emergence of new cadres, produces fragmented elites, and is usually present in unconsolidated democracies. The elite development model of replacement or quasi-replacement is, in fact, most characteristic of totalitarian or authoritarian regimes. It follows that the first road should be the one to strive for: a model in which “there is high certainty about the rules and about the practices that flow from them, but low certainty about the political outcomes, with today’s winners likely to become tomorrow’s losers” (Higley and Lengyel).

5. Embrace a global anti-corruption push and set an example for the region

Montenegro is infamous for being a captured state. From the cigarette smuggling with the Italian crime families Camorra and Santa Corona Unita in the 1990s (and later), to Daphne Caruana Galizia’s murder in recent years, the country’s involvement in global dynamics of organised crime and corruption has resonated far wider than its own borders – not unlike Serbia’s embargo-busting experience. There are concrete legislative steps the government can take that would place Montenegro at the forefront of global anti-corruption and anti-money laundering discussions. From the setting up of a thorough register of beneficial owners, to setting stricter rules for its sprawling high-end real estate industry (a boon for money launderers), to implementing a Global Magnitsky-style law that would take into account grand corruption as well as human rights abuses, there are ways for the government to show that they are serious about tackling these grave problems head on and potentially turn Montenegro’s bad reputation on its head. While some of these discussions are contained in the EU negotiation talks, Montenegro going the extra mile in this field would be truly significant.

These are but a start…

…as there are, obviously, a great number of challenges that stand in front of the new government. Building a truly inclusive Montenegro – and thus rebuking the insistent criticism according to which Serbian nationalism and Russian influence are those that stand behind the overthrow of the supposedly ‘civically minded’ DPS – is an important one. There is a long way to go in this sense: the recent statements by DF MP Jovan Vučurović denying the Srebrenica genocide are absolutely unacceptable and should be condemned as such. Making good on the promise of keeping Montenegro firmly on a pro-EU and pro-NATO track is another crucial, and related, tenet. Implementing a strong economic programme that delivers growth while ensuring that it balances off inequalities, rather than deepening the divide, is of course key.

But if Montenegro’s new government manages to deliver on the all-important issue of the rule of law, the next one will be better placed to take on these, and other, topics. All the dirt will not be eradicated at once, but it is time for some serious elbow grease. 

This text has been prepared within the project “Strengthening the Rule of Law in the Western Balkans: Old Tools for New Rules” implemented by Politikon Network, in cooperation with Centre for Contemporary Politics, and with the support of the Embassy of the Kingdom of the Netherlands. This blog was originally published by Politikon Network.