19653 June 1999 Al~~~~~~~~~~~4 8- --p- A Comparative Review ot Selected legal Aspects ot State Practice and Major International Initiatives i P a a 3 i 0 S - a Combating Corruption A Comparative Review of Selected Legal Aspects of State Practice and Major International Initiatives W. Paatii Ofosu-Amaah Raj Soopramanien Kishor Uprety © 1999 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433 All rights reserved Manufactured in the United States of America First printing June 1999 The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affili- ated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. 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Library of Congress Cataloging-in-Publication Data Ofosu-Amaah, W. Combating corruption: a comparative review of selected legal aspects of state practice and major international initiatives / W. Paatii Ofosu-Amaah, Raj Soopramanien, Kishor Uprety. p. cm. Includes bibliographical references. ISBN 0-8213-4523-0 1. Political corruption-Developing countries. 2. Bribery- Developing countries. I. Soopramanien, Raj, 1950- . II. Uprety, Kishor, 1958- . III. Title. K5261.033 1999 345'.02323-dc2l 99-30183 CIP Contents Foreword ...............................................v Abstract .............................................. . vi Acknowledgments ............................................... viii I. Introduction ...............................................1 II. Initiatives Conducive to a Corruption-Free Environment -A Preventive Approach ..............................................5 Indirect Technique .........5.....................................5 National Commitment ..............................................5 Leadership Codes ...............................................7 Declaration of Assets ...............................................8 Codes of Conduct .............................................. 11 Proactive Media ............................................... 16 Direct Technique .............................................. 21 Transparent Financial Management System .............................. ...... 21 Campaign Financing ............................................... 25 Procurement .............................................. 31 III.Legal Framework to Combat Corruption -A Curative Approach ............................................... 38 Investigation of Corruption .................. ............................. 38 Traditional Enforcement Mechanisms .............................................. 38 The U.S. Independent Counsel .............................. ................ 40 Other Specialized Corruption Investigation Agencies ............ ...... 43 Judicial Process ............................................... 47 Traditional Bribery Legislation .............................. ................ 47 Special Corruption Offenses ....................... ........................ 48 Money Laundering ............................................... 53 Offenses Involving Special Rules of Evidence ...................... .......... 57 Sanctions and Penalties .............. ................................. 61 Corruption Redefined .............................................. 63 IV. International Efforts Against Corruption . .............................. 68 U.N. Efforts .............................................. 68 U.N. Initiatives in the 1970s .................... .......................... 68 The U.N. Declaration against Corruption and Bribery ........... ...... 70 iii 1V COMBATING CORRUPTION Regional Efforts ................................................ 70 Efforts within the Organization of American States: Inter-American Convention against Corruption ........................ 70 Efforts within the Organisation for Economic Co-operation and Development (OECD) ............................. ................... 72 Efforts within the Council of Europe: The Criminal Law Convention ................................................. 75 The African Initiative ................................................ 76 Efforts at the Nongovernmental Level ................................................ 78 The Lima Declaration against Corruption ....................................... 78 The International Chamber of Commerce ........................................ 79 V. Conclusion ................................................ 82 Endnotes ................................................. 84 Foreword The negative effects that corruption has on the development prospects of developing countries is becoming better understood over time. Since the Annual Meetings of the World Bank and the International Monetary Fund in October 1996, when the President of the World Bank, James Wolfensohn, offered World Bank assistance to member countries to devise and imple- ment appropriate anticorruption strategies, international attention to the effects of corruption on development has grown markedly. Indeed, a num- ber of major international agreements have been signed since then and countries around the world, whether developed or developing, have taken specific actions within their territories to combat the negative effects of corruption. The importance of an effective legal and judicial framework in the context of the combat against corruption has also been recognized, and countries are seeking ways in which they can strengthen such frame- works to deal with this issue. A major part of this work involves a better understanding of the approaches, mechanisms, instruments, and other tools, including legally related ones, that may be used. This study, written by my colleagues in the World Bank's Legal Depart- ment, is timely for its attempts to review and analyze various legal and quasi-legal approaches and mechanisms used around the world in this combat against corruption. It should add to the growing volume of litera- ture in this relatively new area of work for the Bank, and assist officials and Bank staff alike in gaining broad knowledge of some of the selected legal aspects relative to this important issue. Andres Rigo Acting Vice-President and General Counsel v Abstract Corruption is not just a fact of life, it is also a worldwide phenomenon. In recent years, it has reached unprecedented levels. As recent events have demonstrated, no country, no matter how rich or powerful, can claim to be totally immune from the ravages that corruption wreaks. Using ex- amples from across the globe, from Europe to Africa, from North America to Asia, the study provides a comparative review of selected legal as- pects of state practice and international initiatives undertaken to fight corruption. Although recognizing that different countries have used different tech- niques to combat corruption, the study proceeds at the outset to make a distinction between preventive and curative instruments that countries have resorted to in this regard. Preventive instruments consist of upstream legal rules and norms of good behavior conducive to the establishment of a corruption-free environment; curative instruments, consisting of anti- corruption laws proper, seek essentially to provide appropriate remedies to sanction acts of corruption that have occurred. While preventive instru- ments operate ex ante, curative laws seek to deal with corruption on an ex post basis. Part II of the study reviews the preventive instruments of corruption, which it further subdivides under two separate headings, according to whether they represent a direct or an indirect method of combating cor- ruption. Financial management, campaign financing, and procurement laws are cited as the three prime examples of preventive instruments of corruption, based on positive law sources, which rely almost exclusively on the direct method of combating corruption. Examples of the more indi- rect method reviewed in the study are codes of conduct, affirmations of national commitment, and leadership codes, as well as many other provi- sions relating to declarations of assets and freedom of information and the media. The curative instruments of corruption are discussed in Part III of the study, which deals, successively, with the process of investigation of cor- ruption offenses and the judicial process. Using examples of best practices from several jurisdictions, the study reviews the contents of corruption legislation, including applicable sanctions and penalties, the evolving defi- nition of money laundering, and last but not least, the special rules of evi- dence applied from time to time to challenge some of the myths associated with the universally recognized presumption of innocence and thus facili- vi ABSTRACT Vii tate the process of investigation and prosecution of corruption charges. Part III concludes with a brief discussion of some elements to be taken into account in the definition of corruption. Although the study highlights some of the bold measures that have been undertaken by countries-with varying degrees of success-to com- bat corruption, it also recognizes that at a national level, the anticorrup- tion agenda is at best unfinished. Hence, the emphasis on the international aspects of the fight against corruption, which is the subject matter of Part IV. Numerous initiatives have been undertaken by the international com- munity to assist countries in their struggle to contain the spread of corrup- tion. Many such global initiatives have been spearheaded by the United Nations. Regional organizations, including the Organization of American States, the Organization for Economic Cooperation and Development, the Council of Europe, and the Global Coalition for Africa, have also followed suit, preferring, however, to adopt their own individual conventions or declarations, as the case may be. The study reviews in turn each of these various international initiatives, highlighting the common themes and varying perspectives that come into play, as well as the parallels between national and international law in this regard. The study concludes that legal initiatives alone cannot make a differ- ence; they are mere tools in the fight against corruption. The most success- ful initiatives have been those that have been backed up by the necessary will to fight corruption, coupled with the required level of resources needed to engage in and sustain the fight. No amount of rhetoric, declarations, or even legislation can be a fitting substitute for adequate political will and a genuine determination to arrest the spread of corruption. Acknowledgments We extend our most sincere thanks to Mr. Louis Forget for reviewing the study and providing insights and valuable suggestions in terms of both its structure and content. Thanks are also due to Ms. Francoise Bentchikou and Mr. Robert Hunja for their comments on an earlier draft of this study. We also extend our sincere appreciation to Mr. Andres Rigo for providing comments, suggestions, and encouragement. Last but not least, we have to acknowledge the strong support and as- sistance of Linda Thompson, Laura Lalime-Mowry, Vivien Richardson, and Helene Selesneff-Kipreos. Without their valuable contribution, much of the research on which this desk study is based would not have been pos- sible. There are also many others who provided support and encourage- ment in this endeavor, but who would rather remain anonymous. We are grateful-as indeed we should be-to all of them. Our huge debt of gratitude notwithstanding, the views expressed in this study are ours and ours alone. So are the errors, omissions, and mis- statements to be found therein. viii I Introduction "Corruption's not of modern date; It hath been tried in ev'ry state" John Gray Fables, 1738 According to the Oxford English Dictionary, "corruption" can occur in many forms. It can affect the "physical" in terms of the destruction or spoil- ing of anything, especially by disintegration or by decomposition with its attendant unwholesomeness and loathsomeness; it can affect "morals" by the "perversion" or "destruction" of integrity in the discharge of public duties by bribery or favor or the use or existence of corrupt practices. "Cor- ruption" in the second sense is a phenomenon found in all societies, whether developed or developing. Its detrimental and corrosive effects know no bounds, but in developing countries, practices recognized as corrupt have had a much more debilitating effect than in developed countries. In many such societies, corruption exacts heavy economic costs, distorts the opera- tion of free markets, slows down economic development, and destroys the ability of institutions and bureaucracies to deliver the services that society may expect. Corruption also casts a negative influence on the efforts to deal with the incidence of poverty. It has been stated that corruption is the mechanism by which a nouveau riche class has been developed in many societies, particularly in the developing world.' The effect of corruption on the economic fortunes of developing countries and its effect on life in the developed countries have therefore been the subject of many learned writings and articles, especially in recent times.2 Although surveys have shown that industrialized countries rank among the least corrupt, no country, rich or poor, can claim to be wholly virtu- ous.3 In Western Europe4, as in Japan and the United States5, an abundance of cases in the daily press demonstrates how vulnerable every society, no matter how developed, is to corruption. In terms of the perceived levels of corruption in countries, the only difference between rich and poor coun- tries is a matter of degree (see table 1). 1 2 COMBATING CORRUPTION Table 1. Perceived Corruption Index Corruption GNP/Capita Corruption GNPICapita Country Index ($) PPP Country Index ($) PPP Denmark 9.94 21,230 Belgium 5.25 21,660 Finland 9.48 17,760 Czech Rep. 5.20 9,770 Sweden 9.35 18,540 Hungary 5.18 6,410 New Zealand 9.23 16,360 Poland 5.08 5,400 Canada 9.10 21,130 Italy 5.03 19,870 Netherlands 9.03 19,950 Malaysia 5.01 9,020 Norway 8.92 21,940 South Africa 4.95 5,030 Australia 8.86 18,940 Korea, Rep. of 4.29 11,450 Singapore 8.66 22,770 Uruguay 4.14 6,630 Luxembourg 8.61 37,930 Brazil 3.56 5,400 Switzerland 8.61 25,860 Romania 3.44 4,360 Ireland 8.28 15,680 Turkey 3.21 5,580 Germany 8.23 20,070 Thailand 3.06 7,540 United Kingdom 8.22 19,260 Philippines 3.05 2,850 Israel 7.97 16,490 China 2.88 2,920 United States 7.61 26.980 Argentina 2.81 8,310 Austria 7.61 21,250 Venezuela 2.77 7,900 Hong Kong (China) 7.28 22,950 India 2.75 1,400 Portugal 6.97 12,670 Indonesia 2.72 3,800 France 6.66 21,030 Mexico 2.66 6,400 Japan 6.57 22,110 Pakistan 2.53 2,230 Costa Rica 6.45 5,850 Russia 2.27 4,480 Chile 6.05 9,520 Colombia 2.23 6,130 Spain 5.90 14,520 Bolivia 2.05 2,540 Greece 5.35 11,710 Nigeria 1.76 1,220 Note: Corruption Perception Index, from 0 to -10, with highest figure indicating least corruption. Source: Transparency International. World Bank. (Table reproduced from Financial Times, September 16, 1997, p. 15. [Wolfe, Martin. "Corruption in the Spotlight"] ) The definition of "corruption" and "corrupt practices" varies from country to country.6 The World Bank and other multilateral institutions have defined it as "the abuse of public office for private gain."7 It involves the seeking or exacting of a promise or receipt of a gift or any other ad- vantage by a public servant in consideration for the performance or omis- sion of an act, in violation of the duties required of the office. It may also involve extortion of monies or theft by public servants of amounts due or payable to public coffers. Corruption may also be found in the political context, where donations are made to political parties and politicians so that, upon assumption of power, favorable decisions and actions may be taken for the benefit of the contributors.8 In recent times, the crime of money laundering has been added to the growing list of actions classified INTRODUCTION 3 as corrupt practices. Money laundering is included because it involves actions designed to obscure the source of monies being used in the eco- nomic system, most of such funds originating from illegal acts, involving not just drug trafficking but corruption and other offenses as well. In- deed, as will be seen in the analysis of selected practices, mechanisms, and laws and regulations to be found in many areas of the world, much has been done and continues to be done to limit its incidence both in countries (national level) and at the international level. An essential element in any discussion of corruption is the legal and judicial framework within which corruption exists and how it can-and often does-contribute to its demise. As noted above, all legal systems of the world include laws and sometimes institutions whose objectives are to stem the increase in corrupt activities. It is unquestioned that law is crucial in the fight against corruption, and this has as its basis the fact that rules included in the laws define how individuals ought to interact with each other. Law also provides the framework for the settlement of disputes and for dealing with the infringement by individuals of acts that society has deemed to be illegal and not in its interests. Thus, any effort to analyze or reduce corruption must include a clear understanding of a country's legal and judicial system. From a domestic point of view, there are two separate, but comple- mentary, aspects of the fight against corruption. The first consists of a set of upstream rules and norms of good behavior (codes of conduct, mani- festos, declarations) conducive to a corruption-free society (preventive approach). The second aspect consists of anticorruption laws proper (gen- eral or specific legislative enactments), whose purpose is to provide ap- propriate remedies, including criminal sanctions and penalties, procedural rules, and institutional mechanisms, as needed, to combat acts of corruption that have already occurred (curative approach). The first aspect deals with corruption ex ante; the second aspect deals with corruption ex post. Most countries have resorted to a combination of both these approaches. In addition, since the 1 970s, the international community has been con- cerned about the negative effects of corruption on national developmen- tal programs and the world's economy. Since then, several binding and nonbinding instruments have been adopted to guide national actions, promote international cooperation, and build support for fighting cor- ruption. This study reviews and analyzes legal and quasi-legal approaches and mechanisms that have been devised to combat corruption in various coun- tries around the world. These selected approaches and mechanisms will be described, analyzed, and evaluated with the aim of drawing lessons of experience that might guide officials and professionals interested in the 4 COMBATING CORRUPTION fight against the cancer of corruption. Parts II and III deal with the pre- ventive and the curative approaches, respectively. The international di- mensions and initiatives of the fight against corruption are discussed in Part IV. II Initiatives Conducive to a Corruption-Free Environment -A Preventive Approach Legal instruments used to combat corruption vary from one country to another. Countries opt for instruments that are most appropriate to their economic, cultural, and sociopolitical situation. Some fight corruption in- directly through general provisions and notions embedded in their consti- tutions, or even informal rules of conduct without the force of law; others seek to control it more directly, using positive law sources, to regulate ar- eas of human activity prone to corrupt practices. Because corrupt prac- tices occur in various situations and require a variety of responses, most countries seek to contain corruption by use of a combination of all these approaches. Ultimately, the choices vary according to the political will, the nature and gravity of the corrupt actions identified, and their influ- ence on society. The preventive approach seeks not so much to sanction acts of corrup- tion as to pre-empt them altogether. Its fundamental purpose is to deter corrupt practices and ensure that private and official activities are carried out and exercised in a corruption-free environment. This approach relies partly on implicit or indirect techniques based on customs, traditions, or soft law, and partly on explicit techniques based on positive law, includ- ing procurement, campaign financing, and financial management rules. Indirect Technique The indirect techniques of combating corruption discussed in this study are those pertaining to national commitment, leadership codes, declara- tion of assets, codes of conduct, and the role of the media, respectively. National Commitment General. The degree of development of a country is the product of not just sound economic policies but also compliance by political leaders, public officials, and citizens with laws, rules, and regulations, as well as adher- 5 6 COMBATING CORRUPTION ence to codes of conduct. A compliant citizenry is more likely to exist in countries where public officials are not only competent, but also impartial and nonpredatory, and also where transparency and accountability pre- vail. Where officials are corrupt, compliance is seldom the optimal strat- egy for citizens, because bribery and illegal activity yield higher rewards. Rampant corruption tends to undermine the legitimacy of state institu- tions and governments. When a public official pursues his own interest without regard to the interests attached to his public function, the balance of authority both among government entities and between the state and civil society is effectively damaged.9 If the general population assumes that public officials are not bound by the restraints of their public func- tions, it will be less likely to obey the laws of the society." In such a situa- tion, it is important to reiterate the preeminence of the rule of law, and more directly the need to combat corruption at the highest level, because it is one of the root causes of destabilizing the rule of law. Several countries have attempted to articulate their willingness to com- bat corruption through hierarchically important legal texts in the legal system. The Constitution of the Fourth Republic of Ghana (1992), for in- stance, provides boldly: "The State shall take steps to eradicate corrupt practices and the abuse of power."'" This provision conveys a strong mes- sage by the constitution makers as to the commitment of the country to prevent and combat corruption. Nepal is another country that has used its constitution as one of the means of indicating its abhorrence of corruption. The eradication of cor- ruption is a commitment of the state embodied in the constitution and for this purpose, Nepal's constitution provides specifically for the establish- ment of a Commission for the Investigation of Abuse of Authority.'2 This Authority is vested with the power to conduct inquiries into and investi- gate improper conduct or corruption by persons holding any public of- fice."3 Considering the importance of this commission, its Chief Commissioner is appointed by the king on the recommendation of the Constitutional Council.14 In the same spirit, the 1995 Constitution of Uganda takes a comprehen- sive approach and devotes an article to accountability. It emphasizes that all public offices are held in trust for the people; all persons placed in po- sitions of leadership and responsibility are, in their work, answerable to the people; and finally all lawful measures will be taken to expose, com- bat, and eradicate corruption and abuse or misuse of power by those hold- ing political and other public offices."5 In Ukraine, corruption has long ceased to be the sole domain of law enforcement authorities: it has now become an issue of national signifi- cance. For the first time, the new President, Leonid Kuchma, on July 21, 1994, signed the "Decree on Urgent Measures of Enhancing Struggle INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 7 Against Corruption." Pursuant to this decree, the president ordered the Ukrainian Ministry of the Interior, the Security Service, the State Customs Committee, the State Committee for Protection of the State Borders, the National Guards, the government of the Republic of Crimea, local execu- tive bodies, and the Prosecutors General to pursue systematically coordi- nated measures aimed at essentially enhancing the fight against banditism, corruption, and other gross crimes. 16 Interestingly, examples of legal and constitutional instruments that posit a state-level national commitment to curbing corruption are not common- place. They are limited in number, of recent origin, and essentially from the developing world. The constitutions of most developed countries do not have similar provisions. Instead, the control of corrupt practices is left to the promulgation of legislation in the context of the legislative frame- work. In such cases, a statement of national commitment hardly brings any added value. Moreover, the civil society in these countries-where democratic institutions have operated for a significantly long period of time-is well versed in the issue of corruption and proactive toward its eradication. Conclusion. Developed countries have been relatively successful in their fight against corruption, even in the absence of specific organic law provi- sions. While some countries in the developing world have included provi- sions intended to state their resolve to combat corruption, this has not so far yielded significant results. Indeed, in countries where corruption is endemic and generalized and institutions to combat it are still in embry- onic form-or totally defunct, postulating norms of state honesty, state in- tegrity, and state commitment through the promulgation of important legal texts, such as constitutions, can make a valuable contribution toward eradi- cating corruption17. At the very least, it illustrates how the body politic feels about this moral and development-related issue. Leadership Codes In the effort to prevent or combat corruption, the role as well as commit- ment of national political leaders is crucial. It is important for the national political leaders to be willing to implement measures that require them to sacrifice their own personal interests and establish good governance. In other words, the top leadership should set the tone for a system of gover- nance that is transparent and agree to abide by it."8 Such measures, mostly transpiring from state policy, are also, in some countries, incorporated in the constitutional or legislative instruments. If not clarified at the outset, the term "leadership code" may be mis- leading. Coined initially in the context of African countries, a leadership code normally includes a series of rules (embedded in the organic or gen- 8 COMBATING CORRUPTION eral laws or informal canons without force of law) that are deemed to be useful for combating corruption in a country, to be followed by, or recom- mended for, senior officials and leaders. The focus of such codes is on the leadership and bureaucracy of the particular country. State Practice. With the intention of minimizing self-dealing by politi- cal leaders (or senior officials) and addressing the issue of conflict of inter- est, some African countries, such as Tanzania and Uganda, have adopted legislation that requires such leaders or officials to report potential for con- flict of interest in their duties.'9 The Constitution of the Fourth Republic of Ghana (1992) goes further and provides an interesting and comprehen- sive example of the commitment of the state, specifies the norms of behav- ior of public officials, and indicates a strong state interest in the prevention of corrupt practices. Conclusion. Although not yet part of the universal positive law, provi- sions encouraging leaders to lead by example are justified in all countries. This should especially be the case in countries that, for a variety of sociopolitical reasons, have failed to develop a satisfactory legal frame- work and where corruption is rampant at high levels of government and society. In such countries and situations, one way to control the propen- sity for corruption is to systematically reduce the incentives and opportu- nities for public leaders and officials to engage in corrupt practices. Indeed, in many countries, scandals and scams that involve high offices, political leaders, and senior officials have shaken the public's confidence in the way governments have performed throughout decades. Hence, codes of conduct inculcating a leadership dimension to the control of corruption may help uplift the frustration of the public and rebuild confidence in the state in general, and the establishment in particular. Declaration of Assets Introduction. Another technique used in the prevention of corruption is to expose the gains (primarily financial) that an official has reaped from corruption and, in so doing, question the legitimacy of its source or sources. This indirect technique of attacking corruption at destination necessitates that states proscribe and sanction a public official whose assets have in- creased substantially and unreasonably during his tenure in office, and who cannot explain such increase in terms of his lawful earnings. For this to happen, it is important for the state (or the general public, in some cases) to be able to compare the real financial worth of senior government offi- cials before and after they assume office. Such financial worth becomes a crucial comparator when examining whether alleged corruption has oc- curred during and after the tenure in office. The declaration makes it easier to detect such corruption. INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 9 State Practice. Several countries have attempted to prevent corruption by providing for this type of preassessment system through constitutional or other legal means. The 1992 Ghana constitution, for instance, requires any person who holds a public office to submit to the Auditor-General a written declaration of all property or assets owned by, or liabilities owed by, him or her, whether directly or indirectly, before taking office, at the end of every four years, and at the end of his or her term of office.20 Such declaration can, on de- mand, be produced in evidence before a court of competent jurisdiction, a commission of inquiry, or an investigator appointed by the Commissioner for Human Rights and Administrative Justice,2" which is a constitution- ally mandated position. Based on the comparisons undertaken, any prop- erty or assets acquired by a public officer after the initial declaration and that is not reasonably attributable to income, gift, loan, inheritance, or any other legitimate source is deemed to have been acquired in contravention of the constitution.22 The 1995 Constitution of Uganda has also made it a constitutional obligation for senior public officials to declare their assets (property) when they assume office and periodically thereafter.23 A com- mittee to which such declarations are to be made has also been created. Similarly, the Turkish constitution requires declarations of assets to be made by persons entering public service and those serving in the legislative and executive organs of government. The frequency of such declarations is governed by specific legislation.24 In March 1998, the Parliament of Mozambique approved an ethics law25 that attempts to specify norms of conduct applicable to politically ap- pointed officials. This law requires all politically appointed officials to submit formal declarations of assets and commercial affiliations upon tak- ing office and to periodically update them. It is interesting to note, how- ever, that the law does not cover civil servants who are also involved in the management of public institutions and resources and who remain highly vulnerable to corrupt practices. Despite this shortcoming, the Eth- ics Law of Mozambique may have an appropriate salutary effect on the conduct of all public servants. In 1978, the United States introduced the Ethics in Government Act26. The Act requires financial disclosure by high government officials in all three branches of the federal government, restricts contacts between former high-level executive branch employees and their former agencies, and es- tablishes a government office to monitor compliance with the law. A pro- vision of the Ethics in Government Act establishes a mechanism for appointing an independent counsel to investigate and prosecute wrong- doing by high government officials.27 In Mauritius, every member of the National Assembly and every cabi- net minister is required to deposit with the Clerk of the National Assem- 10 COMBATING CORRUPTION bly a declaration of assets and liabilities in relation to self, spouse, and minor children and grandchildren.2" They are required to specify any prop- erty sold, transferred, or donated to them in any form or manner.29 Simi- larly, Singapore requires public servants to declare their assets each year and to keep free from debt.30 Expressing accountability through a public declaration is not a novel idea. A number of countries require those who wield executive power and elected representatives of the people in general to make their assets and liabilities public. In the Philippines, since the "people power" revolution of 1986, a law has been promulgated that requires the president and the cabinet to declare their assets and liabilities in a register accessible to the public. A number of other Asian countries, including India and Nepal, have also instituted systems to carry out such preassessment, albeit not necessarily as a legal or constitutional requirement. Evidence in many countries suggests that laws relating to the declara- tion of assets have been on the books but seldom been taken seriously.3' For example, to ensure enforcement of the measures stipulated in the Eth- ics Law of Mozambique, in early March 1998, the Mozambican govern- ment submitted a bill entitled "High Authority Against Corruption" (pursuant to which the authority was to be vested with power to investi- gate and prosecute corruption cases, including cases related to the decla- ration of assets) but Parliament rejected it without any debate. Similarly, to ensure a smooth implementation of the code of conduct stipulated in its constitution, Nigeria envisaged a Code of Conduct Bureau as well as a tribunal, but the tribunal has never been made operational, although mem- bers of the bureau were appointed.32 A 1996 move in India to exclude elected representatives from the purview of the Indian Prevention of Corruption Act (1988) also shows the gap between the political will to curb corruption and related implementation measures.33 The lessons of experience tend to point to a situation where assets are declared but appropriate mechanisms are not put in place to enforce violations. Conclusion. Although the requirement that public officials should de- clare their assets has been helpful on its own merits, in practice it has not significantly curbed the incidence of corruption in any country. Indeed, the examples indicate that very few countries have established mecha- nisms to check the accuracy of the information provided. Also in many countries, the family and kinship systems make it difficult to ensure the accuracy of the information. The corrupt will always find ways to conceal their illicit gains by transferring them to friends or relatives while actually retaining control of them; and many legal systems remain unequipped to cope with this situation or use such declarations as a basis for successful enforcement actions. Some national laws have attempted to provide, in relation to the offenses of bribery and unexplained excessive wealth, that, INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 11 where there is reason to believe that any person was holding assets on behalf of a person accused of corruption or to have acquired assets as a gift from such accused person, those assets shall be presumed to have been in the control of the accused.34 However, despite these provisions, experi- ence around the world indicates that implementation of the requirement of assets declaration has been less than formidable. Known instances of senior government officials being taken to court on grounds of having made a false declaration of assets (even where rumors are strong and rampant) are uncommon. Similarly, not many top government officials have ever been removed from office on grounds that they were not able to explain the assets shown in their declarations. To make matters worse, a generally accepted methodology for verifying the information contained in the dec- laration of assets and liabilities does not exist. Notwithstanding such shortcomings, it should be further stressed that a system of disclosure of assets can be a powerful deterrent in its own right. Backed by an increased level of dissemination of information re- garding declaration of assets worldwide, and coupled with efficient imple- mentation and enforcement mechanisms (including mechanisms to check the accuracy and monitor failures to report), it can contribute-albeit mod- estly-to a country's effort to reduce and prevent the incidence of corrup- tion. Codes of Conduct General. Codes of conduct are standards of good behavior that are pre- scribed from time to time in relation to groups of individuals, organiza- tions, or professional bodies. The substance of the codes varies according to the functions, purposes, and objectives of such groups, bodies, or orga- nizations. Although codes of conduct are, generally speaking, more infor- mal, and their application generally less rigid than laws, there are instances of codes of conduct established in the form of laws and subject, accord- ingly, to the full force of the law, including the application of civil and criminal penalties. More often, however, codes of conduct are expressed in the nature of informal, but binding, rules of conduct that rely partly on peer pressure but partly also on other forms of internal professional disci- pline and self-policing mechanisms. Although these codes of conduct are not primarily meant as devises against financial corruption, they certainly contribute to the promotion of transparency and accountability, and in so doing, contribute-however indirectly-to the control of corruption in society. Public Officials. In many countries, codes of conduct have been pre- scribed for civil servants and elected officials to govern their professional behavior and their dealings with other parties. In some countries, attempts 12 COMBATING CORRUPTION have been made, particularly in the case of political leaders and other se- nior officials, to accord enforceability to rules of conduct by embodying such rules in the constitutional or legal framework. Many of the codes of conduct governing the behavior of elected repre- sentatives as well as public appointees are self-explanatory. When mon- etary compensation is limited, there is a tendency to sell privileges.35 Thus, an effective technique to assist in the prevention of corrupt practices is to establish a clear-cut code of conduct for public officers. The practices in several countries are illustrative of this approach. State Practice. In Australia, the "Guidelines on Official Conduct of Com- monwealth Public Servants," as amended in 1987, covers relationships among politicians and between their staff and public servants, as well as the treatment of public and official information. The guidelines also cover their participation in public interest groups, financial and other private interests, and personal behavior.36 The 1992 Constitution of Ghana also includes a comprehensive code of conduct for public officers.37 For instance, it states that " a public officer shall not put himself in a position where his personal interest conflicts or is likely to conflict with the performance of the functions of his office."33 Further, "no person shall be appointed or act as the chairman of the gov- erning body of a public corporation or authority while he holds a position in the service of that corporation or authority."39These provisions estab- lish the notions of incompatibility of offices and of conflict of interest. The ethical conduct for public servants in Japan is prescribed in the National Public Service Law of 1948, which places primary focus on pub- lic interest and confidentiality. Standards of ethical conduct cover such items as service to the people, oath of service, obeying laws, prohibition of conduct causing discredit to the public service, preserving secrecy, restric- tion of political activity, and exclusion from private enterprises.40 As noted above, in March 1998, the Parliament of Mozambique approved an ethics law aimed at codifying the conduct of some officials. It defines the rights and responsibilities of governing officials and discourages ac- ceptance of gifts by public officials.4" Gift acceptance by public officials has also been considered as seriously unethical under the laws of the United States. The Congressional Ethics Code of the United States (1977) lays out detailed provisions establishing standards of conduct, and limiting income earned over and above con- gressional salaries, honoraria fees, and gifts.42 Singapore's Prevention of Corruption Act and Hong Kong's Prevention of Bribery Ordinance, which are intended mainly to reduce the incidence of corruption among public employees, are also noteworthy in this con- text. In Singapore, public servants are forbidden to receive gifts, in money or in kind, from persons other than friends or family. There are no limits INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 13 on gifts and loans from relations. The Hong Kong law, though not as strict, is quite specific. On special occasions, public officials can accept gifts not exceeding $130 (HK$) from the public and $260 from friends. At other times, friends can give gifts of HK$52 and loans of HK$260. Loans from the public cannot exceed HK$130. Similar, though less detailed but stringent, provisions are stipulated in the Law on Status of a People's Deputy of Ukraine. For instance, Article 4 provides that the status of a People's Deputy is incompatible with the oc- cupation of any other business or service position, except teaching, re- search, and other creative work. A People's Deputy cannot receive gifts or awards from foreign governments or foreign and Ukrainian institutions, organizations, and enterprises irrespective of their form of ownership, except for teaching, research, and other creative work. In addition, a People's Deputy of Ukraine must abide by other demands and limitations established by the legislation on fighting corruption. Any Deputy who vio- lates the provisions of this law by taking a position incompatible with the position of Deputy can have his mandate annulled. The Russian Antimonopoly Law43 also adopts a similar approach, pro- hibiting state and government officials from engaging in independent entrepreneurial activity; owning enterprises; voting in the general meet- ing of economic partnerships or societies, either independently or through a representative; and holding office in any administrative struc- ture of an economic entity. Officials of federal executive bodies, execu- tive bodies of Russian Federation (RF) subjects and local self-government agencies, for-profit or nonprofit organizations or their managers, and individuals, including individual entrepreneurs, bear civil, administra- tive, or criminal liability for violations of any of the provisions of the Antimonopoly Law. The control of travel by executive officials is another noteworthy aspect of the Russian legal framework. RF Presidential Decree No. 98144 prohibits officials and executives of central federal bodies of the executive branch and managers and officials of the administration of the president of the RF and the staff of the RF government from taking official trips abroad at the expense of enterprises, institutions, organizations, or individuals doing business with the state. According to the decree, these officials shall also not take personal trips at the expense of any of these same entities. This prohibition against official trips abroad does not apply if such travel takes place in accordance with RF international agreements, or on a mutual ba- sis pursuant to an agreement between the RF and a foreign state. How- ever, there are no penalties specified in Decree No. 981 for individuals who violate its provisions. Other Elected Officials and Professional Groups. Among the array of professional codes of conduct, those that have attracted the most attention 14 COMBATING CORRUPTION in the context of the current debate on corruption are the ones dealing with political leaders45 and judges. Code of conduct of ministers: Ministers in the executive branch of the gov- ernment play an important role in ensuring that government policies are implemented in a transparent and accountable manner. However, in situ- ations where a minister who is a member of the government is also a mem- ber of a political party, accountabilities are blurred, and there is scope for corrupt acts to occur. It is important for the minister, accordingly, to clearly distinguish between his or her actions as a minister and actions as a mem- ber of a political party.46 The U.K. model: The United Kingdom's Code of Conduct and Guidance on Procedures for Ministers attempts to establish certain norms to that effect.47 The U.K. code establishes guiding principles essentially based on the principles of integrity, honesty, and impartiality in public functions. In this context, it spells out the rules of conduct governing the ministers' over- seas travel45, the rules of protocol that apply to their dealings with foreign governments, and the privileges they, their spouses, or their advisers en- joy. The provisions of the U.K. code stress that the ministers are expected to behave according to the highest standards of constitutional and personal conduct in the performance of their duties.49 The proper use of public funds is key to the code. For instance, with respect to official facilities financed out of public funds, it specifies that such facilities should be used only for publicizing and advertising the activities of government, but not for the dissemination of materials related to the minister's political party. According to the U.K. Code, it is the duty of ministers to uphold the political impartiality of the Civil Service and not to ask civil servants to act in any way that would conflict with the Civil Service Code. It is their duty to ensure that influence over appointments is not abused for partisan pur- poses.' Similarly, the code makes it clear that ministers should ensure that no conflict arises, or appears to arise, between their private interests (fi- nancial or otherwise) and their public duties.5" Finally, the U.K. Code prohibits ministers from accepting a gift from anyone to whom the minister would then be obligated. Paragraph 126 of the Ministerial Code states: "It is a well-established and recognized rule that no minister or public servant should accept gifts, hospitality or ser- vices from anyone which would or might appear to place him or her un- der an obligation."52 Code of conduct of judges-the Madagascar example: Like ministers, judges are expected to behave according to the highest possible norms of propri- ety for justice to be credible. To deal with the credibility gap of judges in Madagascar, in 1997 a comprehensive code of conduct for judges was is- sued in the form of a Circulaire from the Minister of Justice.53 Although INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 15 primarily concerned with the rights and duties of judges, the Malagasy Code of Conduct of Judges also covers other officials who are directly or indirectly involved in the administration of justice. In essence, the rela- tively detailed code acknowledges that the standard of conduct of the judges and such officials should be above reproach and certainly higher than those being judged, and that their public personae should leave no grey area that could raise questions about their integrity and honesty. The code prohibits judges from taking or accepting any monetary ad- vantage from the treasury beyond what is provisioned in the laws govern- ing their terms of service. The judges should refrain from taking any unlawful perquisites by interpreting them as a necessity or an inevitable precondition for the performance of their duties. According to the code, the judges must disengage themselves from any direct or indirect involve- ment in any business or profession and in any sale or purchase of or any dealings in shares, debentures, or any other similar financial instruments, and they must abstain from hearing any case involving a corporate or busi- ness entity in which they or their immediate relatives have interests. They are expected to decline any donations or gifts from any organizations or persons who could undermine or influence their performance as judges. In addition, they are to strictly refrain from any fund-raising activities. In short, judges are required to maintain the highest honor and dignity of their high offices. Code of conduct of judges-the American model: There are many similari- ties but also striking differences between the Malagasy code and the code of conduct applicable to federal judges in the United States. The United States Code deals in an elaborate fashion with, among other things, the methodology of compensation of judges, an important vehicle for control- ling corruption in courts."4 The code provides that a judge may receive compensation and reimbursement of expenses for the law-related and ex- trajudicial activities permitted by the code, if the source of such payments does not give the appearance of influencing the judge in the judge's judicial duties or otherwvise give the appearance of impropriety [emphasis added155. In addi- tion, for purposes of clarity, the code specifies that compensation should not exceed a reasonable amount, nor should it exceed what a person who is not a judge would receive for the same activity. According to the code, reimbursement for expenses should be limited to the actual costs of travel, food, and lodging reasonably incurred by the judge and, where appropri- ate to the occasion, by the judge's spouse or relative. Any payment in ex- cess of such an amount is considered to be compensation. Finally, the code requires a judge to make financial disclosures in compliance with appli- cable statutes and Judicial Conference regulations and directives.56 In the United States, additional restrictions on the receipt of compensa- tion by judges are imposed by the Ethics Reform Act of 1989 and regula- 16 COMBATING CORRUPTION tions promulgated by the Judicial Conference thereunder. The restrictions include, but are not limited to (a) a prohibition against receiving "hono- raria" (defined as anything of value received for a speech, appearance, or article); (b) a prohibition against receiving compensation for service as a director, trustee, or officer of a profit or nonprofit organization; (c) a re- quirement that compensated teaching activities receive prior approval; and (d) a 15 percent limitation on the receipt of "outside earned income."57 Conclusion. Codes of conduct have at least two distinct advantages. First, even in the absence of enforceability, and even where a particular form of behavior falls short of a criminal offense, the existence of the code can still provide appropriate disincentives for corrupt activities. An im- proper act of a professional nature can be questioned by peers, and the professional group may take actions according to the mores of the group. Second, codes of conduct can serve as the catalyst for criminal proceed- ings. Whether such codes originate in an organic law, a parliamentary enact- ment, or a mere informal code of behavior, there is growing recognition that a consistent set of rules of behavior, which promotes transparency and condemns abuse or misuse of power, is a powerful tool for the pre- vention of corruption within any group of officials, organization, or pro- fessional body. Proactive Media There is clearly a direct link between corruption in the public service and the lack of accountability on the part of public servants. One way to make public servants more accountable is to promote efficient and proactive mass media. The media (the Fourth Estate) play a key role in investigating alle- gations of impropriety in public affairs and exposing corruption and cor- rupt practices58. This role pertaining to denunciation of corruption becomes even more important when existing political institutions are inadequate and inefficient in ensuring accountability of public servants. Every gov- ernmental entity needs to be subjected to scrutiny, either directly, through the public eye, or indirectly, through the mass media.59 Role of the Media in the Context of Freedom of Expression. The mass media as the main expression of public opinion have long been recog- nized as having a role to play in ensuring that governments are account- able to the governed. Credible media exercise strong influence over the public and play an important part in revealing improper and unfair ad- ministrative actions and corruption. A good illustration of this is the role the media played in the Lockheed scandal, which prompted the resigna- tion of the then-Prime Minister of Japan after allegations were made by a local monthly magazine.60 Other examples abound. INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 17 In the last few decades, political liberalization in many countries has gradually made the media more powerful. Because of their efforts in gath- ering information, governments are becoming more accountable to their people or at least ensuring a modicum of transparency with respect to governmental action. Indeed, the media in some countries have demon- strated tenacity and unearthed information that law enforcement officials would not have been able to obtain, thereby making the media a prime source of potentially useful information, including information regard- ing acts of corruption committed in the society. Therefore, the media are, in the present-day world, not only passive spectators of the affairs of gov- ernment but also active participants with increasing responsibility in so- ciety. To enable the media to play their role, that of "divulger" of governmen- tal action-including corrupt practices, a necessary precondition has been the grant of legally sanctioned protections. The media need a guarantee of unrestricted discussion of public affairs, among other things, through free- dom of expression or inviolability of privileged information, and they should be given the possibility to organize, as well as the autonomy to act and react, as an institution. Journalists should, however, not be compelled to reveal their sources. Only a few countries worldwide have laws that provide such guarantees, and, even in such cases, these protections are not absolute. The most important protection for the media is the guarantee of free- dom of expression. In theory, this guarantee has already become common- place in most constitutions and is often encompassed under the fundamental rights chapter of most constitutions. But, often again, such provisions are not always implemented. Only a few countries, such as the United States, are dedicated to making this fundamental human right a reality in prac- tice. The First Amendment of the U.S. Constitution decrees that "Congress shall make no law ... abridging the freedom of speech, or of the press....' This constitutional provision for freedom of expression has been interpreted in a variety of ways in the courts and academic publications. The interpre- tations range from those that take a near-absolutist view that "no law" re- ally means no law (a literal interpretation), to those that defend the theory of preferred position (of individuals), to those that take the approach of balancing interests, to those that advocate limited rights.61 In spite of the noticeable contrast in the different views, the usefulness of the media is now undeniably established. Indeed, responsible and forthright media in- terested in presenting facts to the general public have thus become a sine qua non for a society that aims at preventing corruption. Consistent with the principles underlying the U.S. constitutional provi- sions, many countries-either through their respective constitutions or specific legislation-have accorded an important role to the notion of the 18 COMBATING CORRUPTION independence of the media. The Constitution of the Fourth Republic of Ghana, for instance, devotes a chapter to the freedom and independence of the media62 and provides for a National Media Commission to adminis- ter press freedom and also to develop principles under which the press will operate.' A similar provision is to be found in the Constitution of Nigeria, which states that "the press, radio, television and other agencies of the mass media shall at all times be free to uphold the fundamental objectives [of the constitution] and uphold the responsibility and account- ability of the government to the people."64 Not all constitutions devote a separate chapter to covering the role of the media. In India, for instance, freedom of the press is part of the free- dom of speech and expression guaranteed by Article 19(1)(a) of the consti- tution. There is no specific provision ensuring freedom of the press. Freedom of the press is regarded as a "species" of which freedom of ex- pression is the "genus."65 Thus, as only a right flowing from the funda- mental right of freedom of speech, freedom of the press in India stands on no higher footing than the freedom of speech of a citizen.66 The effect, how- ever, is to give the press the same rights as may be found in those coun- tries that have emphasized the importance of the press through a separate provision in their constitutions. Even though the importance of the media has been recognized by al- most all the principal legal systems, and the principle of freedom of the media has become part of the organic laws in many countries, nonetheless there is still a significant gap between practice and theory. Indeed, in spite of similarity of constitutional provisions, the performance of the media in, for instance, Nigeria or Pakistan cannot be compared with that in the United States or France. The role of the media in providing ammunition for the fight against corruption is vital. Accordingly, it is necessary not just to provide the media with the freedom required for them to play this role but also to ensure that this freedom is not subject to unwarranted limitations in terms of cumbersome individual legal rights (libel), infringement of jour- nalists' pledge of confidentiality, or compelling necessities of the states (secrecy). Role of the Media in the Context of Libel Laws. In spite of the free- dom of the media granted by constitutions, journalists (and media in gen- eral) continue to face a serious legal problem: the danger of being sued for libel or slander. The fear of libel suits, as a consequence, often leads jour- nalists to suppress stories they would otherwise publish. The threat of suits, however, helps to bring discipline to the media in that they have to be responsible and develop methods to ensure that their publications re- flect the facts. The mere right to sue for libel gives people with real or imagined griev- ances an unparalleled opportunity to harass the mass media, regardless of INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 19 whether they actually have a valid complaint. In the United States, for instance, a person suing for libel has the right to ask questions on a wide variety of issues during the pretrial discovery process. Those who have received unfavorable publicity sometimes may sue for libel merely as a means of identifying a whistleblower who helped a reporter gather infor- mation. Because the refusal to name a news source may be deemed an admission that no source exists, the media face the perennial dilemma of whether to reveal the identity of the confidential sources, to defend them- selves against costly libel suits, or not to reveal the source and lose the suit. Journalists' Pledge of Confidentiality. journalists are often given in- side information that no law enforcement officer could hope to obtain. Investigative journalists unearth confidential information of importance and often publish it without revealing their sources, as they are bound to by their rules of ethics or by the confidential nature of the sources. With- out confidential sources, journalists would not be able to report many im- portant news stories. It is common for whistleblowers (people with inside information about wrongdoing in government) to come forward and talk to a reporter in secret, something they would not do without a pledge of confidentiality.67 Journalists thus are ethically obliged to protect the confi- dentiality of news sources. This pledge of confidentiality is a privilege of journalists that is widely recognized. However, in the interests of fairness and justice, judges in all jurisdictions would like all relevant information to be made available in court, and they are increasingly using their con- tempt of court power to enforce orders requiring journalists to supply con- fidential information. In this context, it should be noted that the journalists' privilege (to main- tain confidentiality of sources) is largely a 20th century idea developed in the United States. In 1896, the state of Maryland adopted a statutory shield law shielding a reporter from the duty to reveal sources of information.68 In 1933, the state of New Jersey, and successively many other states, fol- lowed suit. More than half of the states in the United States now have such shield laws.69 Because of widely varying judicial interpretations provided by different jurisdictions, it is difficult to generalize about the effective- ness of the state shield laws. Notwithstanding the absence of shield laws, the First Amendment of the U.S. Constitution (which provides for free- dom of speech and of the press) protects the rights of journalists to keep their sources confidential, at least in the United States. Role of the Media in the Context of Secrecy Rule. Another important dimension of the principle of freedom of information is how one would limit this role of the media in the light of a compelling high interest-that is, the need for a degree of secrecy on the part of government to assure the effectiveness of its operations. The role of the media is inevitably subject 20 COMBATING CORRUPTION to the perennial conflict between the government's need for secrecy in cer- tain areas to protect the public interest, and the public's need for free ac- cess to information to ensure that all public policy issues are discussed. The ability of the citizens to control governments is an inherent feature of any democracy. However, the present balance in a large majority of coun- tries is tilted toward secrecy on the part of administrative agencies. Only a few countries have accorded their citizens the right and access to a significant amount of government-related information. The four Scan- dinavian countries, the United States, Canada, and Hungary have a long history of public access to information." In Sweden, for instance, the prin- ciple of access to information was established as early as 1766 as part of the Freedom of the Press Act.71 In the United States, besides the protection granted by the constitution, the Administrative Procedures Act of 1946 requires the routine disclosure of government-held information. The most important piece of legislation, however, is the Freedom of Information Act of 1966 (FOIA), which replaced the provisions of the 1946 Act and states unequivocally that public access to most documents is to be the general rule. Most significantly, it listed the types of documents that could be kept secret (in nine general categories of exemption) and included provisions for the challenge by any citizen of a decision to withhold information.72 Under the FOIA, virtually every record possessed by a federal agency must be made available to the public in one form or another unless it is specifi- cally exempted from disclosure or specially excluded from the coverage of the Act in the first place.73 The nine exemptions of the FOIA ordinarily provide the only bases for nondisclosure, and they are generally discre- tionary, not mandatory, in nature. The Ugandan Constitution provides its citizens with the right of access to information. According to that constitution, every citizen has a right of ac- cess to information in the possession of the state or any other organ or agency of the state, except where the release of the information is likely to prejudice the security or sovereignty of the state or interfere with the right to privacy of any other person.74 In Nepal, the right to information is a constitutional right.75 In spite of the legal or constitutional provisions, however, citizens in countries such as Uganda or Nepal have not taken advantage of the right to information to the same extent as the citizens in developed countries. In contrast, in most countries where the right to free access to informa- tion is not yet established, the decision to withhold administrative informa- tion or refuse access to documents is at the discretion of the executive branch of government. Such governments are free to withhold any information not only for legitimate reasons, such as the protection of national security or personal privacy, but also to protect themselves from criticism of wrongdo- ing, embarrassment, or inconvenience. This state of affairs is not conducive to good government and directly or indirectly fosters corruption. INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 21 Conclusion. The media's influence on building public opinion has, in many countries around the globe, been one of the indirect, but helpful, tools in the reduction of corrupt acts and practices in government. The media can also be used to emphasize and publicize the positive side of the country's efforts to prevent corruption. Indeed, it may be more than just a matter of coincidence that-with the exception of some countries such as India where the press enjoys near-absolute freedom, or Singapore, where the incidence of corruption is remarkably low-corruption appears to be most rampant in countries without a free, active, and objective press. Thus, there appears to be some correlation in the depth of corruption between those countries where the press enjoys significant freedoms and those where its rights are circumscribed. Direct Technique Campaign finance and procurement have been cited as two of the major sources of corruption, as has the absence of adequate financial manage- ment rules. Not surprisingly, therefore, much of the debate on corruption has focused on the contents of financial management, procurement, and campaign finance laws and their application. Along with financial man- agement laws, procurement and campaign finance laws are regularly cited as some of the positive law sources that have a significant role to play in the campaign against corruption. Transparent Financial Management System Purpose. In a broad sense, the public sector financial management system encompasses the process of budget preparation, internal controls, and ac- counting. The financial management practices of most countries vary ac- cording to the nature of their political system. It may be centralized or decentralized, federated or unitary. Whatever the form, a general review of practices reveals that, in countries seeking to establish and maintain sound financial management systems, a distinction is imposed, often by law, among (a) the public entity that requests that an expenditure be made; (b) the budget division of the ministry of finance, which accepts the ex- pense and gives the order to pay; and (c) the treasury, which actually makes payment. Systematically, these three distinct levels of acts are carried out by separate entities. To ensure smooth implementation of the process, emphasis is laid on a legal framework that governs transparent planning processes and internal check-and-balance mechanisms, as well as ex post supervisory role by an apex body. In short, a public accounting system capable of reporting on all expenditures has been considered indispens- able for a country's good governance. 22 COMBATING CORRUPTION Financial Management. An appropriate legal framework is required to allow government agents to implement the budget, trace the financial records and statements, and control the implementation and accounting of expenses. This may take the form of constitutional provisions, laws and regulations, or both. Examples of such laws and regulations are the fi- nance law itself, the laws on the organizational structures mandated to deal with the execution and control of state budgets, the budget law, and rules regarding bookkeeping for funds and property. Legal instruments vary from one country to the other.76 Budget execution law ensures that expenditures are consistent with the limits set out in the annual budget law (or laws) and with the require- ments of other financial legislation and regulations. From a legal stand- point, budget execution is thus the practical application of the spending authority granted by the budget law. Accounting and auditing, though often considered as separate operations, are regarded as the final stage of budget execution. There is no phase of financial activity that is not con- trolled and directed, in some manner or other, by law.77 A comprehensive example of a legal framework for financial reporting is provided by the United States. In accordance with Section 3515 of the U.S. Federal Financial Management Act,78 not later than March 1 in each year, the head of each executive agency is required to prepare and submit to the Director of the Office of Management and Budget79 an audited fi- nancial statement for the preceding fiscal year, covering all accounts and associated activities of each office, bureau, and activity of the agency.80 Each such audited financial statement of an executive agency shall reflect the overall financial position of the offices, bureaus, and activities covered by the statement, including assets and liabilities thereof; and results of operations of those offices, bureaus, and activities. The Director of the Of- fice of Management and Budget prescribes the form and content of the financial statements of executive agencies, consistent with applicable ac- counting and financial reporting principles, standards, and requirements.8" One important precondition of transparency in financial management is the establishment of a mechanism for checks and balances. An adequate and effective financial management system presupposes that there is in place a mechanism permitting overall direction and control of the coun- tries' finances. In the case of the United States, for instance, the Comptrol- ler General is vested with the authority to prescribe accounting requirements, systems, and information. Section 3511(a) the Financial Management Act states: The Comptroller General shall prescribe the accounting prin- ciples, standards, and requirements that the head of each execu- tive agency shall observe. Before prescribing the principles, INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 23 standards, and requirements, the Comptroller General shall con- sult with the Secretary of the Treasury and the President on their accounting, financial reporting, and budgetary needs, and shall consider the needs of the heads of the other executive agencies. As the U.S. example illustrates, an effective internal control system, and one that promotes accountability, presupposes that all government enti- ties must apply uniform accounting rules, principles, and standards. In every sound financial management process, there is the need for sub- mission of the entire financial statements to an apex body for ex post su- pervision. The U.S. law requires that, not later than March 31 of each year, the Secretary of the Treasury, in coordination with the Director of the Of- fice of Management and Budget, prepare and submit to the President and the Congress an audited financial statement for the preceding fiscal year, covering all accounts and associated activities of the executive branch of the U.S. government. The financial statement reflects the overall financial position, including assets and liabilities, and results of operations of the executive branch of the U.S. government, and is prepared in accordance with the form and content requirements set forth by the Director of the Office of Management and Budget.82 The Comptroller General of the United States audits this financial statement.83 Public Accounts Committees. Many countries, particularly those with a common-law tradition, have parliamentary committees responsible for monitoring public accounts that are known as Public Accounts Commit- tees (PACs). PACs ensure ex post supervision of the financial manage- ment process. Mostly stemming from the states' constitutional provisions, these committees have the responsibility of ensuring ex post that all pub- lic funds are spent for purposes for which they are released. The members of these committees are often parliamentarians from different political parties. Parliamentary practice often requires that these committees be chaired by leaders of the opposition parties in the parliament. This prac- tice provides an additional dimension of the financial checks and balances system, an essential element of a corruption-free society. However, it also carries the potential risk of unduly politicizing debates and neglecting its purely technical and financial aspects. Nonetheless, the existence of PACs assists in promoting a culture of accountability on the part of public offi- cials. Office of the Auditor General. In the process of financial management of a country, the role of the Office of the Auditor General (OAG) is also noteworthy. In many countries, the OAG or its equivalent is the organ of a state that has the responsibility of conducting independent audits and ex- aminations that provide objective information, advice, and assurance to the parliament. Given the importance of the role the OAG fulfills, in most 24 COMBATING CORRUPTION countries, the Auditor General is an independent officer appointed by the head of state or the parliament under an organic law. In a general context, the Auditor General's responsibility is to audit and report to the parliament on the financial management and administrative practices of government agencies in order to enhance public sector ac- countability and performance. In a broader context, the Auditor General serves the public interest. The Auditor General, in his or her role as the principal provider to the parliament of independent and impartial infor- mation on public sector accountability and performance, serves as a "watch- dog," guarding against waste of taxpayers' resources and checking that government delivers services in an equitable, efficient, and effective man- ner for the benefit of the citizens as a whole. The Auditor General is thus an ally of the people and the parliament. He must act, and be seen to be acting, independently in carrying out all of his or her powers and duties. This independence is the cornerstone of public sector audit; and, therefore, to properly discharge his responsibilities, the Auditor General must be free from pressure, influence, or interference from any source that may erode that independence, another important element in the fight against corruption. As in the case of the Office of the Comptrollers General, Auditors Gen- eral are generally treated as constitutional entities. The appointment and dismissal of the heads of such institutions are often made pursuant to con- stitutional provisions.A4 In the absence of such constitutional provisions, many states use organic laws. In most countries, these entities report di- rectly to the parliament and the head of state. Direct accountability of these entities to the parliament safeguards their independence and ensures that they are not subservient to political leaders. Specific Features of Countries with Civil Law Traditions. In countries with legal systems deriving from civil law traditions, the practice of finan- cial management and related principles is not much different. Among coun- tries that have an appropriate financial reporting, accounting, and auditing system, one can observe a common legal and institutional framework. A set of financial accounting and auditing laws is generally found to be in place. Budget laws provide for responsibilities of government in the area of public accounting. Also, laws impose clear classification systems per- mitting the allocation of resources to the different functions of govern- ment and the use of such resources. In addition, many countries have established administrative tribunals (tribunais de contas, in lusophone countries, or cours des comptes in francophone countries), completely autonomous institutions to deal with matters of public accounts. In France, for instance, there are courts charged with dealing with these matters. Such courts have both judicial and nonjudicial functions. They operate at both the national and regional levels. In the exercise of their judi- INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 25 cial functions at a regional level, they sit as chambres regionales des comptes and examine and approve all public expenditures of the state departments and municipalities. In parallel, they exercise administrative supervision of public funds at the same regional level and can make reports that contrib- ute significantly to an understanding of patterns of use of public funds. Against judgments of these chambres regionales des comptes, an appeal lies to the national cour des comptes. At the central level, the Cour des comptes is primarily responsible for auditing the accounts of state treasuries and pay- masters and for supervising the carrying out by the appropriate officials of budgetary measures decided by the National Assembly. These accounting functions are coupled with judicial powers in that the cour des comptes can order rectification of errors made by the officials it supervises and, in ap- propriate cases, impose sanctions. In addition to the cour des comp tes, there also exists in France the cour de discipline budgetaire et financiere, which can deal with any irregularities committed by public officials responsible for implementing state and local authority budgets.5 Conclusion. Without adequate accounting, auditing, and financial re- porting systems, it is impossible for a country to monitor expenditures and integrity of accounts. In the absence of such systems, misallocation or mis- appropriation of funds can easily occur and corruption can go undetected. Hence, whether regulated by law or not, it is imperative for countries to find and maintain systems that permit them to keep track of the sources, use, and the destination of public funds. This is the most important aspect of financial management for a society that seeks to be corruption-free. Campaign Financing Campaign financing is a major source of corruption in any modern demo- cratic society. Many of the major scandals that have rocked democracies during the past decade have been linked in one way or another to campaign financing. If unchecked, it has the potential to discredit the society and per- vert the democratic process. No review of anticorruption legislation is there- fore complete without a careful analysis of campaign finance legislation. The many cash-for-favors scandals associated with campaign financ- ing are not peculiar to democracies. Tyrants, dictators, military leaders, and other self-appointed rulers alike rely on a coterie of loyal supporters and sycophants to consolidate their hold on power and compensate for the lack of legitimacy of their regimes. Even though campaign finance re- strictions as such may never have been uppermost in the minds of such illegitimate leaders, the system of payoffs and kickbacks that they need to ensure their political survival is strongly reminiscent of the cash-for-fa- vors scandals that have plagued the election process in modern democra- cies during the past decade. 26 COMBATING CORRUPTION In the United Kingdom, according to newspaper reports, one in three of the ruling Labor Party's biggest donors in the last general election has gained a peerage, a ministerial position, or an advisory role on policy after giving millions of pounds sterling to finance the party's election war chest86. In France, a former prime minister was being investigated for al- legedly approving the creation of 26 fictitious positions in the city gov- ernment of Paris. It was alleged that the creation of the so-called "ghost" positions amounted to a breach of recently adopted French campaign fi- nance legislation. In the United States, there was speculation that the At- torney General would yield to growing demands for an independent counsel to investigate alleged illegal campaign contributions and other breaches of campaign finance legislation. Three sets of scandals that have dominated the headlines in three major democracies illustrate the grow- ing impact of campaign financing on democratic society and its potential to unravel anticorruption efforts in established and emerging democra- cies alike. Scope and Purpose of Campaign Finance Regulation. Campaign fi- nance regulation varies from one country to another. Theoretically, there are at least three main purposes that it can serve. First, it serves to set overall spending limits. Second, it serves to set limits on campaign contri- butions, including limits on individual campaign contributions. Finally, it establishes disclosure rules and promotes transparency. Typically, there are also rules governing contributions by foreign nationals, as well as de- tailed rules governing record-keeping and the role, during elections, of the election supervision commission. The purpose of spending limits is to keep to a minimum the pernicious effect of money both on politics and on the decisionmaking process. Lim- its on individual campaign contributions serve to reduce the potential in- fluence of individual contributors and, in so doing, preserve the integrity of the political process. The combined effect of the spending limits and campaign contribution limits is to prevent the rich from exerting a dispro- portionate influence on politics, thus ensuring that the principle of politi- cal equality is maintained and adhered to.87 The United Kingdom. Campaign finance in the United Kingdom is governed by the Representation of the People Act (1983). The Act has pro- visions to control and limit candidates' overall election expenses, but not campaign contributions. Accordingly, the disclosure provisions of the Act are limited to candidates' election expenses. There are no restrictions on campaign contributions other than those resulting from the prescribed overall spending limits and, accordingly, no obligation to disclose the source or origin of campaign contributions. The Act prescribes overall spending limits based on the number of reg- istered voters, and according to whether the election is a parliamentary or INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 27 local government election."8 It provides, among other things, that no ex- penses aimed at promoting candidates, or securing their election or the defeat of another candidate, shall be incurred otherwise than by the can- didates themselves or on their behalf."9 Where any person other than the candidate or an agent acting on the candidate's behalf incurs expenses on behalf of a candidate, that person is required under the Act to submit a report to that effect to the relevant authorities, giving full particulars of the amount of the expenses and their purposes.90 At the end of the election cycle, all candidates are required to submit to the appropriate authorities a return, along with a declaration, giving de- tails of the overall expenses incurred on their behalf for purposes of the election, as well as full particulars of the candidate's personal expenses, paid and unpaid claims, and disputed claims, if any.91 Returns and decla- rations submitted by candidates or on their behalf are kept by the appro- priate authorities and made available for inspection.92 Mauritius. In Mauritius, the Representation of the People Act 1958 is based on an earlier version of the U.K. Representation of the People Act. Like its U.K. counterpart, this Act makes no attempt to control or restrict campaign contributions. Accordingly, the provisions governing election expenses are solely concerned with overall spending restrictions,93 as are the disclosure provisions.94 As in the case of the United Kingdom, the Act provides that no expenditure in respect of a candidate shall be incurred otherwise than by the candidate himself or on his behalf.95 Where any person incurs expenditures in respect of a candidate in ex- cess of the authorized amount, or without proper authority, both that per- son and the candidate in respect of whom the expenditures are incurred are deemed to be guilty of an illegal practice under the Act.96 In the case of candidates, however, it is expressly provided that they shall not be guilty of an illegal practice unless it is proved that the expenditure was incurred with their consent.97 General Observations. Both the U.K. Representation of the People Act 1983 and the Mauritius Representation of the People Act 1958 are based on the somewhat simplistic assumption that all election expenses incurred in respect of a candidate will be authorized by the candidate or an agent acting on his behalf. There is no provision in either Act governing so-called independent expenditures, or expenditures expressly advocating the elec- tion or the defeat of a clearly identified candidate but made without pre- arrangement or coordination with a candidate, or party expenditures. Nor is there any reference in either of the Acts to the treatment of issue advo- cacy, a device made famous in the last U.S. presidential elections by a well- orchestrated blitz of issue advertisements designed, according to critics, not so much to promote specific issues, as their name implies, but to actu- ally promote candidates. In so doing, both Acts blissfully avoid some of 28 COMBATING CORRUPTION the complex campaign finance issues that have plagued U.S. elections in recent years. In the case of Mauritius, although there is no specific reference to inde- pendent expenditures as such, there is nonetheless a clear recognition that candidates cannot be held criminally accountable for expenditures incurred on their behalf, but without their consent, by a third party.9" Notwithstand- ing the provision that no expenditure in respect of candidates shall be in- curred otherwise than by the candidates themselves or on their behalf,99 it is arguable that candidates cannot be held financially accountable, either, for such expenditures incurred by a third party on his own initiative, and that such expenditures cannot count against a candidate's total spending limits. The United States. Federal elections campaign finance in the United States is governed by the Federal Election Campaign Act (FECA).100 Un- like the U.K. model, FECA focuses not just on spending limits, but on cam- paign contributions and related disclosure requirements as well. The courts in the United States have consistently upheld the right of Congress to regu- late campaign contributions and impose strict disclosure requirements, affirming time and again that the primary purpose of FECA is to regulate campaign contributions and expenditures in order to eliminate the perni- cious influence, actual or perceived, over candidates by those who con- tribute large sums.10' Rejecting suggestions that the effect of FECA was to limit the right of free speech or freedom of association, the courts have stressed that the primary government interest recognized with respect to FECA's contribution limits is the interest in preventing corruption or the appearance thereof in the political process."02 FECA establishes a series of restrictions and limitations on campaign contributions and expenditures, including dollar limits on federal election campaign expenditures and, in the case of contributions, a ceiling of $1,000 on individual contributions to any candidate with respect to any election for federal office,'03 and another ceiling of $25,000 on the aggregate contri- butions of any individual in any calendar year.104 Other restrictions apply to contributions made by or for the benefit of political committees."05 Un- like the U.K. legislation,106 FECA also goes on to impose an absolute ban on contributions by foreign nationals.107 The central feature of FECA, however, is its elaborate disclosure provi- sions. As the U.S. Supreme Court has pointed out in one famous case,"0' disclosure requirements deter actual corruption and avoid the appearance of corruption by exposing large contributions and expenditures to the light of publicity. It has been said of the rationale for disclosure that a public armed with knowledge about political contributions will be able to pun- ish candidates who sell their office or who are otherwise inappropriately influenced.'09 Irrespective of the actual merits of this proposition, there INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 29 can be no doubt that a well-informed public is better placed to appreciate the true extent and scope of postelectoral favors, and to draw appropriate conclusions from them, than one that is not. The overriding interest the courts have cited to justify strict regulation of campaign contribution limits is the interest in preventing corruption or the appearance of corruption in the political process. This interest is no doubt a valid consideration in the case of direct contributions to political campaigns. In the case of some of the other more indirect contributions that political campaigns have attracted in recent years, its relevance is some- what questionable. Based, at least in part, on concerns about the need to protect political speech, there has been some reluctance to regulate the so- called independent expenditures, or expenditures made without prear- rangement or coordination with a candidate, expenditures incurred by political parties for party-building purposes, or expenditures in respect of the now infamous issue advertisements. Not surprisingly, independent expenditures, party-building, activities and issue advocacy have all come to be regarded as convenient instruments to be used to channel funds in- directly into political campaigns. Many of the allegations that have sur- faced as a result of the last U.S. presidential campaign are linked to the use of one or other of these instruments. That is not to suggest that these loopholes in campaign finance legisla- tion cannot be fixed. There have been persistent calls for the appointment of an independent counsel to investigate alleged breaches of campaign finance legislation during the last presidential election. More importantly, there has been a campaign reform bill under consideration during the last Congress to address some of these issues. The McCain-Feingold Bill,"' named after its two principal sponsors, seeks in effect to reform campaign finance legislation by narrowing the scope of some of the loopholes that have been used to circumvent campaign finance regulation."' France. In France, campaign finance is governed by the French Elec- toral Code."2 As in the case of FECA, the French Electoral Code regulates not only campaign expenditures but also campaign contribution limits. There are also strict disclosure requirements. The French Electoral Code provides a ceiling for campaign expendi- tures, which varies according to the size of the population and the type of election,113 as well as a series of rules and restrictions governing campaign contributions. It prescribes, among other things, a ceiling of FF30,000 on campaign donations provided by any individual for the benefit of one or more candidates at any election."14 The code also bans campaign contribu- tions in favor of any candidate by entities other than political parties and political groups, whether in the form of donations or in the form of goods or services, or any other benefit or advantage, direct or in direct, provided on terms that are more favorable than would normally apply."' There is a 30 COMBATING CORRUPTION limit on cash contributions to political campaigns,"16 as well as a require- ment to have checks issued in respect of all donations in excess of FF1,000.71 As in the United States, there is a ban on foreign contributions, but only with respect to contributions provided by foreign states and foreign enti- ties."8 Curiously enough, contributions by foreign individuals appear to be exempt from the ban. Although the French Electoral Code does not provide any comprehen- sive definition of campaign expenditures, as FECA does, there is nonethe- less extensive jurisprudence available in France on the scope and extent of such expenditures. The French courts have tended to treat as campaign expenditures all expenditures incurred primarily to promote a candidate and further his election. Conversely, expenditures incurred primarily for a purpose other than the election are not treated as campaign expendi- tures, even if they may have indirectly served the candidate's interests in the election process."19 Thus, transport and communications costs, the costs of publication of campaign materials, and office rent and personnel ex- penditures, including even the salaries of a candidate's security guards, have all been treated as campaign expenditures to be accounted for in election returns.120 Conversely, general issue advertisements,121 mailing expenditures incurred by an official for purely routine administrative pur- poses,122 and general party expenditures incurred for party-building pur- poses123 have not been treated as campaign expenditures. More interestingly, the courts seem willing to treat as campaign expenditures those incurred for the benefit of a candidate by another, fictitious candi- date,124 or even by third parties acting with the candidate's consent, albeit tacit.125 Finally, the French Electoral Code provides for campaign returns to be prepared and submitted to the Commission nationale des comptes de campagne et des financements politiques for its approval. This commission reserves the right to approve or reject the returns or to approve them subject to changes.126 Breaches of the spending limits provided under the code call for pecuniary sanctions and are referred to an election judge for a rul- ing.127 Other breaches of the code are referred to the state prosecutor's office for action."2' Conclusion. Campaign finance regulation is a formidable undertak- ing; but it is also an indispensable tool in the combat against corruption. As recent experience with campaign finance regulation in the United States shows, much remains to be done to plug some of the loopholes that have been used to circumvent campaign finance legislation. That is not to say that other countries have fared any better than the United States in the application of campaign finance regulation. The United States, like France, has adopted as sophisticated a set of campaign finance rules as any. The fact that these rules have generated one scandal after another is not neces- INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 31 sarily indicative of a higher level of corruption than in other countries. Rather, it is evidence of a greater willingness on the part of the United States and France to recognize and address some of the pernicious effects of excessive and unregulated campaign contributions. Regulated or not, campaign contributions are a potential source of cor- ruption. In the United States, campaign finance reform is still very much alive. It is not by brushing the issue aside or sweeping it under the carpet, as many other countries have done, that the integrity of the political pro- cess can be maintained. The absence of major campaign finance-related scandals in many of those other countries is not so much an indication of a corruption-free political environment in those countries, as it is a reflec- tion of the lack of transparency and public accountability that character- izes the electoral process and permeates the conduct of their public affairs."29 The emerging democracies in the developing countries have useful les- sons to draw from the French and U.S. experiences, and they have much to do in this difficult and formidable area to regulate. Procurement Introduction. Procurement, like campaign finance, is another major source of corruption. Admittedly, some countries are more vulnerable than oth- ers to charges of mismanagement of their public procurement activities. Although some countries have responded to the challenge by adopting reasonably effective and transparent procurement procedures, others have continued to be beset by one procurement scandal after another. Public procurement activities in many countries continue to be tainted with fraud and corruption, and invariably saddled with protests, allega- tions of impropriety, and even court challenges. In some cases, the alleged irregularities result from a genuine lack of understanding of procurement rules and practices among officials. More frequently, however, they are attributable to weaknesses in the legal framework governing public pro- curement, which, in many cases, could have been avoided but for a simple, if somewhat ironic, fact of life: those who are vested with the power to introduce change are often the ones who are best served by the status quo. Not surprisingly, there have been repeated attempts to link at least some of the irregularities noted in public procurement activities with political campaign contributions. Hence, the inevitable link between procurement and campaign finance legislation. Recent Legal Developments. Ever since procurement activities have been recognized as a potential source of corruption, many countries have set out in earnest to strengthen the legal framework governing their pub- lic procurement activities. A prime example is South Africa, whose consti- tution specifically refers to the need for a fair, equitable, transparent, 32 COMBATING CORRUPTION competitive, and cost-effective system of public procurement.'30 In France, the Code des marches publics"3' was updated on successive occasions in the early 1990s to improve the systems for public procurement. The Code des marches publics is a comprehensive piece of legislation governing public contracts, including full details of procurement procedures, price and other financial clauses, dispute settlement clauses, and other contract provisions. In 1992, the Republic of Mali adopted a presidential decree'32 governing public contracts that closely follows the French model. The United Nations Commission on International Trade Law (UNCITRAL) recently prepared a model law on the procurement of goods, construction, and services, which has since been adopted by the commission and issued by the United Nations.'33 This decision to under- take the preparation of a model law was, according to the "Guide to Enactment" annexed to the model law, made in response to the fact that in a number of countries, the governing procurement law is inadequate or outdated.'34 The model law is intended to serve as a model for states for the evaluation and modernization of their procurement laws and prac- tices and for the establishment of procurement legislation where none presently exists."35 The Republic of Latvia is one of the first countries to have put together a draft law on procurement based on the UNCITRAL model.'36 The modern tendency is to have the legal framework governing pro- curement adopted by the legislative branch or, in the case of francophone states, by a decree issued by the Chef d'Etat or chef de gouvernement.'37 There are still countries, however, particularly those of Anglo-Saxon tradition, that continue to rely on so-called tender board regulations issued, usually, by the minister of finance, to govern public procurement. Such regula- tions are still in force in Kenya and in Ghana. In Mauritius, tender board regulations have been superseded by the adoption of the Central Tender Board Act,'3' which establishes the central tender board and prescribes its administrative functions and structure, but without prescribing either the basic principles or detailed rules governing procurement. There are many considerations related to principles of openness, trans- parency, and fairness that have prompted countries to adopt legislation, and not mere administrative regulations, to govern procurement. Legisla- tion, unlike a regulation, provides a reasonable guarantee that the rules of the game will not be changed arbitrarily or to suit particular situations or individuals. This is clearly the approach favored by the UNCITRAL model. By using its constitution to lay out its basic procurement principles, South Africa has sent a strong signal, to both its own nationals and to the inter- national community, of the importance that it attaches to these basic prin- ciples. Conversely, countries that continue to rely on ministerial regulations for guidance in procurement matters send the opposite message: they agree INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 33 to be bound by the rules, but only to the extent that their own interests continue to be served by those rules. Purpose of Procurement Legislation. According to the UNCITRAL model, the purpose of procurement legislation is to maximize competi- tion, accord fair treatment to suppliers and contractors, and enhance trans- parency and objectivity, and, in so doing, promote economy and efficiency and curb abuses.139 In Madagascar, according to the explanatory note that accompanied the presentation of the relevant decree,140 the purpose of the decree was to foster economy and efficiency, in terms of the rational use of public funds and competitive prices, and to promote domestic busi- ness, having regard to principles of fairness, transparency and nondis- crimination.,4" Similar sentiments are to be found in the procurement laws of many other countries. The World Bank has its own set of procurement guidelines governing the procurement of goods and works under contracts financed by the Bank in its member countries."42 The four considerations that guide the Bank procurement guidelines are, first, the need for economy and efficiency; second, the Bank's interest in giving all eligible bidders an equal opportu- nity to compete for Bank-financed contracts; third, the Bank's interest in encouraging the development of domestic contracting and manufactur- ing industries in the borrowing country; and, fourth, the importance of transparency in the procurement process.143 The underlying theme common to procurement laws in general is the need to promote economy and efficiency, as well as appropriate standards of transparency and accountability, while curbing abuse. Choice of Procurement Method. Most legal systems have introduced competitive bidding as the method best suited to achieve the overall ob- jectives of procurement legislation. Competitive bidding can be interna- tional or limited to national bidders; it can be open or restricted to a limited number of bidders, whether on the basis of prequalification or otherwise."4 Even though international competitive bidding is presented as the pre- ferred method of procurement, alternative methods may be appropriate in specified circumstances. Thus, under the model law, in cases of low- value procurement of standardized goods or services, it may be best to use the request-for-quotations method, which allows the procuring entity to solicit quotations from a limited number of suppliers and select the low- est-priced responsive offer."45 In other circumstances, single-source pro- curement may be warranted.146 Whether the procurement entity decides to use competitive bidding or some other method of procurement, it is necessary to ensure that the pro- cedures are appropriate and consistently applied with regard to the rel- evant provisions of the law. Any exception to the rule that competitive bidding is the norm must be fully justified and, if need be, approved by a 34 COMBATING CORRUPTION higher authority.147 The model law requires the procuring entity to keep a record of procurement proceedings, giving details of key decisions per- taining to the proceedings, including, in cases where a procurement method other than competitive bidding has been used, the grounds and circum- stances on which the procuring entity relies to use such method.149 Simi- larly, in cases where the procurement proceedings are limited to nationals, the record must indicate the grounds and circumstances relied upon by the procuring entity to impose such a limitation.149 The purpose of such a record is quite clearly to promote transparency and accountability, and preempt possible abuses or perceptions of impropriety in the procurement process. Bidders' Qualifications. Procurement rules generally include provi- sions to ensure that suppliers and contractors to whom public contracts are ultimately awarded have the necessary qualifications to provide the goods or services or execute the construction works, which are the sub- ject matter of contracts. The model law, accordingly, requires suppliers and contractors to demonstrate that they have the necessary qualifica- tions, including the professional qualifications and experience, technical competence and know-how, and the required financial and other resources, to perform their contracts.150 Details of such qualifications must be speci- fied in the bidding documents.151 The model law goes on to provide that the prequalifications requirements as set forth in the bidding documents shall apply equally to all bidders, and that they shall constitute the sole basis for the evaluation of the qualifications of bidders.152 In the case of complex contracts or assignments, there are also provisions for prequalification proceedings.153 Similar provisions are found in the national legislation of other coun- tries. In France, the Code des marches publics provides for details of the re- quired qualifications to be specified in the bidding documents.'54 Based on the qualifications criteria specified in the bid documents, bidders are re- quired to include appropriate evidence of their qualifications in an outer envelope accompanying their bids.155 Unless they produce adequate evi- dence of their qualifications in the outer envelope, the inner envelope con- taining their actual bids is retumed to them unopened. The procuring entity is precluded from using qualifications criteria other than those specified in the bidding documents to disqualify bidders.156 The rules governing bidders' qualifications serve a fundamental pur- pose. They contribute to a climate of fairness and transparency by ensur- ing that no participant in a procurement exercise can be eliminated except on grounds that have been communicated in advance to all bidders and apply across the board, without any discrimination on grounds of nation- ality or otherwise. The rules apply to all public contracts, whether they are awarded on the basis of competitive bidding or otherwise. INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 35 Submission of Bids. The key features of tender procedures are to be found in the UNCITRAL model law and summarized in its Guide to En- actment."57 They include the need to give as wide publicity as may be ap- propriate to the invitation to bid, having regard to whether the tender is intended to be open or limited, local or international;"58 the need for a com- prehensive description of the goods, construction works, and services that will be procured to be provided in the bid documents, along with detailed specifications, if any;'59 the need for full disclosure to suppliers and con- tractors of the criteria to be used in evaluating and comparing tenders and in selecting the successful tender;"60 and public opening of tenders. 161 Bid submission procedures usually require the procuring entity to al- low sufficient time for bidders to prepare and submit bids. Where, on its own initiative or as a result of a query or a request for clarification submit- ted by a bidder, the procuring entity issues a clarification or modification of the bidding documents, the procuring entity is required to communi- cate the clarification or modification to other potential bidders to whom the bidding documents have been provided, and, if necessary, extend the deadline for submission of bids to allow sufficient time for bids to be pre- pared and submitted."62 Bids must be submitted in writing or in any other form specified in the bidding documents, which offers adequate guaran- tees of authenticity, security, and confidentiality.'63 As a rule, bids are opened in the presence of all bidders who have submitted bids, or their represen- tatives, who wish to be present.'64 The bid submission procedures have a common objective. They pro- vide a common basis to suppliers and contractors for the preparation of bids, thus affording them an equal opportunity to compete for public con- tracts. In so doing, they seek to create the necessary conditions of honesty, fair play, and transparency needed to foster competition and promote economy and efficiency. Evaluation Criteria. As in the case of qualifications criteria, basic pro- curement principles require all bid evaluation criteria to be specified in the bidding documents. Evaluation criteria may be based on price alone; more usually, however, they are based on a combination of price and other tech- nical or economic factors.165 It is provided in the model law that the bid documents must include criteria to be used in determining the successful tender, including any margin of preference and any nonprice criteria and the relative weight of such criteria.'66 The criteria to be used in the evalua- tion and comparison of bids are solely those specified in the bid documents.'67 In case it is proposed to grant a preference in favor of domestic contrac- tors or suppliers of goods or services, the margin of preference has to be determined and specified in the bidding documents, along with the appli- cable eligibility criteria for the grant of the preference.16' In such cases, the margin of preference is treated as one more element in the list of evalua- 36 COMBATING CORRUPTION tion criteria. Subject to the application of the margin of preference, the rules do not allow for further preferential treatment in favor of domestic contractors and suppliers. The bid evaluation and comparison phase is one of the most critical phases of the procurement process. Its purpose is to determine the lowest evaluated bid, according to a common set of clear and objective evaluation criteria speci- fied in the bid documents. The model law refers to the need to have evalua- tion criteria that are, to the extent practicable, 'objective and quantifiable"169. Having objective and quantifiable evaluation criteria establishes a common basis for the evaluation and comparison of bids, and, in so doing, promotes objectivity and predictability and reduces the scope for arbitrary or discre- tionary decisions. In the context of the bid evaluation and comparison phase, arbitrariness and discretionary powers are a recipe for corruption. Award of Contracts. The general rule is that the contract award has to be made in favor of the lowest evaluated bidder who meets the qualifica- tions requirements and satisfies the other requirements specified in the bid documents. Negotiations with bidders on the terms of their respective bids, after the closing of bids and prior to the award, are not allowed. It is not unheard of for corrupt officials to engage in simultaneous negotiations with two or more of the highest ranked bidders on the price or other elements of their bid proposals in a deliberate attempt to reverse the final outcome of the bidding process. This is clearly an abuse of the procurement process. It is generally part of a scheme to use elements of the bid proposal of one bidder to apply pressure on another bidder in a disingenuous attempt to bring that other bidder to improve the terms of his own original bid. The model law has a clear provision prohibiting negotiations between the procuring entity and a supplier or contractor concerning a tender sub- mitted by the supplier or contractor."70 To assist in the examination, evalu- ation, and comparison of bids, at the time of bid opening, a procuring entity has the right to ask suppliers or contractors for clarification of their tenders.171 The entity may also, if need be, correct purely arithmetical er- rors discovered during the examination of bids.172 The entity has no right, however, to make any change in a matter of substance in the bid, includ- ing changes in price or other changes aimed at making an unresponsive bid responsive."73 Similar provisions are found in the Mali Decret portant reglementation des marches publics, which requires the procuring entity to award the contract to the lowest evaluated bidder, with regard to the evalu- ation criteria specified in the bid documents.'74 In addition, it is not unheard of for officials to decide after the fact to split a contract among more than one bidder, even though there is no pro- vision to that effect in the bid documents. Again, this is clearly an abuse of the bidding process. In many cases, it represents an attempt by officials to frustrate the results of the bidding exercise, but without seeking to an- INITIATIVES CONDUCIVE TO A CORRUPTION-FREE ENVIRONMENT 37 tagonize the would-be successful bidder to the point of risking an outright challenge of the process. Under the model law, the procuring entity is pre- cluded from splitting the procurement as it sees fit after the fact, unless there is provision for split procurement in the bid documents."75 In this connection, the Mali Decret portant reglementation des marches publics pro- vides that, whenever a contract is likely to be split or divided into lots, provision to that effect has to appear in the bid documents.'76 The rules governing contract award are frequently disregarded by decisionmakers and other unscrupulous officials who have no immediate interest in a fair and transparent procurement process. The adoption of dear, objective, and transparent rules are an important safeguard to combat such practices, and create a climate of confidence and predictability, which is also one of the underlying objectives of procurement legislation in general. World Bank-financed Contracts. Responding to concerns about the in- cidence of corruption in World Bank-financed contracts in its member coun- tries, the World Bank took a series of initiatives recently to amend its procurement guidelines to address such concerns. A first set of amend- ments approved in July 1996 empowers the Bank to cancel an amount of the loan if it determines, with respect to any contract to be financed out of the proceeds of the loan, that the borrower's representatives or a benefi- ciary of the loan has engaged in corrupt or fraudulent practices during procurement activities or contract execution, and the borrower has failed to take timely and appropriate action to the Bank's satisfaction to remedy the situation. The same set of amendments also allows the Bank to reject a proposal for contract award if it determines that the bidder proposed for the award has engaged in corrupt or fraudulent practices in competing for the contract. Finally, the amendments also allow the Bank to blacklist bid- ders, contractors and suppliers, either indefinitely or for a stated period of time, if it determines that they have engaged in corrupt or fraudulent prac- tices in competing for, or in executing, a Bank-financed contract. Another amendment to the procurement guidelines approved in July 1997 permits the introduction of a so-called no-bribery clause, pursuant to which, for purposes of Bank-financed contracts, every bidder competing for or executing a contract undertakes to observe the country's laws against fraud and corruption. The World Bank is currently engaged in a high profile campaign to com- bat corruption in its member countries. The amendments to the procure- ment guidelines were part and parcel of this current campaign. The emphasis that the Bank has placed on procurement activities in the course of its anti-corruption campaign provides a strong indication not just of the perceived links between procurement and corruption, but, more impor- tantly, of the growing relevance of procurement rules and practices in the current debate on corruption. III Legal Framework to Combat Corruption-A Curative Approach After a review of the so-called preventive laws, rules, and behavioral codes designed to promote a corruption-free environment, this section examines the contents of corruption laws and their application. It deals, successively, with the process of investigation of corruption offenses and the judicial process, including the special rules of evidence, and sanctions and penal- ties, applicable to corruption offenses. Investigation of Corruption Traditional Enforcement Mechanisms The decision to charge an accused person with a criminal offense, or to investigate a suspect for an economic crime or any other crime, is a seri- ous matter and one that ought not to be treated lightly. Surprisingly, the seriousness with which this issue is treated varies from one jurisdiction to another. In most Anglo-Saxon jurisdictions, such decisions are taken by either the police or the prosecutor's office, depending on the nature and gravity of the offense. This is not the case in the United States or France. France. In France, the decision to open a criminal investigation and charge an accused person with a crime is taken invariably by investigat- ing magistrates (juges d'instruction) appointed by the courts. The investi- gating magistrate is appointed at the request of the state prosecutor's office or a complainant. The role of the juge d'instruction is not to seek an indict- ment at all costs, but to gather evidence pertaining to a crime and deter- mine whether there is sufficient evidence to indict an accused and, if so, to refer the case to the appropriate tribunal. In this process, the juge d'instruction has powers to hear witnesses, search premises, appoint ex- pert witnesses, and, if necessary, issue summonses to witnesses and war- rants of arrest. He can call on both the police and the state prosecutor's office for assistance, as needed. The juge d'instruction is also competent to make an order for the detention of the accused party or to rule on an appli- 38 LEGAL FRAMEWORK TO COMBAT CORRUPTION 39 cation for the accused's release pending the outcome of the investigation. The decision of the juge d'instruction to indict or not to indict the accused party, as the case may be, is subject to a final appeal to the chambre d'accusation of the court of appeal. Several reasons account for the weight accorded to the indictment de- cision in France and other similar jurisdictions. First, a decision to charge an accused party for an offense has the potential to cause irreparable harm to the accused's reputation, because of the negative publicity that it gen- erates, particularly in cases where the accused party is a prominent per- sonality. Even in cases where the charges are subsequently dismissed, it comes as little consolation to those involved to discover that a dismissal seldom attracts as much publicity as an original indictment. Second, in cases where the accused is an employee, a decision to charge him with a criminal offense, irrespective of the final outcome, is bound to have ad- verse effects on his continued employment and career prospects. Third, there are, inevitably, many instances in which an indictment is followed by an order for the preventive detention of the accused party. Quite apart from any stigma that such an order never fails to generate, its consequences are invariably damaging for both the accused and the accused's family. The United Kingdom and Other Anglo-Saxon Jurisdictions. In most Anglo-Saxon jurisdictions, the police, not judicial personnel, is invariably in charge of criminal investigations. In the United Kingdom, the consent of the Attorney General or the Director of Public Prosecutions (DPP) is required for the prosecution of specific offenses. Similarly, the Crown Pros- ecution Service (CPS), which is headed by the DPP, has the discretion to prosecute or stop proceedings. It may also ask the police to investigate criminal offenses, but cannot order it to do so. More important, the CPS has no authority to supervise police investigations.177 Even in cases where the decision to indict the accused is taken by the prosecutor's office, the decision is bound to be strongly colored by the outcome of the police investigation, to the point of being, in many cases, a mere formality. The inquisitorial process that characterizes the French system stands in sharp contrast with the more adversarial process of the Anglo-Saxon sys- tem, the outcome of which depends on the outcome of the exchanges be- tween the parties before the court. There are rare cases of serious crimes in which a preliminary investigation is required as a matter of law before criminal proceedings can be instituted. Except for such cases, the decision to institute criminal proceedings is never subject to any prior judicial con- trol, as in France. In cases where an accused party's contention is that there is no prima facie case made out and that, accordingly, there is no case to answer, the only remedy available to the accused is to make a submission to that effect, but only at the trial, and then only after the prosecution has rested its case. 40 COMBATING CORRUPTION The United States. In the United States, as in France, the authority of the District Attorney (DA) to file charges in felony cases is invariably sub- ject to a process of pretrial judicial scrutiny. As in other Anglo-Saxon ju- risdictions, the police conducts investigations and recommends charges. However, although the DA is competent to file charges, he is not free to refer felony cases to a superior court until either a lower court or a grand jury, if there is one, has certified that there is sufficient evidence on record to convict the defendant. The grand jury is a group of citizens convened by the court, whose role is to decide whether there is sufficient evidence to charge a person with a felony and, if so, to indict him accordingly. The grand jury has broad investigative powers; but its proceedings are secret. General. It is no wonder that, as corruption reached unprecedented levels and there were mounting calls for action to contain it, countries such as the United States and France were fully prepared to meet the challenge. In both of these countries, it was business as usual, even as independent-minded investigators on both sides of the Atlantic proceeded relentlessly to investigate corruption allegations involving the highest echelons of the executive branch. Other countries that did not share the same strong tradition of investigative independence, including countries that had inherited the French legal system but without the same respect for judicial independence, had little to offer, except more of the same, in terms of charges and allegations involving previous regimes and opposi- tion groups. In many of these countries, their ill-trained and poorly educated police forces- riddled, in many cases, with corruption in their own midst-had already had the limits of their investigative powers tested by routine crimi- nal investigations. Lacking in both the necessary sophistication and tech- nical know-how, they were ill prepared to cope with the additional challenge of investigating corruption and other economic crimes. It would not be long before their inability to combat economic crime, coupled with an overriding public need to demonstrate commitment to combating cor- ruption, would generate a demand for the establishment of specialized enforcement agencies, skilled in the art of investigating white-collar crime and specially trained to penetrate its sophisticated world. Not surpris- ingly, the creation of politically controlled specialized agencies, directly answerable to the executive branch and sympathetic to its political agenda, would also, in many cases, serve as a powerful political tool to discredit political opponents. The U.S. Independent Counsel The United States, which has had its own "Watergate" and other major scandals involving the presidential administrations to contend with, was LEGAL FRAMEWORK TO COMBAT CORRUPTION 41 quick to recognize that an administration cannot credibly investigate it- self. Any attempt to have a key member of the administration investigated by the Attorney General has been viewed with skepticism, not least be- cause of the perception of a conflict of interest that it creates. Even a find- ing that happens to clear the administration of any wrongdoing, no matter how much it is substantiated, tends to enhance public skepticism about the credibility of the investigative process. It was precisely to avoid this appearance of a conflict of interest that the independent counsel process was established in the aftermath of the Watergate scandal. The Independent Counsel Statute"7' was promulgated as part of the Ethics in Government Act of 1978.179 It was part of an overall attempt by lawmakers to prevent abuses of presidential power, create and reorganize agencies of the federal government, and enhance the probity of public officials and institutions.'80 The statute applies to investigations concerning the president and vice president of the United States, cabinet members, officials of the Department of Justice, and other senior officials of the administration, as well as individuals who have previously occu- pied such offices or positions"'8 and members of Congress."82 According to the statute, whenever the Attorney General receives in- formation suggesting that there are grounds to investigate whether such an official may have committed an offense under a federal criminal law, he is required to conduct a preliminary investigation with a view to deter- mining whether further investigation of the official by an independent counsel is warranted."3' The Attorney General has a time limit of 30 days after receiving such information within which to determine whether there are sufficient grounds for a preliminary investigation.'84 Unless the Attor- ney General is able within the 30-day period to make a positive determi- nation to the effect that the information is not sufficiently specific or the source insufficiently credible, the statute requires him to proceed with a preliminary investigation.'85 The statute prescribes a deadline of 90 days after the beginning of the preliminary investigation,'86 within which the Attorney General is required to file a notification to the appropriate division of the court. If the Attor- ney General determines that there are no reasonable grounds to believe that further investigation is warranted, he may decide to bring the process to a close.'87 Alternatively, if the Attorney General determines that there are grounds to believe that further investigation is warranted, or even if no notification is filed within the specified time frame, the court is required to proceed with the appointment of an independent counsel.'88 Unless a preliminary investigation can show conclusively that an allegation is false, the Attorney General must seek an independent counsel. Subject to the prosecutorial jurisdiction of the Office of the Indepen- dent Counsel, the independent counsel has extensive investigative and 42 COMBATING CORRUPTION prosecutorial powers to conduct proceedings before grand juries and other investigations, participate in court proceedings and engage in any litigation that he considers necessary, review documentary evidence, and start and conduct prosecutions in any court of competent jurisdic- tion in the name of the United States."89 The independent counsel re- ports to Congress"90 and cannot be removed from office except for good cause.191 Independent counsels have been appointed to investigate a number of politically charged complaints. Many such investigations have been criti- cized on the grounds that they tend to be costly, protracted, and partisan. In the aftermath of the negative public reaction to the recent impeachment proceedings against President Clinton, there is growing speculation that Congress may not renew the Independent Counsel Statute when it expires on June 30, 1999. Not surprisingly, much of the criticism leveled at the independent counsel has tended to be as partisan as the investigations themselves.192 Notwithstanding the existence of such controversial investigations, the independent counsel process has gone a long way toward isolating the appointment of independent counsel from politics, emphasizing the le- gal considerations that drive the appointment process at the expense of purely political considerations. It is interesting to note that the decision to apply for the appointment of an independent counsel is the Attorney General's alone, and it is not subject to a challenge before any court of law. Such a decision is not intended to amount to an indictment or to raise any presumption of guilt or wrongdoing on the part of officials un- der investigation. At best, it is intended to be the expression of the Attor- ney General's determination that there are grounds to believe that further investigation is warranted. There have been cases in which independent counsels have been appointed amid strong evidence of criminal conduct. There has also been at least one case in recent months in which Attorney General Janet Reno sought the appointment of an independent counsel, not so much because she believed that there was evidence to warrant a prosecution, but because she was convinced that the law left her no other choice.193 A special counsel, according to one commentator, may sometimes be the only way to investigate the executive branch, especially at the high- est levels. The Department of Justice may be too compromised; Con- gress, whose job this should be in principle, is sometimes too partisan.'94 The impending demise of the Independent Counsel Statute, if indeed it is confirmed, is bound to be followed by further calls for an investiga- tive process independent of the Department of Justice to investigate crimes involving elected and other senior officials of the executive branch. LEGAL FRAMEWORK TO COMBAT CORRUPTION 43 Other Specialized Corruption Investigation Agencies Partly to mitigate the shortcomings of the adversarial investigative proce- dure, and partly in recognition of the limited capability of conventional police forces, many countries have opted for specialized corruption inves- tigation agencies of their own to investigate and combat economic crimes and corruption in particular. Hong Kong established its Independent Com- mission against Corruption (ICAC). Tanzania and Malawi established the Prevention of Corruption Bureau and the Anti-Corruption Bureau, respec- tively. Similar agencies have been established in Singapore, Pakistan, Kenya, and Mauritius. Hong Kong. ICAC was established by the Independent Commission against Corruption Ordinance (Chapter 204). It consists of a commis- sioner, a deputy commissioner, and such other officers as may be ap- pointed."95 Both the commissioner and deputy commissioner are appointed by the chief executive. The commissioner is answerable to the chief executive in the exercise of his functions under the ordinance, but he is not otherwise subject to the direction or control of any other person.196 The role of ICAC is to receive and investigate allegations of corruption, including alleged or suspected offenses under the ordinance and related legislation, including the Prevention of Bribery Ordinance (Cap. 201, 14 May 1971, Law No. 58 of 1971, originally 102 of 1970) and Corrupt and Illegal Practices Ordinance, as well as alleged or suspected offenses of blackmail involving public officials or misuse of public of- fice.197 The commission is also competent to examine the practices and procedures of government departments with a view to facilitating the discovery of corrupt practices and securing the revision of work meth- ods and procedures, as well as advising on changes in practices and procedures needed to reduce the likelihood of occurrence of corrupt prac- tices. Singapore. The Corrupt Practices Investigation Bureau (CPIB) is an in- dependent body that investigates and seeks to prevent corruption in the public and private sectors in Singapore. Established in 1952, it derives its powers of investigation from the Prevention of Corruption Act (Chapter 241, Statutes, Law of 1952, 1993 revision). The bureau is headed by a di- rector who is directly answerable to the Prime Minister. The CPIB is responsible for safeguarding the integrity of the public ser- vice and encouraging corruption-free transactions in the private sector. It is also charged with the responsibility of checking on malpractices by public officers and reporting such cases to the appropriate government depart- ments and public bodies for disciplinary action. Although the primary function of the bureau is to investigate corruption under the Prevention of Corruption Act, it is also empowered to investigate any other arrestable 44 COMBATING CORRUPTION offense under any written law that is disclosed in the course of a corrup- tion investigation. Besides bringing corruption offenders to book, the CPIB carries out ac- tivities aimed at preventing corruption. For example, it reviews the work methods and procedures of corruption-prone departments and public bod- ies to identify administrative weaknesses in the existing systems that could facilitate corruption and malpractices, and it recommends remedial and preventive measures to the heads of departments concerned. CPIB offic- ers regularly conduct lectures and seminars to educate public officers, es- pecially those who come into contact with the public, on the pitfalls of-and the avoidance of-corruption. Pakistan. In Pakistan, the Accountability Ordinance provides the legal and institutional framework to combat corruption. The ordinance provides for the establishment of a Chief Ehtesab Commission (CEC), headed by a commissioner, to investigate allegations of corruption and corrupt prac- tices, and institute proceedings accordingly before a bench of three High Court judges.'98The commissioner, who has the rank of a Supreme Court judge, is appointed for a term of four years. The appointment of CEC of- ficers and staff is made by the federal government with the concurrence of the CEC. The CEC is vested with wide-ranging powers, including the power to seek the required assistance and call for documents and infor- mation relevant to any proceedings pending before it, and the power to punish for contempt. The Accountability Ordinance provides effective measures for prosecu- tion and speedy disposal of cases involving corruption and corrupt prac- tices, including extraordinary powers of the court to order forfeiture of property obtained through corruption and corrupt practices and property found to be disproportionate to the known sources of income of the ac- cused party, and power to freeze the property of an accused party, before a conviction, if the court has reasonable grounds to believe that the ac- cused party has committed an offense.99 Tanzania. The Tanzanian Prevention of Corruption Bureau was estab- lished by the Tanzanian president pursuant to the Prevention of Corrup- tion Act.200 It consists of a director general and directors, and other officers as the president may determine. Its functions are to take measures to pre- vent corruption in the public, parastatal, and private sectors; investigate and prosecute for offenses involving corruption; and advise on ways to prevent corruption. The bureau is subject to the control and supervision of the president. In the exercise of its powers to prosecute for offenses under the Prevention of Corruption Act, it is also subject to the directions of the Director of Public Prosecutions. Malawi. The Malawi Corrupt Practices Act of 1995 established the Anti- Corruption Bureau, which consists of a director, a deputy director, and LEGAL FRAMEWORK TO COMBAT CORRUPTION 45 such other officers as may be appointed from time to time.201 The director is appointed by the president, but he is subject to the direction and control of the relevant government minister on all matters of policy, and the ap- pointment is subject to confirmation by the Public Appointments Com- mittee (PAC).202 Both the director and deputy director are liable to be suspended or dismissed for cause by the president, subject, however, in the case of dismissal, to confirmation by the PAC.203 The powers and functions of the Anti-Corruption Bureau are not unlike those of its counterpart in Hong Kong.204 It has extensive powers of arrest and search and seizure, as well as access to books, records, and other docu- ments relevant to its functions.205 As in the case of its counterparts in Hong Kong and Tanzania, it is also subject, in the exercise of its powers to pros- ecute for offenses under the act, to the directions of the Director of Public Prosecutions. Under certain circumstances, the Director is even empow- ered to issue an order directing an officer of the bureau to investigate any bank account, share account, purchase account, or any other account or safe deposit box in any bank, and the issue of such an order is deemed to be sufficient authority for the release by any person of any information or other document pertaining to such account or safe deposit box.206 Kenya. The role and functions of the Anti-Corruption Authority are governed by the Prevention of Corruption Act.207 The Act gives the direc- tor of the Anti-Corruption Authority wide-ranging powers to investigate and prosecute offenses involving corruption.200 It vests employees of the authority with powers similar to those of the police. In the performance of their functions, the members of the authority are vested with all the pow- ers of a police officer of the rank of assistant superintendent of police. The provisions of the Police Act conferring upon police officers powers neces- sary for the prevention, investigation, and prosecution of offenses apply equally to them. The Prevention of Corruption Act represents a bold move on the part of the authorities to provide the director with some degree of security of ten- ure and, in so doing, isolate the office from political interference. The con- ditions and circumstances in which the director can be removed from office are stated and prescribed in the Act. It is expressly provided that the direc- tor can be removed from office, but only if he is incapacitated, bankrupt, or convicted of a criminal offense, or if he absents himself from office. When it is intended to remove the director, the Act provides for the ap- pointment of a tribunal of judges to investigate the allegations against him and make recommendations accordingly to the president. Mauritius. The Unified Revenue Board in Mauritius was established pursuant to the Unified Revenue Act of 1993. The functions of the Unified Revenue Board are, among other things, to "co-ordinate and supervise the activities of the revenue departments,"209 to "take such measures as may 46 COMBATING CORRUPTION be necessary to improve the effectiveness of the revenue departments and maximize revenue collection in Mauritius,"'210 and to "determine the steps to be taken to counteract fraud and other forms of fiscal evasion."'211 Sub- ject to the overall authority of the board, the Commissioner of Fiscal In- vestigations has authority to "take such steps as may be necessary with a view to expediting revenue collection or combating fraud and other forms of fiscal evasion."212 In the discharge of its functions under the Act, the board is required to act in accordance with such directions of a general character as the minister may issue from time to time.213 All the board's members either report to or are designated by the minister.214 General Observations. The Hong Kong model has been widely cited as a one of the rare success stories in the campaign against corruption. Its legislative framework has served as a model in many other countries, including Malawi and Botswana. Following the Hong Kong model, many countries in Africa and elsewhere have enacted new laws, established new specialized corruption investigative agencies, and defined new cor- ruption-related offenses. To date, however, there is no hard evidence to suggest that the Hong Kong success story has been widely replicated abroad. At least three elements account for the successful enforcement of cor- ruption laws. First, an enforcement agency must have available adequate resources-human, physical, and intellectual-to be effective. Second, it has to be independent of the political leadership. Third, its actions can succeed only to the extent that they are matched by the requisite measure of political will to combat corruption. It is reasonable to assume that ICAC in Hong Kong has been blessed on all three counts. Where political will to combat corruption runs deep, it serves not only to strengthen the hand of the enforcement agency, but also to unleash the resources that it requires to deliver the goods. The presence of these three elements-adequate resources, indepen- dence, and political will-may have contributed to yet another factor that accounts for the Hong Kong success story: the commitment of the people of Hong Kong to the rule of law.2"5 Corruption investigation is an expensive undertaking, requiring con- siderable resources and involving special skills and a level of profession- alism that few developing countries care to develop. It also requires a delicate balance of political support and independence that is not always readily achievable. Beyond paying lip service to the need to eradicate cor- ruption and engaging in a handful of mostly politically motivated anticor- ruption crusades by subservient watchdog agencies under their control, many political leaders have shied away from any genuine attempt to em- power their enforcement agencies and provide them with both the resources and the independence they need to establish their credibility. LEGAL FRAMEWORK TO COMBAT CORRUPTION 47 As examples from several developing countries readily demonstrate, there is still a strong tendency among political leaders in such countries to keep a tight control over the investigative process in corruption cases and, in so doing, make sure it never gets out of hand. The control model adopted has varied from one developing country to another. In some cases, a tight and highly centralized control model has been adopted, giving political leaders unrestricted authority to oversee both individual staffing arrange- ments and the progress of individual investigations. In other cases, the control model has been more relaxed, leaving it to enforcement agencies themselves to use their best judgment to conduct investigations and es- tablish their findings, subject only to such general directives as the politi- cal leadership may issue from time to time. Although there is no compelling reason to assume that political leaders are a main source of corrupt practices, let alone the only source, there is a real perception-at least in the eyes of the public-that, along with other public officials, they rank among the chief perpetrators of corruption of- fenses and other economic crimes, if only because of the power they wield and, more important, their ready access to public funds. To vest the same political leaders and their acolytes with day-to-day control over the inves- tigation of corruption offenses is to subvert a quasi-investigative process and undermine its credibility, reducing it at best to a preferred instrument of political vendetta. In countries where democratic reforms have been accompanied by periodic changes of regime, political leaders would do well to remind themselves that successive regimes have been known to enforce-to equally damaging effect-the unjust laws and other reprehen- sible legal instruments they inherit from their predecessors, subverting them for their own political ends and, in the process, providing their pre- decessors with a proverbial taste of their own medicine. Judicial Process Traditional Bribery Legislation In most countries, bribery legislation has been on the statute books for a long time. Well before bribery and corruption came to be regarded as spe- cial offenses requiring special treatment, there were already provisions in the legislation of most countries relating to offenses of bribery and corrup- tion. Such provisions were usually to be found in the penal code and, in some cases, in special corruption legislation. The United Kingdom. In the United Kingdom, the existing legislation governing the offense of bribery involving public officers dates back to an Act of Parliament introduced late in the 19th century.216 The Act makes it an offense for any person to solicit or receive, or to give, promise, or offer, 48 COMBATING CORRUPTION to a public officer, any gift, loan, fee, reward, or advantage as an induce- ment or reward for any public officer to do, or refrain from doing, an act in respect of any matter or transaction in which a public body is concerned. Legislation governing acts of bribery in the private sector was introduced in 1906.217 Similar legislation governing corruption in both the public and private sectors was introduced in Kenya in 1956.218 The United States. According to bribery legislation in the United States, it is an offense for any person to give, offer, or promise directly or indi- rectly anything of value to any public official for or because of any offi- cial act performed or to be performed by such public official.219 Conversely, it is also an offense for such an official to demand, seek, receive, accept, or agree to receive or accept anything of value personally for, or because of, any official act performed or to be performed by such official.220. The provisions do not apply obviously to cases in which the reward, gift, or promise is made, offered, or given, or received or accepted by the official, in accordance with the law and for the proper discharge of an official duty. France. In France, as in Mauritius, there are provisions in the penal code governing bribery offenses. French law makes a distinction between ac- tive and passive acts of corruption. An active act of corruption is commit- ted whenever any person gives or offers any gift, reward, or other advantage to any public officer, to induce the officer to do, or to refrain from doing, an act in the execution of his duties. Conversely, an act of corruption is deemed to be passive whenever it is the officer who solicits or receives a gift, reward, or other advantage in order to do, or to refrain from doing, an act in the execution of his duties. In both cases, the act of corruption is punishable under the penal code.221 Similarly, in Mauritius, it is an offense under the penal code for any public officer to accept or receive a bribe, or for any person to give or offer a bribe to such an officer, if the purpose of the bribe is to induce the officer to do, or to refrain from doing, an act in the execution of his duties, or to reward him on account of such an act done in the execution of his duties.' Special Corruption Offenses The United States. The Foreign Corrupt Practices Act was promulgated in 1977. The Act makes it an offense for any company registered in the United States; its employees or agents; any U.S. citizen, national, or resi- dent; or any other U.S.-based enterprise to be involved in foreign corrupt practices. For purposes of the Act, "foreign corrupt practices" involve the use of mail or other means of interstate commerce to give, offer, or prom- ise to any foreign official or political party or candidate for political office anything of value to bring the foreign official, political party, or candidate LEGAL FRAMEWORK TO COMBAT CORRUPTION 49 for political office to use his influence, directly or indirectly, to assist the company, enterprise, or individual to secure or retain business.223 The Foreign Corrupt Practices Act provides for an exception in the case of a payment to a foreign official, political party, or party official for the purpose of expediting or securing the performance of a so-called "routine governmental action."224 Similarly, it is a defense under the Act that the payment, promise, or offer was lawful under the laws of the foreign coun- try concerned, or that it was a reasonable and bona fide expenditure in- curred for the promotion, demonstration, or explanation of products or services, or for the execution or performance of a contract with a foreign government or agency.225 The Foreign Corrupt Practices Act empowers the Attorney General to issue guidelines on standards of conduct that the Attorney General would regard as being in conformity with the Act.226 At the request of concerned parties, the Attorney General may also issue advisory opinions, indicat- ing whether and, if so, to what extent any prospective conduct of such parties is, in the Attorney General's view, consistent with the standards laid down in the Act. The Attorney General's advisory opinion is not bind- ing on a court of law, but, in cases where the conduct under review had been supported by a favorable advisory opinion, such an opinion creates a rebuttable presumption that such conduct was indeed consistent with the Act.227 It has been suggested that the United States may be the only nation in the world that punishes criminally its business community for bribing another country's public servants. Whether this statement is strictly cor- rect is questionable. Suffice it to say, however, that the enforcement record under the Foreign Corrupt Practices Act has been somewhat mixed, with convictions few and far between.228 There are several obvious reasons that account for the dubious record of the Act. First and foremost, it is clearly not in the best interest of the United States to bring systematically charges of bribery of foreign officials against its own citizens while other states condone similar acts involving their own citizens. To do so would undermine the ability of U.S. companies and businesses to compete for business in other countries. Second, the Act suf- fers from a lack of clarity, which makes it difficult to determine in specific situations whether the conduct complained of amounts to a breach of the Act or not. Third, even if a specific form of conduct is determined to be actionable under the Act, charges of bribery of foreign officials invariably involve complex and time-consuming investigations. Such investigations require significant resources that the United States, like any other country, may prefer to allocate to other, more visible law and order issues, such as violent crimes, drug-trafficking offenses, and other issues considered to be of higher priority. 50 COMBATING CORRUPTION Tanzania. The Tanzanian Prevention of Corruption Act creates three sets of corruption offenses. The first set relates to so-called corrupt trans- actions, which, unlike other offenses created under the Act, are not re- stricted to the public sector. The Tanzanian Prevention of Corruption Act makes it an offense for any person to corruptly solicit, accept, or obtain, or to agree to accept or attempt to obtain, any advantage as an inducement to, or reward for, doing or forbearing to do, or for having done or forborne to do, anything in relation to his principal's affairs or business.229 A similar offense is created in respect of any person who corruptly gives, promises, or offers an advantage under similar circumstances.230 This first set of of- fenses applies exclusively to cases in which the recipient or intended re- cipient of the advantage acts, not on his account, but on behalf of a principal. Although the offenses are not limited to transactions involving public of- ficials, there are harsher penalties provided for offenses committed in re- lation to public sector contracts.231 The other two sets of offenses are limited to transactions involving pub- lic officials. In the first case, Tanzania's Prevention of Corruption Act makes it an offense for a public officer to solicit, accept, or obtain, or to agree to accept or attempt to obtain, any undue advantage from any person in con- nection with his official duties. The other set of offenses relates to the fail- ure on the part of a public officer to satisfactorily account for wealth he may have or may have had in his possession, or for the benefit of services which he may have received. Under the Act, the appropriate authorities are empowered by notice in writing to require any public officer to provide a full and true account of properties that such public officer may have or have had in his possession, including a true account of how such property has been acquired.232 Fail- ure to provide such a full and true account as required in the notice is in itself an offense punishable with imprisonment of up to two years.233 More- over, where a public officer is found to be or to have been in possession of property, or to have received the benefit of services, that he is reasonably suspected of having corruptly acquired or received while holding public office, he may be charged with an offense under the Act and required to satisfy a court of law that he did not corruptly acquire the property or receive the benefit of services, as the case may be; failing which, he may be deemed to have corruptly acquired the property or received the benefit of services, as the case may be.234 Malawi. Most of the offenses provided under the Tanzanian Preven- tion of Corruption Act are also to be found in the Malawi Corrupt Prac- tices Act. As in Tanzania, the Corrupt Practices Act makes a distinction between corrupt transactions involving public officials and those that do not. Both types of transactions are covered under the Act and punished accordingly. Unlike the Tanzanian Act, however, the Malawi Corrupt Prac- LEGAL FRAMEWORK TO COMBAT CORRUPTION 51 tices Act goes on to create a number of offenses relating to abuse of author- ity on the part of public officials and other persons in connection with the award of contracts. It is an offense under the Act for a member of a public body to corruptly solicit, accept, or obtain, or to agree to accept or attempt to receive or ob- tain, or for any other person to corruptly give, promise, or offer to a mem- ber of a public body, any gratification as an inducement or reward for such member of a public body to use his voting rights or other influence to further or hinder any course of action, or to procure any contract or ad- vantage in favor of any person.235 Similarly, it is also an offense for any public officer to corruptly solicit, accept, or obtain, or to agree to accept or attempt to receive or obtain, or for any other person to corruptly give, promise, or offer to a public officer, any gratification as an inducement or reward for such public officer to exercise undue influence for the promo- tion, execution, or procurement of any contract involving a public or pri- vate body, or for the payment of any price, consideration, or other moneys thereunder.236 Finally, it is an offense under the Act for any person to cor- ruptly solicit, accept, or obtain, or to agree to accept or attempt to receive or obtain, or for any other person to corruptly give, promise, or offer to any such person, any gratification as an inducement or reward for the withdrawal of a tender or for refraining from making a tender for any contract with a public or private body,237 or for refraining from making a bid at any sale by auction conducted by or on behalf of a public or private body.238 There are also provisions in the Malawi Corrupt Practices Act pertain- ing to a public officer who maintains a standard of living, or has pecuni- ary resources or property, that is not commensurate with his official emoluments, past or present, or other known sources of income, or is in receipt of the benefit of services which he is reasonably suspected of hav- ing received corruptly or under circumstances that may amount to an of- fense under the Act.239 Although the Act does not appear to make it an offense as such for a public officer to maintain such a standard of living or to have such pecuniary resources or property, or to be in receipt of such benefit of services, it does require the officer, upon receipt of a notice in writing to that effect, to provide a satisfactory explanation of such stan- dard of living, pecuniary resources or property, or receipt of the benefit of services, as the case may be.240 Finally, the Malawi Corrupt Practices Act, like the U.S. Foreign Cor- rupt Practices Act, claims to have extraterritorial application. Its provi- sions are declared to be applicable to citizens and residents of Malawi both within and outside Malawi, and offenses committed thereunder by such citizens and residents outside Malawi are treated and dealt with as if they had been committed within Malawi.24" In view of the specific scope 52 COMBATING CORRUPTION of the terms "public bodies" and "public officers," which have been de- fined under the Act to refer solely to public bodies and public officers of Malawi, it is reasonable to assume that offenses involving public bodies and public officers under the Act can only be committed in relation to such public bodies and public officers of Malawi. Even though the Act provides for extraterritorial jurisdiction, it is doubtful that Malawi, any more than the United States, has either the ability or the inclination to divert significant resources away from more pressing domestic concerns to engage in the aggressive pursuit of acts of bribery committed outside its immediate borders. Hong Kong. In Hong Kong, the provisions governing bribery of public officials are not found in the law creating the special corruption law en- forcement agency, but in a separate Prevention of Bribery Act.2' The main focus of the Act is on acts of bribery involving public officials. The Act makes it an offense for any person, whether in Hong Kong or elsewhere and without lawful authority or reasonable excuse, to offer any advantage to a public servant. The Act also makes it an offense for a public servant to solicit or accept such an advantage if the purpose thereof is to induce or reward any act or omission on the part of the public servant, or to favor any person or put him at a disadvantage.243 Hong Kong's Prevention of Bribery Act defines an advantage as includ- ing any service or favor accruing to the public servant.24 It places the bur- den of proving lawful authority or reasonable excuse on the accused.245. In any proceedings under the Act, it is not a defense to show that any advan- tage is customary in any profession, trade, vocation, or calling.246 As in the case of the U.S. Foreign Corrupt Practices Act and the Malawi Corrupt Practices Act, the Hong Kong Prevention of Bribery Act claims to have extraterritorial jurisdiction to the extent that the offense of bribery can be committed "whether in Hong Kong or elsewhere." In this case, however, the extraterritorial nature of the jurisdiction is limited to the extent that the alleged bribery has to relate to a public servant of Hong Kong.247 As in the case of Malawi, there are provisions pertaining to bribes of- fered or solicited as an inducement or reward for the promotion, execu- tion. or procurement of any contract, or for the payment of any price, consideration, or other moneys thereunder,248 for the withdrawal of a ten- der or for refraining from making a tender for any contract,249 or for re- fraining from making a bid at any sale by auction,50 but only in cases of contracts and auctions involving a public body. The Act also makes provi- sions in relation to corrupt transactions with agents acting on behalf of their principals."5 Finally, as in Tanzania, the Act makes it an offense for any public ser- vant to either maintain a standard of living above that commensurate with, or to be in control of pecuniary resources or property disproportionate to, LEGAL FRAMEWORK TO COMBAT CORRUPTION 53 his present or past official emoluments, unless he can satisfactorily ac- count for such a standard of living or pecuniary resources or property, as the case may be.252 Where the pecuniary resources or other property that is the subject matter of the charge is held by a person other than the accused party, and the court is satisfied that that person was holding such pecuni- ary resources or property on trust for the accused or received such pecuni- ary resources or property as a gift from the accused, such pecuniary resources or property may, having regard to that person's relationship to the accused or other circumstances and in the absence of evidence to the contrary, be presumed to have been in the control of the accused.253 Where any person has been convicted on account of pecuniary resources or property in his control, which he has failed to satisfactorily account for, the court may, at the request of the Attorney General, and in addition to other penalties provided under the Act, make an order for the confisca- tion of pecuniary resources or property in his control, not exceeding the amount or value of pecuniary resources or property that the convicted party failed to satisfactorily account for.254 A confiscation order shall not be made in relation to pecuniary resources or property held by a person other than the convicted party, unless that other person has been given adequate notice of the proposed order and an opportunity to show cause why it should not be made,255 or if that other person satisfies the court that he acted in good faith or that, in regard to the circumstances in which the pecuniary resources or property were acquired, an order would be unjust.256 Money Laundering Money laundering is the process of transformation of the form or usage of ill-gotten proceeds of economic crimes, with a view to obscuring the source or origin of such proceeds. The term "money laundering" has tradition- ally been associated with drug-trafficking offenses. Today, however, money laundering has come to be regarded as an essential element in the fight against corruption. Its scope has been extended to apply generally to all economic crimes, including corruption offenses. As in the case of drug trafficking, the purpose of money laundering legislation is to ensure that crime does not pay, and that no amnesty is provided after the fact to per- petrators of serious economic crimes. The United Kingdom. In the United Kingdom, legislation creating money-laundering offenses in connection with drug trafficking was first introduced in 1986.257 But it was not until the Criminal Justice Act of 1993, amending the Criminal Justice Act of 1988, that money-laundering provi- sions were extended generally to cover other forms of criminal conduct. The Criminal Justice Act makes it an offense for any person to be involved 54 COMBATING CORRUPTION in any arrangement designed to enable another person to retain control over the proceeds of criminal conduct, or to have such proceeds placed at that other person's disposal or applied to acquire property by way of in- vestment on his behalf, knowing that that other person has been involved in criminal conduct or has benefited from criminal conduct.25" In any pro- ceedings against any person under the Act, it is a defense for the accused party to prove that he did not know or suspect that the arrangement re- lated to the proceeds of criminal conduct or that the effect thereof was to enable that other person to retain control over the proceeds of criminal conduct, or to have such proceeds placed at that other person's disposal or applied to acquire property by way of investment on his behalf, or that he intended to disclose details pertaining to the arrangement, or that his failure to do so was excusable.259 There are also provisions in the Act to protect the rights of persons involved in such arrangements who take ap- propriate steps to disclose the arrangements' existence to police or other persons in authority.260 Similarly, it is an offense for any person to conceal or disguise, for the purpose of avoiding prosecution, any property that is the proceeds of that person's own criminal conduct, or to convert or transfer such prop- erty out of the jurisdiction, or the making or enforcing of a confiscation order relating to such property.261 It is also an offense for any person to conceal or disguise any property that is the proceeds of another person's criminal conduct or to convert or transfer such property out of the juris- diction, for the purpose of assisting that other person in avoiding pros- ecution, or the making or enforcing of a confiscation order relating to such property.262 Switzerland. Faced with criticism that its state-of-the-art financial ser- vices had combined with the absence of regulatory constraints and strict bank secrecy rules to make Switzerland a haven for the safekeeping of proceeds of criminal activities, Switzerland has taken a number of mea- sures to curb money-laundering activities. It has participated in a number of international initiatives, including a Financial Action Task Force set up by the G-7 countries in 1989 to propose measures to combat money laun- dering. The task force has since issued a set of 40 recommendations for national and international action. Actions taken by Switzerland to combat money laundering have been based in large part on the recommendations of the Financial Action Task Force.263 The Swiss Criminal Code now makes it an offense for any one to com- mit an act the effect of which is to impede the identification of the source, discovery, or confiscation of assets that he knows, or should have known, came from a crime.264 A crime under Swiss law includes most serious of- fenses, including theft, robbery, fraud, extortion, blackmail, kidnapping, and, of course, acceptance of bribes by public officials.265 The offense is LEGAL FRAMEWORK TO COMBAT CORRUPTION 55 punishable in Switzerland, even if the underlying crime has been commit- ted abroad, provided, of course, that the set of circumstances that consti- tute the underlying crime amounts to a crime under both Swiss law and the foreign law.266 The Swiss Criminal Code also makes it an offense for financial interme- diaries to accept, keep on deposit, help to invest, or transfer assets of a third party without verifying the identity of the beneficial owner of such assets with the vigilance required by each particular set of circumstances.267 After amendments introduced in March 1994, the code also provides for the right of persons to whom the relevant section applies to notify law enforcement authorities "of indicia founding a suspicion that the assets have a criminal origin."268 The right to report this type of suspicion was the subject of legal controversy on account of the requirement of secrecy imposed by Swiss banking rules.269 The Money Laundering Act was enacted by Switzerland in October 1997. The purpose of the Act was to combat money laundering and ensure an adequate level of vigilance in financial transactions. The Act takes account of the outcome of several international initiatives taken to combat money laundering. It also supplements existing legislation, including the Swiss Criminal Code, in several ways. First, the Money Laundering Act introduces a duty to report, according to which financial intermediaries are required to report the knowledge or suspicion of a criminal activity that they acquire in the course of their busi- ness relationship with their clients.270 Attorneys and public notaries are exempt from the duty to report, but only to the extent that they acquire their knowledge or suspicion of a criminal activity in privileged circum- stances.271 Second, in cases where a duty to report arises, the Act also imposes a duty on the financial intermediary to block the assets that are the subject matter of the report.272 The purpose of this measure is obviously to avoid the disappearance of assets suspected to be the proceeds of a crime.273 The blocking of assets is maintained for a period of no more than five business days, after which the funds are automatically released, unless in the mean- time the competent law enforcement authorities have decided to inter- vene.274 Finally, the Act has a number of provisions designed to strengthen the implementation of the so-called "Know-Your-Customer" (KYC) rules and extend them to all financial intermediaries.275 The KYC rules are an impor- tant element of the overall strategy to combat money laundering. They were part of the recommendations of the Financial Action Task Force, and include rules such as customer identification rules and bookkeeping rules, as well as an obligation to clarify the economic background of suspicious transactions.276 56 COMBATING CORRUPTION Latvia. The law on the Prevention of Proceeds Derived from Crimi- nal Activity in Latvia was passed on December 18, 1997, and went into effect on June 1, 1998. According to an unofficial translation of the law, its purpose is to prevent the laundering of proceeds derived from crimi- nal activities. To this effect, the law establishes the rights and responsi- bilities of financial institutions, credit institutions, and their supervisory and control activities, and it provides for the establishment of the Office for Preventing Laundering of Proceeds Derived from Criminal Activity (also referred to in the law as the Disclosures Office) and the Advisory Council.277 The Disclosures Office is described as an independent body, subject to the oversight authority of the Latvian Public Prosecutor's Office.278 Its role is to receive, collect, store, and analyze reports made by credit and finan- cial institutions, to determine whether there is sufficient evidence of money laundering and, if so, to assist law enforcement authorities and the courts to have the case heard and reach a final determination.279 The Disclosures Office is also charged with responsibility to analyze information and pro- vide guidance as appropriate to credit and financial institutions, and to cooperate with other state institutions. It does not, however, have any prosecutorial powers, nor does it appear to have any special powers of search and seizure or other enhanced investigative powers. The purpose of the Advisory Council is to strengthen cooperation among state institutions for purposes of the law, advise on the list of indicators of unusual transactions, and make recommendations to the Disclosures Of- fice on the performance of its functions under the law.380 The Advisory Council consists of eight members, six of whom represent the private sec- tor.281 For purposes of the definition of money laundering under the law, the activities that constitute criminal activities are described in some detail. They include "giving and taking of bribes, [and] intermediation in brib- ery."282 They also include a host of other criminal activities ranging from smuggling and dealing in arms and ammunitions to organized crime, hos- tage taking, dealing in pornographic materials, and traffic in narcotic drugs.283 The law requires credit and financial institutions to refrain from con- ducting transactions that they suspect involve money laundering or at- tempted money laundering.24 It sets forth the procedural measures to be followed by institutions to monitor financial transactions and report un- usual or suspicious transactions and, thus, to avoid the possibility of the financial system being used for money-laundering purposes.285 Transac- tions can be characterized as unusual or suspicious, according to a list of indicators of unusual transactions issued by the Disclosures Office that takes into account proposals of the Advisory Council, which have been LEGAL FRAMEWORK TO COMBAT CORRUPTION 57 approved by the Cabinet.286 There are also provisions to protect credit and financial institutions in cases where they either pursue a transaction after duly reporting it to the Disclosures Office or refrain from pursuing the transaction altogether.287 Although the law appears to create an offense of money laundering, surprisingly, it does not precisely define the elements constituting such an offense. In particular, it does not make it clear whether, and to what ex- tent, a conviction for the underlying criminal activity that forms the basis of the money-laundering activity is a precondition for a conviction on a money-laundering charge. It does not provide any guidance on the treat- ment of funds found or suspected to be the proceeds of a money-launder- ing offense. Although the law appears to suggest that the offense may be committed solely by credit and financial institutions, it is arguable that employees and customers may also be liable to commit specific offenses thereunder. Finally, the law does not provide for any specific penalties to deal with money-laundering offenses. Offenses Involving Special Rules of Evidence Many of the corruption offenses created under recently adopted corrup- tion legislation involve the introduction of special rules of evidence, the effect of which is to ease the burden of proof resting on the prosecution and, in so doing, increase the odds of securing convictions. The intro- duction of new rules of evidence is not just a recognition of the sheer impossibility of establishing one or more of the elements of corruption charges; it also signals society's growing frustration with corruption, as well as its determination to develop appropriate legal techniques to ar- rest its pervasive influence. New rules of evidence have been introduced in relation to possession of unexplained wealth or property, bribery, and possession or control of property by close relatives or associates of ac- cused parties. Possession of Unexplained Wealth or Property. Hong Kong's Preven- tion of Bribery Act provides a classic example of policymakers' clear de- termination to ease the burden of proof resting on the prosecution and challenge some of the myths surrounding the constitutional rights of ac- cused parties. In any proceedings against a public servant on account of the standard of living that he maintains or pecuniary resources or prop- erty under his control, it is for the accused, not the prosecution, to account satisfactorily for such standard of living or such pecuniary resources or property, as the case may be.288 Even though the accused party bears the burden of proof on this one issue, the standard of proof that applies in the case of the accused is merely an evidential burden of adducing sufficient evidence to displace the legal presumption created by the Act, which op- 58 COMBATING CORRUPTION erates in favor of the prosecution. Subject to the obligation of the accused to discharge the evidential burden in relation to one of the elements of the offense, the prosecution continues, in accordance with constitutional pro- visions governing the rights of accused parties, to bear the overall burden of establishing guilt. Similarly, the Tanzanian Prevention of Corruption Act reverses the nor- mal rules governing the onus of proof in a criminal case to the extent that it relieves the prosecution from having to establish one of the key elements of the offense-the element of corruptibility involved in the acquisition of property or in the receipt of benefit of services, as the case may be.299 For a prima facie case to be established against the accused, it is enough for the prosecution to establish that the accused was a public officer; that, in that capacity, he or she acquired property or obtained the benefit of services; and that there are reasonable grounds to suspect that he or she corruptly acquired property or obtained the benefit of services, as the case may be. Provided a prima facie case has been made against the accused, the Act creates a legal presumption, the effect of which is to shift the burden of proof, requiring the accused to adduce sufficient evidence to show that he did not corruptly acquire property or receive the benefit of services; fail- ing which, the property or the benefit of services is deemed to have been so acquired or so received, as the case may be. There have been numerous attempts to challenge the constitutionality of provisions requiring an accused party to bear, at least in part, the bur- den of disproving guilt. Such provisions, it is argued, contravene the con- stitutionally guaranteed rights of accused parties and, in particular, the universally recognized presumption of innocence. Not surprisingly, such attempts have failed.290 Corruption charges invariably involve a great deal of factual evidence, which lies within the exclusive knowledge of the ac- cused party. To require the prosecution to establish elements of the charges that rely wholly or in part on such evidence would be to impose an impos- sible burden on the prosecution, which in turn would frustrate any at- tempt to secure convictions for corruption offenses. Ultimately, the constitutional issue that arises is whether it is reasonable to expect an ac- cused party to adduce enough evidence of the source and origin of his wealth to rebut the presumption created by law, or whether such a re- quirement is so unbearable as to infringe the constitutional right to be pre- sumed innocent until proven guilty. In an environment where practically every responsible government in the rest of the world has launched a worldwide campaign against corruption, it is unlikely that courts would invalidate a measure that might prove to be one of the ultimate tools in the combat against corruption, and one that can hardly amount to an undue imposition-except, precisely, in those cases in which accused parties have something to hide. LEGAL FRAMEWORK TO COMBAT CORRUPTION 59 Bribery. One of the essential elements of the offense of bribery, ac- cording to Hong Kong's Prevention of Bribery Act, is that the advantage that is the subject matter of the bribery charge must have been given, offered, or accepted without lawful authority or reasonable excuse.29" The Act provides that the burden of proving a defense of lawful authority or reasonable excuse lies with the accused.292 Because the reversal of the onus of proof affects only one of the several elements that constitute the offense of bribery, the prosecution must prove all the other elements- namely, that a person has offered or given to a public servant, or a public servant has solicited or accepted, an advantage as an inducement or re- ward for any act or omission on the part of the public servant in the course of his official duties. It is only if the prosecution proves all these other elements of the offense, thereby establishing a prima facie case against the accused, that the reversed onus of proof provision comes into play, requiring the accused to establish a defense of lawful authority or rea- sonable excuse. Similar provisions are found in both the Tanzanian Prevention of Cor- ruption Act and Malawi Corrupt Practices Act. The Malawi Act provides that whenever it is proved in any proceedings under the Act that any per- son solicited, accepted, or obtained, or agreed to accept or attempted to receive or obtain, any payment in any of the circumstances set out in the relevant section under which the accused is charged, in the absence of evidence to the contrary, such payment shall be presumed to have been corruptly solicited, accepted, or obtained, or agreed to be accepted, re- ceived, or obtained.293 The effect of this provision and the corresponding provision in the Tanzanian Prevention of Corruption Act294 is to relieve the prosecution from having to establish the element of fraud involved in the offense-provided, of course, that all the other elements of the offense have been duly established and a prima facie case has been made out against the accused. Reversing the burden of proof in criminal cases is a serious matter, which no legislature is likely to take lightly. It is also a reflection of the serious- ness with which society perceives corruption, as well as its growing frus- tration with the magnitude of the task facing corruption law enforcement agencies. Whether or not it amounts to an infringement of the right of the accused to be presumed innocent until proven guilty is a question that must be addressed on a case-by-case basis. Courts are bound to take a dim view of any attempt to use this device to shift onto the accused the substantive burden of disproving essential elements of the offense. In Hong Kong, however, as in Malawi and Tanzania, not every innocent act trig- gers a reversal of the burden of proof in a bribery case. In Hong Kong, a shift in the burden of proof does not come into play unless and until the prosecution establishes both the existence of a transaction between a pub- 60 COMBATING CORRUPTION lic servant and another person involving an advantage accruing to the public servant, and a direct relationship between the advantage and an act or omission on the part of the public servant in the exercise of his offi- cial functions. Reversing the burden of proof in such circumstances, with regard to a possible defense or attenuating circumstances that are within the exclusive knowledge of the accused, can hardly be regarded as an im- position: It is a small price to pay to promote the chances of victory against the organized forces of corruption. Possession or Control of Property by Close Relatives or Associates. Section 9(2) of the Tanzanian Prevention of Corruption Act creates an ad- ditional presumption with respect to property alleged to have been cor- ruptly acquired or the benefit of services alleged to have been corruptly received by an accused party. In cases where such property is found to have been acquired or the benefit of services found to have been received by a person other than the accused party, the court may, in appropriate cases, having regard to that other person's relationship with the accused, infer that such property was acquired or such benefit of services received by that other person on behalf of the accused. In such cases, the prosecu- tion is relieved from having to establish one of the elements of the offense- namely, that it was the accused himself who acquired property or received the benefit of services. A similar legal presumption is found in the Malawi Corrupt Practices Act, the effect of which is to relieve the prosecution from having to estab- lish actual possession or control of pecuniary resources or other property by an accused party, in cases where such pecuniary resources or other property is held by another person, and a court of law is satisfied, because of that other person's close relationship to the accused or other circum- stances, that such pecuniary resources or other property is held in trust on behalf of an accused, or has been acquired as a gift or loan without ad- equate consideration from the latter.295 A similar provision is to be found in the Hong Kong Prevention of Bribery Act.296 The presumption relating to property in the possession or control of close friends and associates of accused parties in corruption cases is an- other indispensable tool in the fight against corruption. It is an attempt to preempt a commonly used technique in corruption cases to divert the ille- gal proceeds of corruption and disguise their source and origin. Without it, many corrupt transactions would remain immune to scrutiny, and their perpetrators would go unpunished. The basis for the presumption is the recognition that much of the factual evidence relating to transfers of prop- erty between an accused party and his close relatives or associates is within their own exclusive knowledge. To require the prosecution to adduce evi- dence of such dealings would be to place an impossible burden on the prosecution of corruption charges. LEGAL FRAMEWORK TO COMBAT CORRUPTION 61 Like other legal presumptions, this presumption is open to challenge on the grounds that it may cause otherwise innocent transactions to be subjected to legal scrutiny, solely because of the relationship between the accused party and the person in possession or control of property. Not- withstanding the potential for abuse that every such legal presumption entails, it is arguable, on the basis of the relevant provisions of the corrup- tion laws of Hong Kong, Malawi, and Tanzania, that the presumption does not apply except in cases where the prosecution has established that sus- picious circumstances surround the source or origin of the property, and then only to the extent that it is not subsequently disproved by evidence to the contrary to be adduced by those who are the most likely repositories of such evidence. Sanctions and Penalties It has been said of the anticorruption laws that, for all their elaborate pro- visions, they have failed to deter corruption or have any measurable im- pact on its level and prevalence. Anticorruption laws have been on the statute books for centuries and, in many cases, continue to co-exist along- side new corruption laws. The advent of new anticorruption legislation, it is argued, has not been accompanied by any renewed effort to root out corruption and expose corrupt practices. It has merely provided many policymakers with badly needed breathing time as they come under pres- sure to repudiate corrupt practices and join in worldwide efforts to com- bat corruption. Adoption of new corruption-related laws has provided the political leadership in many countries with a unique opportunity to pro- vide a solid display of their commitment to fight corruption, without any concomitant need for immediate follow-up action to enforce such laws. Adoption of laws is not an end in itself, and, in the final analysis, it is for each country to use its new laws to demonstrate its willingness to fight corruption. Laws alone are of limited value in any anticorruption strategy if they are not also supported by the requisite measure of political will, as well as appropriate institutions and mechanisms to enforce them. From a purely technical point of view, however, the new anticorruption laws have enhanced the ability of countries to combat corruption in at least four re- spects. First, as a rule, new corruption-related laws provide for much stiffer sentences and harsher penalties than were available under traditional cor- ruption legislation. The penalty provided for corruption offenses under Malawi's Corrupt Practices Act ranges from 5 to 12 years' imprisonment.297 Corresponding offenses under the Tanzania's Prevention of Corruption Act are punishable with imprisonment of up to 14 years and a fine.298 The penalty for bribery and related offenses under Hong Kong's Prevention of 62 COMBATING CORRUPTION Bribery Act is imprisonment of up to 10 years and a fine, which may in- clude the amount or value of any advantage received or, in case of a con- viction for an offense of possession of pecuniary resources or property that has not been satisfactorily accounted for, the value of the pecuniary resources or property.299 Second, in addition to other penalties provided under the new anticor- ruption laws, there are also provisions for the attachment and forfeiture of property that is the proceeds of corruption offenses. Provisions for the at- tachment of property300 that is the subject matter of corruption charges and, upon a conviction, for its forfeiture,301 are to be found in Tanzania's Prevention of Corruption Act. Under Hong Kong's Prevention of Bribery Act, where any person is suspected of, or charged with, an offense, the court may issue a restraining order in respect of any property in that person's possession or under his control, or in the possession or under the control of any other person acting for, or on behalf of, the person so sus- pected of, or charged with, an offense. The effect of the restraining order is to restrict the right of any person to whom the order is addressed to dis- pose of or otherwise deal with the property except in accordance with the terms of the order.302 Upon a conviction for possession of pecuniary re- sources or other property that has not been satisfactorily accounted for under the Act, other provisions enable the court to order the confiscation of pecuniary resources or other property not exceeding pecuniary resources or other property that is the subject matter of the conviction.303 Third, the new laws have introduced a number of legal presumptions that have significantly eased the burden of proof that normally rests on the prosecution with respect to specific elements of the charges in criminal cases in general. One such legal presumption relieves the prosecution from having to establish the element of fraud in bribery cases, provided, of course, that all the other elements of the offense have been established. Another relieves the prosecution from having to prove that property is in the possession of an accused party or under his control, if such property is in the possession or under the control of a close friend or associate of the accused, and the court is satisfied, having regard to that person's relation- ship to the accused or other circumstances, that such property is held on trust on behalf of the accused party or was received as a gift or loan and without sufficient consideration from the latter. A third presumption ap- plies in cases of possession of unexplained pecuniary resources or prop- erty, requiring an accused party charged with such an offense to give a satisfactory account of his pecuniary resources or property, failing which the court is entitled to assume that the accused has none and proceed to convict him accordingly. The introduction of legal presumptions relieves the prosecution from having to adduce factual evidence that is largely, if not exclusively, within the knowledge of accused parties without neces- LEGAL FRAMEWORK TO COMBAT CORRUPTION 63 sarily infringing the rights of the accused to be presumed innocent until proven guilty. Finally, the introduction of money-laundering legislation has added a new dimension to the anticorruption movement. Money laundering is to bribery and other economic crimes what possession of stolen property is to theft. It tracks down the proceeds of economic crimes in the hands of third parties, thereby providing alternative charges for indictments based not so much on the conduct of the original perpetrators of the bribery or other economic crimes as on the tainted origin of the proceeds of the crimes. Although it is not uncommon to charge one and the same person with both money laundering and the economic crime on which the money laun- dering charge is based, it is more common to rely on money-laundering legislation to proceed against those who seek to obscure or disguise the proceeds of economic crimes, thereby aiding and abetting the perpetra- tors of such crimes. Money-laundering legislation has had the effect of considerably expanding the nexus of parties liable to be called to account as a result of any single economic crime. Its objective is to make sure that any subsequent transaction involving the proceeds of a corruption or other economic crime shall not, in and of itself, have the effect of relieving such proceeds of their tainted origin. Corruption Redefined A review of anticorruption legislation in force in different parts of the world reveals striking similarities, as well as basic differences, in the approach followed from one country to another. The similarities are obvious. First and foremost, they are to be found in the basic elements that constitute the offense of corruption. In substance, as this study has illustrated, these ele- ments vary little from one country to another. Anticorruption legislation in most newly developed and developing countries has been largely based on the existing laws of other, more developed countries, which have been used as models to be built upon and adapted, as needed, to local circum- stances. In so doing, most major legal systems appear to have settled on a fairly standard basic definition of corruption, treating it as consummated whenever a public officer or other agent accepts or solicits a bribe, or any person gives or promises a bribe to such a public officer or other agent; provided, however, that the purpose of the bribe is to serve as a reward to the public officer or agent for an act that he has done or refrained from doing in the exercise of his functions, or as an inducement designed to ensure that the public officer or agent does, or refrains from doing, any act, in the exercise of his functions. Although there is consensus on the core definition of corruption, there are also other aspects of the definition that have been subject to contro- 64 COMBATING CORRUPTION versy. Several of these aspects merit further attention. They are, first, the definition of a bribe; second, the relevance of the value of the bribe, whether small or large, insignificant, or of a routine nature, and the related issue of local customs; third, the relative importance of public and private corrup- tion; and, finally, the effect of the consent of a principal to an act of corrup- tion committed by an agent or public officer. Definition of a Bribe. The definition of what constitutes a bribe has varied from one jurisdiction to another. In the United Kingdom, as in Kenya, a bribe is defined as a gift, loan, fee, reward, or advantage. The term "ad- vantage," however, is subject to an even more elaborate definition, includ- ing "any office, dignity, or any forbearance to demand any money or money's worth or valuable thing, . . . any aid, vote, consent or influence, ... or the holding out of any expectation of any gift, loan, fee, reward, or advantage. ..304 In Tanzania, the central element of the corruption offense is an advan- tage, which is defined as a gift of any property, movable or immovable; loan, fee, or reward, including valuable consideration of any kind; dis- count; commission; rebate; bonus; deduction or percentage; employment or services; or an agreement to give employment or render services.305 A similar definition is to be found in the Corrupt Practices Act of Malawi.306 In U.S. bribery legislation, a bribe is referred to as "anything of value."307 In a recent policy study on corruption,300 the World Bank has also injected its own definition of corruption: abuse of public office for private gain. As the scope and extent of corruption have expanded in recent years, some of the limitations inherent in the traditional definition of a bribe have gradually come to light. Although bribery has for a long time been associ- ated with the concept of a tangible gift, loan, or reward, the classic defini- tion of a bribe has evolved over the years to cover less tangible benefits, such as any aid, vote, consent, or influence or employment or services, or an agreement to give employment or render services. This evolution not- withstanding, there has been little attempt to do away with the tangible or pecuniary element that has mainly characterized the crime of bribery in many jurisdictions. The World Bank's own definition of corruption is a case in point. The emphasis on the tangible and pecuniary elements of bribery has tended to obscure the role that other less tangible benefits or advantages can play in corruption cases. Examples of such intangible benefits and advantages that drive corruption include cronyism, patronage, and nepo- tism, which are correctly identified as potential sources of corruption in the recent World Bank policy study on corruption.309 There are jurisdic- tions in which the offense of corruption is so defined as to allow for pros- ecution of bribery cases, irrespective of whether the bribes are of the tangible pecuniary variety or not. In many other instances, however, this is not the LEGAL FRAMEWORK TO COMBAT CORRUPTION 65 case. A candidate for public office or a bidder for a contract who offers sexual favors to a public official in order to attain his objective is no less guilty of corruption than one who offers money or other pecuniary advan- tages to achieve the same purpose. Similarly, a political leader who holds out a promise of access to the party leadership, whether express or im- plied, or the mere prospect of future benevolence, to procure employment or other contracts on behalf of friends and relatives should not escape punishment solely on account of the fact that the benefits in question are not quantifiable. As cronyism, patronage, and nepotism continue to take their toll on the social and economic progress of many countries, it may perhaps be time to recognize that they are as much a source of corruption as bribery and ought to be dealt with accordingly. Insignificance or Routine Nature of a Bribe. The small value of a bribe, its insignificance and routine nature, and reliance on local customs have all been cited in one form or another as possible defenses to a charge of bribery. The existence of such defenses based on value or customs has been reaffirmed from time to time in some countries and, needless to say, chal- lenged in others. Having regard to the diversity of circumstances that pre- vail from one country to another, it is not likely that there will ever be any consensus on the validity of such defenses. In Malawi, the definition of the gratification that is the core element of the corruption offense has been adjusted to exclude a casual gift, which has been defined as "any conventional hospitality on a modest scale or an unsolicited gift of modest value not exceeding K500 offered to a person in recognition or appreciation of his services, or as a gesture of goodwill to- wards him, and includes any inexpensive seasonal gift offered to staff or associates by public and private bodies or private individuals on festive or other special occasions, which is not in any way connected with the performance of a person's official duty . .""3 Under the U.S. Foreign Corrupt Practices Act, a similar exception is provided for payments to for- eign officials, political parties, or party officials for the purpose of expedit- ing or securing the performance of so-called routine governmental actions.3" Conversely, in Hong Kong, it is expressly provided that it is not a defense to show that the advantage that is the subject matter of a bribery offense is customary in any profession, trade, vocation, or calling."32 In actual practice, regardless of the existence or otherwise of a defense based on local custom or the value of the bribe, it is uncommon in most jurisdictions for charges to be brought for bribery based solely on an alle- gation pertaining to a small or insignificant bribe, or one generally regarded as consistent with normal practice or local custom. Even if such charges are brought and established, the penalty is unlikely to be more than a sym- bolic one. Whether or not what is regarded as ordinary practice can be regarded as corrupt is one of the issues with which the U.K. Law Commis- 66 COMBATING CORRUPTION sion was confronted in its recent review of corruption legislation. A com- mon example of ordinary practice that the Law Commission had in mind was that of corporate hospitality. What prevents an ordinary practice from being corrupt, the commission concluded, is not so much that it is ordi- nary, but that in general it creates no substantial conflict of interest be- tween the recipients' interests and their duty.313 The Law Commission's conclusion would be hard to challenge. Although the commission reached this conclusion in relation to "normal practice" corruption, the same prin- ciple is equally applicable in respect of small value or insignificant bribes. Public versus Private Corruption. It comes as no surprise that corrup- tion in the public sector has attracted more attention than corruption in the private sector. As the U.K. Law Commission has pointed out in its recent report on corruption legislation, the public expects higher standards of be- havior from those in public life, occupying offices of public responsibility, or paid by the state than it expects from those who work for private compa- nies.314 That is not to suggest that corruption is more widespread or perva- sive in the public sector than in the private sector. Although public sector corruption has often generated more publicity than private sector corrup- tion, there is growing concern about corruption in the private sector. In the United Kingdom, the Public Bodies Corrupt Practices Act was passed in 1889. As its name implies, it was concerned solely with bribery in the public sector. It was not until 1906 that the Prevention of Corruption Act was passed. The 1906 Act was intended to apply to all agents, whether in the public or private sector. Modern corruption legislation in Hong Kong, Tanzania, and Malawi apply equally to private and public sector corrup- tion. However, the World Bank's study on corruption restricts its concern for and definition of corruption to its incidence in the public sector. Al- though the Bank recognizes that bribery exists in the private sector, the study explains that "bribery in the public sector, offered or extracted, should be the Bank's main concern, since the Bank lends primarily to govern- ments and supports government policies, programs, and projects."'315 It has long been assumed that corruption in the public sector is more damaging to the public interest, and therefore a more serious offense, than corruption in the private sector. But, as the U.K. Law Commission has pointed out, this assumption has become increasingly suspect.3"6 There are at least three reasons that account for the growing interest in corruption in the private sector. First, to suggest that corruption in the private sector is less serious than corruption in the public sector is to create a double stan- dard that is hard to justify on moral, ethical, or economic grounds, and, in so doing, send the wrong signals on the moral standards expected of the private sector. Second, as more and more public sector functions are being privatized or taken over by the private sector, the line between the public and private LEGAL FRAMEWORK TO COMBAT CORRUPTION 67 sectors has become increasingly difficult to draw. Where public utility en- tities have been privatized, as has been the case in many countries, there is no apparent reason why corruption in that sector ought to be treated less harshly solely because that sector has been privatized. Finally, it is questionable whether corruption in the private sector is less damaging to the public interest than in the public sector. Large-scale corruption in the private sector results in higher consumer prices and re- duced tax revenues, bringing about significant losses in earnings and rev- enue shortfalls, as it does in the public sector. Consent of Principal. The offense of bribery as commonly defined pre- supposes the existence of a duty of trust between the agent and the agent's principal. The breach of that duty by the agent forms the basis of the of- fense. Regardless of whether the breach of duty originates with the agent or is instigated by a third party, there is no offense, according to this hy- pothesis, unless the principal's trust has been betrayed.317 Based on this hypothesis, there has been some speculation that the con- sent of the principal is an effective defense to a charge of bribery. There is no breach of trust, it is argued, if the principal consents to the alleged act of bribery. Others have argued that the consent of the principal can be a defense, but only in cases that do not involve a breach of a public duty. This distinction between the private sector and the public sector assumes- somewhat optimistically-that the principal's consent or lack thereof is more easily ascertainable in a private sector context than in the public sector. The better view, it is submitted, is that the consent of the principal is a sufficient defense in both the private and public sector contexts, provided, of course, that such consent can be appropriately verified. Of course, such consent will be more easily ascertained in cases of a principal who hap- pens to be a single individual than in the context of the public sector or a large corporation. A waiter who adjusts the quality of the service provided according to the size of his tip is not guilty of soliciting bribery: The prac- tice of taking tips is consistent with normal practice, and it is a practice that is accepted, if not actively encouraged, by his employer. Assuming that similar practices were ever to be extended to the public sector or even large corporations, they would presumably, depending on the power struc- ture involved, require prior legislative or board of directors' approval, as the case may be. IV International Efforts Against Corruption No universally applicable law pertaining to the combat against corrup- tion has been adopted to date. However, there have been numerous re- gional and international efforts to assist in the reduction and possible eradication of corruption. These efforts started in the early 1970s, when there was significant interest in the increasing role of multinational corpo- rations in the world economy. They have continued over the years, and the 1990s have engendered much interest in this subject. U.N. Efforts U.N. Initiatives in the 1970s In 1974, the Economic and Social Council of the United Nations (ECOSOC) established an intergovernmental subsidiary body, the Commission on Transnational Corporations (CTC), with the objective of furthering a bet- ter understanding of the nature of transnational corporations and their political, legal, and economic effects on host and home countries. An- other objective was to secure effective international arrangements aimed at enhancing the contribution of such corporations to national develop- ment goals and world economic growth, while controlling and eliminat- ing their negative effects. The main aim of the CTC was to prepare for adoption by the United Nations a Code of Conduct on Transnational Cor- porations, which would offer credible assurances to both host countries and home countries in the treatment of various issues, such as tax and foreign exchange requirements, and in the stability, confidence, and trans- parency required in international transactions. The CTC also dealt with one of the negative aspects of such transactions-the problem of corrupt practices. This exercise was to be carried out by the Ad Hoc Intergovernmental Working Group on the Problem of Corrupt Practices, established in Au- gust 1976, and ECOSOC, after General Assembly Resolution 3514 (XXXXXX) of December 15,1975. Its outcome was due to be reflected in an 68 INTERNATIONAL EFFORTS AGAINST CORRUPTION 69 article in the proposed code of conduct. This resolution expressed concern over corrupt practices in the activities of certain transnational corpora- tions and requested ECOSOC to include this question in the work of the CTC. The Ad Hoc Intergovernmental Working Group worked with the CTC to produce several drafts on the issue of bribery and corruption and, in particular, a draft of an international agreement on illicit payments.318 The Ad Hoc Working Group was replaced by the Committee on an Inter- national Agreement on Illicit Payments, which was established by ECOSOC on August 4, 1978.3l9 After 12 meetings, the committee agreed on a draft text of an interna- tional agreement that was transmitted to ECOSOC and the CTC for inclu- sion in the relevant article the code of conduct which was under preparation. The principal corruption-related provision in this agreement required each contracting state to make punishable by appropriate crimi- nal penalties under its law several specified acts. These include: (a) The offering, promising or giving of any payment, gift or other advantage by any natural person, on his own behalf or on behalf of any enterprise or any other person whether juridical or natural, to or for the benefit of a public official as undue consideration for performing or refraining from the performance of his duties in 22connection with an international commercial transaction. (b) The soliciting, demanding, accepting or receiving, directly or indirectly, by a public official of any payment, gift or other advantage, as undue consideration for performing or refrain- ing from the performance of his duties pertaining to an inter- national commercial transaction. The term "public official" was defined broadly to include both ap- pointed or elected officials at the national, regional, or local level who are employees of a government or public or governmental authority or who perform a public function. Other interesting features in this draft agreement related to cooperation between states in connection with criminal investigations and prosecutions in respect of offenses covered by the agreement and the fact that any such offenses are "deemed to be included as extraditable offenses in any extradition treaty existing be- tween Contracting States."320 After this significant foray into this prob- lem area, the draft agreement was never adopted and put into operation by ECOSOC. However, some of the principles underlying this work have found their way into the more recent initiatives discussed in the follow- ing sections. 70 COMBATING CORRUPTION The U.N. Declaration against Corruption and Bribery The United Nations' confirmed interest in the subject of corruption over the last two decades (after the earlier discussions on illicit payments) culminated on December 16,1996, with the adoption by the General Assembly of a Decla- ration against Corruption and Bribery."2 As part of this resolution, the General Assembly also adopted an International Code of Conduct for Public Officials. Despite its nonbinding nature, this declaration comprehensively cov- ers the issues. It broadly defines bribery to include all actions deemed to be included in the laws on bribery and corruption in many states.322 It urges states to take necessary action for the adoption of laws to combat these practices, including the development or maintenance of accounting standards and practices, as well as appropriate business codes and best practices. In this connection, it recommends that states take action not only to deny the tax deductibility of bribes paid by enterprises in such states to elected or public officials of another state, but also to make illicit enrich- ment by public officials and elected representatives an offense. Its most far-reaching recommendations concern cooperation among states. It pro- vides that states should afford each other the greatest possible assistance in connection with criminal investigations and legal proceedings brought in respect of corruption and bribery in international commercial transac- tions. This cooperation includes, without limitation, the production of documents and other information and facilitation of access to documenta- tion about transactions and about the identity of persons engaged in brib- ery, notice to other states about the initiation of criminal proceedings and their outcomes, and more liberal application of extradition laws. Regional Efforts The concern and discussion about corruption continued unabated at the na- tional level and also in a significant number of international forums in the 1980s. Every major corruption-related scandal in both developed and developing coun- tries elicited international condemnation as well as calls for more significant action by both multinational corporations and states. The 1990s have, however, seen concerted action on the part of regional groups, as well as within the frame- work of multilateral organizations. This interest has in part been fueled by the notion of "good governance," another issue of major concern in the 1990s. Efforts within the Organization of American States: Inter-American Convention against Corruption One of the landmark expressions of concern and possible action on the issue of corruption was taken by member nations of the Organization of INTERNATIONAL EFFORTS AGAINST CORRUPTION 71 American States (OAS) in 1996. The Inter-American Convention against Corruption was signed by 21 Latin American countries in March 1996 and by the United States and Canada later the same year. 32 It entered into force on March 20, 1997, with the deposit of instruments of ratification by Paraguay and Bolivia. Several other countries have since ratified the con- vention, which was signed after more than two years of negotiations. The main objective of the convention is to promote the development and strengthening of legal mechanisms in signatory countries to "prevent, detect, punish and eradicate"324 official corruption in both the domestic and international spheres. It is a major treaty in terms of both its form and substance. Its main focus is, however, to require contracting parties to criminalize bribery of both local and foreign officials and also to enact measures to combat the illicit enrichment of public officials. The conven- tion defines corruption very broadly to include "solicitation or acceptance of a bribe, offering or granting of a bribe, inappropriate acts or omissions of public officials (includes government officials), fraudulent use or con- cealment of property derived from any such action and participation, col- laboration or conspiracy to commit any of such acts."315 Even though states agree to take all necessary actions to promulgate laws to prohibit or pun- ish persons allegedly violating the laws on corruption, the convention in- cludes a provision that appears to potentially limit the obligation of contracting states. It provides that a state's obligations under the conven- tion are "subject to its Constitution and the fundamental principles of its legal system.".326 The convention introduced interesting provisions that follow up on the discussions in the 1970s on unjust or illicit enrichment of public officials and are reminiscent of the more recent anticorruption laws in Malawi and Tanzania. Article IX requires the parties to the convention to establish a new offense of illicit enrichment where there is "a significant increase in the assets of a government official that he/she cannot reasonably explain in relation to his/her lawful earnings during the performance of his/her functions." It is interesting to note that where a state does not criminalize such enrichment, such state is required, insofar as its laws permit, to coop- erate with other states that are parties to the convention in the enforce- ment of the other states' laws. In addition, the convention takes an expansive view of the notion of corruption by making certain acts that have not normally been considered "corrupt practices" to be so consid- ered. These include '(i) the improper use of classified or confidential in- formation obtained by a public official for his own benefit or that of a third party; (ii) the improper use of property belonging to a state by a public official for the same purposes, (iii) any attempt by a person to obtain a decision from a public authority whereby he/she illicitly obtains for him- self/herself illicit benefits, and (iv) cases where movable or immovable 72 COMBATING CORRUPTION properties are diverted by a public official for his own benefit or that of a third party"327 If the areas identified are criminalized as required by the convention, such laws potentially will have the effect of closing some of the remaining loopholes in this area. The convention also deals with the issue of governance in general and requires states to take measures to ensure good governance, such as those related to transparency and accountability in governmental activities. The rules and procedures concerning procurement are also given some promi- nence, as is the adoption of codes to promote ethical behavior by public officials.329 The question of the tax treatment for expenditures made in vio- lation of the anticorruption laws of other states is also dealt with by the convention.329 Efforts within the Organisation for Economic Co-operation and Development (OECD) The OECD Recommendations. A noteworthy international instrument outlining a program of action for the combat against bribery and corrup- tion in international business transactions is to be found in the final OECD Council Recommendations on Combating Bribery in International Busi- ness Transactions, adopted on May 23, 1997.33° Apart from generally recognizing the fact that bribery is a widespread phenomenon in international business transactions, the OECD Council Recommendations note that corruption raises serious moral and political concerns and distorts international competition in business transactions. These consequences are also fully recognized in the various U.N. instru- ments and those from other forums. The OECD instrument recommends that expenditures originating from bribery of public officials should not be granted tax deductibility in countries and stresses the importance of the assurance of transparency through the maintenance of proper accounts, establishment of appropriate controls, and auditing.33' However, its most important contribution to the efforts aimed at alleviating the concerns about bribery and corruption is its distillation of common elements of criminal legislation.332 According to the recommendations, the first element of bribery is the promise or giving of any undue payment or other advantages, whether directly or through intermediaries, to a public official, for him- or herself or for a third party, to influence the official to act or to refrain from acting in the performance of his or her official duties to obtain or retain business. The second element is that the term "foreign public official" includes any person holding a legislative, administrative, or judicial office of a foreign country or in an international organization, whether appointed or elected, or any person exercising a public function or task in a foreign country. A INTERNATIONAL EFFORTS AGAINST CORRUPTION 73 third element is the offeror, who can be any person who makes an offer or gives a bribe, or on whose behalf an offer is made or a bribe given. An ancillary element is that the general criminal law concepts of attempt, com- plicity, and conspiracy of the law of the prosecuting state should be recog- nized as applicable to the offense of bribery of a foreign public official. Hence, bribery of foreign public officials to obtain or retain business is an offense irrespective of the value or outcome of the bribe, perceptions of local custom, or tolerance of bribery by local authorities.333 Another important element dealt with in the OECD Council Recommen- dations relates to the issue of jurisdiction. Jurisdiction over the offense of bribery of foreign public officials should be established when the offense is committed in whole or in part in the prosecuting state's territory. The terri- torial basis for jurisdiction should be interpreted broadly so that an exten- sive physical connection to the act of bribery is not required. Moreover, states that prosecute their nationals for offenses committed abroad should do so in respect of the bribery of foreign public officials according to the same principles. In contrast, states that do not prosecute on the basis of the nationality principle should be prepared to extradite their nationals when they are accused of bribery of foreign public officials.334 The recommendations further provide that the offense of bribery of for- eign public officials should be sanctioned and punishable by effective, proportionate, and dissuasive criminal penalties, sufficient to secure ef- fective mutual legal assistance and extradition, comparable with those applicable to the bribers in cases of corruption of domestic public officials. Monetary or other civil, administrative, or criminal penalties on any legal person involved should be provided, taking into account the amount of the bribe and the profits derived from the transaction obtained through the bribe. Forfeiture or confiscation of instrumentalities and of the ben- efits of the bribe and the profits derived from the transaction obtained through the bribe should be provided for, or comparable fines or damages imposed.335 Efficient enforcement is another element promoted by the recommen- dations. In view of the seriousness of the offense of bribery of foreign pub- lic officials, public prosecutors should exercise their discretion independently, based on professional motives. They should not be influ- enced by national economic interests, fostering good political relations, or the identity of the victim. Victims' complaints should be seriously investi- gated by the competent authorities. The statute of limitations should al- low adequate time to address this complex offense, and states should provide adequate resources to prosecuting authorities so as to permit ef- fective prosecution of bribery of foreign public officials. OECD Council Recommendations provide a good framework for the development of the elements, both procedural and otherwise, of the crimes 74 COMBATING CORRUPTION of bribery and corruption. These recommendations were further supple- mented by the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The OECD Convention on Combating Bribery of Foreign Public Of- ficials in International Business Transactions. The issue of corruption has also been included periodically in the discussions among the G-7 heads of state. This subject was more specifically discussed as an agenda item during the meeting of the G-7 heads of state in Lyon, France, in 1996. After a reportedly lively debate, the conclusions of the discussions were included in the communiqu6 as follows: We are resolved to combat corruption in international business transactions, which is detrimental to transparency and fairness and imposes heavy economic and political costs. In keeping with the commitment of OECD Ministers to criminalize such brib- ery in an effective and coordinated manner, we urge the OECD to further examine the modalities and appropriate international instruments to facilitate criminalization and consider propos- als for action in 1997 336 It is not surprising that the OECD was also discussing the issue of cor- ruption at the same time that the United Nations, World Bank, Interna- tional Monetary Fund, OAS, Council of Europe, and European Union were all working to advance international understanding of ways to combat corruption. After calling on OECD countries to criminalize foreign brib- ery, eliminate the tax deductibility of bribes to foreign public officials, and develop guidelines to be used in drafting legislation for the combat of bribery and corruption, the OECD Council of Ministers finally, on No- vember 21, 1997, adopted the Convention on Combating Bribery of For- eign Public Officials in International Business Transactions.337 The convention focuses on the criminalization of the bribery of foreign public officials. There had been considerable discussion since 1977 of how mem- ber countries of the OECD could match the provisions of the U.S. Foreign Corrupt Practices Act. Parties to the OECD convention are required to take all measures nec- essary to establish the crime of bribery of a foreign public official.333 The term "foreign public official" is defined broadly to include most public officials, including officials of parastatal entities and agents or officials of public international organizations, but the definition excludes officials of political parties or candidates for public office.339 According to the Com- mentaries on the Convention, it is an offense to bribe or obtain or retain business or other improper advantage whether or no. the briber concerned was the qualified bidder or could properly have been awarded the busi- INTERNATIONAL EFFORTS AGAINST CORRUPTION 75 ness. It is also noteworthy that small facilitation payments are not intended to be covered by Article 1 and are therefore not punishable. The convention provides that the crime of bribery of a foreign public official should be punishable by effective, proportionate, and dissuasive criminal penalties. Further, the range of penalties should be comparable with that applicable to bribery in the case of the state party's own public officials, which may include imprisonment.340 Another interesting provi- sion is the relationship between this crime and money laundering. The convention provides that the crime of bribery of a foreign public official should be made a predicate offense for money-laundering legislation if a party to the convention has made either active or passive bribery of its own public officials such an offense.341 Finally, the parties are required to cooperate in carrying out a program of systematic follow-up to monitor and promote the full implementation of the convention.342 Follow-up of implementation will be done within the purview of the work of the OECD Working Group on Bribery in International Business Transactions.343 Efforts within The Council of Europe: The Crinminal Law Convention Review of international instruments dealing with the combat against cor- ruption would not be complete without acknowledgment of the contribu- tion of the Council of Europe. At their 19th Conference held in Valletta, Malta, in 1994, the European Ministers of Justice considered that corrup- tion was a serious threat to democracy, the rule of law, and human rights. The Council of Europe then called upon its membership to respond to that threat. The ministers were convinced that it was necessary to adopt ap- propriate legislation in this area, and that a multidisciplinary approach was needed. They recommended the creation of a multidisciplinary group under the aegis of the European Committee on Crime Problems (CDPC) and the European Committee on Legal Cooperation (CDCJ), to be vested with the responsibility of examining the possibility of drafting model laws or codes of conduct, including international conventions on the subject. In light of these recommendations, in September 1994, the ministers' committee established a Multidisciplinary Group on Corruption (MGC) and requested the MGC to examine suitable measures to be included in an international program of action against corruption. The MGC was also asked to make proposals to the Committee of Ministers before the end of 1995 as to the priorities and working structures, taking due account of the work of other international organizations. The MGC prepared a draft pro- gram of action against corruption, which was endorsed in January 1996 by the Committee of Ministers, who in turn invited the CDPC and the CDCJ to express their opinions. In the meantime, the Committee of Minis- 76 COMBATING CORRUPTION ters further requested the MGC to begin the implementation of some of the actions in the program, such as work on one or more international instruments.344 The Committee of Ministers formally adopted a Program of Action in November 1996 and instructed the MGC to implement it before the end of the year 2000. In accordance with the objectives of the Program of Action and on the basis of interim terms of reference, the Criminal Law Working Group of the MGC (MGCP) began work on a draft criminal law conven- tion in 1996. Between February 1996 and November 1997, the MGCP held 10 meetings and completed two full readings of the draft convention. In November 1997, they sent the text to the MGC for consideration. After several internal meetings and consultation within the MGC, the CDPC approved the draft convention in September 1998 and submitted it to the Committee of Ministers, which formally adopted the convention and de- cided to open it for signature. The Criminal Law Convention, which was opened for signature on De- cember 1, 1998, principally aims at developing common standards con- cerning certain corruption offenses. The convention reflects the Council of Europe's comprehensive approach to the fight against corruption. It pro- vides a detailed, although not uniform, definition of activities covered by the term "corruption." These include both active and passive bribery, as well as trading in influence over the decisionmaking of public officials and money laundering. In scope, the convention is not limited to public officials. It covers, among others, private parties, foreign entities, senior officials of international organizations, elected representatives of interna- tional bodies, and judges and officials of international courts. In addition to the substantive as well as procedural law matters relevant to corruption offenses, the convention also seeks to improve international cooperation.345 It provides for cooperation and assistance among the parties in the inves- tigation of corrupt acts and the confiscation of proceeds emanating from such acts, as well as additional remedies for their victims. The African Initiative The issue of corruption has been a subject that has found great interest in Africa. It has been one of the facets of many of the discussions on gover- nance issues in countries and in African regional forums, including the Organization of African Unity and various subregional institutions, such as the Economic Community of West African States. The problem of cor- ruption and its threat to the development prospects of African countries has been a topical issue during deliberations in plenary sessions of the Global Coalition for Africa (GCA), a coalition of senior governmental offi- cials from Africa and OECD countries, who meet periodically to discuss INTERNATIONAL EFFORTS AGAINST CORRUPTION 77 development issues of relevance to Africa and provide a voice and sup- port for African development-related issues on the world scene. This issue was considered to be one that needed urgent attention at the meeting of the GCA Plenary in Maastricht, the Netherlands, in November 1995, prompting the GCA Co-chairpersons to decide that corruption and devel- opment should be a main topic of one of their annual policy forums. Thus, corruption was the main issue of discussion at the GCA Forum in Maputo, Mozambique, in November 1997. This forum was attended by several heads of state from Africa, as well as senior government officials from both Af- rica and OECD countries and representatives of international organiza- tions such as the World Bank. Discussions at this meeting were based on a study prepared by the GCA Secretariat, which contained recommendations for combating corruption, primarily at the national level but also at the international level in connec- tion with international business transactions. It noted that preventing cor- ruption required a consistent, coherent, broad-based approach and a long-term perspective. The proposed framework emphasized the impor- tance of leadership and political will, reform of the public sector and the implementation of broad policy reform aimed at reducing government involvement in their economies (that is, the promotion of the private sec- tor), streamlining government functions, limiting the discretionary decisionmaking authority of officials, and strengthening the judicial, ex- ecutive, and legislative branches of governments. It was also considered important to create autonomous and independent watchdog agencies and to significantly increase the role of civil society.346 On the international front, the study focuses on the increased role that international institutions, in- cluding the World Bank, United Nations Development Programme, and African Development Bank, should continue to play in the improvement of governance in African countries as well as efforts within such institu- tions to limit the opportunities for rent seeking and corrupt practices in their programs of assistance.347 The meeting was a resounding success. Several of the presidents and prime ministers confronted the issues in public for the first time, and the common elements of anticorruption programs were generally agreed to by all concerned. At the national level, these elements included direct and forceful support of the highest political leadership for the improvement of mechanisms to ensure transparency and accountability, introduction of independent watchdog bodies, reduction and simplification of government regulations, and improving procurement procedures.343 At the international level, the forum urged the criminalization of bribery in international busi- ness transactions and the end of tax deductibility of bribes, as well as sup- port by the international community to African countries to assist them to build capacity and establish effective systems to combat corrupt practices.349 78 COMBATING CORRUPTION Since this meeting, discussions on this issue have continued in Africa and elsewhere. A representative group of African, European and North American countries, and international organizations, such as the OECD and the World Bank, are collaborating to develop an appropriate frame- work to address the issue of corruption. On October 8,1998, a preliminary meeting was held under the auspices of the GCA and the U.S. govern- ment. Various issues were discussed, including the strengthening of re- gional and international cooperation to address corruption and, in particular, how existing regional cooperation can be further strengthened and formalized. Possible areas of action were suggested, including con- sideration of anticorruption charters or conventions, development of re- gional networks and mechanisms to exchange information, training programs to strengthen police capacity and encourage cross-border police cooperation, and the convening of another meeting of heads of state to emphasize that corruption will not be tolerated. This meeting was followed by a meeting of ministers and senior offi- cials from Benin, Botswana, Ethiopia, Ghana, Malawi, Mali, Mozambique, SenegaL South Africa, Tanzania, and Uganda in Washington, D.C., on Feb- ruary 23, 1999. At the end of this meeting, the participating officials ap- proved and adopted Principles to Combat Corruption in African Countries.350 The principles (25 in all) set out actions that African govern- ments should take to combat corruption. These include establishment of budgetary and financial transparency and strong financial management systems; elimination of conflicts of interest by the adoption and enforce- ment of effective national laws, guidelines, ethical regulations, or codes of conduct for public officials; promotion of transparency in procedures for public procurement; establishment and enforcement of self-regulatory codes of conduct for different professions, including those in the private sector; appropriate measures to ensure that anticorruption agencies are autonomous, independent, and effectively empowered to pursue investi- gations; and consideration of the elaboration of an African convention for combating corruption based on these principles. These principles deal with a number of issues that are being discussed in other regional and interna- tional forums, and are similar in content to the Lima Declaration against Corruption.351 Efforts at the Nongovernmental Level The Lima Declaration against Corruption. The International Conference on Anticorruption in Lima, Peru, in September 1997 was the first attempt by states, nongovernmental organizations, and representatives of civil so- ciety to discuss openly the subject of bribery and corruption. The confer- ence was attended by citizens of 93 developed and developing countries INTERNATIONAL EFFORTS AGAINST CORRUPTION 79 and included representatives of governments and the private sector as well as private citizens. At the end of a full week of discussion, the partici- pants adopted the Lima Declaration against Corruption on September 11, 1997. After noting that corruption erodes the moral fabric of every society, undermining democracy, subverting the rule of law, and retarding the development of societies, particularly among the poor, the declaration called for governments, international and regional organizations, and or- dinary citizens to take specific actions for the control and possible eradica- tion of corruption. At the international and regional levels, the Lima Declaration called for the recognition of the creative role that civil society can play in the fight against corruption and noted, as other instruments referred to in this study have provided, that tax deductibility of bribes paid in connection with international transactions should be outlawed. It called on various inter- national institutions, such as the OECD, World Bank, International Mon- etary Fund, European Union, World Trade Organization, INTERPOL, International Chamber of Commerce, and World Customs Organization, to take actions within their respective mandates and spheres of influence and, in particular, to cooperate in the suppression of corruption.352 At the national and local levels, states are asked to operate in a trans- parent and accountable manner in all activities and, more significantly, to improve the effectiveness of their laws dealing with corruption by intro- ducing several new concepts, so long as they are consistent with constitu- tions and international human rights norms. Among the suggested actions are "abolishing any requirement to prove that an official who received an illegal gift actually gave favors in return,"353 requiring those who have declared assets to justify increases that are out of line with legitimate sources of income (perhaps shifting the normal burden of proof in criminal cases),354 empowering the state to seize and confiscate illicitly acquired wealth of officials found guilty of corruption,355 and debarring convicted criminals from standing for political office and appointment to positions of trust.356 The Lima Declaration concludes with a description of steps to make the prevention and prosecution of corrupt practices more effective.357 These include improvement in procurement practices, including the possible blacklisting of firms involved in corruption associated with the bidding process; strengthening of codes of professional conduct for a wide variety of professions; improving campaign finance regulation; and education ini- tiatives by governments, schools, and religious institutions.358 The International Chamber of Commerce. Another effort to adopt multilateral standards designed to influence the activities of multinational corporations was undertaken under the auspices of the International Cham- ber of Commerce (ICC). After work undertaken by an ad hoc commission 80 COMBATING CORRUPTION under the chairmanship of Lord Shawcross, in 1978, the ICC issued rules that were to be applicable to international business transactions.359 The basic purpose of the rules was to address issues of extortion and bribery in international business transactions and encourage the business commu- nity to voluntarily apply high standards of business ethics to ensure growth of international business within a framework of fair competition. The rules also suggested that governments should review their statutes relevant to extortion and bribery and take steps to effectively prohibit "all aspects of both giving bribes, as well as so-called facilitating payments to expedite the performance of functions which governmental officials have a duty to perform."'60 These rules were widely circulated, but, judging from the na- ture of recent amendments to them, their effect on the business commu- nity could not have been substantial. Thus, in March 1996, with the increased attention to these issues, the ICC strengthened the earlier rules and urged greater action against corruption at both the national and inter- national levels. It is interesting to note that although these rules appeal to public international organizations to take measures to combat corruption, they basically address the behavior of ICC-member corporations. They prohibit corruption in a broad sense, which includes extortion, bribery, kickbacks, payments to agents that represent more than the appropriate remuneration for legitimate services, and contributions to political parties or committees or to individual politicians if undisclosed and made in vio- lation of applicable laws.36' Moreover, the rules require proper financial recording and auditing by the enterprises and require them to introduce control and review procedures within such enterprises to ensure compli- ance and sanctions against any director or employee responsible for con- travening the rules. For whatever it is worth, despite their less formal and legally nonbinding nature, these rules of ethical business conduct undoubt- edly contribute to the fight against corruption by raising the awareness of these issues among the international business community. Conclusion. International interest in the issue of corruption has grown considerably in recent decades. Recognition of the crime of corruption has become important, and one of the crucial items on the development agenda worldwide. In addition, there is now near-unanimity of opinion that by distorting international competition, corruption has a negative effect on international business transactions. Common traits run through the bevy of recommendations, declarations, resolutions, agreements, and conven- tions. First, all states are asked to take more seriously this issue of corruption and to promulgate appropriate legislation to combat it. In this connection, there appears to be even a willingness to make some changes in the proce- dural aspects of prosecutions-namely, shifting the burden of proof to the accused in some cases and in effect challenging the presumption that a INTERNATIONAL EFFORTS AGAINST CORRUPTION 81 party is innocent unless proven guilty. The willingness to move in this direction appears to be, however, mainly in connection with the crime of illicit enrichment. Second, it is clearly recognized, at least for the developing countries, that corruption is a systemic issue that needs to be confronted in a broad- based fashion. All governmental functions need to be transparent. In par- ticular, states need to put into place mechanisms that will ensure transparency and accountability within government, such as clear, unam- biguous, and improved procurement procedures with very little discre- tionary authority given to government officials. Third, there is a move in many countries, especially those within the OECD, to deny the tax deductibility of illegal kickbacks or bribes to for- eign public officials. Fourth, the proposition that concerted action by the international com- munity may yield tangible results has been broadly accepted. This has improved government-to-government cooperation in the fight against cor- ruption through the sharing of informnation on alleged offenders and the possibility, more than ever, that an alleged offender may be subject to ex- tradition. Finally, the role of multilateral institutions, such as the World Bank and the International Monetary Fund, in taking actions within their respective mandates to assist in the fight against corruption has been firmly recog- nized and encouraged. v Conclusion The combat against corruption raises difficult challenges, legal and other- wise. As this comparative review of selected domestic and international legal initiatives has demonstrated, many interesting legal initiatives have been launched or are underway. Some have produced tangible results- others, less so. But legal initiatives are mere tools in the fight against cor- ruption. History demonstrates that the most successful initiatives are those backed up by the necessary political will to fight corruption, coupled with the necessary resources to engage in and sustain the fight. No amount of rhetoric, declarations, and even legislation will have the necessary impact unless there is strong political will and the desire to improve the monitor- ing and enforcement capacities in all countries. This study has attempted to review the approaches used in some of the major legal systems in the world in the fight against corruption. The analysis indicates that no single approach would be sufficient to deal effectively with this issue: a combination of the preventive and curative approaches is clearly needed. Also, bold steps must be taken to introduce new notions that should be included in the definition of corruption in a constantly chang- ing and sophisticated world. These legal initiatives will go a long way toward dealing with this intractable problem. This study demonstrates that for any legal initiative to have a chance of achieving its objectives, requisite political and societal will needs to be present. This is especially the case when these new initiatives have the effect of taking away long-standing and revered fundamental human rights. There is also much to be learned from experiences in the respective legal systems, which should serve as guides in any legal reform program to assist in abating corruption in any particular country. In this connection, the common elements to be considered in the development of criminal legislation with respect to bribery and corruption proposed by the OECD and dealt with by the Council of Europe offer themselves as notable ex- amples. It is also evident from the analysis that the existence of procure- ment legislation that includes clear, transparent, and monitorable mechanisms, and which is devoid of discretionary powers, is desirable. Such mechanisms should ensure that processes used by states are fair, open, and competitive. This is particularly relevant in developing countries, where the main avenue for corruption often lies in the area of public pro- curement. In this connection, the UNCITRAL model law offers the appro- priate framework for the development of such a law. Also, in this era in 82 CONCLUSION 83 which the winds of democracy are blowing worldwide, the importance of laws to protect the transparency of the electoral and political process can- not be overemphasized. In this vein, there is need to promulgate appro- priate legislation to regulate contributions to political parties and establish campaign spending and contribution limits that are not only transparent, but strictly audited. However, corruption cannot be wiped out by legislative means alone, and it will continue to exist and be attempted in every state, as John Gray foresaw in 1738. In terms of its effect on international business transac- tions, it can be abated only if the cooperation among states, both develop- ing and developed, continues to be strengthened. Within states, much action remains to be taken after careful analysis of what has worked or is work- ing in terms of the legal mechanisms in existence in the world. Endnotes 1. Sarassoro, Hyacinthe Cabago. 1990. <> Afrique Contemporaine (Paris) 156(4th quarter):195. 2. For example, see Mauro, Paulo. 1996. "The Effects of Corruption on Growth, Investment, and Government Expenditure." p. 1-27. Washington D.C.: IMF. See also Kofi, Tetteh A. 1995. "Corruption, Perverse Capital Ac- cumulation and Underdevelopment in Africa." IMF Working Paper pre- sented at the Seventh International Anticorruption Conference, Beijing, China, October 6-10. 1995. 3. See, generally, Goode, Richard. 1984. Government Finance in Develop- ing Countries, pp. 310-11. Washington, D.C.: Brookings Institution. See also Paul, Samuel. 1997. "Corruption; Who Will Bell the Cat?" Economic and Political Weekly (June 7):1350. 4. On March 15, 1999, amid allegations of cronyism, nepotism, fraud, and corruption, the entire membership of the European Commission an- nounced its resignation en masse. The resignation of the 20 members of the commission followed the release of a report of an independent panel of five auditors, which accused them of tolerating widespread fraud, cor- ruption, and mismanagement. The report has singled out the president of the commission, a former French Prime Minister, and four other members as having engaged in or failed to prevent the hiring of friends and rela- tives for nonexistent jobs, and for failing to account for massive misspend- ing in European Union programs. Other allegations noted in the report concern the recruitment of the wives of two commissioners and the brother- in-law of a third to high-level positions. See 1999, March 16. "EU Execu- tive Body to Resign in Fraud Probe." The Washington Post. See also 1999, March 17. "EU Officials Show Little Remorse Following En Masse Resig- nation." The Washington Post. 5. Following the decision of the International Olympic Committee (IOC) in 1995 to award the 2002 winter Olympic games to Salt Lake City, Utah, there has been a series of embarrassing revelations involving cash pay- ments, jobs, scholarships, and even land deals and escort services pro- vided by Salt Lake Olympic Committee (SLOC) officials to IOC members 84 ENDNOTES 85 to influence the site selection process. Several local Olympic officials have since resigned or been fired in the wake of the scandal. If ever there was a blatant case of corruption, the Olympic scandal in Salt Lake City provides the classic example. Mindful of its potentially harmful ramifications, sev- eral agencies in the United States, including the Federal Bureau of Investi- gation, the Internal Revenue Service, the U.S. Customs Service, and the SLOC's ethics panel, as well as the IOC itself, have launched their sepa- rate investigations of the scandal. (See "The Olympic Scandal: Go for the Greed," Newsweek, January 25, 1999.) After the resignation or firing of lo- cal Olympic officials, city officials have sought to contain the damage by pinning most of the blame on their former colleagues. Meanwhile, the IOC president has claimed ignorance of the "greedy habits" of his colleagues and vowed to stay on in office. Similarly, Salt Lake City officials have indi- cated that they have no intention whatsoever of relinquishing their much- coveted and hard-won prize of hosting the winter Olympic games in 2002. By all accounts, the Olympic spirit is not the only lure of the games. They also bring with them millions of dollars in revenue, tourism, and new in- frastructure, which no government, no matter how rich or powerful, would lightly dismiss on account of a corruption scandal. (See also "Blame Rolls Downhill: New Salt Lake Sins," Newsweek, February 15, 1999.) 6. Each and every discipline uses its own parameters to define corrup- tion. Economists tend to define corruption from the perspective of supply and demand, or the market; political scientists tend to define it in relation to the exercise of power and of outsiders' influence on public offices; soci- ologists define corruption in terms of social relationship represented in the violation of socially accepted norms of duty and welfare. Similarly, while a public administration specialist will be more concerned with bu- reaucratic corruption, business organizations will treat corruption simply as a trade and investment policy issue. For more detail on the different perspectives on corruption, see Shihata, Ibrahim F. I. 1996. "Corruption: A General Review with an Emphasis on the Role of the World Bank." Paper presented at Jesus College, Cambridge, U.K., September 9, pp. 1-6. 7. For details on the World Bank perspective and involvement in com- bating corruption, see World Bank. 1997. Helping Countries to Combat Cor- ruption. The Role of the World Bank, p. 8. Washington, D.C. See generally, World Bank. 1994. Governance. The World Bank Experience. Development in Practice. Washington, D.C. 8. According to experts, there are three forms of corruption: collusive (involving willing and planned cooperation of the giver and the taker), extortionary (implying forced extraction of bribes or other favors from vul- 86 COMBATING CORRUPTION nerable victims by the authority), and anticipatory (involving payment of a bribe or presentation of a gift in anticipation of favorable actions or deci- sions). See Paul, supra note 3, p. 1351. For additional detail on techniques to conduct corrupt acts, see also World Bank, 1997, Helping Countries to Com- bat Corruption, pp. 8-20. 9. See, generally, Gray, Cheryl W., and Daniel Kauffmann. 1998. "Cor- ruption and Development." Finance and Development (March):7-10. 10. See, generally Gray and Kauffmann 1998; see also Rose-Ackerman, Susan. 1997. "The Political Economy of Corruption." In Kimberly Ann Elliott, ed., Corruption and the Global Economy, pp. 3-56. Washington, D.C.: Institute for International Economics. See also Mauro 1996, pp. 83-105. 11. Ghana Constitution (1992), Article 35.8. Entered into force on Janu- ary 7, 1993. 12. Nepal Constitution (1991), Article 97(1). 13. Nepal Constitution, Article 98(1). 14. Nepal Constitution, Article 97(2). 15. Uganda Constitution (1995), Article XXVI. See also the Ugandan Leadership Code (1991), Statute N.8. 16. The legal basis for combating corruption in Ukraine was further strengthened by the law introduced by the Verkhovna Rada's (Parliament) Resolution No. 357-95-BP (the Law on the Combat Against Corruption, October 5, 1995). The law defines corruption as an "activity of persons authorized to perform state functions, aiming at illicit usage of their au- thority for receiving material benefits, services, privileges and other ad- vantages." The "persons authorized to perform state functions" include civil servants and members of the parliament of Ukraine. 17. In 1996, Pakistan promulgated the Accountability Ordinance. Its objective is to provide for the eradication of corruption by public officials as well as provide effective measures for prosecution and speedy disposal of cases involving corruption. In substance, the Accountability Ordinance applies to every holder of public office, with a focus on higher-ranking members of the bureaucracy and legislatures at both the federal and pro- vincial levels. It brings within its purview not only those presently hold- ENDNOTES 87 ing certain public offices, but also those who held such public offices in the past. While the application of the Accountability Ordinance is limited to senior officials and legislators in terms of the practices that it sanctions, its coverage is extensive. The ordinance relies on a broad definition of the term "corruption and corrupt practices," using it to include not just finan- cial corruption (acquisition of property by illegal or unfair [noncontrac- tual] means or through abuse of power), but political corruption (committing or causing rigging of elections) as well. For a more detailed discussion of the Ordinance, see Hassan, T. 1997, November 13. "Corrup- tion and Accountability in Pakistan." http:/www.erols.com/ziqbal/ corrup.htm. 18. The Lima Declaration against Corruption (September 11, 1997) re- ferred to this as "cleaning a staircase by starting at the top." For details of the Lima Declaration, see notes 351 and 352 and accompanying text. 19. Such provisions are found, for instance, in the Tanzanian Public Leadership Code of Ethics N.13 (1995) (An Act to Establish a Code of Eth- ics for Certain Public Leaders to Provide for the Organization of the Ethics Secretariat and for Matters Connected with or Incidental to Them), and the Ugandan Leadership Code Statute (1991), N.8. 20. Ghana Constitution, Article 286(1). 21. Ghana Constitution, Article 286(3). The Commissioner is empow- ered to investigate all instances of alleged or suspected corruption and misappropriation of public monies by officials (see Article 218(e)). 22. Ghana Constitution, Article 286(4). 23. This is complemented by the Leadership Code Statute of 1991, which requires annual declarations of income, assets, and liabilities by leaders. The code specifies minimum behavior and conduct standards for leaders regarding gifts and benefits in kind, as well as interests in contracts and tenders and the use or abuse of public property. See Langseth, Petter, Damien Kato, Mohammad Kisubi, and Jeremy Pope. 1997. "Good Gover- nance in Africa: A Case Study of Uganda," p. 17. Economic Development Institute Working Paper, World Bank. Washington, D.C. 24. Turkish Constitution 1982 (as amended), Chapter IV, Part 2, Article. 71 (on the right to enter the public service). 25. Mozambique Ethics Law, March 1998. 88 COMBATING CORRUPTION 26. Ethics in Government Act 1978, Pub. L. No. 95-521, 92 Stat. 1824. 27. See Section 3 A(2). 28. Declaration of Assets Act 1991, Sections 3(1) and 3(2). 29. Declaration of Assets Act, Section 3(3). 30. Prevention of Corruption Act (Chapter 241 Statutes, Law of 1952- 1993 Revision). 31. See, generally, Pope, Jeremy. 1995. "Containing Corruption in Inter- national Transactions. The Challenges of the 1990s. In Issue in Global Gover- nance, p. 73. Commission on Global Governance. London:Kluwer Law International. 32. Olowu, Dale, and Victor Ayeni. 1998. "Public Service Accountabil- ity in Nigeria." In Joseph G. Jabbra and O .P. Dwivedi, eds., Public Service Accountability: A Comparative Perspective, p. 149. Connecticut: Kumarian Press. 33. Paul 1997, p. 1355. 34. See de Speville, Bertrand. 1997. "Reversing the Onus of Proof: Is it Compatible with Respect for Human Rights Norms?, p. 9. Paper circu- lated at the 8th International Anti-Corruption Conference, September 7- 11, Lima, Peru). See also, for instance, Section 17(2) of the Malaysian Prevention of Corruption Act 1961. 35. See also generally, Paul 1997, pp. 1350-55. 36. Wiltshire, Kenneth. 1988. "Accountability in the Australian Public Service." In Joseph G. Jabbra and 0. P. Dwivedi, eds., Public Service Ac- countability: A Comparative Perspective, p. 106. Connecticut: Kumarian Press. 37. Ghana Constitution, Chapter 24. 38. Ghana Constitution, Article 284. 39. Ghana Constitution, Article 286(5). The public offices to which the provision applies are those of: the President of the Republic, the Vice Presi- dent of the Republic, the speaker, the deputy speaker and members of parliament, minister of state or deputy minister, chief justice, justice of the ENDNOTES 89 superior court of judicature, chairman of a regional tribunal, the commis- sioner for human rights and administrative justice and his deputies and all judicial officers, ambassador or high commissioner, secretary to the cabinet, head of ministry or government department or equivalent office in the civil service, chairman, managing director, general manager and departmental head of public corporation or company in which the state has a controlling interest, and such officers in the public service and any other public institution as parliament may prescribe. 40. See, generally, Tashiro, Ku. 1988. "Accountability in the Public Ser- vice: A Comparative Perspective in Japan." In Joseph G. Jabbra and 0. P. Dwivedi, eds., Public Service Accountability: A Comparative Perspective, p. 218. Connecticut: Kumarian Press. 41. The rationale for making illegal the demand or acceptance of gifts and benefits by public officials in return for, or in connection with, the performance of their official functions, is important. Giving or receiving gifts is a practice deeply rooted in the culture of many societies. As noted emphatically by the Constitutional Commission of Ghana in connection with the drafting of Ghana's 1978 constitution, a prevailing belief is that something must be done to stop the transformation of a once laudable practice into a shameless machinery and pretext for open and serious cor- ruption and graft. This has led many countries to incorporate provisions accordingly in their legal framework. See "The Proposals of the Constitu- tional Commission for a Constitution for the Establishment of a Transi- tional (Interim) National Government for Ghana" (1978), Accra, Ghana, pp. 117-21 (in connection with the drafting of that constitution). Accord- ing to the Constitutional Commission, it is now difficult to accept that, as the practice is so rampant and deep-rooted in some societies, no attempt should be made to bring it under some control. Certainly, it is difficult to abol- ish altogether the giving and receiving of gifts as genuine to- kens of gratitude for kindnesses or courtesies shown. But the existence of clear provisions against the giving and receiving of gifts and benefits which are clearly intended to influence pub- lic officers to take measures or adopt procedures not permitted by the applicable rules or regulations can serve as a deterrent and a standing warning and reminder to all public officers. For detailed discussions of the rationale for having code of conduct, see "The Proposals," pp. 117-21. 42. The Congressional Ethics Code is indeed detailed. For instance, the gift rules applicable to the House of Representatives prohibit any 90 COMBATING CORRUPTION member, officer, or employee of the House of Representatives from knowingly accepting a gift. As per the rule, the term "gift" means any gratuity, favor, discount, entertainment, hospitality, loan, forbearance, or other item having monetary value. The term includes gifts of ser- vices, training, transportation, lodging, and meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimburse- ment after the expense has been incurred. Similarly, a gift to a family member of a member, officer, or employee of the House of Representa- tives, or a gift to any other individual based on that individual's rela- tionship with the member, officer, or employee, shall be considered a gift to the member, officer, or employee if it is given with his or her knowledge and acquiescence and the member, officer, or employee has reason to believe the gift was given because of his or her official posi- tion. The scope of the rule extends even to hospitality: If food or re- freshment is provided at the same time and place to both a member, officer, or employee and his or her spouse or dependent, only the food or refreshment provided to the member, officer, or employee shall be treated as a gift. 43. On Competition and the Restriction of Monopolistic Activities in Commodity Markets, March 21, 1991, as amended through May 25, 1995 (the Antimonopoly Law). 44. On the Foreign Travel of Officials of Central Federal Bodies of the Executive Branch, July 2,1993 (Decree No. 981). 45. As a result of the allegations of cronyism, nepotism, fraud, and corruption that have plagued the European Commission during the early part of 1999, the President of the Commission has installed an ethics code for commissioners that prohibits them from running for office in their home countries while they are employed by the European Commission in Brus- sels, accepting outside income, and using personal influence in recruit- ment matters. See "EU Executive Body to Resign in Fraud Probe" 1999, March 16, p. See also 1999, March 17. "A Day After Resigning, Some Euro- pean Commissioners Have Second Thoughts." The Washington Post, The new ethics rules notwithstanding, there is at least one commissioner, ac- cording to The Washington Post, who is running for the presidency in the commissioner's own country. 46. See Ministerial Code. A Code of Conduct and Guidance on Proce- dures for Ministers, United Kingdom, 1997 (U.K. Code). 47. See U.K. Code, 1997. ENDNOTES 91 48. See, for further details, the Aitken case, infra note 52 and accompany- ing text. 49. The U.K. Code is elaborate and comprises provisions that are not always necessarily related to financial corruption proper, but also to other aspects of political governance. For instance, the ministers are to make the most important announcements of government policy in the first instance in Parliament and are to consult with law officers in good time before the government is committed to critical decisions requiring legal consideration. Moreover, the U.K. Code specifies that the prime minister is responsible for the overall organization of the executive branch and the allocation of functions between ministers in charge of departments. As a result, the prime minister's written approval should be sought wherever changes are pro- posed that affect the allocation of responsibilities for the discharge of min- isterial functions. The U.K. Code also provides guidance to ministers to enable them to carry out their functions without any conflict of interest, and provides detailed rules governing the relationships between minis- ters and the Crown, ministers and the government, ministers and the par- liament, ministers and their departments, and ministers and the civil service. 50. The U.K. Code provides detailed guidance on the relationship be- tween ministers and civil servants. It indicates, among other things, that in reaching policy decisions, it is the duty of ministers to give fair consid- eration and due weight to informed and impartial advice from civil ser- vants, as well as to other considerations and advice. It also provides for a duty to observe the obligations of a good employer with regard to terms and conditions of those of who serve them. 51. In this connection, a recent case is noteworthy. Alan Meale, the U.K. Minister of Environment, was accused of breaching the U.K. Code after lobbying his own department to promote a £14 million scheme that would benefit Tony Kleanthouse, with whom he had a personal friendship. Dur- ing questioning by the press, the minister was invited to explain his be- havior in light of the U.K. Code. Somewhat curiously, his response was that he was unaware of its very existence. See. 1998, November 1. "Minis- ter Gave Millionaire Party Donor a Commons Pass." The Sunday Times (Lon- don). See also 1998, November 1. "Meale and the Men Who Profited from Friendship." The Sunday Times (London). 52. Another fairly recent case in London involving a former minister, Jonathan Aitken, is a case in point. In 1993, while he was defense procure- ment minister, Aitken was alleged to have allowed an Arab friend pay his 92 COMBATING CORRUPTION hotel bill in the Paris Ritz. He was later charged with conspiracy, perjury, and perverting the course of justice. The hospitality Aitken enjoyed ap- pears to have been in clear violation of Paragraph 126 of the U.K. Code. Paradoxically, however, his tribulations arose not as a result of any crimi- nal action, but after he tried and failed to use a libel suit to disprove allega- tions of impropriety made against him by a newspaper. His was a personal tragedy brought about not so much by any sophisticated anticorruption legislation, but by a basic rule of conduct coupled with the power and te- nacity of a free press. In other countries, the journalists might have been hounded, intimidated, and even thrown in jail for their embarrassing rev- elations. In the United Kingdom, the matter was left to be decided by the courts, whose verdict left little room for doubt about the course of events that precipitated Aitken's downfall. The case provides important lessons, not just about the practical application of codes of conduct but also in terms of the role of the media, which is the subject of the next section of this study. See, for more detail, Carroll, Rory. 1998, September 16. "Aitken in Dock over Libel Case." The Guardian. See also Jones, Tim. 1998, September 16. "Aitken in Court to Face Perjury Charge." The Times (London). 53. See Deontologie des magistrats, Circulaire No. 57-MJ/CAB (June 30, 1997). 54. The Code of Conduct for United States Judges. Most state courts in the United States have adopted the abbreviated version of the Judicial Canons recommended by the American Bar Association. See Ashman, Charles R. 1973. The Finest Judges Money Can Buy and Other Forms of Judicial Pollution, pp. 279, 280-96. 55. Code of Conduct for United States Judges, Canon 6. 56. Code of Conduct for United States Judges, Canon 6. 57. Commentaries, Code of Conduct for United States Judges, Canon 6. 58. See, generally, Paul 1997, pp. 1350-55. 59. The Japanese press, for instance, is believed to conceive its mission as involving systematic and continuous criticism of the government in power. See Ward, Robert E. 1978. Japan's Political System, 2nd ed., p. 52. Englewood Cliffs, N.J.: Prentice-Hall. 60. See Tashiro 1988, p. 219. It should also be noted that in the United States, as in European or Asian countries, major corruption scandals have ENDNOTES 93 come to light as a result of the vigilance and determination of a free and dynamic press. 61. See Padgett, George E. 1980. "A Quantitative Analysis of United States Supreme Court Decision-Making Relative to First Amendment Is- sues of Free Speech and Free Press," p. 1. Ph.D. diss. Ohio University. 62. Ghana Constitution, Chapter 12, Articles 162-65. 63. Ghana Constitution, Chapter 12, Articles 166-73. 64. Nigeria Constitution, Article 21. 65. Sakal Papers V. India, AIR 1962 SC 305, cited in Jain, M. P. 1987. Indian Constitutional Law, 4th ed., p. 527. Bombay: N. M. Tripathi Ltd. 66. See Jain 1987, p. 527. 67. See,for details, Pember, Don R.1977. Mass Media Law. Dubuque, Iowa: Brown Company. In whistleblowing cases, there is always a tension between the severe private costs to an individual and the benefit of whistleblowing to the community at large. Because of the significant contribution whistleblowers can make, the society should devise a reasonable protection system for them. Apart from the protection granted in the context of the freedom of the media, in 1988, a Whistleblower Protection Bill passed in the U.S. Senate and House unanimously. However, the bill was vetoed by Presi- dent Reagan. See, for detail, Glazer, Myron Peretz, and Penina Migdal Glazer. 1989. Whistleblowers: Exposing Corruption in Government and Industry, pp. 250-51. New York: Basic Books Inc. Many states in the United States have promulgated whistleblower laws with the purpose of protecting per- sons reporting violations of law. In essence, these laws stipulate that a state agency or local government may not suspend or terminate the employment of, or discriminate against, a public employer who in good faith reports a violation of law to an appropriate law enforcement authority. 68. For additional detail on different shield laws protecting journalists' confidential sources, see Dill, Barbara. 1986. The Journalist's Handbook on Libel and Privacy, pp. 242-44. New York: Free Press. 69. Dill 1986, pp. 242-44. 70. See, generally, Rowat, Donald C., ed. 1979. Administrative Secrecy in Developed Countries, p. 1. New York: Columbia University Press. 94 COMBATING CORRUPTION 71. See Holstad, Sigvard. 1979. "Sweden."In Donald C. Rowat, ed., Ad- ministrative Secrecy in Developed Countries, p. 29. New York: Columbia Uni- versity Press. 72. See, generally, Carter, Lief H. 1983. Administrative Law and Politics: Cases and Comments, p. 107. Boston: Little, Brown and Company. For the problem regarding interpretation of the scope of the categories of exemp- tion and the American case law, see Carter 1983, p. 108. 73. The FOIA applies to records maintained by agencies within the executive branch of the federal government, including the Executive Of- fice of the President and independent regulatory agencies. Records main- tained by state governments, municipal corporations, the courts, Congress, or citizens are not included. 74. Uganda Constitution, Article 41. 75. Nepal Constitution, Articlel6. 76. Some countries require several layers of legal instruments. Article 57 of the Senegal Constitution, for instance, requires that the finance laws be voted in the National Assembly in accordance with an organic law. More- over, an organic law on national resources, debt services, and accounting allocation, and the law pertaining to the Ministry of Finance, treasury, tax and customs, financial control, inspectorate general, auditor general, and numerous other rules and regulations detailing several aspects thereof, are also relevant in ensuring the implementation of the financial management system in Senegal. An approach more or less similar to the one in Senegal is common to most West African countries with civil law traditions. 77. See, for detail, Mikesell, R. M., and Leon. E. Hay. 1961. Governmental Accounting, p. 3. Homewood, Illinois: Richard D. Irwin Inc. 78. U.S. Federal Financial Management Act of 1994, Title 31 of the United States Code (Financial Management Act). 79. The Office of the Management and Budget is an office in the Execu- tive Office of the President. See Financial Management Act, Section 501. 80. Financial Management Act, Section 3515. 81. See Financial Management Act, Section 3515. ENDNOTES 95 82. Financial Management Act, Section 331(e). 83. See, generally, Financial Management Act, Section 331. 84. For instance, in the United States, pursuant to Section 703 of the Financial Management Act, the Comptroller General is appointed by the president, by and with the advice and consent of the Senate. 85. See,for details, Weston, Martin.1991. An English Reader's Guide to the French Legal System, pp. 89-90. New York: St. Martin's Press. 86. According to a recent frontpage newspaper report, the list of party donors compiled for presentation to the Labor Party conference in the fall of 1998 was bound to reignite controversy over allegations of cash for fa- vors. Although there are no laws requiring disclosure of political contri- butions in Britain, the Labor Party appeared to have taken the initiative to publish the names of those donors who contributed in excess of £5,000. See Brennan, Zoe, and Jonathan Carr-Brown. 1998, August 30. "Labor Donors Trigger Cash-for-Favors Row." The Sunday Times (London). See also Lowrie, Margaret. 1997, April 4. "In Britain, Keeping Campaign Finances Secret Is No Crime." CNN World News Report. 87. Ortiz, Daniel R. 1998. "The Democratic Paradox of Campaign Fi- nance Reform." 50 Stanford Law. Review, 893, 897-901. 88. U.K.: Representation of the People Act 1983, Section 76. 89. U.K.: Representation of the People Act 1983, Section 75(1). 90. U.K.: Representation of the People Act 1983, Section 75(2). 91. U.K.: Representation of the People Act 1983, Section 81. 92. U.K.: Representation of the People Act 1983, Section 89. 93. Mauritius: Representation of the People Act (1958), Section 51. 94. Mauritius: Representation of the People Act, Section 56. 95. Mauritius: Representation of the People Act, Section 52. 96. Mauritius: Representation of the People Act, Section 55(1). 96 COMBATING CORRUPTION 97. Mauritius: Representation of the People Act, Section 55(2). 98. See Mauritius: Representation of the People Act, Section 55(2). 99. Mauritius: Representation of the People Act, Section 52. 100. U.S.: Federal Election Campaigns Act (FECA), 2 U.S.C. 431-442 (1994). 101. Karl Rove & Co. v. Thornburgh (C.A.5 Tex. 1994), 39 F.3d 1273; Orloski v. FEC (C.A.D.C. 1986), 795 F.2d 156, 254 U.S. App. D.C. 111. 102. FEC v. National Republican Senatorial Committee (D. D.C. 1991), 761 F.Supp.813. 103. U.S.: FECA, , 2 U.S.C. Sections 431-442, 441a(a)(1)(A) (1994). 104. U.S.: FECA, 2 U.S.C. Section 441a(a)(3) (1994). 105. U.S.: FECA, 2 U.S.C. Section 441a(a)(1), (2) (1994). 106. In the United Kingdom, foreign contributions are not just lawful; according to some reports, they are actively encouraged. In the period from 1992 to 1997, at least 6 of 17 donations of more than £1 million received by the Conservative Party came from overseas. See "New Rules for Campaign Finance." 1998, October 17-23. The Economist, p. 61. 107. U.S.: FECA, 2 U.S.C. Sections 431-442, 441(e) (1994). 108. Buckley v. Valeo, 424 U.S. 1 (1976). 109. Ayres, Ian, and Jeremy Bulow. "The Donation Booth: Mandating Donor Anonymity to Disrupt the Market for Political Influence." 1998. 50 Stanford Law Review, 844, 893. 110. The purpose of the Bill is to curtail the indiscriminate use of the so-called "soft money" contributions of political parties, by providing a detailed definition of such contributions and the purposes to which they can be applied. It seeks to expand the scope of "express advocacy," a regu- lated form of political speech designed to advocate the election or the de- feat of particular candidates, by providing a more comprehensive definition of the term, and one that does not rely on the use of any magic words to convey support for such advocacy. In so doing, the Bill seeks conversely to ENDNOTES 97 narrow the scope for issue advocacy, an unregulated form of political speech intended to promote specific issues of general importance that has also been used to great effect to expressly advocate the election of particu- lar candidates. Finally, the Bill proposes detailed definitions of the terms "independent expenditures" and "coordinated expenditures" and goes on to draw a sharp dividing line between the two types of expenditures, both for reporting purposes and for the purposes of campaign expenditures made by political parties. 111. According to a Washington Post editorial, soft money was the source of most of the fund-raising abuses in the 1996 election. The Re- publicans denounced the practice, but then went on to block the legis- lation that would have forbidden it. They love the issue, according to the editorial, but they love the money even more. The Post concluded that the Catch 22 of campaign finance is that the power to change the system rests with precisely the people it has helped to elect. See "A Campaign Finance Breakout." 1998, October 29. The Washington Post, p. A26. 112 Dalloz.1998. Codes e'ditions pe'riodiques: Code electoral, Articles L.52- 4-L.52-18. 113. Dalloz 1998, Article L.52-11. 114. Dalloz 1998, Article L.52-8, Paragraph 1. 115. Dalloz 1998, Article L.52-8, Paragraph 2. 116. Dalloz 1998, Article L.52-8, Paragraph 4. 117. Dalloz 1998, L.52-8, Paragraph 3. 118. Dalloz 1998, Article L.52-8, Paragraph 5. 119. Dalloz 1998, 136-143. 120. Dalloz 1998, 126-136. 121. Dalloz 1998, 139, Paragraph 7. 122. Dalloz 1998, 139, Paragraph 2. 123. Dalloz 1998, 139, Paragraph 1. 98 COMBATING CORRUPTION 124. Dalloz 1998, 133, Paragraph 38. 125. Dalloz 1998, 129, Paragraphs 1, 2. 126. Dalloz 1998, Article L.52-15, Paragraph 1. 127. Dalloz 1998, Article L.52-15, Paragraph 3. 128. Dalloz 1998, Article L.52-15, Paragraph 4. 129. After the Labor Party victory in the last general elections in the United Kingdom, the new Labor government appointed the Committee on Standards in Public Life, headed by Lord Neill, to re-examine the issue of funding of political parties. The committee, which delivered its report recently, has made a number of drastic recommendations on campaign financing that are cur- rently under review. The comnmittee's report called for a ban on foreign dona- tions and a modest increase in public funding for political parties, as well as tax relief measures to encourage small donations of up to £500. Although the committee did not wish to set any limit on individual donations, it has urged the government to take action to have all donations of more than £5,000 swiftly declared. The committee has also recommended a limit of £20 million on total expenditures by any political party during an election, as well as a limit of £1 million on spending by third parties. See "New Rules for Campaign Finance." 1998, October 17-23. The Economist, p. 61-2. 130. Article 217(1) of the Constitution of South Africa provides as fol- lows: "When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, con- tracts for goods and services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective." 131. France: Code des marches publics, Decree No.64-729 of July 17,1964, as amended, among others, by Decree No. 91-1232, December 6, 1991; Decree No. 92-1310, December 15, 1992; and Decree No. 94-334, April 27, 1994 [French Code des marches publics]. 132. Mali: Decret portant reglementation des marches publics, Decree No. 92-059, February 14, 1992 [Mali: Decret portant reglementation de marches publics]. 133. United Nations. 1995. UNCITRAL Model Law on Procurement of Goods, Construction and Services [UNCITRAL Model Law], with Guide to Enactment. New York. ENDNOTES 99 134. Guide to Enactment 1995, Paragraph 3. 135. Guide to Enactment, Paragraph 1. 136. Ministry of Economy of the Republic of Latvia. 1995, November 27. Draft Law on Public Procurement [Latvia: Draft Law on Public Pro- curement]. 137. In the case of states with civil law tradition, the constitution usu- ally prescribes a list of matters that are within the exclusive province of the national assembly and in respect of which formal legislation is required (domaine reserve de la loi). Matters not so reserved to be under the exclusive legislative authority of the national assembly may be regulated by decree. 138. Mauritius: Central Tender Board Act (Act 39 of 1994), December 29, 1994. 139. Guide to Enactment, Paragraph 8. 140. Madagascar: Decree No. 91-056, January 29, 1991. 141. 1992. African Public Procurement Systems, a Compendium of Public Procurement Rules and Regulations in Eleven African Countries-with a Com- parative Analysis., p. 3. International Trade Center. 142. World Bank. 1995, January. Guidelines for Procurement under IBRD Loans and IDA Credits, revised January 1996, August 1996, September 1997, and January 1999 [World Bank Guidelines for the Procurement of Goods and Works]. Washington, D.C. Procurement of services under World Bank-financed contracts is gov- erned by World Bank. 1997, January. Guidelines: Selection and Employment of Consultants by World Bank Borrowers, revised September 1997 and Janu- ary 1999 [World Bank Consultant Guidelines]. Washington, D.C. 143. World Bank Guidelines for the Procurement of Goods and Works, Paragraph 1.2. 144. The French Code des marches publics makes a distinction between two types of competitive bidding: marches par adjudication and marches sur appel d'offres. The essential distinction between the two methods of pro- curement is that, in the first case, the award is made solely on the basis of price, while in the second case, it is usually based on price and other tech- nical and economic criteria as may be relevant. See French Code, Articles. 100 COMBATING CORRUPTION 38,38 bis, and 84-97 quater. See also Mali: Decret portant reglementation 1992, February 14, Articles 24-46. 145. UNCITRAL Model Law 1995, Article 21. 146. UNCITRAL Model Law 1995, Article 22. 147. Mali: Decret portant reglementation 1992, Article. 56 requires the prior approval of the Direction Gdne'rale des Marches Publics in respect of any pro- posal to procure on a sole-source basis. 148. UNCITRAL Model Law 1995, Articles 11(1)(i), 18(4). 149. UNCITRAL Model Law 1995, Article 11(1)(1). 150. UNCITRAL Model Law 1995, Article 6(1)(b). 151. UNCITRAL Model Law 1995, Article 3. 152. UNCITRAL Model Law 1995, Articles 3, 4. 153. UNCITRAL Model Law 1995, Article 7. See also Latvia: Draft Law on Public Procurement 1995, Article 5, and Mali: Decret portant reglementation 1992, Article 46. 154. France: Code des marches publics, Articles 38, 50. 155. France: Code des marches publics, Article 94 bis. 156. France: Code des marche's publics, Article 95. 157. Guide to Enactment 1995, Paragraph 16. 158. UNCITRAL Model Law 1995, Article 24. 159. UNCITAL Model Law 1995, Article 27(d). See also Latvia: Draft Law on Public Procurement 1995, Article 17.1.3. 160. UNCITRAL Model Law 1995, Article 27(e). See also Latvia: Draft Law on Public Procurement 1995, Article 17.1.4. 161. UNCITRAL Model Law 1995, Article 33(2). See also Latvia: Draft Law on Public Procurement 1995, Article 21.2. ENDNOTES 101 162. UNCITRAL Model Law 1995, Articles 28(1)-(2), 30(2). 163. UNCITRAL Model Law 1995, Article 30(5). The double-envelope procedure, which applies in many jurisdictions, requires bidders to sub- mit a double envelope, consisting of a sealed outer envelope, containing the details of the bidder's status and qualifications, and an inner sealed envelope containing details of the tender. 164. UNCITRAL Model Law 1995, Article 33(2). See also Mali: Decret portant reglementation 1992, Article 37, which provides for bids to be opened and read aloud in the presence of bidders or their representatives who wish to be present. By contrast the French Code des marches publics has no provision for the public opening of tenders in cases of marches sur appel d'offres. 165. UNCITRAL Model Law 1995, Article 34(4)(b), -(c). 166. UNCITRAL Model Law 1995, Article 27(e). 167. UNCITRAL Model Law 1995, Article 34(4)(a). 168. UNCITRAL Model Law 1995, Article 34(4)(d). 169. UNCITRAL Model Law 1995, Article 34(4)(b)(ii). 170. UNCITRAL Model Law 1995, Article 35. 171. UNCITRAL Model Law 1995, Article 35(1)(a). 172. UNCITRAL Model Law 1995, Article 35(1)(b). 173. UNCITRAL Model Law 1995, Article 35(1)(a). 174. Mali: Deicret portant reglementation 1992, Articles 38, 40. 175. UNCITRAL Model Law 1995, Article 27(h). 176. Mali: Decret portant reglementation 1992, Article 53: <> 102 COMBATING CORRUPTION 177. Darbyshire, Penny. 1995. "English Legal System." In Nutshells, 3d ed., p. 71. London: Sweet and Maxwell. 178. U.S.: Independent Counsel Statute, 28 U.S.C. 591-599. 179. U.S.: Ethics in Government Act 1978, Pub. L. No. 95-521, 92 Stat. 1824. 180. Rossbacher, Henry H., and Tracy W. Young. Spring 1997. "The For- eign Corrupt Practices Act within the American Response to Domestic Cor- ruption." Dickinson Journal of International Law 15:509. 181. U.S.: Independent Counsel Statute, 28 U.S.C., Section 591(b). 182. U.S.: Independent Counsel Statute, Section 591(c)(2). 183. U.S.: Independent Counsel Statute, Section 591(a). 184. U.S.: Independent Counsel Statute, Section 591(d)(2). 185. U.S.: Independent Counsel Statute, Section 591(d)(2): preliminary investigation is mandatory if, within the 30-day period, the Attorney Gen- eral determines that the information is specific and from a credible source, or even if, within that period, he has been unable to make any determina- tion whatsoever. 186. U.S.: Independent Counsel Statute, Section 592(a)(3): the 90-day deadline is subject to a one-time extension of not more than 60 days, which the court may grant at the request of the Attorney General, and upon show- ing of good cause. 187. U.S.: Independent Counsel Statute, Section 592(b)(1). 188. U.S.: Independent Counsel Statute, Section 592(c)(1). 189. U.S.: Independent Counsel Statute, Section 594(a). 190. U.S.: Independent Counsel Statute, Section 595(a)(2). 191. U.S.: Independent Counsel Statute, Section 596(a)(1). 192. Among the more serious grounds of criticism that the Office of the Independent Counsel has attracted, one in particular merits attention. ENDNOTES 103 It was alluded to by New York Mayor Rudolph Guiliani in remarks that he made to Washinigton Post reporters. The independent counsel is charged with investigating charges on the basis of a given set of circumstances. His or her entire career often rests on the ability to establish the charges and their outcome. See 1998, December 3. "Espy Case Could Spur Reform of Independent Counsel Law." The Washington Post. See also "Are Indepen- dent Counsels Necessary?" 1999, March 6. The Economist, 21: ". . . a special prosecutor tends now to be appointed to investigate a person rather than a crime; and, mindful that he is spending a lot of public money and must show some return for it, he has every incentive to investigate that person almost to death." 193. Even though the Attorney General moved, on May 11, 1998, to have an independent counsel appointed to investigate the conduct of La- bor Secretary Alexis Herman, her request to the court did not, according to a Washington Post editorial, read as if she thought that a criminal case against Ms. Herman was likely: ". . . our investigation," she wrote, "has developed no evidence clearly demonstrating Secretary Herman's involve- ment in these matters, and substantial evidence suggesting that she may not have been involved ... ." See "Another Independent Counsel." 1998, May 13. The Washington Post. 194. "Are Independent Counsels Necessary?" 1999, March 6, 21. 195. Hong Kong: Independent Commission against Corruption Ordi- nance [ICAC Ordinance] (Chapter 204), Section 3. 196. Hong Kong: ICAC Ordinance, Section 5. 197. Hong Kong: ICAC Ordinance, Section 12. 198. For general discussions, see,generally, Hassan,1997, November 13. 199. See Hassan, 1997, November 13. 200. Tanzania: Prevention of Corruption Act 1993 (as amended) (Chap- ter 329), Section 2A. 201. Malawi: Corrupt Practices Act of 1995 (No. 18 of 1995), Section 4. 202. Malawi: Corrupt Practices Act of 1995, Section 4. 203. Malawi: Corrupt Practices Act of 1995, Sections 6, 7. 104 COMBATING CORRUPTION 204. Malawi: Corrupt Practices Act of 1995, Section 10. 205. Malawi: Corrupt Practices Act of 1995, Section 11. 206. Malawi: Corrupt Practices Act of 1995, Section 12. 207. Kenya: Prevention of Corruption Act 1965 (Chapter 65 of the laws of Kenya). 208. 1998, May 15. The Weekly Review. 209. Mauritius: Unified Revenue Act of 1983 (Act 59 of 1983), Section 5(l)(b). 210. Mauritius: Unified Revenue Act of 1983, Section 5(1)(d). 211. Mauritius: Unified Revenue Act of 1983, Section 5(1)(e). 212. Mauritius: Unified Revenue Act of 1983, Section 8(4). 213. Mauritius: Unified Revenue Act of 1983, Section 5(2). 214. Mauritius: Unified Revenue Act of 1983, Section 3(2). 215. "Hong Kong's Tung Tied." 1998, March 28. The Economist, 39. In many countries the refusal of the political leadership to prosecute an indi- vidual who has been investigated for fraud and found amenable to pros- ecution hardly causes a stir. In Hong Kong, according to news media, such an episode caused an uproar. According to Professor Yash Ghai of the Uni- versity of Hong Kong, the commitment of the people of Hong Kong to the law may be greater than their commitment to democracy. 216. U.K.: Prevention of Corruption Act of 1889, Section 1. 217. U.K.: Prevention of Corruption Act of 1906, Section 1(1). 218. Kenya: Prevention of Corruption Act of 1956 (Cap 65). 219. U.S.: Bribery Laws, 18 U.S.C., Section 201(c)(1)(A). 220. U.S.: Bribery Laws, 18 U.S.C., Section 201(c)(1)(B). In spite of the requirement that the gift to a public official must be given "for or because of any official act" rendered, there has been some speculation, backed by ENDNOTES 105 precedents, that simply giving a gift to an official in a position to make decisions affecting the giver was enough to constitute a crime. Overturn- ing a conviction based on such precedents against Sun Diamond Growers of California, the D.C. Circuit Court of Appeals recently ruled that there must have been some official act that the gift giver benefited from, or hoped to benefit from, for the law to be breached. According to the appeals court, it was not enough for a gift to be motivated by the mere desire of the giver to ingratiate himself generally with the official. The appeals court ruling is being challenged before the U.S. Supreme Court, which is expected to give a definitive ruling in 1999. See 1998, November 3. "High Court to Review Espy Probe Conviction." The Washington Post, p. Al, A4. Sun Diamond Growers' case is linked to the case of the former Secre- tary of Agriculture, Mike Espy, who was charged with accepting illegal gratuities for himself and his former girlfriend and relatives, and with violating the Meat Inspection Act of 1907, which bars Department of Agri- culture employees from taking anything of value from companies they are charged with regulating. Espy has since been acquitted of all 30 counts of corruption with which he had been charged. The basis for the acquittal appears to have been that, although Espy admittedly received gifts, there had been no evidence to demonstrate that he did anything in return for them. According to The Washington Post, the law permits officials to re- ceive gifts out of friendship or a desire to establish warm feelings, so long as the items are not "for or because of official acts." See 1998, December 3. "Ex-USDA Espy Acquitted on 30 Corruption Counts." The Washington Post. 221. France: Nouveau code penal, Articles 432-11, 433-1. 222. Mauritius: Penal Code, Sections 126, 128. 223. U.S.: Foreign Corrupt Practices Act of 1977, 15 U.S.C., Sections 78dd-1, 78dd-2. The 1977 act, as originally enacted, required merely that a company should have "reason to know" that an improper payment was being made. After an amendment was introduced in 1988, that standard was changed to introduce a requirement of actual knowledge. A person meets this standard if he or she is aware that an improper payment is being made, the circumstances for an improper payment exist, the im- proper payment is substantially certain to be made, or the person has a firm belief that the circumstances exist or that the improper payment is substantially certain to occur. See also Rossbacher and Young, 520-25. 224. U.S.: Foreign Corrupt Practices Act of 1977,15 U.S.C., Section 78dd- 2(b). Routine governmental actions include obtaining permits, licenses, or other official documents; processing governmental papers, such as visa 106 COMBATING CORRUPTION and work orders; providing police protection, mail pick up, and delivery; loading and unloading cargo; and actions of a similar nature. 225. U.S.: Foreign Corrupt Practices Act of 1977,15 U.S.C., Section 78dd- 2(c). 226. U.S.: Foreign Corrupt Practices Act of 1977,15 U.S.C., Section 78dd- 2(e). 227. U.S.: Foreign Corrupt Practices Act of 1977,15 U.S.C., Section 78dd- 2(f). 228. Rossbacher and Young. Spring 1997. 15 Dick. J. Int'LL.509, 523- 25. 229. Tanzania: Prevention of Corruption Act, Section 3(1). 230. Tanzania: Prevention of Corruption Act, Section 3(2). 231. Tanzania: Prevention of Corruption Act, Section 4. 232. Tanzania: Prevention of Corruption Act, Section 8(1). 233. Tanzania: Prevention of Corruption Act, Section 8(2). 234. Tanzania: Prevention of Corruption Act, Section 9(1). 235. Malawi: Corrupt Practices Act of 1995 (No. 18 of 1995), Section 28. 236. Malawi: Corrupt Practices Act of 1995 (No. 18 of 1995), Section 29. 237. Malawi: Corrupt Practices Act of 1995 (No. 18 of 1995), Section 30. 238. Malawi: Corrupt Practices Act of 1995 (No. 18 of 1995), Section 31. 239. Malawi: Corrupt Practices Act of 1995 (No. 18 of 1995), Section 32(1). 240. Malawi: Corrupt Practices Act of 1995 (No. 18 of 1995), Section 32(2). 241. Malawi: Corrupt Practices Act of 1995 (No. 18 of 1995), Section 53(l). ENDNOTES 107 242. Hong Kong: Prevention of Bribery Act (Cap. 201). 243. Hong Kong: Prevention of Bribery Act, Section 4(1), (2). 244. Hong Kong: Prevention of Bribery Act, Section 2(1)(d). 245. Hong Kong: Prevention of Bribery Act, Section 24. 246. Hong Kong: Prevention of Bribery Act, Section 19. 247. Hong Kong: Prevention of Bribery Act, Section 4(1), (2). 248. Hong Kong: Prevention of Bribery Act, Section 5. 249. Hong Kong: Prevention of Bribery Act, Section 6. 250. Hong Kong: Prevention of Bribery Act, Section 7. 251. Hong Kong: Prevention of Bribery Act, Section 9. 252. Hong Kong: Prevention of Bribery Act, Section 10(1). 253. Hong Kong: Prevention of Bribery Act, Section 10(2). 254. Hong Kong: Prevention of Bribery Act, Section 10 12AA(1). 255. Hong Kong: Prevention of Bribery Act, Section 10 12AA(3). 256. Hong Kong: Prevention of Bribery Act, Section 12AA(4). 257. The Drug Trafficking Offenses Act of 1986 has been consolidated and reenacted in the Drug Trafficking Act of 1994. For a more detailed discussion of the money laundering provisions of this act, and of money- laundering offenses in general, see Rider, Barry A. K. 1995. "The Wages of Sin-Taking the Profit Out of Corruption-A British Perspective." Dickinson Journal of International Law 13:391-421. 258. U.K.: Criminal Justice Act of 1988, Section 93A(1), as amended by Criminal Justice Act of 1993, Section 29(1). 259. U.K.: Crimninal Justice Act of 1988, Section 93A(4), as amended by Criminal Justice Act of 1993, Section 29(1). 108 COMBATING CORRUPTION 260. U.K.: Criminal Justice Act of 1988, Section 93A(3), as amended by Criminal Justice Act of 1993, Section 29(1). 261. U.K.: Criminal Justice Act of 1988, Section 93C(1), as amended by Criminal Justice Act of 1993, Section 31. 262. U.K.: Criminal Justice Act of 1988, Section 93C(2), as amended by Criminal Justice Act of 1993, Section 31. 263. Du Pasquier, Shelby R. 1998. "The Swiss Anti-Money Laundering Legislation." J. INTL Banking L. 13:160. 264. Swiss Criminal Code, Article 305 bis. 265. Du Pasquier 1998, 161. 266. Swiss Criminal Code, Article 305 bis, Paragraph 3. 267. Swiss Criminal Code, Article 305 ter, Paragraph 1. 268. Swiss Criminal Code, Article 305 ter, Paragraph 2. 269. Du Pasquier 1998, 162. 270. Switzerland: Money Laundering Act of 1997, Article 9(1). See also Du Pasquier 1998, 163. 271. Switzerland: Money Laundering Act of 1997, Article 9(2). 272. Switzerland: Money Laundering Act of 1997, Article 10(1). 273. Du Pasquier 1998, 164. 274. Switzerland: Money Laundering Act of 1997, Article 10(2). 275. Du Pasquier 1998, 163. 276. According to a recent report issued by the U.S. General Accounting Office (GAO), Citibank allegedly transferred as much as $100 million in drug money for the brother of the former Mexican president, Carlos Salinas de Gortari, without examining the source of funds or his financial background. According to the report, Citibank failed to follow its own procedures against ENDNOTES 109 money laundering and facilitated a money managing system that disguised the origin, destination, and beneficial owner of the funds. It has been alleged that Citibank's failure to conduct the background check was a violation of its own internal KYC policy. Citibank has denied the charges. See 1998, Decem- ber 4. "Citibank Called Lax on Salinas Money Trail." The Washington Post. 277. Latvia: Prevention of Proceeds Derived from Criminal Activity (De- cember 18, 1997), Article 2. 278. Latvia: Prevention of Proceeds Derived from Criminal Activity (De- cember 18, 1997), Article 28(1). 279. Latvia: Prevention of Proceeds Derived from Criminal Activity (De- cember 18, 1997), Article 29. 280. Latvia: Prevention of Proceeds Derived from Criminal Activity (De- cember 18, 1997), Article 37. 281. Latvia: Prevention of Proceeds Derived from Criminal Activity (De- cember 18, 1997), Article 38. 282. Latvia: Prevention of Proceeds Derived from Criminal Activity (De- cember 18, 1997), Article 4(10). 283. Latvia: Prevention of Proceeds Derived from Criminal Activity (De- cember 18, 1997), Article 4. 284. Latvia: Prevention of Proceeds Derived from Criminal Activity (De- cember 18, 1997), Article 17. 285. Latvia: Prevention of Proceeds Derived from Criminal Activity (De- cember 18, 1997), Articles 6-10. 286. Latvia: Prevention of Proceeds Derived from CriminalActivity (De- cember 18, 1997), Article 11. 287. Latvia: Prevention of Proceeds Derived from CriminalActivity (De- cember 18, 1997), Articles 18, 19. 288. Hong Kong: Prevention of Bribery Act, SectionlO(1). 289. Tanzania: Prevention of Corruption Act, Section 9(1). 110 COMBATING CORRUPTION 290. For a more detailed discussion of the rules governing reversal of the onus of proof and, in particular, their compatibility with human rights and related constitutional rights of accused parties, see de Speville 1997. 291. Hong Kong: Prevention of Bribery Act, Section 4(1), -(2). 292. Hong Kong: Prevention of Bribery Act, Section 24. 293. Malawi: Corrupt Practices Act of 1995, Section 45(2). 294. Tanzania: Prevention of Corruption Act, Section 10. 295. Malawi: Corrupt Practices Act of 1995, Section 32 (3). 296. Hong Kong: Prevention of Bribery Act, Section 10(2). 297. Malawi: Corrupt Practices Act of 1995, Section 34. 298. Tanzania: Prevention of Corruption Act, Sections 3, 4. 299. Hong Kong: Prevention of Bribery Act, Section 12. 300. Tanzania: Prevention of Corruption Act, Section 15. 301. Tanzania: Prevention of Corruption Act, Section 16. 302. Hong Kong: Prevention of Bribery Act, Section 14C. 303. Hong Kong: Prevention of Bribery Act, Section 12AA(1). 304. U.K.: Public Bodies Corrupt Practices Act of 1889, Section 7. 305. Tanzania: Prevention of Corruption Act, Section 2. 306. Malawi: Corrupt Practices Act of 1995, Section 3. 307. U.S: Bribery Law, 18 U.S.C., Section 201. 308. World Bank 1997. 309. World Bank 1997, Chapter 2. 310. Malawi: Corrupt Practices Act, supra note 200, sec.3. ENDNOTES 11 311. U.S.: Foreign Corrupt Practices Act, Section 78dd-2(b). 312. Hong Kong: Prevention of Bribery Act, Section 19. 313. U.K. Law Commission. 1997, March 18. "Legislating the Criminal Code: Corruption." Law Commission Consultation Paper 145. Paragraph 8.52. London. 314. U.K. Law Commission 1997, March 18, Paragraph 8.29. 315. World Bank 1997, Chapter 2. 316. U.K. Law Commission 1997, March 18, Paragraphs 6.19-6.21. 317. U.K. Law Commission 1997, March 18, Chapter VII. 318. U.N. Document E/1978/115. 319. Economic and Social Council Resolution 1978/71, United Nations Economic and Social Council Official Records. 320. Economic and Social Council Resolution 1978/71, United Nations Economic and Social Council Official Records, Article 10. 321. U.N. 1996, December 16. "Declaration against Corruption and Brib- ery in International Commercial Transactions." 36 ILM 1043 (1997). 322. According to the U.N. declaration, bribery includes (a) the offer, promise, or giving of any payment, gift, or other advantage, directly or indi- rectly, by any private or public corporation, including a transnational corpo- ration, or individual from a state to any public official or elected representative of another country as undue consideration for performing or refraining from the performance of that official's or representative's duties in connection with an international commercial transaction; and (b) the soliciting, demanding, accepting, or receiving, directly or indirectly, by any public official or elected representative of a state from any private or public corporation, including a transnational corporation, or individual from another country, of any pay- ment, gift, or other advantage as undue consideration for performing or re- fraining from the performance of that official's or representative's duties in connection with an international commercial transaction. 323. Organization of American States (OAS). 1996, March 29. "Inter- American Convention against Corruption." 35 I.L.M. 724 (1996). Caracas. 112 COMBATING CORRUPTION 324. OAS 1996, March 29, Article II. 325. OAS 1996, March 29, Article VI(1)(a)-(e). 326. OAS 1996, March 29, Article VIII. 327. OAS 1996, March 29, Article XI(a)-(d). 328. OAS 1996, March 29, Article III(4)-(6). 329. OAS 1996, March 29, Article III (1). 330. Organisation for Economic Co-operation and Development. 1997, May 23. "OECD Council Revised Recommendations C(97) 123/Final on Combating Bribery in International Business Transactions." 36 ILM 1016 (1997). Paris. 331 OECD Council Revised Recommendations 1997, May 23, Sections TV,V. 332 See OECD Council Revised Recommendations 1997, May 23, An- nex to the Recommendation. 333. OECD Council Revised Recommendations 1997, May 23, Annex to the Recommendation, Element 1. 334. OECD Council Revised Recommendations 1997, May 23, Annex to the Recommendation, Element 4. 335. OECD Council Revised Recommendations 1997, May 23, Annex to the Recommendation, Element 5. 336. See Communique, G-7 meeting, Lyon, France. 337. Organisation for Economic Co-operation and Development. 1997, November 21. "Convention on Combating Bribery of Foreign Public Offi- cials in International Business Transactions." 37 ILM 1 (1998). Paris. This convention entered into force on February 15, 1999, in Bulgaria, Canada, Iceland, Germany, Greece, Hungary, Finland, Japan, Korea, Nor- way, the United Kingdom, and the United States. 338. Organisation for Economic Co-operation and Development 1997, November 21, Article 1. ENDNOTES 113 339. Organisation for Economic Co-operation and Development 1997, November 21, Article 4. 340. Organisation for Economic Co-operation and Development 1997, November 21, Article 3. 341. Organisation for Economic Co-operation and Development 1997, November 21, Article 7. 342. Organisation for Economic Co-operation and Development 1997, November 21, Article 12. 343. The OECD Ministerial Council had agreed to take collective ac- tion to confront the problem of bribery in May 1994 and, more particu- larly, had adopted a recommendation against tax deductibility for bribes to foreign government officials. In recommending this action, the OECD Council of Ministers, recognized at the time that, although most of its member countries have legislation that makes the bribing of their pub- lic officials and the taking of bribes by these officials criminal offenses, only a few had laws making the bribing of foreign officials a punishable offense, as it is in the United States. They established a Working Group on Bribery in International Business Transactions to examine, among other things, specific issues relating to bribery and carry out regular reviews of actions taken by member countries in the implementation of the antibribery recommendation for bribes to foreign government offi- cials. 344. See Council of Europe. 1998, December 1. "Explanatory Report on the Criminal Law Convention." MGC(98)40. Strasbourg. 345. Council of Europe. 1998, December 1. "Explanatory Report on the Criminal Law Convention." MGC(98)40. Strasbourg. 346. See Global Coalition for Africa. 1997, November 2. "Corruption and Development in Africa." Document GCA/PF/No. 2/11/1997. Maputo, Mozambique. The paper refers also to the mechanisms for dealing with corruption in Botswana, which is hailed as a country with a comparatively low level of corruption. Botswana has an independent entity to combat corruption, which has been highly effective in dealing with corruption cases. See Glo- bal Coalition for Africa. 1997, November 2, Annex 1. 347. Global Coalition for Africa. 1997, November 2, Annex 1. 114 COMBATING CORRUPTION 348. Global Coalition for Africa. 1997, November 2, Co-Chairperson's Closing Statement at 5, Document GCA/11/1997. 349. Global Coalition for Africa. 1997, November 2, "Co-chairperson's Closing Statement," 5-6. 350. GCA. 1999, February 23. "Report of the Meeting on Collaborative Frameworks to Address Corruption." Washington, D.C.. 351. The Lima Declaration against Corruption (September 11, 1997), Declaration of the 8th International Conference against Corruption held in Lima, Peru from 7-11, 1997. (Lima Declaration.) (http: / /www.transparency.de/lacc/e-limadecl.html) 352. Lima Declaration, 1997 October, 3-7, Paragraphs 1-20. 353. Lima Declaration, 1997 October, Declaration 6.1. 354. Lima Declaration, 1997 October, Declaration 6.2. 355. Lima Declaration, 1997 October, Declaration 6.3. 356. Lima Declaration, 1997 October, Declaration 6.7. 357. Lima Declaration, 1997 October, 10-13. 358. See, generally, Lima Declaration, 1997 October, 31-40. 359. The Shawcross Commission Report, which was presented and adopted at the 131st session of the Council of the ICC (November 29,1977), became the Rules of Conduct. 360. See International Chamber of Commerce. 1996, May. "Extortion and Bribery in International Business Transactions." Report adopted on March 26, 1996 by the Executive Board at its 83rd session. 361. See Shihata 1996, 25. his study distinguishes between preventive and curative measures, and between direct and indirect ways to fight corruption. in this context, it examines the national laws relative to financial management, campaign finance, and procurement, and explores codes of conduct, national commitment and leadership codes, as well as provisions dealing with freedom of information and deciaration of assets. Combating Corruption discusses how corruption is investigated and reviews anti-corruption legislation, sanctions, and penalties, using examples of best practice from several jurisdictions. It looks at the evolving definition of money laundering and the special rules of evidence that have been used to facilitate the investigation and prosecution of corruption charges. This publication contrasts global initiatives with regional efforts. Common themes, varying perspectives, and the parallels between national and international laws are highlighted. Combating Corruption is an important resource for a better understanding of a problem that is recognized as being worldwide and needing urgent attention. W. Paatii Ofosu-Amaah is currentiy Chief Counsel, Africa Division in the Legal Department of the World Bank. Prior to joining the Bank, he worlked for the New York law firm of Davis Polk and Wardwell and for the Food and Agricultural Drganization of the United Nations. He holds law degrees from the University of Ghana and Harvard Law School. Rai Soopramanien is currently Senior Counsel in the East Asia Division of the Legal Department of the World Bank. Prior to joining the Bank he worked, successively, as magistrate and law officer in Mauritius, and counsel at the African Development Bank. He is a graduate of London University and a barrister of Lincoln's Inn, London. Kishor Uprety is currently Senior Counsel in the Africa Division of the Legal Department of the World Bank. Prior to joining the Bank he worked for the International Fund for Agricultural Development of the United Nations. He holds a law degree from Tribhuvan University, Nepal, and a Dipl6me d'Etudes Superieures and a Doctorate in law from Sorbonne University. ISBN 0-8213-4523-0