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One field where the “fight” against corruption has been perhaps the least effective is procurement, rather referred generally as contracting. It is difficult to put it more bluntly. The technical director (now on leave) of the company in charge of building the Berlin Airport (BER) is currently being investigated for alleged bribery. In his former role as consultant to this same company, and apparently with powers to award contracts, he may have requested a bribe in the amount of 500 thousand Euros to award a contract[i]. In Colombia, 9 thousand km away and more frequently badmouthed than Germany, a few years ago two brothers and their cousin organized a simple and effective scheme of bribes, revolving doors and conflicts of interest to successfully secure visible infrastructure contracts[ii]. The good thing in both cases? Prosecutors are looking into the matter. The annoying commonalities? This is corruption 1.0: we are not talking about sophisticated, complex, high-tech schemes that would escape expert scrutiny. Read More
I used to like Gerard Depardieu’s performances until he said he would become Russian -just to avoid paying taxes in France, and went on to praise Russia’s democratic character. He could at least have saved the last bit. There is however something revolutionary in his decision: the idea, that one could choose (as opposed to endure) the government one submits to. Read More
We know corruption is bad, we argue about its consequences but we have been obsessed with its causes and the perpetrators. The main point of academic, activist and reformist attention view has been: whether it is the supply or the demand side of corruption; whether the offender is at home or abroad (or both); whether the method used was a bribe or a kickback; whether we are dealing with petty or grand corruption and how much is it and where does it happen; if and how we can ensure that not only individuals but also that legal entities be responsible for acts of corruption, and so on. Partly this focus on causes, parallels our focus on the perpetrators, which has been the focus of what is called the “anti-corruption movement” which includes civil society organizations, international institutions, donors, academics and professionals of different kinds among others. In fact this is the main focus of international legal instruments (United nations Convention Against Corruption and the OECD Anti-Bribery Convention) with some minor exceptions. And where are the victims? Fighting corruption is not an objective per se, and if corruption can’t be prevented or avoided, its consequences at least need to be repaired. Read More
The logic of Judge Rakoff is clean, whether one likes the consequence or not, so does his math. In rendering his decision on the Consent Judgment in S.E.C v Bank of America he considered the proposed agreement unfair, unreasonable and inadequate. According to the facts in the case, in the proxy statement that the Bank of America made to its shareholders for their approval of the merger with Merrill Lynch, it represented “…that Merrill had agreed not to pay year-end performance bonuses or other discretionary compensation to its executives prior to the closing of the merger without Bank of America’s consent” …what turned out not to be true. The S.E.C discovers this little problem (thus too late), wields its regulatory sword on the agreement and threats to sanction Bank of America. Short of issuing the sanction, the SEC and the Bank strike an agreement to reduce it: the Bank pays a fine of US$33 Million dollars and is not expected to accept or deny the charges. This is the agreement the Judge was asked to give his blessing on. Read More
This is the note containing a commentary I submitted in the context of the 2004 US BIT Model review. Looking forward to your reactions. Juanita Olaya (c) Klick here for the full text