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Friday
Sep012017

Bill Steinman on graft: Why we fight

My approach as a contributor to the FCPA Blog has been to take real world issues I encounter in my law practice and share practical approaches for overcoming them. Today’s post will be different. 

Instead of parsing through a specific compliance challenge, I’d like to take a step back, and explore why folks like me, and presumably you the reader, fight corruption.

Before delving into my thoughts on the subject, let me share with you why I’ve decided to depart from my characteristic practicality. The answer is two-fold.

First, quite by happenstance I saw an episode of Frank Capra’s brilliant propaganda series from the early days of World War Two, “Why We Fight.” (thus the name of this particular post). In younger days, I had watched the entire series, but hadn’t thought about it in years. In the series, Capra examines why the United States must join and stay in the fight against fascism and stand up for what is right.

Second, I teach courses focused on international anti-corruption law at two fine law schools -- the Columbus School of Law at Catholic University here in the Nation’s capital and Roger Williams University Law School in Rhode Island.

While my classes -- much like my typical blog posts -- focus on the practical, my students want to know not only the substance of the law, but its etiology as well as the importance of what we, as anti-corruption practitioners, do. Like Capra, I share with them why we fight, why it is in our national interest and the interests of humankind to battle international corruption. And thus, here we are.

In the past, many spoke of corruption as a victimless crime, but we’ve thankfully progressed beyond that mindset. In truth, corruption has a corrosive impact on the daily lives of millions of people. Some simple statistics illustrate the point. 

Let’s consider two countries that rely heavily on petrochemicals, Equatorial Guinea and the United Arab Emirates. Both produce roughly comparable amounts of crude oil per capita on an annual basis. However, they occupy widely divergent positions on Transparency International’s Corruption Perceptions Index

In 2016, the U.A.E. ranked at 24, well into the top quarter of countries. You have to go back to 2013 for Equatorial Guinea’s ranking, but they came in with a paltry 163 -- fourteen spots from the very bottom.   

Now let’s overlay some other statistics from the CIA World Factbook. According to the good folks at the Agency, the life expectancy for Emirati women is 80.2 years, and for men is 74.8 years. The infant mortality rate in the Emirates is 10.3 deaths for every 1,000 births. 

Over in Equatorial Guinea, things are not as rosy. The average Equatorial Guinean woman can expect to live 65.4 years, while her male counterpart will only see 63.1 years. Equatorial Guinea faces a staggering infant mortality rate of 67.2 deaths per 1,000 births. 

Now, there are certainly a wide range of factors aside from corruption that contribute to the disparity between living conditions in these countries. But corruption is no doubt a major factor. Equatorial Guinea’s GDP per capita is 28th in the world. Certainly its government can do more with its oil wealth to enhance the population’s quality of life, and its rampant corruption explains why it fails to do so.

Another, perhaps more graphic, example drives home the point that corruption can be disastrous for the average person. During the 2008 earthquake in China’s Sichuan province, more than 7,000 schools collapsed into ruin, killing more than 5,000 children. It has been widely alleged that the construction companies that built the schools engaged in widespread bribery to induce officials to ignore substandard work and materials.

Turning to the utilitarian, corruption undermines free market forces. It means that sometimes, the company that won a tender didn’t have the best product, but instead paid the biggest bribe.

Like legions of other business travelers, I log thousands of miles each year on airplanes. Every now and then, I stop and think whether the air traffic control vendor won their contract because they had the best product, or because they paid bribes to officials at the civil aviation authority. Does the fire alarm system in my hotel actually work, or is it a substandard system installed by the most corrupt contractor? Sure, these might be flights of fancy on the part of a tired business traveler who spends a lot of time thinking about corruption. But perhaps not. 

In 2016, an overpass in Kolkata collapsed, killing 24 people. The construction company that built the overpass, IVRCL, as well as several local government officials, are under investigation for corruption. How much time does each of us spend sitting in traffic during our travels? 

There are numerous other reasons to fight corruption. Bribes move through dark corners of the international financial system -- the same shadows in which money financing terrorism, human trafficking, drug trafficking and widespread tax evasion also hide.  

Corruption undermines investor confidence. Remember Worldcom and Enron? It wasn’t much fun having them in your stock portfolio when they went from the Fortune 50 to bankruptcy in the early days of the 21st Century. 

The reasons are too many to thoroughly examine here, but they are all too familiar, all too ever-present in our daily lives. When I introduce my students to Transparency International’s heat map, as they see far more dark red than light yellow, they are left with the impression that the primary human activity is corruption. As I endeavor to look at the map with fresh eyes each semester, I cannot blame them for despairing.

So, we fight. But unlike the conflict Capra’s series urged America to join, I have little faith that humanity will ever win the fight against corruption. It is simply too pervasive, too entrenched. But that doesn’t really matter. 

The importance is that we fight because it is the right thing to do. We improve the lot of humanity, not just writ large, but on an individual level. We improve the chances of good government to take root in places where it does not currently blossom. We make it just that much harder for kleptocrats to purloin public funds and for the morally challenged to undermine public procurement. We ensure that the enforcement agencies stay within the written law and that their investigations adhere to the high standards of our Constitution. 

We fight because we must, and because it would be wrong to sit on the sidelines. 

____

Bill Steinman is a Contributing Editor of the FCPA Blog. He's the senior partner at Steinman & Rodgers LLP, a boutique law firm in Washington, D.C. specializing in international anti-corruption compliance and investigations.

Reader Comments (2)

Bill – You are so right to focus on this. It is the human side of corruption that needs to be emphasized. I once read a quote from a young African that stuck with me: “We should call evil by its name.” This is no academic exercise: corruption is an evil that harms those most in need. We should accept no excuses or justifications for bribery. Cheers to you for your views, Joe
September 1, 2017 | Unregistered CommenterJoseph Murphy
Dear Mr Steinman - I read your post with great interest, but was literally horrified when I noted that most people perceive corruption to be a 'victimless' crime. (although you are winning the fight to convince them otherwise). Indeed, it most certainly is not 'victimless' as my wife and I can attest - having directly suffered at the hands of corrupt government agencies and courts working in unison with ruthless greedy criminals here in Thailand.
We have been cheated (defrauded) out of everything we have - our house, all our life savings....everything. We are faced with an extremely difficult and uncertain future - particularly as I am not young anymore and finding work at my age is not easy. Furthermore, we are not alone and several other families have been thrown into this terrible situation through no fault of their own - due to Thailand's parlous judicial system and openly 'pro-corruption' stance.
The most tragic outcome from all this is the abject level of support we have received. Nobody is interested in hearing about the victims of corruption (and crime in general) only the criminals themselves, who the media etc - for whatever reasons - love to tell us about. We have contacted as many people as we possibly can - politicians, police, anti-crime organisations, media etc - and yet not one of them has shown any interest. We are not seeking notoriety or fame - but simply want to warn people of the dangers of property scams and corruption in Thailand.
So please keep up your good work and do your utmost to ensure that people understand that as with all crime - there ARE victims of corruption. The problem is that nobody hears about them and so anything you can do to change this situation has to be a good thing! Laurie & Ana
September 2, 2017 | Unregistered CommenterLaurie Smith
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