The FCPA Blog

Anti-corruption NGO Integrity Watch Afghanistan said its latest survey shows that bribery in the country has doubled since 2007 and now costs Afghans about $1 billion a year.

One in seven Afghan adults pay bribes directly, and two thirds said their household was deprived of at least one public service due to corruption. The police, courts, and administrative services demanded the highest number of bribes. But the biggest bribes, averaging $180, were paid for education and health sevices.

The survey confirmed that the rural poor are most susceptible to public graft.

Half of the 6,200 respondents in 32 provinces said corruption fosters the expansion of the Taliban. One third said graft causes conflicts at the local level, mainly related to land issues.

Report author Lorenzo Delesgues said: "It reduces the legitimacy of the state, it gives more legitimacy to the Taliban. More than half of the respondents think that the Taliban are gaining ground because of corruption of the Afghan state."

Integrity Watch said the survey demonstrates that bribery is not part of Afghan culture. Ninety percent of the respondents said they felt guilty when paying a bribe.

View the full survey and related materials here.

A U.K.-funded anti-corruption court in Afghanistan this week sentenced the manager of a British company that guards the British embassy in Kabul to two years in prison for bribery.

Bill Shaw, a 28-year British army veteran who retired as a major and was awarded the MBE, will be sent next week to one of the country's most notorious jails, Pul-e-Charkhi, according to reports from the Guardian and others.

Shaw was also fined $25,000. Convicted with him was an an Afghan, Maiwand Limar, who was also sentenced to two years in prison.

Shaw said he made what he believed were legitimate payments of $25,000 to gain release of two bombproof vehicles confiscated by Afghan security forces last year. He said he used an intermediary and tried for weeks to obtain an official receipt.

He was sentenced by three judges sitting on an anti-corruption tribunal that's funded largely by the U.K. Shaw's case was one of the first to come before the special court.

Shaw said he cooperated with Afghan investigators, giving interviews and returning to the country in early January after a vacation in the U.K. He was arrested on March 3rd.

Shaw's lawyer, Kimberley Motley, criticized the trial. "For some reason," she said, "[the tribunal] decided not to follow Afghan law or the U.N. conventions to which Afghanistan is a party. Furthermore, the presumption of innocence did not exist for him."

The U.S. and other Western countries have criticized Afghan President Hamid Karzai for corruption. But he has blamed foreigners for importing most of the graft. Now his government is apparently targeting expatriates. In addition to Shaw's prosecution, three Italian medical workers in Helmand were arrested and held briefly last month for plotting to murder the local governor. This month in Kabul, police raided at least five bars and restaurants popular with foreigners, alleging illegal sales of alcohol.

There's no way to measure how much corruption the U.S exports to other countries. But sometimes events reveal what may be happening. The latest case is Kyrgyzstan and a revolution triggered largely by public disgust with so much sleaze.

Writing in Forbes, Ariel Cohen said, "What's behind the revolution in Kyrgyzstan? Its people were fed up with the graft, nepotism and authoritarian ways of deposed president Kurmanbek Bakiyev. The irony is that Bakiyev rose to power riding the same wave of public discontent and revulsion. It enabled him to depose Askar Akayev, his equally corrupt predecessor, five years ago."

Where did Kyrgyzstan's corruption come from? The U.S. has used the country as a staging area for the war in Afghanistan. "Many Kyrgyz demonstrators," according to Tom Malinowski in Foreign Policy, "were disgusted by signs that their leaders were personally profiting from the increasingly high payments they extracted from the United States for use of the country's Manas air base (and believed that the U.S. government stayed silent about their government's abuses to keep the base)."

In Afghanistan itself, President Hamid Karzai has accused the U.S. of importing corruption into his country. While it's tempting to think he's merely deflecting blame, that's not the whole story. Stephen M. Walt said last week, also in Foreign Policy: "But even as we are telling the Afghans to stop corruption, we are contributing to it by pumping vast sums of cold hard cash into Afghan society. According to yesterday's New York Times, part of our strategy in southern Afghanistan consists of flooding places like Marjah with 'hundreds of thousands of dollars a week,' in an effort to buy the loyalty of the local population."

U.S. companies also play a role in overseas corruption, as FCPA enforcement actions demonstrate. A story in the Chinese press in December 2007 said, "According to a report by local consulting company Anbound, of the 500,000 bribery cases investigated in China over the last 10 years, 64 percent involved foreign companies." It mentioned allegations involving Lucent Technologies Inc., IBM, Cisco and NCR. The story quoted a Beijinger as saying: "I cannot understand after many foreign companies complain about corruption and bribery in China, then why are they doing similar things?"

What should we do with news about American's role in fueling overseas corruption? We shouldn't declare our country hopelessly hypocritical and unworthy of the right to enforce the FCPA. But knowing that American money contributes to the graft we're supposed to be fighting should give us some humility. It's too easy to scold someone else's graft while justifying our own.

Above all, the news should remind those in charge that our actions need to be consistent with our words, including the words of the FCPA. Otherwise, the world will laugh in our face.

Corruption may have been a cause of the night club fire last week in the Russian city of Perm that killed 113 people. Alexander Fridman, an entertainment producer there, told the Christian Science Monitor, “Fire inspectors found violations of the regulations a year ago, yet they didn’t come back to check whether corrections were made. Why was that? There were hundreds of people gathering at that club every night, yet they never closed it down. The basic lesson is that fire inspectors should not take bribes.”

Russia's red tape is terrible. The country ranked 182 out of 183 on the World Bank's 2010 Doing Business Index in the category of "Dealing with Construction Permits." It takes an average of 704 days to obtain the permits needed to build a warehouse in Russia; the OECD average is 157 days. Such extreme bureaucratic delays mean petty corruption is the only way to keep things moving.

The Christian Science Monitor said, "Amid Russia’s decaying infrastructure and often jury-rigged new construction, the potential for accidents [such as the nightclub fire] abound because laws are not enforced, experts say." A professor at Moscow's Institute of Architecture said most public buildings are hazards. “As long as we have this practice of paying bribes rather than making the needed improvements," he said, "nothing will change."

The story said 18,000 Russians die each year in fires, several times the rate in most developed countries. The U.S., with twice Russia's population, had 3,500 fire fatalities in 2008.

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More on the indictment of Joel Esquenazi and Carlos Rodriguez (reported here). The two Florida residents were identified by the DOJ as the president and a former vice president respectively of "Company X." The company is Terra Telecommunications Corp., formed in Nevada on July 1, 1996 and domesticated in Florida in 2002. A copy of its Florida business registration can be downloaded here. Thanks to the U.S. readers who provided this information.

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Women in Kabul marched against corruption. As reported by the LA Times and others, hundreds of women on Wednesday held a peaceful but noisy street protest. They want President Karzai to remove from his government anyone connected to corruption and the drug trade. "These women are being very brave," said the protest leader, her face hidden by a burka. "To be a woman in Afghanistan and an activist can mean death. We want justice for our loved ones!" The protest group called itself the Social Association of Afghan Justice Seekers. A spokesperson said "our people have gone into a nightmare of unbelieving" because of the disputed election and the fact that "the culture of impunity" still exists despite Karzai's vow to eliminate it.

Kim Barker's "Letter from Kabul" in the November 30, 2009 edition of Foreign Affairs (here) confirms what a lot of people have feared: That the Taliban are doing more to fight corruption in Afghanistan than the elected government. Who's Kim Barker? She's now a press fellow at the Council on Foreign Relations. Previously, as a foreign correspondent for the Chicago Tribune, she spent nearly five years covering India, Pakistan, and Afghanistan. So she knows the turf. 

Afghanistan ranked 179 out of 180 on the 2009 Corruption Perception Index, and 7th worst on Foreign Policy's Failed States Index. What's the current regime done to deserve such dismal recognition? Plenty. Barker reports stories about a government minister who made $25 million in a single year, and a northern governor, $75 million. "Two of Karzai's brothers," she writes, "Mahmoud Karzai and Ahmed Wali Karzai -- and relatives of at least one governor, Gul Agha Shirzai, and the country's defense minister, Abdul Rahim Wardak, have either earned money with questionable tactics or been awarded lucrative Western contracts with little fair competition. They have been helped by their relatives' political clout and suspicious bidding practices."

That's the grand corruption. There's also petty graft everywhere, due mainly to underpaid police and civil servants. Barker says it's the small stuff that has ruined the government in the people's eyes. "Safiullah Abidy," she says, "the 24-year-old manager of a cosmetics shop in Kabul, said that corruption 'is the most dangerous and bad thing in the country,' adding that 'it is the worst memory we have of the last eight years.'"

Regular Afghans are desperate for an alternative. And they've got one. Public support is tilting toward the Taliban because it takes corruption seriously. "In 33 of the country's 34 provinces," Barker writes, "the Taliban has set up its own anticorruption committees, which allow local Afghans to complain about any injustice, including those inflicted by the Taliban. . . . The Taliban also runs its own courts, which are known for quick justice without the need to pay bribes."

The Karzai government, by comparison, has no track record of fighting corruption on any level. It set up a drug court a few years ago that's been cited as a possible model for an anticorruption court. But the drug court, Barker says, is probably itself corrupt; there have only been a few drug-related prosecutions and Karzai pardoned most of the targets. And, Barker says, one of the few reputedly clean judges on the court, Mohammad Alim Hanif, was assassinated more than a year ago and the crime remains unsolved.

Policy-makers say the end game is nation-building. For that to happen you need the rule of law. But if Kim Barker and the people she talks to in Afghanistan have it right, the only rule of law to be found there is coming not from the institutions the Western alliance is supporting, but from the Taliban.