9/11 And The FCPA

What happened that day a decade ago changed the way the world looks at corruption.

The tracks of the 9/11 perpetrators and those who helped them led back to corrupt third-world countries -- Afghanistan, Sudan, Somalia, Yemen, and others. Those regimes had leaky borders, weak passport control, unreliable law enforcement agencies, poor anti-money laundering programs -- just what the bad guys needed.

That led then President George W. Bush to ramp up enforcement. He signed into law Presidential Proclamation 7750. It protects democratic institutions and national security by banning from the U.S. foreign kleptocrats and their family members and friends involved with corruption or benefitting from it.

The policy review had taken a few years -- it was August 2004 when Proclamation 7750 became law.

Around the same time, FCPA enforcement went into high gear. As the Wall Street Journal said a week ago, the DOJ brought 24 enforcement actions in 2010, up from five in 2004. Penalties increased from about $11 million in 2004 to nearly $2 billion in fiscal 2009 and 2010 combined.

What now? There's no turning back.

The Obama Administration's emphasis on enforcement in its May 2010 National Security Strategy can be traced straight back to 9/11. Other parts of the government -- the State Department, the IRS, Homeland Security, Immigration and Customs Enforcement -- have responded with their own anti-graft initiatives, either alone or with inter-agency task forces headed by the DOJ.

The Western democracies and developed economies now understand the risks. That's partly why Britain adopted the Bribery Act, why Canada is now enforcing its anti-corruption law, and why the OECD is pushing everyone else to get on board.

What happened on 9/11 taught that public corruption isn't a local problem but a global threat. In the years since, countries have finally started working together to fight cross-border graft. The DOJ has mentioned cooperative agencies in the U.K., Germany, France, Haiti, and Costa Rica, among others.

Welcome to the post-9/11 world.

Leaked Cable Reveals Kenya Visa Case

A secret cable published last week by WikiLeaks shows for the first time how decisions to exclude foreign kleptocrats from the United States are made under Presidential Proclamation 7750.

The unredacted cable is from the U.S. Embassy in Kenya to the Secretary of State. It's dated September 16, 2009. Ambassador Michael Ranneberger classified the cable 'secret' and 'sensitive.'

Proclamation 7750 gives the State Department the power to ban from the U.S. foreign leaders and their family and friends involved with corruption or benefiting from it. Deliberations under Proclamation 7750 aren't revealed and U.S. law requires that visa determinations be kept secret. The visa bans apply for life.

The leaked cable began:

Embassy is seeking a security advisory opinion under Section 212(f) of the Immigration and Nationality Act, Proclamation 7750, suspending the entry into the United States of Aaron Gitonga Ringera and members of his family. Ringera was born in Meru, Kenya on June 20, 1950. Post strongly believes Mr. Ringera has engaged in and benefited from public corruption in his capacity as Director/Chief Executive of the Kenya Anti-Corruption Commission (KACC) for the last five years by interference with judicial and other public processes, and that this corruption has had a serious adverse impact on U.S. national interest in the stability of democratic institutions in Kenya, U.S. foreign assistance goals and the international economic activities of U.S. businesses.

In November 2009, we talked about Ambassador Ranneberger. He had made 'a very strange announcement' on his Twitter page, we said, confirming that the U.S. government had denied a visa to Kenya's attorney general Amos Wako. It was the first time an American official had revealed a visa determination under Proclamation 7750.

Justice Ringera, the subject of the leaked cable, became head of Kenya's anti-corruption agency in 1999. He resigned in 2009 when the country's parliament said his re-appointment by the president was illegal. He had been a judge on Kenya's high court and court of appeal.

The leaked cable said:

Justice Aaron Ringera, is at the heart of Kenya's debilitating corruption problem. While it was anticipated that he would be part of the solution when he took office, he has, instead, become an important element in a system of protection for political elites. Post strongly believes that Mr. Ringera has engaged in and benefited from public corruption in his capacity as KACC Director for the past five years by interference in public and judicial processes. The record demonstrates that:

-- the KACC Director is part of the group protecting itself from prosecution for the Anglo-Leasing scandal;

-- he participated in at least one meeting in which the attempted assassination of John Githongo was planned this year;

-- he was aware of threats to Kenyan anti-corruption official John Githongo and shared them with Githongo as an apparent intermediary;

-- Ringera has not successfully investigated for prosecution a single case involving a senior [Government of Kenya] official in five years in a country that is consistently rated as among the most corrupt in the world;

-- Ringera has not acted on recommendations from Parliament or followed through on his own recommendations for prosecution to the President of Kenya;

-- Ringera has stopped pursuing Anglo-Leasing cases, one of Kenya's largest scandals for which no senior level investigations/prosecutions have been concluded;

-- The backdoor manner in which Ringera was reappointed makes clear the premium value placed on him heading the KACC among the political elite.

Ringera was not 'informed of the fact that he may be ineligible for a U.S. visa under section 212(f) of the INA and Proclamation 7750,' the cable said. 

It said his last U.S. visa expired on July 15, 2007. "Mr. Ringera has travelled frequently to the United States," the cable continued. "He is expected shortly to apply for a U.S. visa."

The cable concluded: 'Because of the serious effect of Mr. Aaron Ringera's corruption, Post recommends that Mr. Ringera be excluded for travel to the U.S. under section 212(f) of the INA and that no exception be granted.'

The cable 'SUBJECT: VISAS DONKEY: CORRUPTION 212(F) VISA DENIAL REF: A. 08 STATE 81854' can be viewed here.

Do Oily Kleptocrats Slip Away?

President Barack Obama and the First Lady at the Metropolitan Museum in New York with Teodoro Obiang Nguema Mbasog in September 2009. White House Photo by Lawrence JacksonKen Silverstein asks in Foreign Policy why the kleptocratic regime of oil-rich Equatorial Guinea has escaped U.S. sanctions.

The article traces a four-year "meandering investigation" by the DOJ and Immigration and Customs Enforcement into Teodoro Nguema Obiang Mangue, son of Equatorial Guinea's permanent president, Teodoro Obiang Nguema Mbasogo, who's been in office since 1979.

"Teddy," as the son is called, is suspected of corruption and money laundering. According to Silverstein, the son is enormously wealthy "despite earning an official salary as Equatorial Guinea's minister of agriculture and forestry of only about $5,000 per month."

Silverstein doesn't mention it, but the U.S.'s handling of Equatorial Guinea contrasts with decisions about Ivory Coast. Beginning in December last year, the Obama administration imposed financial and travel sanctions on President Laurent Gbagbo. Until his arrest this week, he had refused to leave office in favor of the apparent winner of last year’s election, Alassane Ouattara. 

Why hasn't the U.S. sanctioned Teddy and his family? Silverstein doesn't know. But he asks whether the "hapless" federal investigation is bogged down because of political interference from the White House, under both the Bush and Obama administrations, perhaps to protect America's "friendly relations with an American oil partner?"

Crude oil production in Ivory Coast is less than 60,000 barrels per day. Production from Equatorial Guinea is between 300,000 and 350,000 bpd.

Equatorial Guinea ranks 168 on the Corruption Perception Index, tied with Angola. Freedom House said the country's "abundant oil revenues do not reach the majority of its citizens; according to the watchdog group Global Witness, 60 percent of the population lives on less than $1 a day."

Silverstein, an editor and writer at Harper's, has covered Teddy and his family before.The U.S. government knows about the family's "apparently ill-gotten gains," he said, "but hasn't taken any action. A Senate report, Silverstein said, alleged that Teddy had laundered more than $100 million into the United States. The money was allegedly used "to buy a $30 million estate in Malibu, California, a $38 million private plane, and a fleet of luxury sports cars. Global Witness, the London-based anti-corruption group, recently reported that Teodorin had commissioned plans for a custom-built $380 million superyacht."

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A final note.

Silverstein was apparently the first American journalist to write about Presidential Proclamation 7750 after the FCPA Blog first mentioned it in a post in March 2009. In his current story in Foreign Policy he revisted the topic:

Legal experts contend that Teodorin shouldn't have been allowed to enter the United States since 2004, when President George W. Bush issued Proclamation 7750, which bars corrupt foreign officials from receiving U.S. visas. President Barack Obama reaffirmed this message, pledging to "vigorously" enforce the proclamation and saying, "We have a responsibility to support those who act responsibly and to isolate those who don't." Meanwhile, as the investigation plods along, a source has informed me that Teodorin has arranged to ship his luxury cars and other assets out of the country.

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Ken Silverstein's article, "How Many Investigators Does It Take to Catch a Kleptocrat?," from the April 7 online edition Foreign Policy, is here.

Is Africa Rising?

Two reports from Africa caught our eye.

From Kenya, Time's Nick Wadhams reported that politicians there are trying to get rid of Michael Ranneberger, America's ambassador.

One reason they don't like him is because he's frank. In a cable released by WikiLeaks that he wrote in January 2010, he said President Mwai Kibaki and Prime Minister Raila Odinga "benefit from and support impunity and the lack of accountability" and that "no significant steps have been taken against high-level corruption, which remains rampant."

Kenya ranks 154 on the current corruption perception index.

Not everyone in Kenya is unhappy with Ranneberger. The Time story said some members of parliament "think Ranneberger's brash brand of diplomacy is just what the country needs. Martha Karua, a lawmaker and former Justice Minister, was expelled from a recent session of parliament for telling her colleagues that the ambassador's portrait of Kenyan corruption is accurate. 'We must listen to even what we don't like,' she said, going on to describe the parliament as 'the greatest auction house in Africa.'"

Ranneberger, a 20-year Africa hand, also bypasses the government and reaches out directly to ordinary Kenyans. He set up and arranged funding for a big youth empowerment program. That caused the Kenyan parliament to accuse the ambassador of violating the nation's sovereignty and meddling, and to start working on a motion recommending his expulsion.

In late 2009, Ranneberger let slip on his Twitter page that the U.S. government had denied a visa to Kenya's attorney general, Amos Wako. It was the first time an American official had revealed a visa determination under Presidential Proclamation 7750 -- the executive order giving the State Department the power to exclude foreign kleptocrats, their families and friends. By law, all visa decisions are supposed to be secret.

The story in Time said the U.S. government in 2009 sent letters to 15 unnamed  Kenyans to tell them they wouldn't be allowed to travel to the U.S. if they kept blocking reforms. Ranneberger told Time: "The visa bans carry enormous weight. If you tell somebody you're banned from traveling to the United States, that is major."

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In the Wall Street Journal online, Samuel Rubenfeld -- who follows corruption stories around the globe -- reported that "Nigeria presidential candidate Nuhu Ribadu, who used to head the country’s anti-corruption agency, called for the resignation of current President Goodluck Jonathan."

Ribadu once headed Nigeria's Economic and Financial Crimes Commission. Under his leadership it secured convictions in over 275 cases. But he fled to London four years ago after a couple of near-miss assassination attempts. He returned to Nigeria after his political ally Goodluck Jonathan became president last February.

Many Kenyans, including Ribadu, had high hopes Jonathan would start cleaning up the country. But a presidential advisory council said last week that Jonathan’s administration is “neck deep” in corruption. Ribadu's campaign team said the report shows the government isn't up to the fight against corruption and that the president is to blame.

A year ago, Ribadu appeared in Washington to speak on behalf of Jonathan's new government. He asked the Senate for America's help in restoring law and order to Nigeria, stepping up the fight against corruption through tougher enforcement of the Foreign Corrupt Practices Act, and ensuring democratic elections in 2011.

A year earlier, Ribadu had visited Capitol Hill as a political exile. In testimony before the House Financial Services Committee, he talked about the human cost of Nigeria's sleaze:

This outflow is not just abstract numbers: it translates to the concrete reality of kids who cannot be put in schools, who will never learn to read, because there are no classrooms; mothers who die in childbirth because the money for maternity care never made it to the hospitals; tens of thousands who die because there are no drugs or vaccines in hospitals; no roads to move produce from farms to markets or enable a thriving economy; no jobs for young school graduates or even ordinary workers; and no security for anyone because the money has been stolen and shipped out.

His empathy and courage have made Ribadu a hero to many Nigerians, especially younger people. Last year they started an online campaign to convince him to run for the presidency.

Yup, We're Still Thankful

The FCPA isn't perfect and the DOJ's enforcement style doesn't always meet heavenly standards. But no one can deny this country's contribution to keeping international business clean and holding national leaders accountable.

Consider this: At the G-20 summit in Seoul earlier this month -- and lost in the noise about currencies and trade -- President Obama convinced the other leaders to sign "a comprehensive Action Plan to strengthen anti-corruption efforts worldwide." 

The Action Plan included some great goals: promoting transparency in public contracts, adopting and enforcing laws against public bribery, preventing access by corrupt officials to the global financial system and denying them safe havens, protecting whistleblowers, and safeguarding anti-corruption bodies.

And in a G-20 briefing paper, the White House listed these American accomplishments:

* Increased enforcement capacity to pursue bribery of officials overseas, including enhanced enforcement efforts of the Fraud Section at the Department of Justice and the creation of a dedicated unit at the Securities and Exchange Commission, which has helped to level the playing field for ethical businesses that operate internationally.

* Filing 105 enforcement actions involving bribery of foreign officials overseas since the beginning of 2009, and collecting over $2 billion in criminal and civil penalties.

* Using Presidential Proclamation 7750 and other immigration authorities to prevent corrupt officials and those who pay them bribes from entering the United States, with increased focus on corruption in extractive industries and a decision to double staffing to provide more capacity to the State Department’s anti-kleptocracy efforts.

* Launched a Kleptocracy Asset Recovery Initiative, initiating the process to substantially increase staffing in the Department of Justice Asset Forfeiture and Money Laundering Section to pursue the proceeds of foreign official corruption and foster international cooperation.

* Led the creation and initiation of a new peer review mechanism to review the efforts of 147 countries in implementing the United Nations Convention Against Corruption, and set an example to other countries by being one of the first countries to be reviewed.

* Continued U.S. leadership in the OECD Working Group on Bribery.

* Provided over $1 billion in fiscal year 2009 in anti-corruption and related good governance assistance aimed at promoting transparency, accountability and participation in government institutions and public processes at all levels.

* Posted expert prosecutors and law enforcement officers in over 35 countries this year to assist in building sound and fair justice systems and establishing non-corrupt institutions.  Provided specialized anti-corruption assistance, including three initial pilot programs on recovery of assets stowed abroad by corrupt officials, in targeted countries.

* Signed three new Millennium Challenge Corporation compacts in 2009 and 2010 totaling $1.2 billion with countries selected, in part, on performance on control of corruption.

* Increased efforts in business education and awareness including outreach to potential importers and investors in developing countries and support for ethics initiatives.

* With this year’s financial commitment, became the largest donor to the Extractive Industries Transparency Initiative -- providing $10.5 million to the Trust Fund over the last three years -- and worked with international organizations, the private sector, and governments to help resource rich countries build transparent and accountable practices in the extractive industries sector.

* Worked with the U.S. Congress to pass a “Publish What You Pay” law requiring that oil, gas, and mining companies report payments to the U.S. or any foreign government for resource extraction.

That's an awesome record. It doesn't mean America is always right. Or that "so-called pundits," as the DOJ calls them, should stop asking tough questions. But there's no doubt about America's unequaled contributions to global compliance.

So yes, we're thankful today for what this country has done to reduce sleaze around the globe. And for the chance to talk about the highs and the lows.

Happy Thanksgiving!