Harry Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Richard L. Cassin Editor at Large

Elizabeth K. Spahn Editor Emeritus 

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor

FCPA Blog Daily News

Entries in John Githongo (13)


Upcoming Event: Fighting graft through collective public, private action

The International Center for Collective Action (ICCA), a division of the Basel Institute on Governance, is hosting a collective action event on June 26 and 27.

Click to read more ...


After mall attack, Kenya's graft history gets closer look

Before last week's siege of Nairobi's Westgate mall had ended, Kenya's rampant corruption was being blamed for making it easier for the Islamic militants to carry out the attack.

Click to read more ...


Anti-grafters push G8 for action in open letter

Graphic courtesy of WikipediaDear G8 leaders,

As a group of individuals who have worked to expose and fight corruption, we have witnessed firsthand the detrimental effects of state looting by unscrupulous politicians and officials. . . .

Click to read more ...


New book tells the story of global corruption and enforcement

The temptation when writing about corruption is to focus on statistics and policy details instead of people -- both the victims and the heroes.

Click to read more ...


Is Aid Money Ailing Africa?

Not everyone agrees that aid creates poverty. But we thought of the aid-to-poverty cycle this week.

Click to read more ...


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.

Click to read more ...


Are We Safer Yet?

In light of the Christmas Day attack on Northwest Flight 253 from Amsterdam to Detroit, let's go off topic with an item from the December edition of Foreign Policy magazine. The story is hard to believe but apparently true:

Since 2007, the U.S. State Department has been issuing high-tech "e-passports," which contain computer chips carrying biometric data to prevent forgery. Unfortunately, according to a March report from the Government Accountability Office (GAO), getting one of these supersecure passports under false pretenses isn't particularly difficult for anyone with even basic forgery skills.

A [Government Accountability Office] investigator managed to obtain four genuine U.S. passports using fake names and fraudulent documents. In one case, he used the Social Security number of a man who had died in 1965. In another, he used the Social Security number of a fictitious 5-year-old child created for a previous investigation, along with an ID showing that he was 53 years old. The investigator then used one of the fake passports to buy a plane ticket, obtain a boarding pass, and make it through a security checkpoint at a major U.S. airport. (When presented with the results of the GAO investigation, the State Department agreed that there was a "major vulnerability" in the passport issuance process and agreed to study the matter.)

From "The Top 10 Stories You Missed in 2009," Foreign Policy (December 2009) here.

*   *   *

Proceed to passport control. Here's an excerpt from our March 9, 2009 post:

The government [of Kenya] in 2002 had said it wanted to update the way it printed and tracked its passports. Everything would be new and high-tech. A French company was found for the job, at a price of €6 million. But the contract went instead to an unknown U.K. company called Anglo Leasing Finance, at a price of €30 million. There was no public tender and the story only leaked to the press because of a junior civil servant. [Government graft-buster John] Githongo grabbed the investigation. Two years later, he'd uncovered about twenty government contracts awarded to phantom overseas companies at inflated prices, signaling the presence of high-level corruption. And most of the tainted contracts related to Kenya's security apparatus -- passport controls, forensic labs, security vehicles and satellite services, among others.


U.K. Bans Kenyans For Corruption

Britain has banned 20 Kenyans from entering the country. According to reports last week from the BBC and others, the names of those banned haven't been made public but they may include senior civil servants, politicians and businessmen. Britain's High Commissioner (ambassador) to Kenya, Rob Macaire, said the ban was necessary because Kenya has never convicted a senior official of corruption.

In November, the U.S. ambassador to Kenya, Michael Ranneberger, confirmed 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. See our post here.

In July 2007, the U.K.'s Serious Fraud Office opened a criminal investigation into contracts between the Kenyan government and a U.K. business known as Anglo Leasing Finance. The contracts for passport controls and border security systems were awarded to phantom overseas companies at inflated prices that topped $100 million. Kenya refused to cooperate and in February this year the SFO ended its investigation, saying without support from the Kenyan government the case couldn't be prosecuted.

Attorney General Wako has denied being involved in corruption and blamed the lack of cooperation with the SFO on Kenya's judicial system. 

Kenya's former top anti-corruption officer, John Githongo, began investigating Anglo Leasing Finance after his appointment in 2002. He delivered his report to President Mwai Kibaki in November 2005. (A copy, later leaked to the public, can be downloaded here.) He received death threats and fled to England. From there, Githongo publicly blew the whistle on many of Kenya's top politicians. President Kibaki was forced to fire three ministers -- though he reappointed two of them a year and half later.


Writing Modern History

An extended interview in this month's Guernica with Michela Wrong is great reading. She's the British journalist who's current book is It’s Our Turn to Eat: The Story of a Kenyan Whistle-Blower. In the book and the interview, she uses the story of John Githongo to talk about the root causes of corruption in Africa, digging deep into tribalism, colonialism and western aid. In other words, she's a serious (but never boring) journalist -- we'd call her a "writer and thinker" -- who doesn't fall for slogans and bumper stickers when it comes to the causes of graft and its cures.

We won't spoil the interview. But here's the set up:

On February 6, 2005, John Githongo appeared at Michela Wrong’s London doorstep, on the run and fearing for his life. Githongo, Kenya’s anti-corruption czar, had done his job too well. Over the past two years, Githongo had uncovered a string of shady procurement deals that led directly to the same ministers who had hired him, including President Mwai Kibaki. In the largest of these, a mysterious British firm called Anglo Leasing was awarded government contracts at hugely inflated prices.

When Githongo investigated the company, he was told to back off, eventually discovering that Anglo Leasing did not exist—“Anglo Leasing,” one minister told a stunned Githongo, “is us.” Then the death threats began. Wrong, a long-time Africa correspondent for various British publications and a friend of Githongo’s, had extended the invitation for a London stay at their last dinner together, where Githongo seemed nervous and distracted. That was three months earlier. Now here he was, suitcase in hand, in need of a safe house. . .

Read our prior posts about John Githongo here.

* * *
From Frederic Bourke's Trial. On Friday the prosecution rested its case. The defense called Robert Evans, Bourke's friend since their seventh-grade in Michigan. His account, Bloomberg's David Glovin reported, "contradicted that of Hans Bodmer, [Viktor] Kozeny’s former lawyer, who earlier testified that he told Bourke details of the bribery scheme during a walk around an Azerbaijan hotel at 8 a.m. on Feb. 6, 1998."

Evans said he and Bourke didn't arrive in Baku that day until 9:30 a.m. and didn't talk with Bodmer until hours later. Evans also said Bodmer told them the Azeri president supported Kozeny’s venture and “was in on the deal.” But he said nothing about illegal payments.

Glovin recaps the case this way: "Bourke, who was once married to a member of the family that owned Ford Motor Co., is accused of investing $8 million with Kozeny knowing he was paying bribes. Backed by $350 million, Kozeny wanted to buy Azerbaijan’s state oil company, known as Socar, for one-tenth of what he valued it and to re-sell it at a profit. . . . Bourke denies knowing of the bribes and says Kozeny stole more than $180 million from him and other investors. Azerbaijan, a nation in the Caspian Sea region, never sold Socar, wiping out the investment. Kozeny, who has also been charged in the case, is a fugitive living in the Bahamas."

Why, by the way, do we mention David Glovin so often? Because he's the only journalist publishing regular accounts of Bourke's trial. He's also a great reporter who covers the federal courthouse in Manhattan for Bloomberg. When the Madoff story broke on his turf, his dispatches -- packed with facts, color and analysis that reached beyond daily journalism -- led the international coverage. So we're lucky he's sitting in on the Bourke proceedings, which he thinks might conclude this week.

Read David Glovin's reports on the trial here.

Read all our posts about U.S. v. Kozeny and the prosecution of Frederic Bourke here.


Proclamation 7750 Unwrapped

Last week, while we were looking into ways the U.S. fights foreign kleptocrats, we heard about Presidential Proclamation 7750. It was issued in 2004 and, by 2006, a high State Department official was calling it a "key tool" in America's anti-corruption arsenal. Yet except for a couple of mentions we found in the African press, Proclamation 7750 was -- and is -- practically invisible.

To find out why, and to learn more about how this anti-corruption tool works, we spoke this week with a couple of U.S. State Department officials. They can't be identified and wouldn't go on the record. But here's the background they provided.

The Foreign Corrupt Practices Act doesn't reach the kleptocrats -- it applies only to bribe-payers and not bribe-takers. And the truth, as the kleptocrats know, is that they're beyond the reach of practically all the laws of other countries. There just aren't that many big sticks to use against corrupt foreign officials.

That's why Presidential Proclamation 7750 is so important. It was issued a year after the G-8's 2003 commitment to deny safe havens to kleptocrats. It helped do that by suspending entry into the United States of past and present corrupt foreign officials and those who bribe them. It also barred their spouses, children, and dependents who benefited from the corruption.

The State Department can't publicly release the names of those denied entry under Proclamation 7750 -- U.S. law generally prohibits disclosure of visa-related information. And while the deterrent effect can't be measured, the idea is that whatever makes life more difficult or expensive for kleptocrats is a good thing. The Kenyan reformer John Githongo, for example, has advised the U.S. that denying the children of corrupt African leaders access to U.S. and U.K. universities is a big deal. The State Department says it welcomes that kind of input, and that's why Proclamation 7750 is only used against children who are college age and above.

The American press hasn't talked about Proclamation 7750, and that's too bad. It's probably because the names of the banned kleptocrats have to be kept secret, draining the entertainment value and pizzazz out of the story. But because quite a few corrupt foreign leaders believe they've been banned from the United States because of Proclamation 7750, and have complained back home about their treatment at the hands of U.S. authorities, the law is better known in developing countries, especially among those who might be targeted.

State Department officials regularly meet with anti-corruption NGOs. Any allegations leveled by NGOs are carefully evaluated along with other available evidence to determine that the individuals fall within the categories defined in the Proclamation. A decision to designate is vetted by several bureaus at the State Department and is approved by a high-level Department official. And despite the public's lack of awareness, the government thinks the program is working well. As when an NGO reported that corrupt officials in a developing country were engaged in systematic and illegal asset stripping of the country's natural resources. A State Department official said the NGO report led to further U.S. investigations and ultimately to some visa determinations under Proclamation 7750.

Sometimes leads come to the State Department from whistleblowers. They're typically anti-corruption investigators or officials in developing countries who've been effective in their roles -- and are therefore fired from their jobs, threatened, or blocked by corrupt judges or opponents. They might show up at a U.S. embassy, ready to talk. The information they bring is checked -- sources are vetted for reliability and evidence is weighed for credibility. Other sources are sought. "We don't want the United States to be used as a tool by political factions in other countries," an official said. "So we're very tough when we look at the evidence. Otherwise the program will lose credibility." For example, corroboration sometimes comes from bank documents showing secret transfers of illicit cash.

The visa bans are essentially lifetime actions, so the stakes are high. The program has plenty of support within the government -- in recent appropriations bills, for example, Congress directed the State Department to use Proclamation 7750 to ban from the U.S. foreign officials "involved in corruption relating to the extraction of natural resources in their countries." The State Department can even use Proclamation 7750 to ban foreign leaders who travel on diplomatic passports, except in limited cases where the U.S. is bound by treaty-based obligations.

This post is Part II of our series, Cornering The Kleptocrats. In Part III, we'll talk about a proposed way to pursue, prosecute and punish corrupt public officials.


Voices From Africa

Marc Ona Essangui is from Gabon -- a West African country with lots of oil, about a million and a half people, and just two presidents since independence from France in 1960. He's the local head of the Publish What You Pay coalition, an NGO operating in 70 countries "that helps citizens of resource-rich developing countries hold their governments accountable for the management of revenues from the oil, gas and mining industries."

Gabonese authorities last year stopped Ona Essangui, 45, from leaving the country on four separate occasions. In June he was prevented from traveling to a conference in New York of Revenue Watch Institute. A spokesperson from Gabon's Ministry of the Interior, Maryse Issembet Me, reportedly said leaders of NGOs are in the pay of Europeans and Americans. In an AFP story, she was quoted as saying, "NGOs get up to whatever they want. They are at the mercy of and act for the Europeans and the Americans . . . The decision of the interior ministry was perfectly normal."

In December last year, Ona Essangui and a co-worker, along with a civil servant and two journalists, were arrested and held for about ten days. He was charged with "possession of a document for dissemination for the purpose of propaganda" and with having "oral or written propaganda for incitement of rebellion against state authorities."

The document in question was an open letter to President Omar Bongo Ondimba that accused his government of mismanagement and corruption. The letter asked why Gabon, with its vast natural resources, doesn't enjoy a standard of prosperity and development equivalent to the Gulf countries in the Middle East.

Ona Essangui, who has been in a wheelchair since contracting polio when he was six, faces a jail term of up to five years and a fine of around $500.

Now, however, he's suing the government in a court in Libreville for damages resulting from his travel ban. His lawyer says the claim of about $103,000 is a matter of "enforcing respect for human rights . . . and fundamental freedoms," according to AFP.

Gabon ranked 96th on the 2008 Corruption Perception Index, tied with Benin, Guatemala, Jamaica, Kiribati and Mali. On the 2009 Index of Economic Freedom, where it ranks 118th, the commentary contains this warning: Gabon's economy is driven by oil, forestry, and minerals. In 2006, oil accounted for over 50 percent of GDP, over 60 percent of government revenues, and over 80 percent of exports. Despite a relatively high average income from oil revenue, most people live in poverty. With oil production declining as fields become exhausted, Gabon needs to diversify its economy.

Add Marc Ona Essangui's voice to the new generation of African reformers -- including John Githongo in Kenya and Nuhu Ribadu in Nigeria -- who are calling for change.


The Case For More Compliance

The pressure these days to comply with the Foreign Corrupt Practices Act and other anti-corruption laws is coming from several directions at once. Last week we mentioned whistleblower hotlines as one example. But there are other reasons why it's harder than ever for companies to cheat and for bride-taking officials to hide their crimes. Here's a quick look at some of what's happening:

The internet. Hundreds of millions of people now have access to uncensored news, chat boards, social sites, blogs, email and short messaging, podcasts and the like. While plenty of the internet's so-called news is gossip, rumor and opinion, there are also some real scoops. Last year in China, for example, someone found a bag on the subway in Shanghai. In it were expense reports from a trip by 23 local officials who'd spent $94,000 of taxpayer money on a three-week USA "study tour. " The receipts showed that the real itinerary included Hawaiian beaches, a sex show in San Francisco, and casinos in Vegas. The finder published them anonymously, a few at a time, on the internet. As reported (here), the details spread "like wildfire across Chinese cyberspace."

The net isn't just for amateur sleuths. Powerful non-traditional news outlets have appeared online, backed by serious money and seasoned professionals. ProPublica is one of them. It's a privately funded, non-profit, independent newsroom led by Paul Steiger, the former managing editor of The Wall Street Journal. Its staff includes some of the best editors and investigative reporters in America. We've featured their work in posts about KBR's Jack Stanley (here) and Siemens (here).

A new virtual newsroom is called The Business of Bribes. It's a ten-week online project from Lowell Bergman and the Investigative Reporting Program at the UC Berkeley Graduate School of Journalism, along with PBS' Frontline. We mentioned Lowell Bergman in a 2007 post (here). He's a Pulitzer Prize-winning former producer of CBS' 60 Minutes. His new online project aims to go deeper into the investigation of international bribery -- how corrupt payments are hidden from sight, how public graft helps destabilize the developing world, and what the U.S. and other countries are doing to combat global corruption.

NGOs and public interest groups. They're able to exert enormous pressure on corporations and governments to be more accountable. Transparency International created the annual Corruption Perception Index, a handy measure of how well countries are doing in the fight against sleaze. You see the CPI everywhere now, and TI's message about it is always clear. Here, for example, is what TI said about crooked courts:

It is difficult to overstate the negative impact of a corrupt judiciary: it erodes the ability of the international community to tackle transnational crime and terrorism; it diminishes trade, economic growth and human development; and most importantly, it denies citizens impartial settlement of disputes with neighbors or the authorities. When the latter occurs, corrupt judiciaries fracture and divide communities by keeping alive the sense of injury created by unjust treatment and mediation.
Another NGO working to shine the light on corruption is Global Witness. It concentrates on graft linked to the exploitation of natural resources. In 2003, it was co-nominated for the Nobel Peace Prize for its work on conflict diamonds. Its latest report, Undue Diligence, names some major banks that it says have been complicit with corrupt regimes (Citigroup, Barclays, HSBC, Deutsche Bank). This is from the introduction of the 116-page report:
Now we are going to go on a journey, to the oil-producing countries of the Gulf of Guinea as well as to Central Asia, to witness the corrosive and devastating effects of banks being willing to do business with corrupt regimes. With each story, the effectiveness of the bank’s ethical standards, compliance with due diligence requirements, and regulatory action will be examined, as far as the available evidence permits. Many of the examples in this report raise serious questions about how well a bank really knew its customer, even if it had been able to tick the regulatory box to say it had done its due diligence; and about whether compliance with the letter of regulations that require identification of the customer is sufficient to prevent banks doing business that contributes to corruption.
Brave Officials. Perhaps inspired in part by the openness of the internet and the advocacy of the watchdog groups, younger people in developing countries are rejecting the old ways of bribery of corruption. In Nigeria, for example, Nuhu Ribadu, 49, was exposing government graft until he lost his job last year as head of the country's Economic and Financial Crimes Commission. In Kenya, John Githongo, 43, was permanent secretary for ethics and governance in the office of the president until one of his investigations took him too close to the president and his cronies. Githongo combines several modern anti-corruption roles -- journalist, founder and former head of Transparency International's Kenya office, and next-generation government official. We talked about him here. He and Ribadu are both in the U.K. now for their own safety. But it's a sure bet Africa and the world will be hearing more from them.

Add to the above the zeal of the United States, the OECD and others to enforce the anti-corruption laws, and you have a powerful case why companies everywhere should be improving their compliance efforts. Anyone who hasn't yet made it a priority to obey the letter and the spirit of anti-corruption legislation could well end up in tomorrow's spotlight -- for all the wrong reasons.