The Regulation of Public Corruption

Episode Notes

Transcript

Planet Lex: The Northwestern Pritzker School of Law Podcast

The Regulation of Public Corruption

09/21/2016

Intro: Welcome to Planet Lex, the podcast of Northwestern Pritzker School of Law with your host Dean Daniel B. Rodriguez, bringing it to you from Chicago, Illinois. Take it away Dan.

Daniel B. Rodriguez: Hello and welcome to Northwestern Law’s Planet Lex podcasting from the Northwestern Pritzker School of Law in Chicago, Illinois. My name is Dan Rodriguez, your host.

My guest today is my colleague Professor Juliet Sorensen. Juliet is Clinical Associate Professor of Law with Northwestern’s Center for International Human Rights. She is a founder of the Northwestern Access to Health Project, an interdisciplinary partnership of Northwestern’s Law, Business and Medical Schools, analyzes access to health in resource limited settings.

I will say that given your wide expertise and contributions to the law school we could talk about any number of subjects, and I will say this in advance, I hope you will join us again in a future broadcast. Today I want to focus on one fascinating aspect of your work and that is in the field of corruption.

I suppose in one of the most oft used or overused phrase from Supreme Court jurisprudence, the late Justice Potter Stewart said about obscenity, we can’t necessarily define it, but we know it when we see it. So I guess I want to ask you whether that is equally true of corruption. What do we mean when we talk about public corruption?

Juliet Sorensen: So public corruption is typically defined as the abuse of public office for private gain. You are absolutely correct that Justice Stewart’s words as they related to obscenity apply to corruption. The challenge is working within the various parameters of both civil causes of action and the criminal law to regulate corruption.

Some forms of corruption, quid pro quo bribery probably being the simplest one, have long been governed by the criminal law. Other forms of what most people would call corruption, including patronage and nepotism, have been grounds for civil actions under the First Amendment, but have generally and most recently pursuant to the Supreme Court’s decision in Skilling been found not be either federal, state or local crimes.

Daniel B. Rodriguez: Great. So we are going to talk a lot about the what and the how, the regulation of corruption with some great examples from your work, but before we get into that I was struck by a passage in a very interesting article, which I highly recommend, that you wrote a few years ago and published in the Northwestern Journal of International Human Rights. This is about the why we should care so greatly, not only as a nation, but as an international community.

What you said is true democracy cannot exist where corruption thrives, and elsewhere you yoked our responsibility to deal with corruption to not only the United States Constitution, which you just referenced, but also the Universal Declaration of Human Rights.

So can you say a little bit more about that? I mean, we could all agree that corruption should be rooted out, but you really try to up the ante in your argument by saying that it’s connected to democracy in a fundamental sense and human rights.

Juliet Sorensen: Sure. As a general matter in a functioning democracy the ultimate backstop against public officials whom the electorate disapproves of for any reason is of course voting them out of office. If corruption has pervaded the functioning of a democracy to the extent that voting public officials out of office can’t be done in a free and fair way, then that’s an impingement on one of the most fundamental human rights, which is voting in a participatory democracy.

Now, some might say that our own campaign finance regulations raise that specter. The particular article that you are referencing I wrote regarding the potential for a democratic North Africa after the Arab Spring that occurred in 2011. And indeed one of the countries I focus on in that article, Tunisia, has actually included in their new post-revolution Constitution a clause guaranteeing the people the right to be free from corruption, Article 9 of the new Tunisian Constitution. Whether or not the Tunisian people are actually free from corruption today is another question.

Daniel B. Rodriguez: Are you able from your own work, your ongoing work to reach a conclusion that there’s any country in the world that is in violation of the Universal Declaration of Human Rights because of their inability or unwillingness to regulate public corruption?

Juliet Sorensen: Many countries are unable or unwilling to regulate public corruption, and the reasons are myriad. Many countries have limited resources and weak institutions, that includes the courts, the judiciary, law enforcement and the bar, the legal profession. In other countries you encounter the so-called culture of corruption, which is so pervasive that it becomes more and more difficult to change.

(00:05:02)

Of course the Universal Declaration of Human Rights is an aspirational and nonbinding declaration, although it has been around and been taken so seriously that it is virtual, if not binding law than a standard that the members of the General Assembly have committed to, but the short answer to your question is, yes.

Daniel B. Rodriguez: So to bring it to the United States for a moment, it’s incredibly nearly 40 years ago the United States enacted, as you know, an historic statute, the Foreign Corrupt Practices Act, and to be honest, I don’t know as in the statute or the legislative history it speaks a lot about corruption, but of course that’s what it’s about at the fundamental level, and regulating through significant means the bribery and other aspects.

So with an almost 40-year vantage point has the FCPA been successful largely in rooting out public corruption in the US?

Juliet Sorensen: Well, the FCPA, as you know, primarily focuses on international corporate bribery. So it focuses on US businesses working overseas and seeking to obtain and retain business from foreign public officials.

The interesting aspect to the answer to your question is that although the FCPA was enacted about 40 years ago, it has only been enforced really over the last 20 years. For the first 20 years of its life the statute lay practically dormant, and whether or not that is the result of vigorous lobbying by the Chamber of Commerce that believed that it would cause US companies to lose out to foreign competitors overseas who didn’t face sanctions like the FCPA is certainly a possibility.

But for whatever reason the Department of Justice began suddenly and vigorously enforcing the FCPA 20 years ago, and I believe it has made significant strides in bringing about a so-called culture of compliance, not only for US companies, but also because of the FCPA’s broad reach for foreign companies that trade on US exchanges.

Daniel B. Rodriguez: Great. Thank you. So let’s shift to some subject matters, you have done some wonderful work and have certainly been paying close attention to public corruption in sports and we are now — as this is being recording, I should say, we are less than two weeks out from the Olympics .

And what’s been in the news in the last few days and I suspect will continue to be in the news is the IOC’s, the International Olympic Committee’s decision to decline to ban Russia from the Olympics. This grows out of a remarkable report, the McLaren Report, which has, to summarize it, in essence says that Russia had been deeply, both conspiratorial and guilty of widespread doping. Of course there’s more to the story.

So could you reflect a bit on how we whether — using maybe the IOC’s example of how we do or do not regulate public corruption in a sports context? I know it’s a big question, but.

Juliet Sorensen: Well, it is a big question and this topic first piqued my interest when I led a delegation to the Conference of States Parties to the United Nations Convention against Corruption in 2013, and there was an official event on this very subject that included representatives from the Russian and Brazilian delegations talking about how they were preventing corruption occurring in the upcoming Olympics in Sochi, as well as of course the World Cup.

And they talked about measures they had taken to ensure transparency, accountability, merit-based procurement contracts, because of course a major sporting event like the Olympics and the World Cup brings with it an infusion of cash, construction, sponsors, tourists, and all of that of course raises the opportunity if not monitored for corruption, fraud and other forms of financial crimes.

Daniel B. Rodriguez: Can I just jump in and say — and we are referencing this confluence of events in 2013-2014, so I was able to dig out a document that I am sure you have seen that is an outline of the initiative for the Global Alliance for Integrity in Sports. And it begins with the sentence holding international sporting events is associated with high risks of corruption.

I take it that’s an accurate statement based on exactly the kinds of examples you have given. So we focus in the news in the last few days about doping, but you give us the wider context of the risks of corruption in a myriad of context.

Juliet Sorensen: That’s exactly right. Doping is actually an interesting twist because you go back to the foundational definition of corruption that we discussed a few minutes ago, the abuse of public office for private gain, I have discussed forms of what we can call petty corruption opportunities to make money on a major sporting event, with the doping situation in Russia you have abuse of all levels of public office, but not necessarily for monetary gain, rather it’s for glory, nationalism, national pride.

(00:09:51)

And so one of the debates that my students and I had in my Public Corruption & Law class this spring was whether or not the doping scandal counted as a form of public corruption. And we concluded that it did, even though it wasn’t in fact necessarily for monetary gain, although of course I am sure you have read about the laboratory officials and the forensic testing folks being paid off in exchange for their saying that the athletes tested clean.

Daniel B. Rodriguez: So I take it that neither you nor your students were persuaded by Vladimir Putin’s comment that the IOC’s actions reflect, as he says, a dangerous relapse into political interference in sport.

Juliet Sorensen: That is one of several comments by Vladimir Putin that does not persuade me.

Daniel B. Rodriguez: So let me shift to a different scandal if I may and maybe this gets more at the core or the heart of corruption in the context of monetary gain and that’s what’s been happening in FIFA.

We might have thought again from the press that that is — the dust has settled on the FIFA situation as Seep Blatter and others have been removed, but I noticed as recently as just a couple of months ago incredibly there was a claim filed in Federal Court in New York where FIFA in essence, and of course this is the post-Blatter FIFA acknowledged that there had been substantial corruption and monetary gain in the past and it actually asked for remuneration from the United States government in order to replenish the coffers of FIFA. So I guess I would just say, what’s up with that?

Juliet Sorensen: In truth, I haven’t read the complaint that was filed. I believe it was in the Eastern District where the criminal case has also been filed, closely. It takes a little hutzpah, but that’s not a very legalistic response.

With regard to the FIFA indictment, generally there are a few interesting points. First of all, the charge is a RICO conspiracy, and it involves a number of overseas defendants. The Supreme Court actually held just this term that RICO in appropriate cases with sufficient nexus to the US can have extraterritorial reach.

Daniel B. Rodriguez: RICO being racketeering and then my memory fades.

Juliet Sorensen: Racketeer Influenced and Corrupt Organizations Act. And of course people typically think of RICO for the purpose that it was enacted, which is to say organized crime in America. In this instance it is FIFA itself that was designated as the racketeering organization and FIFA officials literally from all over the world have been indicted.

Now, that’s a far cry from them having to appear in a US Court, which of course they have to do in order for a criminal proceeding to go forward. I know that one Guatemalan Judge on the Guatemalan Supreme Court took a Disney cruise last year, Disney cruise docked in Orlando. FBI agents boarded the cruise ship and placed him in custody.

Daniel B. Rodriguez: I guess for him it wasn’t the happiest place on earth.

Juliet Sorensen: I guess Orlando is no longer the happiest place on earth for some people.

Daniel B. Rodriguez: Indeed. So I have — we are on the radio so our listeners cannot verify this, but I have in my left hand a very large document, a big stack of paper that is the United Nations Convention against Corruption, a strategy for safeguarding against corruption in major public events. And alongside it a document that — it was a printout from a website from just a few days ago that describes something called the Sport Integrity Global Alliance.

So my question is, as we sit here today, how is the international community — are they successfully grappling with this big issue of public corruption in sports?

Juliet Sorensen: In truth, they are not grappling with it successfully. It is a hydra. Sport is a worldwide passion, and rightfully so. There are a number of ways, some which I mentioned earlier, to make money off of sports. By the way, we haven’t touched on gambling, which is also highly regulated in the United States, not typically regarded as corruption, but in other means to illegally profit from —

Daniel B. Rodriguez: Right, the whole issue of fixing games and any number of things.

There was a 30 For 30 ESPN special on the Boston College point-shaving scandal from many years ago that reminds us that in the United States we still have these terrible situations that arise from time to time.

Juliet Sorensen: That’s absolutely right, and in terms of illegally fixing matches, the bookie profits, the people placing the bets who are in the know profit, and by the way, the team and team members who may come from seriously under-resourced countries or organizations also profit. So that’s another example of the challenges of meaningfully minimizing corruption in global sporting events.

Daniel B. Rodriguez: Let me shift focus still on the topic of corruption of course to another just fascinating area that you have been looking at, which is climate change. And you have been writing about this and want to get your thoughts about this, but I am just struck by a reference to a study that you made in one of your writings. This was a study from 2011. It was published in Nature. And it reached with the analysis of data the remarkable conclusion that the death toll from all earthquakes from — they analyzed the death toll from all earthquakes from 1980 to 2010 and drew the conclusion that some 83% of all deaths from earthquakes during the period were found in countries with a level of corruption significantly exceeded its level of development. So could you comment on that in the context of climate change, the connection between public corruption and climate change?

(00:15:14)

Juliet Sorensen: Sure. Although meaningful studies were not available on this issue until a few years ago, it now appears fairly well established that in the incidence of extreme weather events. Earthquakes, tsunamis, hurricanes are increasing along with climate change.

Like major sporting events the emergency reconstruction phase after an extreme weather disaster brings a time-sensitive urgency, an infusion of funds because of the emergency nature people need shelter, housing, transport, schools need to reopen, limited resources and limited regard for quality control and all of these are ingredients for a recipe of corruption, of contracts being passed out as sweetheart deals irrespective of merit, bribes being passed in exchange for a lucrative rebuilding opportunity.

Now with regard to earthquakes, first building a structure according to a basic building code is not rocket science. This is not something that is limited to countries that are wealthier than others and the earthquake in Nepal is the prime example. Only weeks before that devastating earthquake struck Nepal last year USAID had released a report expressing serious concern about the level of corruption in the building industry in Nepal. The absence of meaningful building inspections, bribes being paid to circumvent the building code, and then we are faced in the most tragic of manifestations of the consequences of that.

So where countries reflect high levels of corruption which often does center around the construction industry, they are going to impact, have an outsized impact when natural disasters strike.

Daniel B. Rodriguez: It seems like an especially tough issue. I don’t want any of these episodes to go by without me using the phrase devil’s advocate at least once. So here’s the chance I have to use it in this.

Juliet Sorensen: Play it.

Daniel B. Rodriguez: So as devil’s advocate, could you say, of course there are significant problems and it adds to the cost of rebuilding all of that, but the challenge is these buildings need to be rebuilt, emergency services need to be provided and so without being glib and saying it’s a cost of doing business we still face the dilemma is if the government whether it’s our government or another government or international committee seriously cracks down on corruption in the process of rebuilding and dealing with severe weather events. Maybe there won’t be businesses or construction firms or organizations that will do the heavy lifting and the immediate hard work of getting in there and solving these problems. So maybe it is in essence a cost of doing business.

Juliet Sorensen: You are right, of course, that no one wants the schools to remain shuttered and people to remain homeless. The solution is what climate change folks call preparedness and resilience. So not only does that mean improved preparedness with regard to addressing extreme weather events, but building into that mechanisms for responding to a disaster that preclude opportunities for corruption and graft.

Daniel B. Rodriguez: Interesting. So let me ask what maybe it is an unfair question. We’ve been focusing here, of course, on this very significant problem of public corruption, but how would you rate or rank the problems domestically and internationally of public corruption against other major issues of social policy, maybe that’s impossibly broad or let me say a little more narrowly criminal law enforcement, because this is as, you well know as, I should have mentioned the outset as a seasoned experienced federal prosecutor, you also know that a former federal prosecutor, you also know that it takes resources, it takes human resource, it takes financial resources, it takes focus and takes energy to really roll our sleeves up and deal with the problem of public corruption in the face of all of these other wicked problems that we have in society how high does it rank?

Juliet Sorensen: Well, it ranks high in my opinion and high in the opinion of the Department of Justice and you can see this in the following illustration. Federal indictments come down, we’ll take our own US Attorney’s Office here in Chicago by way of an example, charging public officials with relatively small dollar amounts as crimes of corruption, a $500 bribe transaction, a $1000 transaction, and you’re right compared to I’ll take another well-known white-collar case here in Chicago that may be seen as Conrad Black’s pocket change.

However, first of all, these one-off bribe transactions can be indicative of larger systemic problems, and I’m sorry to say that in the case of Illinois they are, and secondly to the extent that corruption is systematic.

(00:19:56)

It has an effect on the society where it occurs, which is much more, in my view, insidious than that isolated transaction. It affects the morale of the business folks who believe that they can compete on the basis of merit who are bringing their building permit applications to be reviewed and approved by the city because they comply with the building code.

It affects the morale of longtime city employees, who see their opportunities for merit-based promotions passed over in favor of somebody who is part of a patronage-based network. And so, for those reasons, corruption is a more serious crime than sometimes the dollar amount of the isolated quid pro quo bribes that are charged.

Daniel B. Rodriguez: Well, I’m struck by a few organizations develop these indices of corruption indexes, sort of rule of law index and one of the interesting lessons to draw from that to your first point about the economic consequences is that businesses become gunshot and the kinds of investments, major investments and even medium-sized investments, decline.

So in addition to the problems of morale and public trust and faith in our institutions there are — just as you said economic consequences that go beyond the money that’s changed hands.

Juliet Sorensen: That’s exactly right. Economists say that corruption acts as a tax, and if you assume that taxes deter businesses from investing in a given locale then that illustrates how the businesses become gun-shy as you say. In fact, that was the most effective rebuttal to American businesses complaining that the Foreign Corrupt Practices Act would cause them to lose out to, for example, their German or French competitors.

A Columbia Business School economist did a study showing that corruption deters generally that the French and German companies are also rendered gun-shy by having to pay out to line pockets everywhere they turn when it comes to foreign direct investment. So you don’t even need a criminal law acting as a deterrent, corruption itself serves as that deterrent.

Daniel B. Rodriguez: I haven’t thought of making this connection or asking this question but earlier on in this broadcast, you referenced campaign financing in the American context. So I have to ask you to say a little bit more about your perspective and your fears about the connection between more or less unlimited campaign spending, campaign financing particularly in the post-Citizens United World and public corruption within the United States.

Juliet Sorensen: So the question you posed really goes to a broader definition of corruption and not necessarily abuse of public office for private gain. If we think of the original meaning of corruption it’s something that has been perverted. The question is, whether or not the democratic process is perverted when some voters or groups of voters have outsized influence.

And to be sure, the Supreme Court has held in a series of decisions that money is speech essentially and that individuals and groups are entitled to exercise that First Amendment right. When you balance it against an anti-corruption interest it does raise the concern that the election is being distorted and in a sense corrupted.

Daniel B. Rodriguez: And there are scholars in the United States and elsewhere and lawyers, as you know, who have in the last many years been drawing these connections just as you’ve done between many aspects of our democratic institutions; campaign financing, the way in which we apportion legislative districts, certainly earmarking in the context of legislative policy, it’s a long list, and drawn the connection between those and deficits in the democratic process which under a widened definition of corruption can really raise some significant stakes. And while this focus has been in the American context, I suspect that given your work and the work of others this is more of an international context.

I don’t want the time to run out without having an opportunity as we say in the business to plug your book. So could you say a bit, I’ve talked a lot about your work but you have a book coming out.

Juliet Sorensen: Yes, I do. To be published by West Academic in September, it’s a casebook, ‘Public Corruption and the Law: Cases and Materials’ along with my co-author David Hoffman.

David and I worked together as federal prosecutors, we worked together on public corruption cases when I was in the US Attorney’s Office and he was the City of Chicago Inspector General and we now both teach courses on public corruption here in Chicago, I at Northwestern and David at the University of Chicago.

Our book really touches on every subject that you’ve just raised, Dan, including campaign finance, redistricting, gerrymandering as well as traditional criminal concepts of bribery, and other forms of corruption.

(00:24:54)

Daniel B. Rodriguez: And you say it’s a casebook, so in the law school context in addition to the course that you teach, is your expectation, your hope that there will be many other courses like this taught at other law schools or maybe there are already?

Juliet Sorensen: There are in number and that number is rising. So yes, it’s my expectation and my hope.

Daniel B. Rodriguez: Great. And what’s next? I say, what’s next, you’re busy of course working on this book, but in terms of your public advocacy and your scholarship, is this a long-term research and advocacy interest?

Juliet Sorensen: It is, I’d like to further the work on corruption and climate change partly because I don’t think either of those issues are going away.

Daniel B. Rodriguez: Great. So that’s our show for today. Thank you, Juliet, for joining me on this ‘Planet Lex’ podcast.

Juliet Sorensen: Thank you so much. It’s been a real pleasure.

Daniel B. Rodriguez: Thank you for listening. I’m Dan Rodriguez, signing off from the Northwestern Pritzker School of Law.

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