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Showing posts for "Governance"

The Anticorruption Boom and U.S. Foreign Policy

by Matthew Taylor
British Prime Minister Cameron is joined by Jim Yong Kim, President of the World Bank Group, (left) Sarah Chayes, a senior associate in the Democracy and Rule of Law Program, (second left) US Secretary of State John Kerry, (third from left) and Nigerian President Muhammadu Buhari, (right), as he opens the international anti-corruption summit on May 12, 2016 in London, England (Reuters/Dan Kitwood). British Prime Minister Cameron is joined by Jim Yong Kim, President of the World Bank Group, (left) Sarah Chayes, a senior associate in the Democracy and Rule of Law Program, (second left) US Secretary of State John Kerry, (third from left) and Nigerian President Muhammadu Buhari, (right), as he opens the international anti-corruption summit on May 12, 2016 in London, England (Reuters/Dan Kitwood).

April and May brought some of the most important movement on the anticorruption front of any two-month period in the past decade. Recapitulating briefly:

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This Week in Markets and Democracy: Deadly Kenyan Protests, Vietnam’s Labor Rights, Still No Haiti Election

by Shannon K. O'Neil
A riot policeman fires a teargas canister to disperse supporters of Kenya's opposition Coalition for Reforms and Democracy (CORD) during a protest at the premises hosting the headquarters of Independent Electoral and Boundaries Commission (IEBC) to demand the disbandment of the electoral body ahead of next year's election in Nairobi, Kenya, May 23, 2016 (Reuters/Thomas Mukoya). A riot policeman fires a teargas canister to disperse supporters of Kenya's opposition Coalition for Reforms and Democracy (CORD) during a protest at the premises hosting the headquarters of Independent Electoral and Boundaries Commission (IEBC) to demand the disbandment of the electoral body ahead of next year's election in Nairobi, Kenya, May 23, 2016 (Reuters/Thomas Mukoya).

Electoral Violence Starts Early in Kenya
In Kenya, police cracked down on opposition protests, killing three and injuring more. With elections still more than a year away, the Coalition for Reforms and Democracy (CORD) party is demanding that current electoral officials resign for corruption and bias toward President Uhuru Kenyatta’s ruling Jubilee coalition. In the wake of the bloodshed CORD halted the demonstrations and agreed to negotiations, responding to other governments’ calls for dialogue. But given Kenya’s history of electoral violence and impunity, many expect clashes to continue.

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This Week in Markets and Democracy: Rana Plaza Anniversary, Press Freedom Declines, Haiti Election Troubles

by Shannon K. O'Neil
A relative holds up a picture of a garment worker in front of the rubble of the collapsed Rana Plaza building (Reuters/Andrew Biraj). A relative holds up a picture of a garment worker in front of the rubble of the collapsed Rana Plaza building (Reuters/Andrew Biraj).

Labor Standards Three Years After Rana Plaza
Three years after Bangladesh’s Rana Plaza garment factory collapse killed or injured over 3,000 people, labor rights remain tenuous. In the wake of the disaster apparel brands, suppliers, and the Bangladeshi government created the Alliance for Bangladesh Worker Safety, a partnership to improve conditions by setting standards and increasing inspections. The Alliance has worked with factories to build emergency exits, install fire hydrants, and rewire electrical systems. It has also blacklisted the worst offenders. Yet it only encompasses those operating under formal contracts. Over half of the nation’s 7,000 factories work in the informal economy. Here, the Bangladeshi government doesn’t enforce Alliance standards, leaving these workers vulnerable.

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Five Questions on Sustainable Investing With Morgan Stanley’s Audrey Choi

by Guest Blogger for Shannon K. O'Neil
A man fills a glass with water from a spring in Chiffa in Medea Governorate, Algeria (Reuters/Ramzi Boudina). A man fills a glass with water from a spring in Chiffa in Medea Governorate, Algeria (Reuters/Ramzi Boudina).

This post features a conversation with Audrey Choi, chief executive officer of Morgan Stanley’s Institute for Sustainable Investing and managing director of its Global Sustainable Finance Group. Choi talks about the evolving $20 trillion sector, including important U.S. policy changes and her thoughts on where sustainable investing is headed. Read more »

This Week in Markets and Democracy: Panama Papers, Curbing Tax Evasion, U.S. Cuts Tanzania Aid

by Shannon K. O'Neil
People demonstrate against Iceland's Prime Minister Sigmundur Gunnlaugsson in Reykjavik, Iceland on April 4, 2016 after a leak of documents by so-called Panama Papers stoked anger over his wife owning a tax haven-based company with large claims on the country's collapsed banks (Reuters/Stigtryggur Johannsson). People demonstrate against Iceland's Prime Minister Sigmundur Gunnlaugsson in Reykjavik, Iceland on April 4, 2016 after a leak of documents by so-called Panama Papers stoked anger over his wife owning a tax haven-based company with large claims on the country's collapsed banks (Reuters/Stigtryggur Johannsson).

Panama Papers Expose Weak Regulations
The “Panama Papers” are an unprecedented leak of 11.5 million files revealing a complex global network of hidden wealth. For four decades, Panamanian law firm Mossack Fonseca helped to set up over 200,000 shell companiesa favored tool for laundering money, stashing ill-gotten resources, and evading taxes—for tens of thousands of clients in over fifty countries, with current and former heads of state among the 143 politicians and cronies named. So far the revelations have forced Iceland’s prime minister and the president of Transparency International’s Chile branch to resign, and upped support for a Brexit given British Prime Minister David Cameron’s involvement. The Panama Papers further expose weaknesses in global financial regulation. More than half of the leaked shell companies are based in UK  territories100,000 in the British Virgin Islands alone—where Cameron has tried to end such anonymity by legally mandating a public registry of companies’ owners. European banks HSBC, Credit Suisse, and UBS are among the ten institutions that worked most frequently with the Panamanian firm to create offshore accounts for clients. Since the leak, countries including the United States and Germany have proposed new legislation to increase transparency around offshore companies.

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This Week in Markets and Democracy: Brazil’s Crisis Snowballs, Deferred Corruption Prosecutions, U.S. Bets on Cuba

by Shannon K. O'Neil
Brazil's President Dilma Rousseff (R) greets former president Luiz Inacio Lula da Silva during the appointment of Lula da Silva as chief of staff, at Planalto palace in Brasilia, Brazil (Reuters/Adriano Machado). Brazil's President Dilma Rousseff (R) greets former president Luiz Inacio Lula da Silva during the appointment of Lula da Silva as chief of staff, at Planalto palace in Brasilia, Brazil (Reuters/Adriano Machado).

Brazil’s Corruption Crisis Snowballs
Brazil’s corruption investigations expanded to encompass the former and current president. Federal police detained and questioned former President Luíz Inácio Lula da Silva (“Lula”) over whether he personally benefited from the Petrobras bribery scheme. São Paulo state prosecutors then separately filed to arrest him on money-laundering charges. In a plea bargain, Senator Delcídio do Amaral claimed current President Dilma Rousseff knew about Petrobras bid-rigging and tried to stop the criminal probe. Abroad, Argentine prosecutors are investigating if their own officials received kickbacks, and my colleague Matt Taylor predicts the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) could bring FCPA charges against Petrobras. And in what most perceive as a cynical move to defy justice, Lula joined Rousseff’s cabinet as chief of staff, removing him from the jurisdiction of both state and federal courts (only the Supreme Court can now try his case). As millions take to the streets in outrage, the political consequences may come more quickly than the legal ones.

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This Week in Markets and Democracy: Nike’s Bribes in Kenya, Elections in Benin and Niger, and Women’s Anticorruption Role

by Shannon K. O'Neil
A policeman is seen outside the gates of Riadha House the Athletic Kenya (AK) Headquarters during a protest in capital Nairobi November 23, 2015. Dozens of Kenyan athletes stormed the athletics federation headquarters in Nairobi on Monday, locking out officials and demanding that top Athletics Kenya (AK) bosses step down following allegations of graft and doping cover-ups (Reuters/Noor Khamis). A policeman is seen outside the gates of Riadha House the Athletic Kenya (AK) Headquarters during a protest in capital Nairobi November 23, 2015. Dozens of Kenyan athletes stormed the athletics federation headquarters in Nairobi on Monday, locking out officials and demanding that top Athletics Kenya (AK) bosses step down following allegations of graft and doping cover-ups (Reuters/Noor Khamis).

Nike Bribes, Will the United States Prosecute?
Bank records and emails show Nike paid a $500,000 “commitment bonus” to Kenya’s athletics federation, and hundreds of thousands more in “honoraria.” Though allegedly to support poor runners, Kenyan prosecutors say athletics officials quickly transferred the money to their personal bank accounts. Yet the United States cannot use the Foreign Corrupt Practices Act (FCPA) against the mega brand. The law only covers U.S. companies that bribe “foreign officials” and “public international organizations.” Sports associations are private, so outside the FCPA’s jurisdiction. In taking on FIFA, the U.S. Department of Justice (DOJ) worked around the FCPA, indicting foreign and U.S. officials for laundering money through U.S. banks, not bribery. The United States may need to do the same in the Nike case if it wants to follow up on President Obama’s pointed criticisms of Kenyan corruption with legal actions.

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Anticorruption Efforts in Mexico

by Shannon K. O'Neil
Relatives hold pictures of some of the 43 missing students of Ayotzinapa College Raul Isidro Burgos and shout during a news conference after a private meeting with Mexico's President Enrique Pena Nieto, ahead of the first anniversary of the students' disappearance (Reuters/Henry Romero). Relatives hold pictures of some of the 43 missing students of Ayotzinapa College Raul Isidro Burgos and shout during a news conference after a private meeting with Mexico's President Enrique Pena Nieto, ahead of the first anniversary of the students' disappearance (Reuters/Henry Romero).

Corruption dominates Mexico’s headlines: helicopter rides for officials’ family members, housing deals from favored government contractors, the still unexplained disappearance of 43 students, and a drug lord escaping a maximum-security prison, for the second time. In a recent survey, Mexicans listed corruption as the country’s top problem, ahead of security and the economy.

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This Week in Markets and Democracy: Malaysia’s Corruption Probes, Ghost Workers, and Lax OECD Bribery Laws

by Shannon K. O'Neil
Malaysia's Prime Minister Najib Razak leaves parliament in Kuala Lumpur, Malaysia, January 26, 2016. Malaysia's attorney-general said on Tuesday that $681 million transferred into Prime Minister Najib Razak's personal bank account was a gift from the royal family in Saudi Arabia and there were no criminal offences or corruption involved (Reuters/Olivia Harris). Malaysia's Prime Minister Najib Razak leaves parliament in Kuala Lumpur, Malaysia, January 26, 2016. Malaysia's attorney-general said on Tuesday that $681 million transferred into Prime Minister Najib Razak's personal bank account was a gift from the royal family in Saudi Arabia and there were no criminal offences or corruption involved (Reuters/Olivia Harris).

International Investigations Take Over as Domestic Malaysian Justice Fails
New evidence shows that transfers from troubled state investment fund 1MDB into Malaysian Prime Minister Najib Razak’s personal bank accounts may top $1 billion—$300 million higher than previously thought. Yet Malaysian authorities continue to clear him of wrongdoing. The attorney general’s office ended its case, saying it found no evidence of graft, and Parliament is delaying a long-awaited investigatory report on the fund. The government has also shut down a Malaysian news site reporting on corruption and threatened harsh punishments for journalists who leak “official secrets”—a thinly-veiled warning to would-be whistleblowers. Less politically malleable are international authorities who continue to probe the cross-border case. Singapore recently seized a “large number” of related bank accounts. Criminal proceedings in Switzerland allege misappropriation of up to $4 billion in state money. And in the United States, the Department of Justice opened an inquiry into Najib’s U.S. real estate holdings and the Federal Bureau of Investigation (FBI) into the 1MDB case itself. Najib maintains the money was a political donation from an unnamed Saudi royal, a claim that conflicts with the growing financial paper trail.

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The Long Arm of U.S. Law and Latin America’s Corruption Malaise

by Matthew Taylor
A demonstrator holds inflatable dolls depicting Brazil's former president Luiz Inacio Lula da Silva (R) and Brazil's President Dilma Rousseff during a protest calling for the impeachment of Rousseff near the National Congress in Brasilia, Brazil, December 13, 2015 (Ueslei Marcelino/Reuters). A demonstrator holds inflatable dolls depicting Brazil's former president Luiz Inacio Lula da Silva (R) and Brazil's President Dilma Rousseff during a protest calling for the impeachment of Rousseff near the National Congress in Brasilia, Brazil, December 13, 2015 (Ueslei Marcelino/Reuters).

Latin America’s corruption scandals of the past two years are moving slowly toward resolution. As they move forward, it is interesting to note that in a region that has been particularly protective of its sovereignty, foreign cooperation has played a significant role, whether it is via bilateral exchanges between prosecutors, mutual legal assistance treaties, or even United Nations support, as in the case of Guatemala’s International Commission Against Impunity (CICIG). But these various forms of international cooperation may soon be joined by another international anti-corruption effort that is less well understood in Latin America: prosecution by U.S. attorneys.

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