Difficulties Confronted by ICSID Tribunals in Deciding International Investment Corruption Cases and Possible Solutions

The issue of corruption has attracted increasing attention in the study and practice of international investment law during recent years. After taking prudent consideration of the corruption defense invoked by the host states in some international investment arbitration cases involved with corruption, International Center for Settlement of Investment Disputes (ICSID) tribunals accordingly determined the final awards. However, some parts of the arbitral jurisprudence aroused strong criticism, especially with regard to the ICSID tribunals’ reasoning that arbitrators have no jurisdiction over corruption-tainted international investments. The ICSID tribunals are legitimately supposed to exercise their jurisdiction and are lawfully obliged to probe into the nature of corrupt activities. The tribunals are strongly expected to adopt a balanced approach in deciding the merits and fairly weighing the obligations, rights, and interests of both disputing parties. It is preferable to strengthen the collaborative interaction between ICSID proceedings and domestic anti-corruption enforcement mechanisms when it comes to combating corrupt international investment activities. Existing international treaties (or specific treaty provisions) on combating corruption in international business transactions and calling for international cooperation, alongside domestic anti-corruption enforcement legislation, have actually laid solid legal foundations for the establishment of such an anti-corruption coordinative mechanism between ICSID and domestic corruption regulatory authorities on the global level.     

Local Processes of National Corruption: Elite Linkages and Their Effects on Poor People in India

This paper provides a bottom–up view of national corruption in India and presents a framework of corruption involving three actors: bureaucrat, politician and legitimate claimant. The paper then focuses on the public service provision of social security in an Indian village and the role of elites in perpetuating the corrupt practices to access this public provision. This study is based on an extensive fieldwork and uses network data. First, I show that the political elite bridges the ‘structural hole’ between the institutions of state and society, have the advantage of information, referrals and are the main beneficiary of local corrupt practices. Second, factional politics is carried out through the use of corruption and it results in exclusion of the poor persons from the welfare rights to which they are entitled. The paper also explores how the local processes of corruption interact with state-level processes and shows how protest against corruption is silenced.     

Between demand and supply: Bribery in international trade

The use of kickbacks and illicit payments to win foreign sales is eroding fair trade and undermining good governance around the world. While often seen as discrete acts by unscrupulous businesses, bribery in international trade is better seen as driven by push and pull forces larger than individual firms. Two hypotheses on the dynamics of transnational bribery are formulated and tested in this study. The demand-pull hypothesis views multinational corporations as victims of corruption in host countries and predicts a positive relationship between corruption in host countries and bribery by guest businesses. The supply-push hypothesis treats multinationals as proactive parties and proposes a positive relationship between pro-bribery conditions in exporting countries and the inclination of their multinationals to foreign bribery. Analysis of cross-national data yielded no support for the demand-pull hypothesis, but strong backing for the supply-push hypothesis. This finding validates the potential of effective bribery reduction through supply-side controls. Direct all correspondence to Hung-EnSung, The National Centeron Addiction and Sub-stance Abuseat Columbia University, 633 Third Avenue, 19th Floor, NewYork, NY 10017, USA.     

The hidden trillions: Secrecy,corruption, and the offshore interface

This paper considers the role of secrecy jurisdictions in creating a supply-side stimulus for corrupt practices and explores the use of the newly created Financial Secrecy Index as a tool for assessing and ranking such jurisdictions. Secrecy jurisdictions are a prominent feature of international financial markets, providing a combination of low or zero tax rates, lax regulation, weak international judicial cooperation, and—above all—legalised secrecy facilities. Citing the case of Barbados, this paper shows how an environment of legalised secrecy is purposefully created by not requiring disclosure of ownership information for corporations, trusts, foundations and other legal entities; through non-participation or ineffective participation in judicial cooperation and information exchange; and through laws to protect banking secrecy arrangements. Taken in combination these factors make secrecy jurisdictions attractive conduits for illicit cross-border financial flows and the harbouring of dirty money. Using secrecy jurisdictions as platforms for their operations, legal and financial intermediaries create complex and opaque offshore structures to facilitate economic crime and impede investigation. Current international efforts to stem the activities of secrecy jurisdictions are largely ineffective, but civil society is raising pressure for effective action to be taken against offshore secrecy.     

灰色地带:反腐败法律的文化分析

法人类学对腐败和反腐败法律的分析做出了重要贡献。指出了法律界定为"腐败"的行为的社会根基以及腐败行为的两个规范框架:国家的法律和社会惯例;评估腐败问题时存在的双重标准:国际组织和西方国家常常认为"南方"和"东方"国家的腐败问题比"发达"国家更严重;反腐败与政治稳定常常难以求得平衡,媒体对腐败的报道带来了一系列棘手的问题,在处理反腐败问题时常常采用过于简单的两分法。法律人应当对这些卓识给予更多的关注。这对于理解英国的几个重大案件具有重要的意义。     

Roh regrets: Leadership, culture and politics in South Korea

South Korea has, in recent years, suffered a number of serious corruption scandals reaching to the very top of the political and economic worlds. This article attempts to explain why corruption scandals are so frequent in Korea. It suggests that practices that in the West are regarded as corrupt are seen as acceptable in Korea, but that nevertheless Koreans do take corruption very seriously. Korean culture is if anything less willing than western culture to see corrupt behaviour as normal; at the same time it is particularly susceptible to behaviour that is, within its own terms, corrupt. Corruption scandals are therefore frequent, both because there are pressures encouraging corruption, and because corruption, when exposed, is indeed seen as scandalous. This revised version was published online in July 2006 with corrections to the Cover Date.     

How damages recovery actions can improve the fight against corruption: the crisis of criminal law policies and the role of private enforcement in an Italian case of judicial corruption

In many countries corruption is rife, despite the fact that there is a criminal-law legislative framework for corruption. Italy is one of these countries. The commitment of judges and prosecutors to combating instances of corruption is often frustrated by the consequences of the excessive length of the proceedings. The fight against corruption has been carried out mainly in the field of criminal law. The criminalisation of corruption both in domestic and in international contexts is not enough to reduce corrupt practices. In the last decade another front in the fight against corruption has been explored: the private law approach as a complement to criminal law policies. Indeed, the same corrupt practise may be subject both to criminal proceedings by public authority and to civil proceedings by the victims of corruption. The argument that private law instruments may be used in order to achieve a public policy goal is not new and goes beyond the definition of "private enforcement" in the context of competition law. The idea of creating a favourable social and legal background to encourage the victims of anti-competitive practices can also be transposed to the fight against corruption. In fact, in many cases of corruption the low percentage of successful criminal persecution and the class of punishment associated with corruption offences do not represent a deterrent, considering the benefits deriving from bribe. This paper aims to address the question as to whether private law remedies under national legal systems could constitute an effective disincentive against corrupt practices, alongside criminal prosecutions. The case CIR vs. Fininvest, Lodo Mondadori is one of the first cases involving damages actions resulting from corrupt practices, and addresses two of the main obstacles to civil actions in this field: evidence and the quantification of damages.     

Fostering management education to deter corruption: what do students know about corruption and its legal consequences?

This article analyses the current knowledge about corruption and its legal consequences among university students. Based on data from 1,511 undergraduate and graduate students from all academic disciplines at four major universities in the German-speaking part of Switzerland, it appears that the majority of students have difficulty identifying corrupt behaviour and its legal consequences. Law students achieve slightly better results. However, even law students demonstrate a significant lack of knowledge of corruption issues. In particular, most of the students are unaware that corruption that occurs abroad can also be prosecuted in Switzerland. The limited knowledge among students regarding corruption and its legal consequences as identified in this study suggests that the teaching and study of anti-corruption-related subjects should be better integrated into the curricula of universities and business schools.     

Mitigating the Harshness of FCPA Enforcement Through a Qualifying Good‐Faith Compliance Defense

In recent years, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have enforced the Foreign Corrupt Practices Act (FCPA) with increasing rigor. These zealous enforcement practices have been criticized for putting excessive pressure on companies to settle, often through nonprosecution or deferred prosecution agreements. The resulting proliferation of such settlements has created a dearth of case law interpreting the statute, resulting in legal ambiguity that reinforces pressures on companies to continue to settle rather than litigate, as uncertainty of the law adds to risk. This dynamic is exacerbated by the broad vicarious liability that firms face for the wrongdoing of individual actors. Given the need for government to enlist business as a partner in any effective battle against global corruption, the current highly adversarial relationship between enforcement agencies and firms is unreasonable and counterproductive. The law and its enforcement agencies should go further in providing incentives for businesses to develop and implement strong good‐faith FCPA compliance programs. They should establish standards for rigorous compliance programs that would provide qualifying companies with a defense against entity liability for the corrupt behavior of individuals. Creation of a qualifying good‐faith compliance program defense would help to prevent future FCPA violations, to recruit companies as partners in fighting corruption, to encourage ethics‐oriented corporate cultures, and to encourage upstanding firms to do business in regimes where rectitude is most needed.     

Control rights, bureaucratic corruption and the allocation of resources

In a two-sector model, we show that corruption is endogenously determined by the model parameters. It depends on the fraction of unskilled labor and the relative TFP differential between skilled and unskilled sector. First, for a larger proportion of unskilled labor force, there is widespread corruption and for smaller share of unskilled labor force, there is no corruption. For the intermediate level, equilibrium depends on the number of corrupt bureaucrats and there are multiple equilibria. Second, corruption decreases with the relative TFP differential between skilled and unskilled sector. For the intermediate level of TFP differential, there are multiple equilibria. On its consequences, corruption causes rise in the wage inequality between skilled and unskilled workers. It distorts the allocation of resources, which results in the output and the welfare losses, and it is associated with the higher tax rate.     

Minimising corruption: Applying lessons from the crime prevention literature

This article explores how the criminology literature, particularly the literature on crime prevention, might supplement current efforts to minimise corruption. It seeks to identify and apply approaches to offenders and offending to the problem of minimising corruption. In summary, this article demonstrates that the crime prevention literature does have a number of applications for those interested in minimising corruption. In general terms, this literature advocates, amongst other things, taking an informed approach to corruption minimisation by developing an understanding of the process of engaging in corrupt conduct. Exploring the offender's perspective and considering different types of corruption separately are two strategies suggested to facilitate understanding the factors which underlie corrupt conduct. In this way those seeking to minimise corruption would be better placed to identify how and where to intervene to optimise the likelihood of prevention and hence be able to tailor prevention techniques to individual types of corruption. Six specific lessons from the crime prevention literature and their applications are illustrated in this article. This current article is intended to promote discussion of potential strategies for combating corruption by the growing numbers of people interested in this challenge. This revised version was published online in July 2006 with corrections to the Cover Date.     

Conflict of interest,corruption or (simply) scandals?

The unprecedented municipal corruption scandals that occurred in Oslo in 1989–91 illustrate the contrasts and interrelationships between publicly-perceived scandal and actual corruption. What was depicted at the time as massive corruption has resulted in no convictions of politicians; on close examination the corrupt behavior appears to have been limited in both significance and scope, though official reports do suggest the possibility that more serious wrongdoing may have occurred. The case illustrates not only the mechanisms by which scandal is propagated, but also the contrasts between legalistic and other definitions of corruption. Analysis of four possible categories of corrupt behavior shows the difficulties of applying legalistic definitions to actual practice, and offers a clearer understanding of how corruption and scandal can diverge so sharply.     

PEER GROUP SUPPORT FOR POLICE OCCUPATIONAL DEVIANCE

Although there have been several journalistic and impressionistic accounts of police corrupt behavior, there are few empirical studies of this phenomenon. One of the reasons for this lack of research is the absence of theoretical frames of reference to guide research endeavors. This paper deals with police corruption as but one of many forms of occupational deviance and discusses the manner in which the social conditions existing within the occupational milieu contribute to such corruption. In particular. the paper examines the manner in which the opportunity structure and socialization practices within the occupation combine with peer group support to create a social situation where certain corrupt acts are tolerated and accepted.     

Corrupt intermediaries in international business transactions: between make, buy and reform

Attempts to deter corruption have little recognized the operation of intermediaries. This study takes a New Institutional Economic-perspective, supported by a variety of case studies, to identify firms’ choices of when to engage corrupt intermediaries (buy) and how to approach reform. It argues that firms should be held unbendingly liable for the operation of their intermediaries. Reform may also focus on certifying “good” intermediaries and holding the certifier liable for the performance of its agents. Prohibiting intermediaries is not advisable, as intermediation can be either arranged in-house (make) or mixed with legal services. Registration and auditing of intermediaries provides a more promising avenue for reform. Legislators should balance the additional regulatory burden by granting a wage premium to registered intermediaries and denying legal recourse to unregistered competitors.     

Political structure,legislative process,and corruption: comparing Taiwan and South Korea

Taiwan and South Korea have the same constitutional system, approximate economic scale, and similar cultural backgrounds, yet they differ in degree of corruption. What political structures and legislative processes cause this outcome is the major question posed in this paper. The political structure in South Korea is a centralization-of-power model, while that in Taiwan is a separation-of-powers model. This paper proposes that Taiwan and South Korea have different types of corruption and different political structures, and the legislative process in South Korea is more compromising than that in Taiwan. These factors contribute to greater corruption in South Korea than in Taiwan. This study clarifies how particular institutional dynamics reduce or enhance the prospects for democratic governance and help to better understand how political structure and legislative process channel different types of corruption into different degrees of corruption. Studies on the relationship between constitutional structure and corruption have concluded that parliamentarism can help reduce corruption more than presidentialism. This thesis argues that a country with centralized power tends to be less corrupt than a country with separation of powers. If this argument and the rationale behind it hold true for countries with both parliamentary and presidential systems, we can expect that semi-presidential countries with a centralized system are less corrupt than those with a decentralized system, all else being equal. However, by comparing these two semi-presidential countries, we find that South Korea, with its centralized model, was more corrupt than Taiwan, with its decentralized model. This comparative case study provides a counterargument to the conventional wisdom of constitutional structure and governance.     

The resources of corruption: Some reflections from the Italian Case

This article focuses on the resources used in corrupt exchanges and the complex network of actors involved. The empirical analysis is drawn from research into the Italian case, and is based on judicial investigations, a newspaper-based data bank, and interviews. Defining corruption as a market for political rent, the analysis focuses on the “commodities” which flow from the public to the private sectors (in particular, influence over political decisions and information) and those which flow in the opposite direction (such as bribes, influence on the mass media etc.). Resources which corrupt agents use to reduce the costs of “producing” corrupt services are also explored as well as the risks involved in hidden exchange. This revised version was published online in July 2006 with corrections to the Cover Date.     

Measuring Control of Corruption by a New Index of Public Integrity

While the last 20 years saw the invention of corruption rankings, allowing comparison between countries and the shaming of corrupt governments, such measurements are largely based on the perceptions of experts, lacking both specificity and transparency. New research, based on a comprehensive theory of governance defined as the set of formal and informal institutions determining who gets what in a given context, allow for more specific and objective, albeit indirect, measurements of control of corruption. Such measurements focus on the institutional framework which empowers public integrity and eliminates many current anti-corruption tools, while validating others. Most importantly, it provides a broader specific context which can empower reforms based on evidence and a clear measure to determine status and progress of corruption control.     

贪污罪量刑基准体系的构建及回归分析

应当根据刑法规定,通过贪污罪的犯罪结果与处刑数量之间的线性关系,把定量分析方法应用于贪污罪的处刑实践,并依此建立了贪污罪的量刑基准体系,以准确确定被告人应当承担刑事责任的数量,这样,可以减少司法实践中法官个体之间对贪污罪行为处刑的差异。     

贪污罪量刑基准体系的构建及回归分析

根据刑法规定,通过贪污罪的犯罪结果与处刑数量之间的线性关系,把定量分析方法应用于贪污罪的处刑实践,并依此建立了贪污罪的量刑基准体系,以准确确定被告人应当承担刑事责任的数量,以减少司法实践中法官个体之间对贪污罪行为处刑的差异。     

Democracy and corruption: a complex relationship

We argue that an ‘electoral democracy’ is not sufficient to reduce corruption. Our contention is that the institutions associated with mature democracy are crucial to successfully deterring corrupt behaviour. At the core of our argument is the idea that with well-functioning institutions, the probability of detection and punishment is sufficiently high to deter most decision makers from choosing to act corruptly. The empirical evidence we present supports this idea. The nonlinearity of democracy variables is tested to confirm that an advanced stage of democracy is crucial for combating corruption.