Monthly Archives: August 2015

Front-Line Interview Episode 1: Alison Taylor, How Organizations Impact Corruption

In the launch of a new video series, Front-Line Interviews, I engage with Alison Taylor, Director of Energy and Extractives at BSR (Business for Social Responsibility). I first became aware of Alison’s work via a Forbes article she authored “Compliance and Risk: Clearing the Org Chart Hurdle” (link here). After an introduction, Alison and I co-authored an article on Ethical Boardroom, “Reconciling Sales Strategy with FCPA Compliance.” (link here). In this interview, Alison shares the findings of her research with respect to her Masters Thesis from Columbia University on “The Organizational Culture Dimension of Corruption.” In her work, Alison identifies the impact of growth forecasts, selective leadership focus, the existence of corrupt sub-cultures within an organization, the role of incentives, and the sense of urgency within business units, as all representing areas which can leave an anti-bribery compliance program as vulnerable to ‘real-world’ behaviors.

Alison’s work brings the ‘WAH’ (What Actually Happens) in an organization to the compliance community as to better understand the real-world corruption risks which can exist and remain unaddressed in a corporation. It is a call to look at compliance at the level of business strategy first, and then to see how those strategies cascade in an organization through incentives, forecasts, and quotas. What follows is a ‘clear eyed’ reality check to see if those strategies are a partner to anti-bribery compliance or a ‘bolt-on’ set of rules and procedures that might be viewed as a ‘work around’ at the front-lines. It is a real honor to bring Alison’s work to life through this interview, and while it is 30 minutes, it brings incredible value and insight to elevate compliance beyond policies, rules and procedures.

I am really excited about bringing this video series to the compliance community. While blogging is certainly an impactful way to communicate,  the opportunity to share perspectives with thought leaders via a professional studio in NYC is really an incredible chance to bring different viewpoints to the field.  I hope that the content of this first interview overcomes my sense of nervousness at this new role. I was going to lose the i-pad but someone likened it to the clipboard that Willam Buckley used on Firing-Line; however, in this interview with Alison, there was so much great content in her Thesis that I didn’t want to chance anything to memory!

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The Looting Machine & The Modernization of Corruption

The Looting Machine & The Modernization of Corruption

Today’ Q and A is with Tom Burgis, Investigations Correspondent at Financial Times and author of “The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth”  available here. As Tom States in his Amazon forward,  “The Looting Machine tells the story of how Africa’s great natural wealth has become its curse, of what life is like for those who live under that curse, and of how shadow states across the continent have, in cahoots with multinational corporations and tycoons from east and west, harnessed Africa’s treasure to their own oppressive interests.” I would add that it is a compelling work with troubling and relevant findings, which I would consider as required reading for front-line personnel and compliance personnel who have the responsibility to manage corruption risk in Africa.

Tom, thank you for allowing me the opportunity to engage with you in this Q and A. I often share that at the front-lines of international business, corruption can look like a win-win as business personnel, corrupt officials, and the intermediaries who bridge the two, might think “who is getting hurt here?” While I speak to that front-line perspective as nothing but an illusion, you bring this dynamic to life in your writing. I hope that in this exchange, we can bring that reality to the compliance community who often operate far from the regions which you so well describe.

Early in your work, you state that the “looting machine has been modernized.” Is part of that modernization designed to circumvent anti-bribery, proceeds of crime, and money laundering laws?

TB: By saying that the looting machine’s been modernized, I really mean it’s been globalized – and it’s gone offshore.

The comparison is with the old commercial conquistadors. People like Rhodes. Broadly, they looted Africa under national flags. Congolese rubber, southern African diamonds, west Africa slaves: they were all carried off with the more or less explicit consent of imperial powers. Through the Cold War, that link between exploitation and national political goals remained. To an extent, it does today: Washington, Paris, London, Beijing: all are content to form alliances with despots to ensure access to natural resources (just look at the French presence in Gabon, America’s in Equatorial Guinea or China’s in Sudan). But increasingly, the looting machine is controlled by transnational networks. By that, I mean networks of local rulers, security bosses and officials, itinerant middlemen, and multinational business. Just look at Sam Pa’s Queensway network: it encompasses connections to Chinese intelligence, shadow African government’s like Robert Mugabe’s and blue chip western companies including BP and Glencore.

You reflect upon due diligence processes, which is a major industry unto itself, as “manufacturing deniability.” If I had one question to ask today, this would be it: Can you share with us more about what that means, and what compliance personnel should take away from your cautionary description.

TB: I’m talking about a process that, like tax avoidance schemes or time-wasting in football, has become detached from its proper purpose. It’s about adhering to the letter, rather than the spirit, of good conduct (and in some cases, of the law). A lot of due diligence is done to tick the boxes. A lot of it is cursory.

And a lot of it appears designed to “manufacture deniability”. That is, its purpose is to be able to demonstrate to any regulators that might subsequently make enquiries that efforts were taken to avoid corruption, rather than a genuine attempt in good faith to avoid contributing to the corruption that does such damage in Africa’s resource states.

The vast majority of the people I speak to who work in due diligence – and there are a great many people of intelligence and integrity in the business – are disillusioned with what their industry has become. Those doing on-the-ground investigative work feel that information they uncover is frequently dismissed as it goes up the chain (through the business intelligence company, the law firm, the compliance department and, ultimately, the executive level) if it doesn’t fit the pre-ordained outcome that the client wants. I would suggest a statutory footing for the most important due diligence work. If companies were liable for, say, failing to establish the beneficial owners of their partners before proceeding with a deal that was subsequently revealed to be corrupt, the scope for “manufacturing deniability” would be dramatically reduced.

In your chapter “It is Forbidden to Piss in the Park,” you describe a situation where “the political economy of the roadblock has taken hold.” When I read that passage, I thought of small, petty bribes. So for someone in the field who might think of small bribery as “the way things get done around here,” and part of the “norm of corruption,” again, where no one gets hurt, what would you say? And what if that front-line manager thought of small bribery as somewhat altruistic in helping some poorly paid and trained public official to “make ends meet.” What might be your response?

 TB: It’s an understandable instinct and certainly a different one from the big-ticket corruption designed to secure an illicit competitive advantage. Someone in fear for their life at a roadblock might well pay a bribe (though that would probably be more like extortion than corruption). But it is possible to say no and still get the form or the permit or the visa or the import license – or indeed, the oil block. It requires patience.

I sometimes detect a whiff of racism in the justifications for petty bribery: “These guys just don’t get how we work, so we need to cut through the red tape…” That is no sort of argument. Every bribe further corrodes the notion that public office is for delivering public goods, not personal advantage. Law enforcement should focus on the biggest forms of corruption, for sure. But perpetuating petty bribery perpetuates the overall system.

That was the point of my story about the Congolese roadblock. It’s part of a shared psychology that comes into play in countries where the state has collapsed. If the big man is capturing territory (Katanga, say, or chunks of eastern Congo controlled by warlords) and squeezing rent from it in cahoots with foreign partners, that provides a model all the way down to the guy with the AK controlling the most remote junction.

In the chapter “Incubators of Poverty,” you state “oil has so corrupted Nigeria that, for those trying to make an honest buck, the outlook is dispiriting.” So, for today’s readers who want to make “an honest buck” in Nigeria, or regions with the same integrity and transparency issues, what’s a company to do?

TB: What is required is courage and good faith. I know plenty of people doing business in Nigeria – foreigners and locals alike – who have both. We often get tangled up in meaningless business jargon when addressing questions like this. We know instinctively if a transaction involves using corrupt means to gain an advantage. Patience helps, too. If you come to London with a big American accent and ask a taxi driver to take you somewhere you can’t pronounce properly, that taxi driver will take you for a ride. The same goes in Nigeria. Get to know the place before leaping in to business.

Later in the chapter you speak of networks which “fuse private interests with public officials; they operate in the underbelly of globalization, where criminal enterprises and international trade overlap.” Given the increase in FCPA and Anti-Bribery enforcement, are these networks being destroyed, diminished, or to use your words, “modernized.”

 TB: It is always hard to say, because, by definition, we only hear about the cases that become public. But history suggests that corruption evolves in response to threats. Just look at how cash bribes have given way to the use of offshore front companies and concealed equity stakes in projects granted to officials.

You reflect on the work of the World Bank, the IMF and other global financial and aid intuitions as being players in “resource ventures of dubious merit.” Can those institutions that were designed and chartered to aid in development really be such a part of the resource curse?

TB: Yes. As I outline in the book, the International Finance Corporation in particular has repeatedly been involved in resources projects that have proved highly damaging. That is not to say that there are not lots of bright people and good intentions within these institutions. I think partly the problem stems from a reluctance, in an era where economic growth often appears to be the only political goal, to accept that one of the biggest industries of the world economy comes with a terrible toll.

In the chapter “God Has Nothing To Do With It,” you speak of how “transactions are structured in an effort to enrich officials without crossing the threshold of illegality.” Is that a contradiction? Isn’t enriching officials in itself an illegal act, or is it somehow as you describe, a “safe sex transaction!”

TB: That goes to my earlier point about the letter and the spirit of the law. It is possible to exploit loopholes and give a technical impression of propriety to what is in fact a transaction that improperly enriches officials. It’s about intent and following the money.

Finally, in “Complicity” you quote one of Nigeria’s young musician’s as saying, “Don’t think you’re not involved.” So if you were addressing a meeting of commercial managers from any one of the Looting Machine regions that you describe, how would you advise them? How would you try to engage them as individuals?

TB: Honestly. And I’d encourage them to listen to more African hip hop. That’s where you hear the best arguments against corruption.

Tom can be reached via e-mail at [email protected] as well as twitter at @Tomburgis

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A Summer of Compliance

A Summer of Compliance

When I was working in the field of international sales, August was typically a month of ‘down time’ as a combination of end user, third party and corporate holidays marked a lull in summer sales activity. Well, I have not experienced such a drop-off in the world of anti-bribery compliance, where it seems to be that ‘compliance never sleeps.’ But as I look at the remainder of 2015,  I have been thinking of some social media advice given to me early on by Deirdre Breakenridge, author, “Putting the Public Back in Public Relations: How Social Media Is Reinventing the Aging Business of PR,” (link here) and that advice was “be a giver.”

The challenge has been to somehow distill and share the deep and wide level of content that pertains to anti-bribery compliance, especially where I look to areas of focus outside the mainstream news feeds of enforcement actions, investigations, and trends. Rather, what has interested me are issues pertaining to behaviors, decision making, individual enforcement, as well as to the continued environment of corruption which exists in the field. Thus, I am greatly indebted to those who have elevated such topics and continue to do so in their writing and speaking. I don’t mention them by name as for certain, I will regrettably, and via an error of omission, forget someone who has provided significant thought leadership. However, with that preamble, I still must thank Philippe Montigny, Scott Killingsworth, Alison Taylor,  and Dr. Roger Miles, who not only shared great thought leadership and content, but who also provided me with significant encouragement so early in my writing efforts.

As to how to best capture such leadership, research, and content, I have turned to a really engaging service called Trap.It, which through a sophisticated content analysis platform, is helping to bring this information to ‘my front door,’ in a way is really well organized and resonating. As their website says, “Surface original, high-quality content you won’t find elsewhere” and that’s exactly what they do. The service has really supported my efforts to find relevant, engaging and hard to find content on the ever-expanding web, and their intuitive platform has been a major part of helping me to discover content that I never knew existed.

As to how I then share that content, I have recently, through an association with Rightside, secured the domain, as part of their product launch of the custom domain .NEWS. (FYI, the design is not yet completed, so the link simply redirects to Why .NEWS? As Marc Gawith, 
Business Development Manager, Rightside,  shared, “the new .NEWS domain was launched for the old media and the new. From major outlets publishing in-depth investigations to grassroots initiatives spreading the word through social media, the business of reporting will gravitate to .NEWS to find out what’s happening, right now in the moment.” In addition, with respect to the use of custom domains, Marc added,  “up until now most companies had to  settle for long, possibly hyphenated, .com domain names, as availability continues to contract.  Now with new domain extensions like  .NEWS, and .ATTORNEY, professionals have a domain extension that is specific to their industry.  These domains are more memorable to the right of the dot with more availability to the left of the dot.  Richard, Google just paid $25 million for exclusive rights to  “.app” so this is a trend which continues to rise.”

Thus, through a combination of Trap.It and, I hope to spend more time elevating the work of new thought leaders and researchers, who might fall out of the traditional ‘compliance zone’ in order to advance how such work has relevance to the field of anti-bribery compliance.

For example, I recently read Dorie Clark’s book, Stand Out (link here) after having read her work Reinventing You while I was in Prison. Thanks to the team at JD Supra, I had a chance to share Dorie’s work with the JD Supra legal and compliance community in a piece called “Online Reputation Management: How Your “Bad and Ugly” Translates Into “Good” for Others.” (link here). Another work I intend to share in the near future is The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth by Tom Burgis (link here), which is a compelling book that brings the front-line of corruption in the oil and gas field to the general public. It is a work, when combined with Sarah Chayes Thieves of State, which should be required reading for those in the field who might think of bribery and corruption as a victimless crime.

Back to being a ‘giver,’ and a few more compliance shout outs.

My deep appreciation to the team at The Network, who have taken my intersection with Robert Appleton in 2007 when he was Chief of the UN Procurement Task Force (PTF), and elevated that investigation as the centerpiece for an anti-bribery panel in NY, where another one is now scheduled for Boston on September 17th (registration link here). They have been a pleasure to work with, starting from our Behind the Bribe White paper (link here), which led to a webinar and now the live multi-city panels. Another moment of gratitude goes to Dick Cassin and his team at the FCPA Blog. I have been following the FCPA Blog for quite some time and the opportunity to be a part of the Blog’s community has really a major ‘best of’ in 2015.

As to the remainder of the year, I am really looking forward to contributing a chapter to the 2016 edition of Trace International’s How to Pay A Bribe, as well as to a number of pieces on The FCPA Report. I am also working with Nicole Rose, CEO, The Centre of Excellence and Create Training, where she has invited me to be a part of a major training initiative, which is soon to be announced. I also want to thank Alain Pirot, an incredibly talented videographer, for producing this video called “From Behind the Bribe” (link here) and again to Dick Cassin, as well as to Maurice Gilbert and the team at Corporate Compliance Insights, for sharing it with their communities.

I am also looking forward to a number of programs, via live presentations, webcasts and whitepapers with ethiXbase ( Given my own background as a corporate executive who bribed, cooperated with international law enforcement, and who served prison time for my own offenses, there is a natural synergy with ethiXbase, who helps their clients to shield themselves from bribery and corruption in their own third party networks. “It is important for compliance practitioners, in-house counsel and senior management to understand practically how bribery and corruption can occur in real life situations” said Leas Bachatene, Chief Executive Officer, ethiXbase. “Richard, for this reason we are pleased to partner with you to educate compliance professionals about ways in which they can shield their business from bribery and corruption by third parties and sales agents who operate on the front lines.”

Speaking this fall also looks quite robust and I have started an events page (link here). So, while I might have bitten off a ‘little more blogging and speaking than I can chew,’ I am really looking forward to this second half of 2015. While my discipline of posting a new blog piece every Monday morning might slow down as to keep my commitments to the aforementioned organizations, I hope to be back on my weekly schedule by late September. However, once I get Trap.It and ‘talking to one another,’ I will be posting the work of other thought leaders more often.

Less than twenty months ago I was on the bottom bunk of a two man cube at the Federal Prison Camp at Lewisburg PA, and thus, this seems like an appropriate time to pause and be a ‘giver’ by thanking all of those who have supported my journey, and continue to do so, since I stepped out of the Camp and into my car on December 17th 2013.

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Does Trade Facilitation Matter in the Fight against Corruption?

Does Trade Facilitation Matter in the Fight against Corruption?

Today’s guest post comes from Evelyn Suarez, Principal, The Suarez Firm.

The World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) may seem to be an odd topic for an anti-corruption blog but it is not. It has everything to do with good governance and addressing the demand side of corruption at the border. But in order to understand the relationship one must understand what Trade Facilitation is and how exactly it addresses public corruption at Customs.

The WTO defines trade facilitation as “the simplification and harmonisation of international trade procedures” covering the “activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international trade.” The main features of the TFA include: required publication of regulations and fees; appeal-and-comment rights when new regulations are introduced; mandatory internet availability of documents and payment options; simple and clear access to overseas documents and regulations; special procedures for expedited release of air cargo and perishable goods; transit guarantees for cargoes from land-locked countries through neighboring countries to seaports without special fees; support for the use of express delivery and air cargo; requirements for clear procedures to deal with cargo holdups and releases; and technical assistance and capacity building for low-income countries to put these reforms into place.  In short, TFA provides a blueprint for customs modernization. Successful implementation will lie in the detailed work that lies ahead.

The TFA was finalized at the conclusion of the 9th Ministerial Conference in Bali, Indonesia, on December 7, 2013 (see here). It was the first WTO trade agreement concluded since 1998 and the first fully multilateral trade agreement negotiated under the auspices of the WTO. Unfortunately, India held up final approval of the TFA by linkage to an entirely separate issue addressing food stockholding programs.   Thanks to the leadership of Director-General Roberto Azevedo and persistent efforts of the U.S. Trade Representative Ambassador Michael Froman, on November 27, 2014 the WTO adopted decisions related to public stockholding for food security purposes, the TFA and the post-Bali work, which put TFA back on track for ratification and implementation.

 In spite of the touted benefits, the WTO member countries has been slow to ratify the TFA. As of June 18, 2015, only eight countries had ratified. They include: the United States, Singapore, Hong Kong, Mauritius, Malaysia, Japan, Australia and Botswana. On July 14, 2015, the European Parliament’s INTA Committee approved TFA. Each European Union member state will be counted individually. Nonetheless, two-thirds of the WTO membership, or 108 members, must ratify TFA before it is implemented. Meanwhile, the U.S. and the WTO are encouraging countries to take action before the Tenth WTO Ministerial December 15-18, 2015 in Nairobi Kenya.

Deputy U.S. Trade Representative Bruce Hirsh also called on U.S. businesses with operations in developing countries to weigh in. Companies should view these reforms as a welcome opportunity to also combat public corruption at the border. Moreover, various countries are donating funds to technical assistance programs for developing countries. For example, on July 2, 2015 Australia donated AUD 1 million for the Trade Facilitation Agreement Facility and on July 27, 2015, Ireland donated EUR 350,000 for technical assistance.

The Organization for Economic Cooperation and Development estimates that the customs reforms effected by TFA implementation would lower the total trade cost of shipping goods by 10 to 15 percent depending upon the country. Some expect implementation of TFA’s measures to boost global trade by an estimated $1 trillion and global GDP by nearly 5 percent. As stated by the Office of the United States Trade Representative, “it makes it easier for businesses big and small to participate in trade around the world – and to support jobs through that trade.”

Various aspects of the Agreement, such as transparency, automated entry and payment of duties, can serve powerful measures to address corruption at Customs. Corruption at the border is undoubtedly a significant impediment to trade and investment in the developing world. Corruption at ports is such a serious problem that the maritime industry has organized a collective action effort called the Maritime Anti-Corruption Network (“MACN”) which seeks to “work toward its vision of a maritime industry free of corruption that enables fair trade to the benefit of society at large.”[1] It goes without question that TFA implementation would aid in this effort.

TFA implementation will also be a test of good governance. Countries will have to make the decision of whether they actually want to avail themselves of the donor assistance for capacity building to modernize their border processes. This can be seen as a test of whether a country is really willing to address corruption at Customs. A country’s willingness or unwillingness to adopt measures facilitating trade and reducing the opportunities for corruption at the border may be a powerful indicator of a culture of corruption – more so than any index of perception of corruption.

For companies doing business abroad, especially in emerging countries, a country that undertakes these reforms may be a better bet for business. And hopefully, the countries that take advantage of the assistance will succeed in establishing their places in the global value chain. In sum, TFA implementation should be an important tool in addressing the demand side of corruption and making the implementing country a more attractive and less risky place to do business.

Ms. Suarez is an experienced customs and international trade lawyer with a special focus on import regulation as well as on anti-corruption and trade policy issues. Her practice includes administrative, regulatory, legislative and litigation matters for global companies that are involved in importing, exporting, transportation, logistics, and customs brokerage. Ms. Suarez has also handled high-profile investigations, such as the U.N. Volcker Committee and various Congressional investigations into the U.N. Oil-for-Food Programme. She can be reached via e-mail at [email protected] and at 202.552.0310.


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