Fighting Corruption, American Style

On May 15^th 2011, a meeting with Lanny Breuer, Assistant Attorney General of the United States, and Loretta Lynch, the US Attorney for the Eastern District of New York, took place at the HSE. The event was organized by the HSE together with the Transparency International Russia Center for Anti-Corruption Research and Initiatives and the Moscow Compliance Club.

Before starting his speech about the specifics of anti-corruption policy and development of the compliance institution in the US, Lanny Breuer, who opened the meeting, said that ‘the problem of the fight against corruption and bribery is becoming internationally important’. ‘During the last couple of years we have witnessed the dramatic events in the Middle Eastern countries where authoritarian regimes prevailed’, he continued, ‘One of the reasons for the Arab Spring was discontent and indignation among young people, who under the conditions of authoritarianism and corruption, could not succeed regardless of whatever education they had received, or how talented and hard-working they were. The key factor for success in these regimes was the ability to give bribes and proximity to powerful people. The situation in other countries proves that society is able to establish institutions to counteract and limit corruption’.

Anti-corruption practice in the US is diversified, and includes support for such independent NGOs as Transparency International. Its ultimate economic goal is to provide equal opportunities for businesses and other economic activities when their effectiveness is determined by the quality of the goods or services, not non-economic factors. ‘Of course you can try to bribe a governmental official, but you should understand that you will be prosecuted for this’, Lanny Breuer warned, ‘There have been many examples of such cases in relation both to companies and to individuals over recent years’.

Drastic anti-corruption measures were introduced by the US government in the 70s, after the scandal which forced President Nixon to resign from office. Society understood that corruption was gaining hold in the country and those laws which were supposed to fight corruption, were ‘sleeping’.

In the last three years several former heads of large companies have been convicted and sentenced to up to 15 years of jail. ‘We are sending a very clear signal: if you give or take bribes, you will be prosecuted and end up in prison’, the US Assistant Attorney General said.

Loretta Lynch spoke about specific high-profile cases (both anti-corruption and related to crimes committed by governmental officials), which her office managed to bring to court. As Ms. Lynch explained, the Eastern District of New York, where she is Attorney, has a population of eight million people. Her office also has to investigate a large number of cases against US companies involved in corruption in foreign countries.

‘There are two spheres where my office is the most active’, Loretta Lynch said, ‘These are investigating crimes committed by police officers, especially those related to human rights violation, and investigating politicians involved in bribery and embezzlement’.

Such investigations, Ms. Lynch admitted, are especially hard to carry out, since the formal principle of equality before the law is perverted here. Policemen often act according to the principle of corporate solidarity, protecting their colleagues, and politicians try to use their connections and influence in order to avoid responsibility.

Answering questions from the audience, Loretta Lynch and Lanny Breuer spoke about the system of compliance which has been formed in the USA, the practice of interaction between judges and attorneys of different levels and international cooperation in the anti-corruption sphere. Lanny Breuer admitted that local investigators do not always have the power and opportunity to investigate cases against influential local politicians and businessmen. At the same time, what helps to bring them to justice is the developed and mostly independent institution of the courts. Corrupt judges should not rest easy, according to Loretta Lynch, as in different states there is a system of anonymous whistleblowing about judges who violate the law or judicial ethics.

A special story is the recently introduced, and not commonly accepted, practice of remuneration for whistle-blowers. Usually they are employees of large banks or corporations who inform the authorities about cases of corruption, bribery of officials and tax fraud and help the investigators get evidence. They do it not for nothing, but for a certain commission from the fines levied against the convicted company. The ‘pioneers’ in this practice were employees (including high level management) of the notorious Enron company, the fraud of which lead in 2001 to one of the largest bankruptcies in US corporate history.

The structure of the US tax service today includes a special department for working with whistle-blowers, and the law introduced in 2006 allows them to paid anywhere from 15 – 30% of the amount of taxes returned to the budget thanks to their information. It is easy to guess that the number of those willing to earn money through this route, including false accusations, is growing.

In response to the question of whether the US government is interested in investigating corruption committed by Russian officials and companies, Lanny Breuer said: ‘If we find out about a crime committed on US territory, we investigate it regardless of who committed it – an American, Russian, or, for instance, Indonesian company. We are not afraid to prosecute large companies – you know about the actions we started against Siemens and Daimler. But when starting them, we should have a basis of specific facts and evidences’.

Speaking about cooperation between the US and Russian attorney offices, Lanny Breuer said that ‘in reality the best way to fight international crime is by building personal relationships between law-enforcement officials in different countries’. He specifically mentioned the level of personal trust between the US and Italian investigators who jointly fight the mafia. ‘I would like to hope that, in addition to formal agreements and protocols, we shall be able to establish such informal contacts with the Russian side’, the US Assistant Attorney General added.

The meeting was wrapped up by Elena Panfilova, head of Transparency International Russia and deputy head of the HSE Laboratory of Anti-Corruption Policy. She thanked the American guests for their presentations and expressed her hope that ‘one day we shall be able to speak absolutely openly about the results of cooperation between Russian and American experts, the property of Russian officials in the USA and the activity of Russian companies in foreign countries’.

Oleg Seregin, HSE News Service

Photos by Nikita Benzoruk