House Majority Leader, Helsinki Commissioners Decry Efforts to Shutter Community Center in HungaryMonday, August 19, 2019
WASHINGTON—Following renewed efforts by authorities in Hungary to shutter the Aurora Community Center in Budapest, House Majority Leader Rep. Steny H. Hoyer (MD-05), Helsinki Commission Ranking Member Sen. Ben Cardin (MD), and Helsinki Commissioner Rep. Gwen Moore (WI-04) issued the following statements: “During my visit to Budapest earlier this summer, I saw firsthand the important resources Aurora provides to the community,” said Majority Leader Hoyer. “The latest attempt by Hungarian authorities to shut down Aurora speaks volumes about the country’s shrinking space for civil society. On the thinnest of pretexts, the rule of law in Hungary is being hijacked to serve one party's political interests.” “Aurora nurtures a vibrant community of civil society groups and has become a symbol of independent organizations in Hungary,” said Sen. Cardin, who also serves as the OSCE Parliamentary Assembly (PA) Special Representative on Anti-Semitism, Racism, and Intolerance. “Unfortunately, such activism is viewed as a threat by those in power, who—through constant legal harassment—are attempting to permanently close Aurora’s doors. Aurora and organizations like it should be protected, not targeted.” “In a time when those who spew hate and divisiveness seem to be ascendant, initiatives like Aurora that build inclusive societies and strengthen democracy are needed more than ever,” said Rep. Moore. “I was honored to visit the center and meet with its president, Adam Schonberger, with my colleagues earlier this year.” Majority Leader Hoyer, Sen. Cardin, and Rep. Moore visited the Aurora Community Center in Budapest in July, en route to the 2019 OSCE PA Annual Session in Luxembourg. Marom, a Hungarian Jewish association, established and runs Aurora Community Center, an umbrella organization that provides office space to other small civil society groups in Budapest, including the Roma Press Center, migrant aid, and Pride Parade organizers. Over the past two years, Hungarian authorities repeatedly have accused Marom of administrative violations ranging from mismatched dates on official documents to, most recently, lacking an appropriate agreement with the center’s landlord. Under the Orbán government, the conditions for independent nongovernmental organizations (NGOs) in Hungary have deteriorated. In 2014, armed police carried out raids on 13 civil society organizations, seizing computers and documents for alleged financial misconduct. No charges were ever brought against the NGOs. In 2017, Hungary adopted a Russian-style "foreign agent" law which, according to the U.S. Department of State, “unfairly burdens a targeted group of Hungarian civil society organizations, many of which focus on fighting corruption and protecting human rights and civil liberties.” In 2018, Hungary passed a law establishing a 25 percent tax on organizations which engage in “propaganda activity that portrays immigration in a positive light.” It is a tax on government-disfavored speech. Hungary also adopted amendments to its "law on aiding illegal migration" that makes handing out know-your-rights leaflets punishable by up to one year in prison. Hungary will hold municipal elections on October 13.
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A Push to Let the U.S. Charge Foreign Officials With BriberyMonday, August 19, 2019
One of the hallmarks of the Foreign Corrupt Practices Act has been that it cannot be used against a foreign official who demands or takes a bribe for helping a company win a contract or retain business. A bill introduced in Congress this month seeks to change that. Called the Foreign Extortion Prevention Act, the legislation would expand the prohibition on bribery to foreign officials who demanded or solicited bribes. The Foreign Corrupt Practices Act’s prohibition on paying bribes abroad is limited to companies in the United States and those acting in this country. It has always excluded the foreign official who takes the bribe, and courts over the years have reaffirmed that. In United States v. Castle, a 1991 decision, the United States Court of Appeals for the Fifth Circuit found that two Canadian officials could not be prosecuted for a conspiracy to violate the F.C.P.A. because Congress exempted foreign officials. In United States v. Hoskins, a 2018 ruling, the federal appeals court in Manhattan held that a foreign national who was never in the United States could not be prosecuted under the foreign bribery law because “Congress did not intend for persons outside of the statute’s carefully delimited categories to be subject to conspiracy or complicity liability.” The bill, which has both Democrats and Republicans as sponsors, would put the prohibition on a foreign official’s accepting a bribe under the federal anti-bribery statute, 18 U.S.C. § 201, rather than the Foreign Corrupt Practices Act. The proposal would also make it a crime for a foreign official “otherwise than as provided by law for the proper discharge of official duty” to demand or accept anything of value for being influenced in the performance of official responsibilities. But putting the prohibition under the federal anti-bribery statute would subject it to the limitations the Supreme Court placed on the law in its 2016 ruling in McDonnell v. United States. That case overturned the conviction of a former governor of Virginia by rejecting a broad reading of what is an “official act.” The justices explained that it must involve “a formal exercise of governmental power that is similar in nature to a lawsuit, administrative determination or hearing.” They found that “merely setting up a meeting, hosting an event or contacting an official — without more — does not count as an ‘official act.’” Favoring a business by arranging meetings or contacting other foreign officials to help it win a contract may not rise to the level of an “official act,” especially if the foreign official who received the bribe did not have the direct authority to decide who should be awarded a contract. So the potential limitations on the federal bribery statute could be read into prosecutions of foreign officials for accepting bribes that violated the F.C.P.A. The F.C.P.A. also contains two defenses that were added in 1988. One is the “local law” defense, which allows a defendant to show that under the written laws and regulations of the place where the bribe occurred that it was not illegal. Another defense permits small “facilitation payments” to obtain routine government action in the country. In both situations, a foreign official could argue that these defenses should preclude liability for accepting a payment. A greater potential issue for the Justice Department if the legislation becomes law is whether a foreign official will be brought to the United States to face a criminal charge. If the person is still in office, a foreign government may be reluctant to send the person to America. But a criminal indictment would most likely limit where the foreign official could travel. The person would need to avoid countries that have an extradition treaty with the United States. The Department of Justice has not been without tools to punish foreign officials who engage in bribery. The money-laundering statute allows a foreign official receiving money through bribery, misappropriation or theft of public funds to be charged with a crime. Federal prosecutors could also use the Travel Act, which prohibits traveling into the United States to engage in bribery. Both statutes, though, require either travel to the United States or a financial transaction using the United States financial system. The new legislation would make it much easier to pursue a foreign official. The Justice Department would not have to show a connection to the United States beyond a payment by an American company. Whether it would result in an increase in prosecutions is a different question. Still, simply charging the official could have the effect of identifying who was responsible in a country for accepting illegal bribes. That should make it easier for American companies and their employees to demand fairness from foreign officials rather than being extorted for payments.
Representatives Jackson Lee, Curtis, Malinowski, and Hudson Introduce Foreign Extortion Prevention ActFriday, August 02, 2019
WASHINGTON—Rep. Sheila Jackson Lee (TX-18), Rep. John Curtis (UT-03), Rep. Tom Malinowski (NJ-07) and Rep. Richard Hudson (NC-08) today introduced the Foreign Extortion Prevention Act. The legislation, developed with the support of the U.S. Helsinki Commission, will criminalize extortion by foreign officials, enabling the Department of Justice to indict such officials for demanding bribes to fulfill, neglect, or violate their official duties. Currently, only paying or offering a bribe abroad is illegal under U.S. law. “Transnational kleptocrats pose a serious national security threat to the United States. They act as agents of U.S. adversaries, undermining the rule of law internationally and in their own countries, and accessing elite circles and levers of power in democracies through strategic graft and corruption. U.S. prosecutors have been able to indict such individuals under criminal statutes such as wire fraud, mail fraud, and the Travel Act; however, these laws were not designed to tackle the problem of transnational kleptocracy, and each contain deficiencies which make it less than ideal for prosecuting foreign extortion. We cannot leave our prosecutors without the legal tools they need to protect the rule of law,” said Rep. Jackson Lee. “U.S. businesses abroad are regularly targeted by foreign extortionists. Transnational kleptocrats hide under the veneer of officialdom and abuse their power to warp the regulatory environment, attempting to co-opt or eliminate legitimate job-creators and entrepreneurs who follow the rules. The Foreign Extortion Prevention Act would protect U.S. businesses from these individuals by punishing the demand side of bribery. Currently, a business being extorted for a bribe can only say ‘I can’t pay you a bribe because it is illegal and I might get arrested.’ This long-overdue bill would enable them to add, ‘and so will you,’” said Rep. Curtis. “Americans who pay bribes overseas can be prosecuted—with this bill, our prosecutors will be able to go after the foreign officials who demand those bribes. We’re giving the Justice Department a powerful new tool to fight the kleptocracy that impoverishes people and empowers dictators around the world,” said Rep. Malinowski. “Pursuing the extortionists is crucial to ending the entire system of international bribery. Even if a kleptocrat cannot be immediately extradited, a U.S. indictment serves as a play-by-play of the crime committed that can be used to support additional measures—such as sanctions—and can force transnational criminals to think twice before traveling abroad to spend their ill-gotten gains. Moreover, a U.S. indictment can help the forces of the rule of law in other countries to root out corruption by pressuring the domestic government in question to charge the individual,” said Rep. Hudson. The Foreign Extortion Prevention Act will bring U.S. laws in line with international best practices. The Organization for Economic Cooperation and Development (OECD), which maintains the OECD Anti-Bribery Convention—a key international mechanism for fighting foreign bribery—has recognized the importance of criminalizing transnational extortion in a recent report. In addition, countries including the United Kingdom, France, the Netherlands, and Switzerland have already criminalized foreign extortion. The Commission on Security and Cooperation in Europe, also known as the U.S. Helsinki Commission, endeavors to counter corruption and malign influence in all its forms. Current and former Helsinki Commissioners have sponsored and cosponsored other anti-corruption legislation such as the Countering Russian and Other Overseas Kleptocracy (CROOK) Act (H.R. 3843), the Kleptocrat Exposure Act (H.R. 3441), and the Rodchenkov Anti-Doping Act (H.R. 835/S.259).
Representatives Keating and Fitzpatrick Introduce Countering Russian and Other Overseas Kleptocracy (CROOK) ActThursday, July 18, 2019
WASHINGTON—Rep. Bill Keating (MA-10) and Helsinki Commissioner Rep. Brian Fitzpatrick (PA-01) today introduced the Countering Russian and Other Overseas Kleptocracy (CROOK) Act. The CROOK Act will establish an anti-corruption action fund to provide extra funding during historic windows of opportunity for reform in foreign countries as well as streamline the U.S. Government’s work building the rule of law abroad. “Russia and other authoritarian states have weaponized corruption, and exposing and countering that malign influence needs to be a priority. For too long, Russian President Vladimir Putin and other Russian politicians and oligarchs have acted with impunity, manipulating U.S. and European financial systems to move and disguise their ill-gotten gains. Their illicit funds are being used to control key economic sectors, fund political parties and organizations that advance Russian interests, and manipulate political processes and policies. The CROOK Act will help prevent Russian and other forms of kleptocracy from eroding democracy, security, and rule of law,” said Rep. Keating. “To counter the weaponization of corruption, the United States must double down on its work to promote the rule of law abroad. However, opportunities for the establishment of the rule of law are rare and success requires that the United States act quickly when reformers come to power and seek to root out corruption. The United States also must take a whole-of-government approach to ensuring that resources are being used effectively and that different U.S. Government agencies are not acting at cross-purposes,” said Rep. Fitzpatrick. The anti-corruption action fund established in the legislation will be funded by 5 percent of fines and penalties imposed pursuant to actions brought under the Foreign Corrupt Practices Act (FCPA). This way, a portion of the monies obtained under the enforcement of the FCPA will be recycled back into further international anti-corruption work. The legislation also establishes several complementary mechanisms to generate a whole-of-government approach to U.S. efforts to strengthen the rule of law abroad. These include an interagency taskforce, the designation of embassy anti-corruption points of contact, and a consolidated online platform for easy access to anti-corruption reports and materials. The Commission on Security and Cooperation in Europe, also known as the U.S. Helsinki Commission, endeavors to counter corruption and malign influence in all its forms. Helsinki Commissioners have sponsored and cosponsored other anti-corruption legislation such as the Kleptocrat Exposure Act (H.R. 3441) and the Rodchenkov Anti-Doping Act (H.R. 835). All House Helsinki Commissioners are original cosponsors of the bill. This includes Helsinki Commission Chairman Rep. Alcee L. Hastings (FL-20), Helsinki Commission Ranking Member Rep. Joe Wilson (SC-02), and Helsinki Commissioners Rep. Steve Cohen (TN-09), Rep. Robert Aderholt (AL-04), Rep. Sheila Jackson Lee (TX-18), Rep. Richard Hudson (NC-08), and Rep. Gwen Moore (WI-04). Rep. John Curtis (UT-03), Rep. Tom Suozzi (NY-03), and Rep. Tom Malinowski (NJ-07) are also original cosponsors of the legislation.
HELSINKI COMMISSIONERS VISIT HUNGARYWednesday, July 17, 2019
Pictured: Mate Szabo, Hungarian Civil Liberties Union (left) meets with Representative Tom Cole (right). From July 1 to July 3, three members of the U.S. Helsinki Commission visited Hungary as part of a bipartisan delegation led by House Majority Leader Steny H. Hoyer. The delegation included Senator Benjamin L. Cardin, Ranking Senate Commissioner and OSCE Parliamentary Assembly Special Representative on Anti-Semitism, Racism and Intolerance, as well as Commissioners Steve Cohen and Gwen Moore. It was the largest congressional delegation to visit Hungary in at least three years. From left: Rep. Garret Graves, Rep. Val Demings, Helsinki Commissioner Rep. Steve Cohen, Helsinki Commission Ranking Member Sen. Ben Cardin, Amb. David Cornstein, House Majority Leader Steny H. Hoyer, Minister of the Prime Minister’s Office Gergely Guylas, Rep. Tom Cole, Helsinki Commissioner Rep. Gwen Moore, Rep. Gregory Meeks The delegation met with civil society representatives; independent investigative journalists; analysts with expertise on corruption, Russian malign influence, and security; experts on the judiciary; and democratic opposition representatives. In addition, the delegation met with the rector of Central European University and the head of Hungary’s Jewish communities. The delegation requested meetings with the Prime Minister, Minister of Foreign Affairs and Speaker of the Hungarian parliament. During the visit, the Members of Congress had an exchange of views with Gergely Gulyás, the Prime Minister’s Chief of Staff, and Zsolt Nemeth, the chair of the Hungarian National Assembly foreign affairs committee. U.S. Ambassador to Hungary David Cornstein welcomed the delegation and accompanied the Members to their meetings, also hearing the diverse concerns raised. The purpose of the visit was to strengthen support for the shared principles of democracy and collective security to which the United States and Hungary have jointly committed and with a view to safeguarding fundamental freedoms, democracy, and the rule of law. In meetings with government officials, the members welcomed the Hungarian parliament’s approval of the Defense Cooperation Agreement on July 2. Following the conclusion of their visit to Hungary, the delegation traveled to Luxembourg to participate in the annual session of the OSCE Parliamentary Assembly. Members of the delegation also spoke about their visit to Hungary at the Parliamentary Assembly meeting. Members of the Congressional delegation at the statue in Budapest of President Ronald Reagan. The statue was erected in 2011 to honor the American president’s efforts to end communism. It is on Liberty Square, facing the U.S. Embassy, with the Hungarian parliament visible in the background. Majority Leader Hoyer served as chair and co-chair of the Helsinki Commission (positions that rotate between the House of Representatives and Senate) from 1985 to 1994. During that critical period of transition before and during the fall of communism, he made Central Europe a focus of the Commission’s efforts to support human rights and democracy. He led delegations to Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland, and Romania, working closely with Secretaries of State George Schultz, James Baker, and Warren Christopher to advance democracy in the region. He also chaired roughly a dozen hearings focused specifically on human rights in Central Europe, including minority rights and religious liberties. As chairman of the Helsinki Commission, Majority Leader Hoyer participated in the 1989 Paris Meeting of the Conference on the Human Dimension and personally introduced a Helsinki Commission initiative that became a formal U.S. proposal: a call for free and fair elections throughout the OSCE region. That U.S. proposal became a key element of the 1990 Copenhagen meeting a year later and set the stage for the subsequent framework for OSCE election observation. Majority Leader Steny H. Hoyer (right) meets with independent journalists Szabolcs Panyi (left) and Anita Komuves (center). Photo: Attila Németh/U.S. Embassy or fotó: Németh Attila/Amerikai Nagykövetség. Majority Leader Hoyer also represented the United States at the 1991 Moscow Conference on the Human Dimension, a meeting notable for taking place shortly after the August coup attempt in Russia. The Moscow Concluding Document included an unprecedented provision explicitly recognizing that human rights and democracy are not strictly the internal affairs of participating States: “The participating States emphasize that issues relating to human rights, fundamental freedoms, democracy and the rule of law are of international concern, as respect for these rights and freedoms constitutes one of the foundations of the international order. They categorically and irrevocably declare that the commitments undertaken in the field of the human dimension of the CSCE are matters of direct and legitimate concern to all participating States and do not belong exclusively to the internal affairs of the State concerned. They express their determination to fulfil all of their human dimension commitments and to resolve by peaceful means any related issue, individually and collectively, on the basis of mutual respect and co-operation. In this context they recognize that the active involvement of persons, groups, organizations and institutions is essential to ensure continuing progress in this direction.” Hoyer Leads Congressional Delegation to Hungary For Immediate Release: July 3, 2019 Contact Info: Annaliese Davis (202) 226-1290 WASHINGTON, DC – House Majority Leader Steny H. Hoyer (MD) led a bipartisan Congressional Delegation to Budapest, Hungary, where they met with government officials, opposition leaders, independent media, and civil society activists. “The United States continues to support efforts to strengthen democracy in Hungary, and we had many honest discussions during our time in Budapest,” said Leader Hoyer. “We were disappointed that we were unable to meet with Prime Minister Orban. The threat of oligarchs and party loyalists gaining control of independent institutions, the judiciary, and the media is alarming. The erosion of democratic checks and balances ought to concern everyone. We appreciated the opportunity to meet with civil society activists and share our support for the work they are doing to renew democracy in their country. We will continue to promote strong democratic institutions in Hungary that hold its leaders accountable to protect the rights and freedoms of its people.” “Our meetings with diverse political leaders, independent journalists, representatives of religious communities and civil society were informative and illuminating. We remain convinced that a strong, democratic Hungary would be the most effective partner for the United States and our NATO allies,” said Senator Cardin, the lead Senate Democrat on the Commission on Security and Cooperation in Europe (CSCE). “We regret that we were unable to speak directly with Prime Minister Orban regarding the steps his government has taken which have undermined core elements of democracy, opened the door to Russian malign influence, and enabled corrosive corruption. Our alliance is not only about shared interests but shared values, and hope alone will not make this reality. The United States remains open, as an active partner, to find ways to strengthen democracy and the rule of law, protect civil society, and counter extremism that fuels anti-Semitism and undermines regional stability.” “Hungary is a firm friend and a loyal ally, but all of us are concerned about the erosion of democratic institutions and the rise of Russian influence," said Congressman Cole. "We intend to work with our Hungarian friends across the political spectrum to ensure that their elections are free and fair, their judiciary independent, and their press vibrant and robust." The delegation prioritized meeting with human rights and anti-corruption leaders. The delegation also met with the leadership of the Central European University and expressed their support for it to remain open. Among the government officials with whom the Members held meetings were the head of the Foreign Affairs Committee of the Hungarian Parliament and the Prime Minister’s Chief of Staff. The other Members of the Congressional Delegation are: Sen. Ben Cardin (D-MD), the lead Senate Democrat on the Commission on Security and Cooperation in Europe (CSCE), and Reps. Tom Cole (OK-04), Gregory Meeks (NY-05), Gwen Moore (WI-04), Steve Cohen (TN-09), Garret Graves (LA-06), and Val Demings (FL-10).
OSCE Representative on Freedom of the Media Harlem Desir to Appear at Helsinki Commission HearingWednesday, July 17, 2019
WASHINGTON—The Commission on Security and Cooperation in Europe, also known as the Helsinki Commission, today announced the following hearing: STATE OF MEDIA FREEDOM IN THE OSCE REGION Thursday, July 25, 2019 3:00 p.m. to 5:00 p.m. Capitol Visitor Center Room HVC-210 Live Webcast: www.youtube.com/HelsinkiCommission Journalists working in the 57 participating States of the Organization for Security and Cooperation (OSCE) are facing increased risks to their lives and safety. According to a new report released the Office of the Representative for Freedom of the Media, in the first six months of 2019, two journalists have been killed and an additional 92 attacks and threats—including one bombing, three shootings, and seven arson attacks—have targeted members of the media. In his first appearance before Congress, OSCE Representative for Freedom of the Media Harlem Desir will assess the fragile state of media freedom within the OSCE region. Mr. Desir also will address the number of imprisoned media professionals as well as the violence, threats, and intimidation directed toward female journalists. The hearing will explore the threat posed by disinformation and online content designed to provoke violence and hate. Following the hearing, at 5:00 p.m. in Room HVC-200, the Helsinki Commission will host a viewing of the documentary, “A Dark Place,” which details the online harassment of female journalists working in the OSCE region.
Delegation Led by Co-Chairman Wicker Demonstrates U.S. Commitment to Countering Kremlin Aggression and Preserving Stability in EuropeWednesday, July 10, 2019
WASHINGTON—From July 4 to July 8, Helsinki Commission Co-Chairman Sen. Roger Wicker (MS) led the largest bipartisan, bicameral U.S. delegation in history to the 2019 OSCE Parliamentary Assembly (OSCE PA) Annual Session in Luxembourg. The participation of 19 members of Congress showed the deep U.S. commitment to European security and to countering Kremlin aggression and anti-democratic trends across the 57-country OSCE region. “The size of our delegation for this Parliamentary Assembly is a clear demonstration of the importance that the Americans place on this institution and its mission,” said Sen. Wicker ahead of the official opening of the event, which brought together approximately 300 parliamentarians from North America, Europe, and Central Asia. Sen. Wicker, who also serves as a vice-president of the OSCE PA, was joined in Luxembourg by House Majority Leader and former Helsinki Commission Chairman Rep. Steny Hoyer (MD-05); Helsinki Commissioners Sen. Ben Cardin (MD), Rep. Robert Aderholt (AL-04), Rep. Steve Cohen (TN-09), Rep. Richard Hudson (NC-08), and Rep. Gwen Moore (WI-04). Other participants included Sen. John Cornyn (TX), Sen. Rick Scott (FL), Rep. Chris Smith (NJ-04), Rep. Tom Cole (OK-04), Rep. Val Demings (FL-10), Rep. Jeff Duncan (SC-03), Rep. Garret Graves (LA-06), Rep. Tom Graves (GA-14), Rep. Andy Harris (MD-01), Rep. Billy Long (MO-07), Rep. Gregory Meeks (NY-05), and Rep. Lee Zeldin (NY-01). In the opening plenary, Rep. Hoyer, a founder of the OSCE PA, reminded the delegates of the OSCE’s commitment to human rights, fundamental freedoms, and democratic governance. Rep. Moore then spearheaded the passage of a resolution on protecting and engaging civil society that was originally introduced by Helsinki Commission Chairman Rep. Alcee L. Hastings (FL-20). The assembly also adopted a second U.S. initiative on educating children to avoid human trafficking introduced by Rep. Smith, who serves as OSCE PA Special Representative on Human Trafficking Issues. Fourteen of the 16 amendments proposed by the U.S. delegation were adopted, including those holding the Kremlin accountable for the collapse of the Intermediate-Range Nuclear Forces Treaty; criticizing Moscow for abusing INTERPOL diffusions to harass Kremlin critics abroad; expressing concern about the overreliance of European countries on Russia for energy supplies; and seeking to protect those who report hate crimes from retaliation. During the annual session, Sen. Wicker and Rep. Smith co-hosted a presentation to raise awareness and encourage reporting of efforts to entice children into being trafficked. Sen. Cardin, who serves as the OSCE PA Special Representative on Anti-Semitism, Racism and Intolerance, hosted a discussion on best practices to combat hate in society. Prior to attending the annual session, Co-Chairman Wicker convened the first-ever Helsinki Commission hearing held outside of the United States. In Gdansk, Poland, senior U.S. civilian and military leaders briefed members of Congress on their approaches to enhancing security in the region. High-level defense officials from Lithuania, Poland, Finland, Sweden, and Estonia also provided regional perspectives on the evolving security environment in and around the Baltic Sea. Hearing participants included Lt. Gen. Stephen M. Twitty, Deputy Commander, United States European Command; Douglas D. Jones, Deputy Permanent Representative, United States Mission to NATO; Raimundas Karoblis, Minister of National Defense, Republic of Lithuania; Maj. Gen, Krzysztof Król, Deputy Chief of the General Staff of the Polish Armed Forces; Janne Kuusela, Director-General, Defense Policy Department, Ministry of Defense of the Republic of Finland; Jan-Olof Lind, State Secretary to the Minister for Defense, the Kingdom of Sweden; and Kristjan Prikk, Permanent Secretary of the Ministry of Defense, the Republic of Estonia. The hearing underscored America’s commitment to security in the Baltic Sea region and its unwavering support for U.S. friends and allies.
Countering Hate: Lessons from the Past, Leadership for the FutureFriday, July 05, 2019
Today at the 28th Annual Session of the OSCE Parliamentary Assembly in Luxembourg, Helsinki Commission Ranking Member Sen. Ben Cardin hosted a U.S. side event in his capacity as OSCE PA Special Representative on Anti-Semitism, Racism and Intolerance. The event, “Countering Hate: Lessons from the Past, Leadership for the Future,” called for parliamentarians from across the 57 OSCE participating States to adopt an action plan to counter bias and discrimination and foster inclusion. Several members of the U.S. delegation—along with U.S. Ambassador to the OSCE James Gilmore and U.S. Ambassador to Luxembourg Randy Evans—attended the event, where speakers included Dr. Rebecca Erbelding of the U.S. Holocaust Memorial Museum and OSCE parliamentarians Michael Link (Germany), Nahima Lanjri (Belgium), and Lord Alf Dubs (United Kingdom). “We are here today to exchange information on what we are doing in our home countries to address the problem and how we might be able to develop a plan of action to work better together to address the rise in hate-based incidents we have been witnessing across the OSCE region and beyond from Pittsburgh and Poway to Christchurch,” said Sen. Cardin. “It is not only the most vulnerable in our societies whom are in danger when we fail to act, but the very foundations of our democracies.” Dr. Rebecca Erbelding of the U.S. Holocaust Memorial Museum shared a cautionary tale, reminding the audience, “The Holocaust did not appear out of nowhere [and] the Nazi Party was in power in Germany for eight years before mass killing began.” Warning signs in the past were ignored, she stated. “A rise of populist leaders, of simple solutions, of demonizing minorities, of propagandizing hate, of neglecting or ignoring refugee protections, of isolationism, of appeasement—these factors, when taken together, have led to genocide in the past, and not just in Europe. We must [..] work together to prevent genocide in the future.” OSCE parliamentarian and former director of the OSCE Office of Democratic Institutions and Human Rights (ODIHR) Michael Link stressed the need for action, saying that we are witnessing these first alarming signs of hate, but have a choice in whether we will repeat the past. He lauded the success of and need to continue the OSCE’s Words Into Action project funded by the German government to increase education on addressing anti-Semitism, security protections for the Jewish community, and build diverse coalitions across communities against hate. He cautioned that Romani populations should also not be forgotten in the efforts to address the problem. OSCE parliamentarian Nahima Lanjri described rampant discrimination in Belgium’s employment sector and its negative impact on the labor market. Citing the need for increased tools to fight all forms of discrimination that have the negative affect of repressing talents needed for societies to flourish, she called for more disparities data and initiatives that address economic and other forms of discrimination and bias. Lord Dubs, a British parliamentarian who was born in Prague in what was then Czechoslovakia, was one of 669 Jewish children saved by English stockbroker Nicholas Winton, and others, from the Nazis on the Kindertransport. He shared a recent hate post he had received online and stressed the need to address increasing hate in our societies through education, legislation against hate speech and discrimination, and by shifting public opinion that denigrates communities instead of building them up. U.S. House Majority Leader Rep. Steny Hoyer cited the anti-discrimination work of Brian Stevenson and stressed that difference does not make one “less than." Parliamentarian Hedy Fry of Canada noted rising hate crimes in her country amid numerous initiatives addressing disparities and inclusion. U.S. Rep. Gregory Meeks highlighted the importance of Jewish and African-American coalitions in the civil rights movement. Stating that no group should have to fight for their rights alone if we truly espouse democratic values, he said, we all should be joining the Roma in their human rights struggle. U.S. Rep. Val Demings called for the conversation to also include LGBT+ communities, recalling the tragic mass shooting at the Pulse nightclub in her Orlando, Florida district. The sessions concluded with Special Representative Cardin calling for an OSCE Action Plan to address bias and discrimination and foster inclusion and OSCE/ODIHR Advisor Dermana Seta providing an overview of tools currently offered by the OSCE to assist governments in addressing hate crimes and discrimination.
The Helsinki Process: A Four Decade OverviewFriday, June 28, 2019
In August 1975, the heads of state or government of 35 countries – the Soviet Union and all of Europe except Albania, plus the United States and Canada – held a historic summit in Helsinki, Finland, where they signed the Final Act of the Conference on Security and Cooperation in Europe. This document is known as the Helsinki Final Act or the Helsinki Accords. The Conference, known as the CSCE, continued with follow-up meetings and is today institutionalized as the Organization for Security and Cooperation in Europe, or OSCE, based in Vienna, Austria. Learn more about the signature of the Helsinki Final Act; the role that the Conference on Security and Cooperation in Europe played during the Cold War; how the Helsinki Process successfully adapted to the post-Cold War environment of the 1990s; and how today's OSCE can and does contribute to regional security, now and in the future.
Co-Chairman Wicker, Sen. Sinema Introduce Legislation to Fight Illicit Tobacco TradeTuesday, June 25, 2019
WASHINGTON—Helsinki Commission Co-Chairman Sen. Roger Wicker (MS) and Sen. Kyrsten Sinema (AZ) today introduced the Combating the Illicit Trade in Tobacco Products Act (CITTPA) in the Senate. The bill was introduced by Helsinki Commissioners Rep. Sheila Jackson Lee (TX-18) and Rep. Richard Hudson (NC-08) in the House in March as H.R.1642. “The illicit tobacco trade supports political corruption, organized crime, and terrorism worldwide. Our bill would take aim at this source of financing from these bad actors and the governments that enable them,” said Co-Chairman Wicker. “We’re combatting the illicit tobacco trade to protect Arizonans, strengthen our economy, and disrupt terrorist and criminal organizations who profit from such illegal activity,” said Sen. Sinema. The Combatting the Illicit Trade in Tobacco Products Act (CITTPA) would improve the U.S. Government’s ability to identify and deter those engaging in the trade of illicit tobacco. The bill would: Enable the United States to deter countries involved in the illicit trade in tobacco, and better assist its allies. The bill grants the Department of State the authority to withhold U.S. foreign assistance from those countries knowingly profiting from the illicit trade in tobacco or its activities. In countries where the government is working to stop these trafficking efforts, the Department of State would be able to provide assistance for law enforcement training and investigative capacity. Help the United States target individuals assisting in the illicit tobacco trade. It authorizes the President of the United States to impose economic sanctions and travel restrictions on any foreign individual found to be engaged in the illicit tobacco trade, and requires the president to submit a list of those individuals to Congress. Provide better information on countries involved with the illicit tobacco trade. The legislation requires the Department of State to report annually on which countries are determined to be a major source of illicit tobacco products or their components, and identify which foreign governments are actively engaged and knowingly profiting from this illicit trade. In July 2017, the Helsinki Commission held a hearing on illicit trade in tobacco products, which included testimony from academia, public health advocacy, and industry.
Conference on Security and Cooperation in Europe and Organization for Security and Cooperation in Europe (OSCE) Commitments Regarding Freedom of Religion or BeliefMonday, June 24, 2019
The 57 participating States of the Organization for Security and Cooperation in Europe have repeatedly committed to recognizing and respecting freedom of religion or belief. The 35 participating States of the Conference on Security and Cooperation in Europe–the forerunner of the OSCE–signed the Helsinki Final Act of 1975, which included: “The participating States will recognize and respect the freedom of the individual to profess and practice, alone or in community with others, religion or belief acting in accordance with the dictates of his own conscience.” The OSCE’s Office of Democratic Institutions and Human Rights has staff dedicated to freedom of religion or belief, led by a senior advisor. ODIHR legal reviews to help participating States comply with their OSCE commitments have included existing law and draft legislation on freedom of religion or belief. ODIHR only conducts such reviews after receiving a formal invitation from a participating State. A panel of OSCE/ODIHR experts on freedom of religion or belief assists OSCE/ODIHR, and the ODIHR director appoints the panel’s 14 members every three years. This compilation, developed by Helsinki Commission staff, covers CSCE/OSCE commitments on freedom of religion or belief in 16 documents from the Final Act to the OSCE Ministerial Council in 2015. It includes the document title, excerpted text, and links to the original document. Participating States have also made commitments relating to discrimination or hate crimes base on religion or belief.” Some examples are in “OSCE Human Dimension Commitments: Thematic Compilation.” This Helsinki Commission compilation only includes commitments on freedom of religion or belief. The Commission will update the compilation when new commitments on freedom of religion or belief are made.
Representatives Cohen and Chabot Introduce Kleptocrat Exposure ActMonday, June 24, 2019
WASHINGTON—Helsinki Commissioner Rep. Steve Cohen (TN-09) and Rep. Steve Chabot (OH-01) today introduced the Kleptocrat Exposure Act. The act will provide the Secretary of State the authority to publicly reveal the names of individuals and their immediate family members who are subject to U.S. visa bans as a result of human rights abuses, corruption, and other malign activity. “Global criminals and corrupt autocrats—or kleptocrats—seek to spend their ill-gotten gains in the United States, where they can indulge in luxury, pursue positions of influence, and exploit the rule of law, which protects their stolen wealth. Our country should not be a shelter for these corrupt individuals,” said Rep. Cohen. “Corrupt elites in Russia, and around the world, fear exposure. They thrive off of secrecy to continue to keep their corruption going. It is time to sound the alarm about who these bad actors are and shield American citizens from these crooks,” said Rep. Chabot. Many kleptocrats already have been prohibited from traveling to the United States on the grounds of their engagement in malign activity. However, under current law, these and future visa bans are confidential. If made public, this information would further protect the United States and its allies by exposing these kleptocrats. Chairman of the Helsinki Commission Rep. Alcee L. Hastings (FL-20), Ranking Member of the Helsinki Commission Rep. Joe Wilson (SC-02), Helsinki Commissioners Rep. Sheila Jackson Lee (TX-18) and Rep. Brian Fitzpatrick (PA-01), and Rep. John Curtis (UT-03) are original cosponsors of the legislation.
Chairman Hastings on World Refugee DayThursday, June 20, 2019
WASHINGTON—In honor of World Refugee Day, Helsinki Commission Chairman Rep. Alcee L. Hastings (FL-20) today issued the following statement: “On World Refugee Day, we recognize those who risk everything—even their lives—in the search for freedom and safety. They have fled their homes in fear, only to face perilous journeys and uncertain futures. “There are more refugees now than at any point since World War II. There are nearly 71 million displaced persons worldwide. Almost 26 million of them are refugees, half of whom are children. “International organizations like the OSCE help ensure that humanitarian assistance and protections, including anti-discrimination measures, are being delivered in accordance with international norms and human rights. “Please join me in commemorating the courage and resilience of the millions of refugees and displaced persons around the world fleeing persecution, war, and violence. Their stories inspire us, and their triumphs have enormously strengthened the nations that have welcomed them.”
International Election Observation in the U.S. and BeyondWednesday, June 19, 2019
In 1990, the 57 participating States of the Organization for Security and Cooperation in Europe (OSCE) pledged to hold free and fair elections. Election observation is one of the most transparent and methodical ways to encourage countries to uphold their commitment to democratic standards, and is a core element of the OSCE’s efforts to promote human rights, democracy, and the rule of law. Since the 1990s, the OSCE has been invited to observe approximately 250 elections in countries throughout the OSCE region, including the United States and Russia. In addition to the OSCE, the United Nations, Organization for American States, European Union, and other multilateral organizations routinely participate in international election observation. Civil society actors—including U.S.-based organizations like the National Democratic and International Republican Institute, the International Foundation for Electoral Systems, and the Carter Center—also observe elections around the world with the common goal of upholding democratic standards. The briefing focused on the benefits and challenges of international election observation, best practices, and emerging issues like voting technology and security.
Curbing Corruption through Corporate Transparency and CollaborationWednesday, May 29, 2019
The United Kingdom has implemented some of the world’s most innovative anti-corruption policies. In particular, its public beneficial ownership registry is the only active one of its kind and its Joint Money Laundering Intelligence Taskforce models effective collaboration between law enforcement and the private sector. This briefing examined these policies and the United Kingdom’s broader strategy to counter illicit finance. Panelists discussed how the United Kingdom implements its policies, their successes and shortcomings, and what remains to be done. Though U.S. corporate transparency proposals take a non-public approach, panelists also discussed the lessons that the United States can draw from the British experience. John Penrose, M.P., U.K. Prime Minister’s Anti-Corruption Champion, explained the reputational risks associated with money laundering in the U.S. and U.K. financial markets to the rules-based system. Penrose explained the British approach of establishing a beneficial ownership registry, saying, “What we are trying to do in the U.K. is we are trying to set up something which will effectively create a global norm to say let’s all have some kind of a register about who owns and controls these companies. We’re not asking for the moon. As I said, we don’t need to know everybody who owns a piece of every company. We just need to know who the controlling minds and the controlling interests are.” Edward Kitt, Serious and Organized Crime Network Illicit Finance Policy Lead at the British Embassy in Washington, covered the issues the U.K is facing with their beneficial ownership policy. Kitt explained, “One challenge we have is feedback to financial institutions on suspicious activity reports. Often, financial institutions will submit suspicious activity reports and they don’t hear any feedback as to actually what was the utility of that, how useful was that.” Even considering the difficulty the policy has experienced, Kitt maintained, “It’s not just a talking shop; it delivers. And… it’s assisted in identifying and restraining in excess of £9 million. So, the results are palpable.” Mark Hays, Anti-Money Laundering Campaign Leader at Global Witness and the sole American panelist, reflected on his company’s investigations into corruption: “Simply put, if the U.S. wants to continue to show this leadership we need to match the U.K.’s efforts in establishing some modicum of disclosure for beneficial ownership transparency for companies.” Hays continued, “If we don’t, not only will we be failing to live up to this leadership test, but we will put ourselves at greater risk for becoming a haven for bad actors and their ill-gotten gains.” Nate Sibley, Research Fellow for the Kleptocracy Initiative at the Hudson Institute, spoke to how the UK’s policies could transfer to the U.S. Sibley described a House Financial Services Committee bill, “introduced by Representative Carolyn Maloney called the Corporate Transparency Act,” that ensures companies disclose beneficial owners. He went on to explain that the bill “would create a private beneficial ownership register. So not a public one like they have in the U.K., but one that was accessible only to law enforcement, under very strict and controlled circumstances.” Sibley outlined the ways that the U.S. federal system changes the prospect of the registry logistics, but maintained that it would still work in the U.S.
Chairman Hastings on Confirmation of Ambassador Gilmore as U.S. Representative to the OSCEFriday, May 24, 2019
WASHINGTON—Following yesterday’s confirmation of Ambassador James S. Gilmore as the U.S. Representative to the Organization on Security and Cooperation in Europe (OSCE), Helsinki Commission Chairman Rep. Alcee L. Hastings (FL-20) issued the following statement: “I congratulate Ambassador Gilmore on his confirmation as the U.S. Representative to the Organization for Security and Cooperation in Europe and look forward to working with him to promote human rights and comprehensive security in Europe and Central Asia. A strong U.S. voice at the OSCE is essential to demonstrating our dedication to common values and continuing to advance implementation of OSCE commitments.”
Shady ShippingFriday, May 24, 2019
Trade-based money laundering (TBML) is the process of disguising the proceeds of crime and moving value through trade transactions in an attempt to legitimize their illicit origins. This highly sophisticated form of money laundering has become a favorite method for transnational criminals, dictators, and terrorists to move ill-gotten gains to new jurisdictions. This event examined what TBML is, how it works, and why it has become such a ubiquitous method of laundering money. Panelists also discussed the broader interplay of illicit commerce, global corruption, and TBML. Finally, panelists recommended practical steps the United States and non-governmental organizations can take to counter TBML. David Luna, President and CEO of Luna Global Networks, shared his insights on the dark side of globalization and how it fits into the TBML paradigm. Luna outlined the need to increase understanding of the networks between illicit commerce and money laundering across legal and illegal means through convergence crimes. He spoke to the methodologies of “cleaning dirty money” utilized by kleptocrats, criminal organizations, and terrorist groups, while expressing the importance of tracing money and the value of goods to expose illicit crimes. Luna cited a 2015 World Economic Forum report to support his points, which estimated the value of transnational criminal activities between 8-15 percent of Gross Domestic Product, even by conservative standards, totaling around 80 trillion in the US market. John Cassara, retired Special Agent of the U.S. Department of the Treasury, spoke about the confusion surrounding TBML, both in understanding and enforcement. He explained that TBML is the largest method of money laundering because of excess ways to commit it: customs fraud, tax evasion, export incentive fraud, evading capitol controls, barter trade, and underground financial systems. Cassara explained how money is transferred under the noses of customs enforcement by undervaluing or overvaluing an invoice of an otherwise legal trade. Cassara asked, “If our highly trained police force can’t catch this, what about the rest of the world?” Lakshmi Kumar, Policy Director at Global Financial Integrity, described the difficulty with tracking TBML, both domestically and internationally. She outlined how domestic policy and law complicates internal tracking, while the lack of consistent transnational collaboration and information sharing complicates international tracking. Kumar spoke to the components of the trade chain and how hard it is to watch all the mechanisms with due diligence. Explaining the role of banks, Kumar noted that 80 percent of all international trade occurs through open account trading, in which banks aren’t involved or able to offer oversight. This allows for trade profits to be separated into various accounts, tricking the customs and enforcement agencies to enforce a lower level of taxation on the profits and the freights and allowing for TBML. In summary, even with world class law enforcement, the U.S. legal and financial frameworks needs to catch up in order to adequately combat TBML.
Helsinki Commission to Hold Briefing on UK Anti-Corruption PoliciesWednesday, May 22, 2019
WASHINGTON—The Commission on Security and Cooperation in Europe, also known as the Helsinki Commission, today announced the following briefing: CURBING CORRUPTION THROUGH CORPORATE TRANSPARENCY AND COLLABORATION The British Model Wednesday, May 29, 2019 9:00 a.m. Rayburn House Office Building Room 2128 Live Webcast: www.facebook.com/HelsinkiCommission The United Kingdom has implemented some of the world’s most innovative anti-corruption policies. In particular, its public beneficial ownership registry is the only active one of its kind and its Joint Money Laundering Intelligence Taskforce models effective collaboration between law enforcement and the private sector. This briefing will examine these policies and the United Kingdom’s broader strategy to counter illicit finance. Panelists will discuss how the United Kingdom implements its policies, their successes and shortcomings, and what remains to be done. Though U.S. corporate transparency proposals take a non-public approach, panelists will also discuss the lessons that the United States can draw from the British experience. Opening remarks will be provided by John Penrose, M.P., the U.K. Prime Minister’s Anti-Corruption Champion. The following panelists also are scheduled to participate: Mark Hays, Anti-Money Laundering Campaign Leader, Global Witness Edward Kitt, Serious and Organized Crime Network Illicit Finance Policy Lead, British Embassy Washington Nate Sibley, Research Fellow, Kleptocracy Initiative, Hudson Institute
Helsinki Commission and House Financial Services Committee Announce Joint Briefing on Trade-Based Money LaunderingFriday, May 17, 2019
WASHINGTON—The Commission on Security and Cooperation in Europe, also known as the Helsinki Commission, in partnership with the House Financial Services Committee, today announced the following joint briefing: SHADY SHIPPING Understanding Trade-Based Money Laundering Friday, May 24, 2019 9:30 a.m. Rayburn House Office Building Room 2360 Live Webcast: www.facebook.com/HelsinkiCommission Trade-based money laundering (TBML) is the process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimize their illicit origins. This highly sophisticated form of money laundering has become a favorite method for transnational criminals, dictators, and terrorists to move ill-gotten gains to new jurisdictions. This event will examine what TBML is, how it works, and why it has become such a ubiquitous method of laundering money. Panelists will also discuss the broader interplay of illicit commerce, global corruption, and TBML. Finally, panelists will recommend practical steps the United States and non-governmental organizations can take to counter TBML. The following panelists are scheduled to participate: John Cassara, Special Agent, U.S. Department of the Treasury, retired Lakshmi Kumar, Policy Director, Global Financial Integrity David Luna, President and CEO, Luna Global Networks
Chairman Hastings on Upcoming Meeting Between President Trump and Prime Minister OrbanSunday, May 12, 2019
WASHINGTON—Ahead of Monday’s meeting between U.S. President Donald Trump and Hungarian Prime Minister Viktor Orban, Helsinki Commission Chairman Rep. Alcee L. Hastings (FL-20) issued the following statement: “Thirty years after Central European nations threw off the mantle of communism and oppression, I recall the unwavering support of the United States for the democratic aspirations of their citizens, and the warm welcome Hungary received when it joined the ranks of self-governing, free nations. I echo Secretary’s Pompeo’s message, delivered in Central Europe in February: Upholding democracy in each and every country is vital to human freedom. “President Trump must urge Prime Minister Orban to end Hungary’s anti-Ukraine policy at NATO, resolve concerns about the relocation of the Russian International Investment Bank to Budapest, ensure that Hungary’s ‘golden visas’ are not used to evade U.S. sanctions, and address document security problems to ensure the integrity of the visa waiver program. In addition, the president must prioritize meaningful democratic change in Hungary and encourage the Hungarian Government to repeal the 2017 and 2018 laws curtailing freedom of speech, assembly, and association.” U.S. authorities have identified at least 85 criminals who fraudulently obtained Hungarian passports to enter or attempt to enter the United States. At an April 2019 Helsinki Commission briefing, Dalibor Rohac of the American Enterprise Institute noted that the chairman of the International Investment Bank has long-standing ties to Russian intelligence agencies, raising concerns that the relocation of the bank from Moscow to Budapest could provide a platform for intelligence-gathering operations against U.S. allies. In April, U.S. Special Representative to Ukraine Kurt Volker visited Budapest and urged Hungary to end its anti-Ukraine policy in NATO. In February, during a visit to Slovakia, Hungary, and Poland, U.S. Secretary of State Mike Pompeo said, “Every nation that raises its voice for liberty and democracy matters, whether that’s a country that’s as big as the United States and with as large an economy as we have in America, or a smaller country. They’re each valuable. Each time one falls, each time a country – no matter how small – each time it moves away from democracy and moves towards a different system of governance, the capacity for the world to continue to deliver freedom for human beings is diminished. And so I would urge every country, no matter its size . . . to stay focused, maintain its commitment.”
By Troy C. Ware, with contributions from Shelly Han
In July 2008, Members of the Commission on Security and Cooperation in Europe (U.S. Helsinki Commission) and other Members of Congress traveled to Astana, Kazakhstan for the seventeenth Annual Session of the Organization for Security and Cooperation in Europe Parliamentary Assembly (OSCE PA). The session’s theme was “Transparency in the OSCE.” At the outset of the trip, Congressman Alcee L. Hastings, then Chairman of the Commission, remarked that while he supported the candidacy of Kazakhstan for the Chairmanship of the OSCE it was “imperative that the government undertake concrete reforms on human rights and democratization.”1 A number of nongovernmental organizations have cited the high level of corruption in Kazakhstan as one impediment to democratic reform.
Kazakhstan is by no means alone. Recognizing the existence of corruption throughout the OSCE region, Helsinki Commissioners have consistently addressed the problem by raising it through hearings, legislation, and the OSCE Parliamentary Assembly. Hearings in 2006 identified corruption as a hindrance to fulfilling human rights commitments and economic development in South-Central Europe (Helsinki Commission June 2006 Hearing). The role of corruption as a force in restricting freedom of the media in Azerbaijan was highlighted in a 2007 hearing (Helsinki Commission August 2007 Hearing). This report will draw attention to recent initiatives undertaken by the Helsinki Commission that have shown corruption undermines human rights, fundamental freedoms and overall security.
Wherever found, corruption not only stunts democratic reform, but also weakens the security and economic condition of states. Although corruption manifests itself in various ways, this report can practically only discuss a few. For example, prominent manifestations within the three OSCE dimensions discussed include parliamentary corruption, diversion of funding from infrastructure and human trafficking. Understandably, countries will not solve a widespread and pervasive problem with a singular approach. Additionally, this report will discuss the importance of capacity building initiatives that focus on prevention as a critical element in an anti-corruption campaign. This is an element that must be included alongside the high profile anti-corruption prosecutions governments may be inclined to conduct.
A number of international governmental and nongovernmental organizations produce regular surveys or reports on corruption. The 2008 survey of corruption by Transparency International (TI), an international nongovernmental organization that promotes anti-corruption policies worldwide, ranked twelve OSCE participating States in the bottom half of 180 countries surveyed. The least corrupt countries were assigned the highest ranking. Kazakhstan ranked 145, which was still ahead of the OSCE countries of Azerbaijan, Belarus, Kyrgyzstan, Russia, Tajikistan, Turkmenistan and Uzbekistan.2 Experts point out that since TI uses a survey, its findings may lag behind reality, reflecting only perceptions based on increased reporting resulting from government enforcement of anti-corruption laws. Others point out that surveys place too much emphasis on bribery although forms of corruption vary greatly from country to country.3 Nonetheless, other barometers, such as evaluations of the Group of States Against Corruption (GRECO), which measures anti-corruption policy reform and capacity through a multi-year expert evaluation process, suggest that some OSCE participating States are only partially implementing standards set by the group. Corruption, which was explicitly highlighted in the Parliamentary Assembly’s concluding document, the Astana Declaration,4 is a multidimensional blight that undermines human, economic, environmental, and security dimension policy goals throughout the OSCE region.
Genuine democracy and rule of law cannot exist if the passage, implementation and judgment of the law favor the highest bidder. Moreover, the rule of law requires more than elections and a neutral and impartial judiciary; it requires that individuals receive the unbiased and dispassionate benefits of the law from all public servants. Larry Diamond wrote in the March/April 2008 issue of Foreign Affairs that, “[f]or a country to be a democracy, it must have more than regular, multiparty elections under a civilian constitutional order.” He points out that when regular elections are accompanied by corrupt police and bureaucracies, many people are “citizens only in name” and in their disillusionment gravitate toward authoritarian leadership.5
Observers frequently focus attention on removing graft from courts and elections. However, corruption in other spheres of society, such as among lower level public servants, contributes to the notion of corruption as an acceptable behavior often having the most immediate adverse effect on the average person. Government employees of modest rank are capable of denying basic fundamental freedoms such as equal protection of the law, enjoyment of property, the right of minorities to exercise human rights and freedoms, and the independence of legal practitioners.6 Those who advocate for the victims of corruption, even within the judicial systems, often cannot do so without repercussions. Furthermore, when parliaments become sanctuaries for persons engaged in corruption the protection conveys a message that corruption will be tolerated elsewhere in society.
In a 2006 brief, the U.S. Agency for International Development (USAID) defined parliamentary immunity as “a system in which members of a legislature are granted partial immunity from prosecution from civil and/or criminal offenses.” USAID further states that parliamentary immunity’s purpose is to “reduce the possibility of pressuring a member to change his or her official behavior [with] the threat of prosecution.”7 Unrestrained parliamentary immunity impedes the investigation and prosecution of corruption, makes parliamentary acquiescence and perpetuation of corruption possible, fosters a culture of corruption among other government officials and security officials, and disproportionately affects minority populations. According to Development Alternative Incorporated (DAI), a development consulting company, developing democracies tend to favor the broadest scope of immunity which allows corrupt activities almost with impunity. Although rare, a parliament may vote to lift immunity from one of its members, as was the case in Armenia in 2006 when immunity was removed for a parliament member who allegedly failed to pay taxes and instigated a gun fight.8
While parliamentary immunity can protect the independence of legislatures, frequently it is a shield for illicit activity. A 2007 USAID report, Corruption Assessment: Ukraine, found that “legislators have amassed fortunes through business interests and other means . . . with little transparency or accountability.” Moreover the report found that broad immunity created a powerful incentive to seek public office and introduced “illicit funding” into the political process.9 Even if prosecuting agencies investigate the activities of legislators, the individuals are rarely prosecuted because the parliament will not lift immunity. ArmeniaNow, an NGO publication, found that in the first fifteen years of Armenian independence, immunity was waived in only five instances.10 Although democratic attributes exist ostensibly in most OSCE participating States, features such as elections may ironically serve to conceal the self-serving rule that results from corruption.
Parliamentary corruption can lead to a cycle in which the parliament cannot effectively exercise an oversight role because its members have a personal stake in the illicit activity. The Bulgarian parliament’s resistance to closing duty-free vendors along its borders is an example of the controlling power of corruption according to Bulgaria’s Center for the Study of Democracy. Since 1992, duty-free fuel, cigarette and alcohol vendors have operated at Bulgaria’s borders.11 These operations, allegedly tied to organized crime, deprived the state of significant tax revenue and could undercut prices of competitors subject to duties. As a condition of joining the European Union, Bulgaria was required to raise excise duties up to a standard set by the EU. Furthermore, in 2003 the Minister of Finance signed a letter of intent with the International Monetary Fund to close all duty-free shops.12 In response to the increased tax, the illegal trade in duty-free goods increased. In 2004, the Finance Minister extended a license for the shops to continue until 2009 despite international commitments to the contrary. In 2006, the Bulgarian Parliament, instead of closing the shops, passed a law that allowed the shops to shift to the non-EU borders with Serbia, Turkey, and Macedonia.13 Finally, in early 2008, the Parliament passed a law to close the duty-free shops.14 Previously, the Center for the Study of Democracy asserted that “national level illegal proceeds from duty-free trade [had] been deployed to capture the state” and the vendors had used “political corruption to secure perpetual monopoly business positions.”15
Helsinki Commission Chairman Senator Benjamin L. Cardin has raised the issue of unbridled parliamentary immunity on many occasions. In a hearing in June 2006 on Human Rights, Democracy, and Integration in South Central Europe, Senator Cardin made a commitment to push the Parliamentary Assembly to adopt initiatives calling for changes to parliamentary immunity laws. At the July 2006 OSCE Annual Session Cardin authored a resolution on parliamentary immunity, which passed, urging the OSCE participating States to “[p]rovide clear, balanced, transparent, and enforceable procedures for waiving parliamentary immunities in cases of criminal acts or ethical violations.” In 2007, Cardin raised the issue of how parliamentary immunity can serve as cover for corruption in a Helsinki Commission hearing on Energy and Democracy (Helsinki Commission July 2007 Hearing). He has also urged nations such as Ukraine to consider changing their parliamentary immunity laws.16
Like water flowing downhill, if corruption exists at the higher levels of government and society, it will permeate the performance of public servants at every level. During a 2008 Helsinki Commission hearing on Kazakhstan’s accession to the OSCE Chairmanship, Martha Olcott of the Carnegie Endowment for International Peace identified corruption that is “rampant in daily life” in Kazakhstan and present at all levels of government (Helsinki Commission July 2008 Hearing).17 Endemic corruption within the government bureaucracy has an immediate effect in terms of confidence in government and cost to the people of any country. A 2009 report stated that among European Union countries, 17 percent of Greeks and thirty percent of Lithuanians had admitted to paying a bribe to obtain service from a public administrative body.18 In many countries, widespread corruption has led to a level of acceptance. GfK Research, an international marketing and research company, conducted a study in 2006 which reported that 61 percent of Romanians, 58 percent of Bosnians, and 56 percent of Czechs regarded bribes as a normal part of life.19
Frequently, national health care service is provided only to those willing to pay extra to medical personnel. In Romania, $225 paid by Alina Lungu to her doctor was apparently not enough to prevent him from leaving the pregnant women alone for an hour during labor and her baby from being born blind, deaf, and with brain damage due to the umbilical cord being wrapped around him.20 Global Integrity, a nonprofit organization that monitors governance and corruption worldwide, provides an account of a Latvian girl experiencing stomach pain who was allowed to sit in a hospital for several days without pain-killers or treatment until her father paid money to the doctor.21 A survey in Bulgaria showed that the amount of Bulgarians identifying the health sector as the most corrupt in comparison to others such as customs, police, and judiciary increased from 20 percent in 2002 to 39 percent in 2007.22 According to 2007 reporting, Bulgarians experienced corruption in almost every type of health service including referrals, surgery, birth delivery, and emergency care. The problem is very widespread in hospital care.23 Some conclude that health workers take extra payments from patients for services already covered by health insurance and administrators overstate costs in hospital care due to insufficient hospital financing and financing regulations that encourage overspending.24
fficials regularly abuse their authority in the enforcement of traffic laws and in the area of travel. Vladimir Voinovich, a prominent Russian author, points out that to become a public official or policeman you must pay off your boss and that payment is financed through taking bribes.25 Even when officials wish to behave honestly, providing “a stream of payments to patrons” becomes a matter of survival.26 In Uzbekistan, permission from the local government is required to move to another city and according to the 2008 Department of State Report on Human Rights Practices in Uzbekistan, local authorities commonly issue the required documents only in return for a bribe. The report also states that police “arbitrarily detained people to extort bribes” on a regular basis.27 The 2008 report on Human Rights Practices in Azerbaijan noted that police officers regularly impose arbitrary fines on citizens and seek protection money.28 The report on Poland recognized that corruption among police was widespread.29 In many countries, drinking and driving has become commonplace because police can be bribed to look the other way.
The Effect of Corruption on Minorities
More often than not, police corruption disproportionally affects minority groups. In a Helsinki Commission briefing in 2004, Leonid Raihman of the Open Society Institute described the plight of Roma in Russia who are trapped in a cycle of poverty exacerbated by bribes extracted by the Russian police (Helsinki Commission September 2004 Briefing). Often detained on charges of not possessing proper personal documents or a false accusation of committing a crime, Roma will hire an attorney whose sole function is to negotiate the price of the bribe for their release. According to Raihman, the situation is analogous to that of a hostage whose freedom is being negotiated. This can sometimes lead to families selling their car, life savings or home. He noted that the worst case scenario results in homelessness.30
Regulations that require people to register their official place of residence or obtain an internal passport provide fertile soil for minority exploitation through corruption. According to the 2007 Department of State Report on Human Rights Practices in Russia, “darker skinned persons from the Caucasus or Central Asia” were regularly singled out to see if they possessed an internal passport and had registered with local authorities.31 Typically, if allowed to register, a person must pay a bribe.
Retaliation against Lawyers
The legal profession, in addition to an independent judiciary, is an essential part of a functioning democracy. Still, government officials have used retaliatory criminal prosecution and coercive measures to discourage lawyers from representing clients in cases that expose corruption. An example from Russia is that of the attorneys representing Hermitage Capital and its executives.32 Lawyers from four independent law firms representing Hermitage have apparently been subject to unlawful office searches, illegal summonses demanding that they testify as witnesses in the same cases where they are representing clients, and that they falsify testimony against clients. Lawyers who failed to comply were subjected to criminal charges. Several of the lawyers have fled Russia.33 Sergei Magnitsky, a Russian lawyer with Firestone Duncan, a firm which represented Hermitage Capital, was arrested in November 2008 in connection with his investigation of government corruption. Magnitsky died in custody this November in a case that highlighted the difficulty of standing up to corruption and poor Russian prison conditions. As the dismissal of the head of the tax agency which Magnitsky was investigating suggests, the death is still reverberating at the Kremlin.34 However, it remains to be seen if long-term actions to protect lawyers exposing corruption will be undertaken. Persons familiar with the Russian legal system say little importance is placed on the attorney-client privilege.35 Allegedly, companies like the 2X2 television network, charged with committing crimes against the state by broadcasting content including the Simpsons and South Park encounter difficulties finding legal representation.36
Government attacks on lawyers and their clients who expose corruption represent a serious threat to the rule of law. When lawyers are intimidated and afraid to represent clients, citizens are defenseless against corruption. A primary reason for this is that courts present many complexities that non-attorneys may find difficult to overcome. The U. S. Supreme Court in Powell v. Alabama explained the challenge faced by a non-attorney representing himself in saying that the non-attorney often cannot recognize if the “indictment is good or bad,” is “unfamiliar with the rules of evidence,” and “lacks the skill and knowledge adequately to prepare his defense.”37 It is imperative that lawyers are protected from government interference and political persecution so that they may effectively represent and protect their clients’ interests.
The Economic Dimension
Studies suggest corruption retards economic development and generally results in a lower standard of living. The OSCE Best-Practice Guide for a Positive Business and Investment Climate, asserts that “corruption is clearly a major indicator of the health of a business and investment climate” and that the “wealthiest OSCE countries are generally the countries judged to be least corrupt by international observers.”38 Corruption adversely affects economic growth by slowing infrastructure development, increasing costs for businesses, and preventing competitive business outcomes. Moreover, the responsibility of wealthier OSCE participating States cannot be disregarded. Multinational corporations from developed nations, largely through acquiescent behavior, may promote corruption in countries where it is most prevalent.
Cost to Business and the Overall Economy
Bribes pose a significant cost for businesses in many OSCE countries. The Best Practice Guide notes that in former Soviet countries a higher percentage of business revenue is dedicated to paying bribes than in Western Europe.39 The guide reported that in some countries businesses pay up to four percent of their total costs in bribes.40 Whether through customs, licenses, or permits, the opportunity for graft exists where there are excessive bureaucracies or regulations. The CATO Institute’s report, The Rise of Populist Parties in Central Europe, identifies building permits as “an especially attractive source of extra income.”41 According to a World Bank report, building a general storage two-story warehouse in Moscow requires 54 procedures and 704 days.42 This interaction with numerous agencies and government officials increases the opportunity for bribes.
Bribes ultimately distort market outcomes because the most competitive companies are not rewarded for their efforts and therefore some companies choose not to compete at all. For example, government contracting is one area where bribes undermine competition and the public good. J. Welby Leaman, an advisor to the U.S. Treasury Department wrote in the Pacific McGeorge Global Business and Development Law Journal, “public officials’ solicitation of their ‘cut’ impoverish government programs.”43 The CATO Institute report cites the case of Dell Corporation losing a computer contract with the Czech parliament. Dell’s bid reportedly met all technical specifications, was the lowest cost and offered to pay a penalty fee for late delivery. Nonetheless, the contract was awarded to a Czech firm that asked for twice as much as Dell.44 Leaman also notes that if a firm cannot pass on a bribe’s cost to the customer, that firm may choose not to compete, which robs the economy of “additional investment and competition.”45
Diversion of Wealth from Natural Resources
While a number of OSCE participating States are fortunate to possess large reserves of oil and natural gas, in many instances the wealth produced by these resources does not benefit the citizens of the states, but only the few who control the resources. The Helsinki Commission held hearings in 2007 spotlighting this misappropriation and betrayal of public trust. Simon Taylor of Global Witness identified the problem’s crux in many countries noting that in Turkmenistan, a country of approximately five million people, “ percent of [the] population lives below the poverty line despite two billion dollars in annual gas revenues.”46 Remarkably, in Kazakhstan, the economy grew only 0.3 percent between 2000 and 2005 despite its exportation of 1.2 million barrels of oil a day. Taylor also framed the diversion of profits for personal use as a matter of energy security resulting in unreliable supply and higher prices (Helsinki Commission July 2007 Hearing).47
Following the hearings, then-Commission Chairman Alcee L. Hastings introduced an amendment to the Energy Independence and Security Act of 2007 (H.R. 3221), which became law, making it U.S. policy to support the Extractive Industries Transparency Initiative (EITI) and for the U.S. Secretary of State to report annually on U.S. efforts to promote transparency in extractive industry payments.48 The 2009 report notes United States contributions to the EITI Multi-Donor Trust Fund, senior level State Department encouragement to developing economies to join EITI, embassy officer engagement with government officials in developing economies, and U.S. Treasury Department collaboration with development banks.49 In 2008, then-Co-Chairman Cardin sponsored an amendment to the Statement of the July 2008 OSCE Parliamentary Assembly Annual Session that among other things, “encourages governments from oil and gas producing countries to introduce regulations that require all companies operating in their territories to make public information relevant to revenue transparency.” The amendment was approved by the OSCE parliamentarians and adopted as part of the Astana Declaration.50 If the economies of oil and natural gas rich OSCE participating States are to reach their full potential, transparency and accountability must exist between extractive industries and national government.
In addition to the price of bribes, a business is disadvantaged to compete in a market with less infrastructure due to corruption. Ukraine exemplifies an OSCE country that stands to gain from economic growth if road projects are funded, efficient and transparent. The World Economic Forum’s Global Competitiveness report on Ukraine notes that the poor state of Ukraine’s roads is hindered by road construction processes that provide many opportunities for corruption.51 This situation impedes not only new road construction, but also repair of existing roads and bridge construction. The State Motor Road Service of Ukraine reported that Ukraine loses the equivalent of one billion U.S. dollars annually due to poor road conditions.52 While new road projects are underway, including a new ring road around Kyiv, current legislation does not allow for a competitive private bidding process, without which the road system will continue to rank 120th out of 134 countries ranked by the World Economic Forum in quality of roads. Ukraine is not alone, Moldova ranked 133rd out of 134 countries.53 Not surprisingly, business leaders in Moldova ranked corruption as the second most problematic business obstacle in that country behind access to financing.54
Fraudulent Appropriation of Private Property
A pattern of takeovers of private companies and the government-directed persecution of their executives and lawyers is reportedly becoming the norm in Russia. A prime example was the illegal takeover of companies belonging to the Hermitage Fund, a joint venture between Hermitage Capital Management and HSBC Bank. The takeover was allegedly achieved through brazen abuses of power by law enforcement authorities and interference by government officials with Russian courts. William Browder, the founder of Hermitage, and Jamison Firestone, his attorney, recently met with Helsinki Commission staff to discuss their case. Browder’s visa was revoked in 2005 for what he believes was his work in exposing corruption in state controlled companies with close links to the Kremlin. He then appealed to high-level Russian officials, Browder said, including an impromptu conversation with then-First Deputy Prime Minister Dmitry Medvedev at the Davos annual meeting of the World Economic Forum. After these appeals, Browder alleges he received a phone call from a senior law enforcement officer apparently offering to restore his visa for a price. When this offer was rejected, the Russian Interior Ministry raided the offices of Hermitage and Firestone (see Human Dimension – Retaliation against Lawyers). Corporate seals, charters, and certificates of registration for the Hermitage Fund companies as well as documents belonging to numerous other clients were confiscated during the raids.
Following the raids, the corporate documents taken by the Interior Ministry in the office raids were used to wipe HSBC off the share registry of the Hermitage Fund companies. The same documents were used to forge back dated contracts and to file lawsuits against the Hermitage companies alleging significant liabilities. Although Hermitage and HSBC were not aware of these cases, various judges awarded $973 million in damages in legal proceedings that were concluded in a matter of minutes. These same fraudulent liabilities were used by the perpetrators to seek a retroactive tax refund of $230 million in profit taxes that Hermitage had paid to the Russian government in 2006. At the time of the refund, HSBC and Hermitage had already filed six criminal complaints with the heads of Russian law enforcement authorities documenting the involvement of senior government officials in this fraud. Despite these detailed complaints, the fraudulent tax refund was promptly approved and paid to the perpetrators in a matter of days in sharp contrast to the lengthy process normally associated with such a refund.
In response to the complaints Russian authorities created an investigative committee staffed by the very officials implicated in the complaints. Moreover, a number of spurious retaliatory criminal cases have been lodged against Browder, his colleagues, and four lawyers from four separate law firms. In the meantime, Mr. Browder and a senior colleague, Ivan Cherkasov, have been placed on the Russian Federal Search List and face the possibility of becoming the subjects of an Interpol Red Notice. Because of the coordinated nature of actions taken by state officials in this scheme together with the official reaction to the Hermitage complaints, Browder suspects high level political interference.55 A country where property can be seized without due process is one where investment is likely to be depressed for fear of arbitrary loss.
Regulation of Multinationals
While the OSCE participating States of Central and Eastern Europe and the former Soviet Union often receive the most criticism for failing to curtail corruption, West European countries also face problems with corruption. One notable case is the recent investigation of defense contractor BAE Systems, a British firm, for alleged bribery in arms sales to Saudi Arabia and separate probes into wrongdoing in arms transactions with Chile, the Czech Republic, Romania, South Africa, Tanzania, and Qatar. The British newspaper, The Telegraph, reported that an alleged six billion pounds (approximately nine billion dollars) were paid to various Saudi officials. Citing a threat to cease intelligence sharing by Saudi Arabia, the British government terminated the investigation.56
In response to the termination of the investigation, the Organisation for Economic Co-operation and Development (OECD), issued a report criticizing the British government for not considering alternatives to discontinuing the investigation. Moreover, the report criticized the U.K. for not enacting legislation to meet the country’s obligation under the OECD Anti-Bribery Convention.57 While other companies are under investigation, and some like Siemens A.G. have paid record-setting fines, the case of BAE systems stands out because of the record of the U.K. in holding its multinationals to account for overseas bribery. Writing in Foreign Affairs in 2006, Ben Heinemann and Fritz Heimann argue that an area of “emphasis must be the implementation of enforcement and prevention measures by developed nations, where bribery of foreign officials can be more readily exposed and prosecuted.” Unfortunately, their article points out that as of 2006, only France, South Korea, Spain and the United States have brought more than one prosecution.58 In July 2008, the House of Lords upheld the decision of the British government to end the investigation of BAE systems and the government of Prime Minister Gordon Brown has taken no steps to reopen the case.
It should be noted that under the pioneer Foreign Corrupt Practices Act (FCPA), which predates the OECD Convention, the United States has steadily increased investigations and prosecutions.59 The FCPA has three major provisions. Its best known provision prohibits U.S. Corporations and individuals from using an instrumentality of interstate commerce to bribe a foreign official, political party or candidate.60The two other primary provisions require corporations to maintain records which accurately reflect transactions and to maintain “internal accounting controls” to provide assurance transactions61 are executed with management’s authorization.62
Observers note that U.S. courts are limiting exceptions to the law and extending its scope while the Department of Justice is joining FCPA charges with charges under other federal laws.63 Reportedly, as of May 2009, the Department of Justice was pursuing 120 investigations of possible FCPA violations.64Recent prosecutions have resulted in favorable court decisions for authorities. In 2004, in a broad interpretation of the law’s application, a Fifth Circuit Court ruling rejected the claim that Congress meant to limit the FCPA only to bribes relating to contracts. The court held that the legislative history implies that the law applies broadly even to payments that indirectly assist in obtaining or retaining business.65 A recent lower court narrowed an exception for lawful payments under the laws of the foreign country. In a situation where a person was relieved of liability after reporting the bribe, the court wrote there “is no immunity from prosecution under the FCPA . . . because a provision in the foreign law “relieves” a person of criminal responsibility.”66 The aggressive enforcement environment and the government’s willingness to consider company-implemented compliance programs in deciding whether to prosecute has a positive consequence of incentivizing other companies to establish such programs.
What remains to be seen is to what extent nations with mature economies will hold multinational corporations to account during times of economic hardship. Although only a handful of countries have brought prosecutions, it should be noted that many investigations result in settlements which require fines. In the case of Siemens A.G., the company settled to pay more than $1.6 billion in fines to both German and U.S. authorities.67 If mature economies do not hold multinational corporations accountable, they are in effect promoting corrupt behavior and being duplicitous in criticizing corrupt practices elsewhere.
The Security Dimension
One account from the book The Natashas: Inside the New Global Sex Trade is the story of Stefa from Moldova who traveled to Romania looking for work. Stefa met a man who introduced himself as an agent marketing positions as maids. Regrettably, nothing could have been further from the truth. This man placed Stefa and other girls in a crowded apartment where they were paraded naked and auctioned like cattle. Natasha was eventually sold and smuggled to Italy where she was sexually assaulted and forced to work as a prostitute.68 Stefa’s story is a common one that is usually facilitated by corruption. Heinemann and Heimann write “one ignores corrupt states that are failed or failing at one’s peril, because they are incubators of terrorism, the narcotics trade, money laundering, human trafficking, and other global crime.”69 In addition to these illicit activities, many recent reports tie corruption to the proliferation of small arms trafficking and sales.
Many observers believe that terrorists appear to have taken advantage of corruption to conduct attacks. It was reported that one of two female suicide bombers from Chechnya who brought down two Russian passenger aircrafts in August 2004 paid a $34 bribe to board a plane for which she did not have a ticket. Shortly after, flight 1047 and another flight boarded by the second suicide bomber, flight 1303, blew up in mid-air after departing Moscow’s Domodedovo International Airport. Prominent Russian author Vladimir Voinovich, wrote on the Pakistani online newspaper The Daily Times that the terrorists who took control of the Dubrovka theatre in Moscow in 2002 were reportedly stopped fifty times by authorities while traveling to Moscow, but solely for the purpose of soliciting a bribe.70 An article inCrime & Justice International alleged that officials identified 100 Ministry of Internal Affairs (MVD) police personnel who were complicit in the travel of the Chechen fighters to Moscow.71
Corruption facilitates terrorism by decreasing border security and increasing money laundering. Kimberley Thachuk writes in the SAIS Review that “[c]riminal and terrorist groups depend on unimpeded cross-border movements, and so border guards, customs officers, and immigration personnel are notable targets of corruption.”72 In the U.S. Department of State’s Country Reports on Terrorism 2008, corruption among border guards was identified as a risk in the OSCE region, particularly Albania, Armenia, Kosovo, and Moldova.73 The targeting of border guards by criminal elements extends even to the United States. Recently, the U.S. Department of Homeland Security reestablished its internal affairs unit amid increased corruption investigations. It had been disbanded in 2003. In the spring of 2008, there were 200 open cases against U.S. law enforcement officers on the border. This corruption has involved smuggling of guns, drugs, and people.74 Corruption ultimately undermines the effectiveness of security forces to fight terrorism. Kimberly Thachuk notes that “such corruption spreads, as does an attendant loss of morale and respect for the command structure.”75 This deterioration in professionalism and morale could not come at a worse time. A July 2008 article in Forbes magazine on European crime claimed a 24 percent increase in terrorist attacks from 2006 to 2007.76
As evidenced by prior testimony before the Helsinki Commission, corruption is a factor in many illicit arms sales worldwide. In June 2003, Roman Kupchinsky, then a Senior Analyst with Crime and Corruption Watch of Radio Free Europe/Radio Liberty, pointed out that sales from former Soviet states frequently involve a marriage of security forces and organized crime (Helsinki Commission June 2003 Hearing).77 This means individuals, not the government, are making the sales. Moreover, although OSCE participating States have agreed through the Forum for Security Cooperation to not issue export licenses for arms without an authenticated end-user certificate, these certificates are often forged. Accordingly, the buyer may not be the actual recipient of the weapons.
United Nations arms embargoes notwithstanding, individuals and companies from numerous countries are involved in the manufacture, transit, diversion from legal use, and fraudulent company registration for illicit arms trafficking to countries or non-state actor groups under embargo according to Control Arms, a group of concerned non-governmental organizations. The list of countries included Albania, Belgium, Bulgaria, Moldova, Romania, Russia, Serbia, Ukraine and the United Kingdom.78 These illegal sales, which fuel conflict in the developing world, are estimated to be worth one billion dollars a year according to Rachel Stohl, an analyst at the World Security Institute’s Center for Defense Information. She noted in an article published for the SAIS Review that “[a]rms brokers are able to operate because they can circumvent national arms controls and international embargoes” frequently through corrupt practices.79
The United Nations Protocol to Prevent, Suppress and Punish Trafficking in Persons defines trafficking as “the recruitment, transportation, transfer, harbouring or receipt of persons, by [involuntary means] for the purpose of exploitation.”80 Victor Malarek, author of The Natashas: Inside the New Global Sex Trade, makes clear that corruption is the lynchpin of the trade in women and girls. Even when countries enact laws and policies to prevent trafficking, corruption threatens to render them ineffective. Mohamed Mattar writes in the Loyola and Los Angeles International and Comparative Law Review that there are indications that exit requirements such as exit visas for trafficked victims are being obtained through bribes.81 Furthermore, Malarek asserts that besides former Soviet states corruption also exists in destination countries in which officials are complicit in allowing the illicit trade. Specifically, the book draws attention to corruption among border guards and police in Greece that enables the trafficking.82
Human trafficking for sexual and labor exploitation has wreaked havoc on Moldova. Moldova is an extremely susceptible source country because of poverty and associated corruption. The breadth of the problem is detailed in an article by William Finnegan in the May 2008 issue of The New Yorker. In large measure due to its economic plight, over 25 percent of Moldova’s workforce has migrated out of the country. A third of all children are missing a parent due to migration. Much of the population views emigration as the only hope to living a better life. Such conditions create a setting abundant with potential victims for traffickers. Finnegan asserts local authorities are generally not helpful unless you are a trafficker. He quotes a local prosecutor as saying “[t]he most powerful pimps in Moldova are all former cops.”83
In 2008 the U.S. Department of State initially ranked Moldova as a Tier 3 country meaning that it had failed to comply with minimum standards and failed to make significant efforts to eliminate human trafficking as outlined in U.S. law.84 In October 2008, the President upgraded Moldova to Tier 2 status because it had reopened investigations into official complicity and drafted a code of conduct for public officials.85 Although less reporting occurs on the breakaway republic of Transnistria than Moldova, the situation there appears alarming. Finnegan discovered that law enforcement officials are uncooperative with NGOs working on behalf of trafficked victims and corruption deters relatives of trafficked victims from contacting the police.86
Finnegan’s article makes clear that destination countries share a significant responsibility for human trafficking.87 Whether through deliberate corruption or turning a blind eye, doctors, police, border guards, accountants, lawyers, travel agencies or hotels in destination countries enable trafficking and exacerbate the problem in source countries. Every Western European country and the United States and Canada are destinations for trafficked persons. In its report, the Department of State claims that more than half of commercial sex workers in France were trafficking victims. The Department also recognizes Turkey as a significant destination country. Trafficked women and girls from Azerbaijan, Belarus, Bulgaria, Georgia, Kyrgyzstan, Moldova, Romania, Russia, Turkmenistan, Ukraine, and Uzbekistan find themselves in Turkey. The report notes that many police in Turkey are complicit in trafficking. The United States is not immune, the recent increase in corruption investigations against Customs and Border Protection officers are in part for taking bribes to allow the passage of human beings.88
OSCE Field Missions and Prevention Efforts89
While it is necessary to sound the alarm and call attention to corruption’s presence across the three OSCE dimensions, it is equally necessary to assess OSCE and non-OSCE efforts in the region to counter corruption. The last two decades have seen a consensus at the international level concerning norms and necessary anti-corruption action at the national level. This consensus is manifested in the United Nations Convention against Corruption (UNCAC). Despite international achievements, some would say that national level progress in decreasing corruption is at a standstill or being rolled back in some OSCE participating States. Broadly conceived, implementation is stalling. To understand why it is helpful to think of implementation occurring in two phases. The first phase consists of the passing of national laws implementing international commitments. The second phase, which is just as important, consists of institutions with independent and trained persons complying with and impartially executing the anti-corruption laws. This second phase has proven most problematic for many countries because the actions required to build capacity require a long term commitment and the dedication of resources and do not often attract media attention. Additionally, the notion that the nature of corruption differs from country to country should be embraced.90
The Office of the Coordinator of OSCE Economic and Environmental Activities (OCEEA) leads OSCE efforts in combating corruption. Through field missions, handbooks, and coordination with other international organizations, the OCEEA has promoted implementation of international anti-corruption agreements, efficient management of public resources and implementation of the Arhus Convention allowing greater access to information on the environment. Work to implement the UNCAC has paid off, with only thirteen OSCE participating States not having ratified the convention; and of those thirteen, only six have not yet signed the convention. However, this underscores the reality that ratification does not equate to true implementation of and compliance with the convention. This report cites corrupt activities within many OSCE participating States that have ratified the convention. With respect to this corrupt activity, OSCE field missions can be effective institutions for promoting substantive compliance with the convention.
An official with one international organization stressed that the hard part in decreasing corruption is the taking of preventative measures. OSCE field missions routinely undertake and promote some of these measures which include identifying and resolving conflicts, training government officials, and engaging civil society. OSCE field missions commonly provide anti-corruption assistance to local governments. However, in a manner befitting the nature of the problem, field missions conduct distinctive work appropriate to their assigned country. For example, in Georgia the mission assisted, before being closed down this year, in establishing an Inspector General’s office to review the finances of government ministries. Advocacy and legal advice centers are operated by the mission in Azerbaijan to provide legal advice on complaints and to educate the public and government authorities. In 2008, the centers in Azerbaijan provided assistance in response to 2,500 complaints. Additionally, mobile workshops reached 2,360 people with awareness campaigns and frequently provided on the spot legal advice.91 Similar centers provide aid in Armenia. The use of existing advocacy and legal advice centers is not high among people in Kazakhstan. This lower use may exemplify the benefit of an approach that carefully addresses the needs of people and nature of corruption in a given country.
Centers that target audiences other than the general public have been successful. In Tajikistan, Resource Centers for Small and Agribusiness and Centers for Promotion of Cross-Border Trade reportedly draw many patrons. It has also been reported that due to these centers, businesspeople have resisted illegal government inspections. Good Governance Centers in Georgia that assisted municipalities received high marks, and in addition to the government, were sometimes used by the general public. Prevention efforts directed at government employees at all levels are essential. Second round GRECO evaluation reports released in 2007 and 2008 identified a number of countries - some with field missions, such as Azerbaijan, and others without, such as Greece - that had not taken appropriate steps to protect government employees who are whistleblowers. In the case of Greece, sufficient protections for career advancement were not in place and employees typically could only report corruption to their immediate supervisor.92 Because the follow-on Addendum to the Compliance Reports are not public, it is unclear if adequate protections and measures to assist reporting has improved. Education coupled with preventative programs that build upon training are initiatives that field missions are well suited to provide through the various types of centers.
The OSCE mission in Ukraine has initiated a public-private dialogue that addresses accountability in local government. Fostering a dialogue between government, private sector, and civil society is important because in many countries these groups mistrust one another. In Georgia, the OSCE is supporting the efforts of Transparency International to ensure that a broad range of voices from civil society and the business community are heard by the Task Force on Fighting Corruption as it develops a new Anti-Corruption Strategy and Action Plan. These initiatives recognize that not only will implementation vary from country to country, but that implementation measures will differ at different levels of government and require input from all facets of society. Field missions are conducting varying efforts to promote a similar dialogue between government and civil society in Tajikistan, Kazakhstan, and Azerbaijan.
Recent meetings between Helsinki Commission staff and members of civil society and officials from international organizations suggest it may be misguided to keep a primary focus on national level authorities prosecuting alleged corrupt acts. One NGO member recently remarked that there are enough national level laws and that what is needed is impartial enforcement and an unbiased judiciary. In Curbing Corruption: Toward a Model for Building National Integrity, Daniel Kaufmann referred to this as the “Tackling-the-symptom bias” which “instead of identifying the root cause, involves thinking that the solution is to catch and jail a target number of criminals . . . or to pass another anti-corruption law in the country.”93 Kaufmann describes what may be the best case scenario. The worst case scenario expressed by both members of the NGO community and international organizations to the Helsinki Commission is that prosecution is used to target political opposition and journalists.
Amplifying the problem are enforcement agencies that may lack the capacity to conduct an even-handed investigation. An official from Bosnia-Herzegovnia recently said that the country “has adopted three strategic plans and ratified numerous international conventions on corruption,” but there is no implementation and the commitments go unmet.94 Public GRECO compliance reports from its second round of evaluations conclude that Albania, Armenia, Azerbaijan, and Romania have only partially implemented measures to fully train investigators, prosecutors and judges to handle corruption cases.95Again, because the follow-on addendum to the reports are not public it is unclear if training has improved in these participating States. In 2005, the President of Kyrgyzstan signed a decree establishing the National Agency of the Kyrgyz Republic for Preventing Corruption. Reportedly, in that first year, the agency opted not to put into practice a number of recommendations of an outside expert sponsored by an international organization to provide support. Later, the agency disagreed with international organizations on the use of funds offered by those organizations. Reportedly, $300,000 were made available for capacity building, but the leadership of the agency was adamant that the money be used to increase salaries. Today the agency has seven computers for 49 staff and no Internet access, Helsinki Commission staff was told.
Concerns also exist that a strong parliamentary immunity is a necessity when many governments are focused on prosecution of political opponents. The NGO member added that this prosecution is often targeted at politicians in a minority party highlighting the continued need for parliamentary immunity laws even if they allow some offenders and wrongdoers to evade prosecution. This view of targeted prosecutions has been echoed by workers with international organizations that have communicated with the Helsinki Commission on this subject. With the above in mind, it should be noted that the resolution authored by Chairman Cardin, and adopted by the Parliamentary Assembly in 2006, incorporates preventative measures by calling for the publishing of “rigorous standards of ethics and official conduct” and establishing “efficient mechanisms for public disclosure of financial information and potential conflicts of interest.”96 The goals set out in that resolution constitute a starting point that must be reinforced with other measures that over time build a common ethos of public integrity and service throughout government.
It should also be noted that the OSCE has worked in tandem with the Global Organization of Parliamentarians Against Corruption (GOPAC) in participating States such as Kyrgyzstan to train parliamentarians in roles of oversight and budget control. Finally, Chairman Cardin’s resolution recommending that the Office of the Coordinator of OSCE Economic and Environmental Activities (OCEEA) develop best practices for parliamentarians to use echoed the 2005 OSCE PA’s Washington Declaration. That document praised the work of GOPAC and recommended that the OSCE “with other parliamentary associations and [GOPAC develop] a programme of peer support, education and anti-corruption initiatives.”97 The OSCE has also worked with GOPAC in running workshops and supporting local GOPAC chapters particularly in Southeast Europe. This is an effort that should receive continued support. The importance of capacity building within parliaments cannot be forgotten when confronting corruption.
Conclusion: The Related Nature of Corruption Across the OSCE Dimensions
No account of corruption in any dimension can be viewed in isolation. If corruption thwarts a competitive business environment or is endemic among public servants then the conditions are set for an underworld of crime to flourish. Once seedlings of graft take root, they grow rapidly. Soon the institutions of democracy that require the nutrients of transparency and accountability are choked by what people may have once considered the harmless taking of small amounts of money or property. In the aggregate, petty corruption emboldens grand corruption and vice versa. Eventually, a government cannot perform the basic tasks expected of it. It cannot defend individual rights enshrined in national law, protect the engagement of commerce, or provide for the security of its people. In many instances, elites restrict political access and limit economic competition. This is what Larry Diamond refers to as a “predatory state.” Moreover, Diamond asserts when people no longer advance “through productive activity and honest risk taking” but only through operating outside the law, the predatory state becomes a “predatory society.”98 While observers may disagree whether some OSCE participating States have reached such an extreme point, all states are always somewhere on the continuum between a functional electoral democracy and a predatory society.
To combat corruption the OSCE, through existing field mission mandates, should continue to focus adequate attention to building capacity to identify and address corruption and promotion of a culture of integrity and anti-corruption among civil servants and civil society. All participating States should implement commitments under international treaties such as the UNCAC. However, ratifying the UNCAC and passing national laws targeting corruption is not enough. While prosecutions serve a deterrence function, they must be balanced by relatively low profile well-planned prevention programs that are sustained by sufficient resources. In order to identify and address the circumstances that foster corruption, collaboration must increase between governments, NGOs, corporations and small and medium size enterprises to develop specific strategies. OSCE countries should consider supporting neighbors by building upon the model of field missions. Corruption is a problem not likely to end soon, but is an area where progress may be made if small successes are reinforced with adequate resources.
Work is needed to live up to the ideals recorded in the Parliamentary Assembly’s Astana Declaration and the earlier Istanbul Declaration of the 1999 OSCE Summit, in which OSCE participating States recognized corruption as a threat to “shared values” and pledged “to strengthen their efforts to combat corruption and the conditions that foster it.” The OSCE countries need to muster the political will, individually and collectively, to conduct a smarter fight against corruption – a threat to security, property, and fundamental freedoms throughout the expansive OSCE region.
1 Joanna Lillis, “Kazakhstan: Nazarbayev Hints that Democratization will Take Back Seat on OSCE Agenda,” Eurasia Insight, July 9, 2008,http://www.eurasianet.org/departments/insight/articles/eav070908.shtml (accessed June 1, 2009)
6 The participating States committed to support and advance these rights and freedoms, in addition to others, in the 1990 Copenhagen Document. “Document of the Copenhagen Meeting of the Conference on the Human Dimension of the CSCE,” June 29, 1990.
10 Gayane Mkrtchyan, “Not Above the Law?: Parliament Lifts Immunity, MP Hakobyan Must Face Prosecution,” ArmeniaNow.com, October 13, 2006, http://www.armenianow.com/?action=viewArticle&AID=1768
14 Elena Koinova, “Changes to Duty-Free Trade Act passed in Parliament,” The Sofia Echo, March 28, 2008, http://sofiaecho.com/2008/03/21/659426_changes-to-duty-free-trade-act-passed-in-parliament
16 Commission on Security and Cooperation in Europe, Energy and Democracy: Oil and Water?, 108th Cong., 2nd sess., 2007 (Prepared statement of Senator Benjamin L. Cardin, not unofficial transcript), https://www.csce.gov/international-impact/events/energy-and-democracy-oil-and-water (accessed June 22, 2009)
17 Commission on Security and Cooperation in Europe, Promises to Keep: Kazakhstan’s 2010 OSCE Chairmanship, 110th Cong., 2nd sess., 2008, (Prepared statement of Martha Olcott not unofficial transcript), https://www.csce.gov/international-impact/events/promises-keep-kazakhstan-s-2010-osce-chairmanship (accessed June 8, 2009).
19 GfK Research, Corruption Climate in Europe, August 9, 2006, available athttp://www.gfk.hr/press1_en/corruption2.htm (accessed June 17, 2009).
25 Vladimir Voinovich, “Drunk on Corruption,” Daily Times, January 3, 2003,http://www.dailytimes.com.pk/default.asp?page=story_3-1-2003_pg3_4 (accessed June 18, 2009).
27 U.S. Department of State, 2008 Human Rights Report: Uzbekistan, February 25, 2009,http://www.state.gov/g/drl/rls/hrrpt/2008/sca/119143.htm.
28 U.S. Department of State, 2008 Human Rights Report: Azerbaijan, February 25, 2009,http://www.state.gov/g/drl/rls/hrrpt/2008/eur/119068.htm.
29 U.S. Department of State, 2008 Human Rights Report: Poland, February 25, 2009,http://www.state.gov/g/drl/rls/hrrpt/2008/eur/119098.htm.
31 U.S. Department of State, 2007 Country Reports on Human Rights Practices: Russia, March 11, 2008, http://www.state.gov/g/drl/rls/hrrpt/2007/100581.htm.
34 Carl Mortished, “Kremlin sacking linked to Sergei Magnitsky case,” TimesOnline, December 16, 2009,http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6957931.ece (accessed December 22, 2009).
49 .S. Department of State, Report on Progress Made in Promoting Transparency in Extractive Industries Resource Payments, June 24, 2009. On file with United States House of Representatives Committee on Foreign Affairs,
55 William Browder, conversation with Helsinki Commission staff, April 14, 2009. William Browder did testify at a Helsinki Commission hearing just as this report was being completed in June 2009. During his testimony he provided a website (http://www.compromat.ru/main/vragi/raderykak.htm) that provided a price list for a range of activities attacking a corporate entity in Russia from erasing a company’s registration data to a complete takeover.
56 Jon Swaine, “BAE Systems executive ‘questioned over alleged bribery,’” The Telegraph, October 23, 2008, http://www.telegraph.co.uk/finance/newsbysector/epic/badot/3245563/BAE-Systems-executive-questioned-over-alleged-European-bribery.html (accessed June 15, 2009).
57 Organizations for Economic Co-operating and Development, United Kingdom: Report on the Application of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the 1997 Recommendation on Combating Bribery in International business Transactions, October 17 2008, 4.
76 Parmy Olson, “Europe’s Crime Capitals,” Forbes, July 15, 2008,http://www.forbes.com/2008/07/15/europe-capitals-crime-forbeslife-cx_po_0715crime.html
77 Commission on Security and Cooperation in Europe, Arming Rogue Regimes: The Role of OSCE Participating States, 108th Cong., 1st sess., 2003, 40 (Prepared statement of Roman Kupchinsky found in official transcript).
80 “Protocol to Prevent, Suppress, and Punish Trafficking in Persons, Especially Women and Children, Supplementing the United Nations Convention Against Transnational Organized Crime,” Article 3 (a), United Nations, (2000).
81 Mohamed Y. Mattar, “State Responsibilities in Combating Trafficking in Persons in Central Asia,”Loyola and Los Angeles International and Comparative Law Review 27 (Spring 2005), 161 (see footnote 76).
83 William Finnegan, “The Counter Traffickers: Rescuing Victims of the Global Sex Trade,” The New Yorker, 2, 6, 7-8, http://www.newyorker.com/reporting/2008/05/05/080505fa_fact_finnegan (accessed June 8, 2009).
85 U.S. Department of State Senior Coordinator for Public Outreach, Office to Monitor and Combat Trafficking in Persons, email to author, December 10, 2008; Embassy of the United States, Moldova, “Moldova Moved up to Tier 2 in Trafficking in Persons,” press release, October 10, 2008,http://moldova.usembassy.gov/pr102908.html.
89 This section of report is based upon meetings and discussions with a variety of international governmental organizations and nongovernmental organizations who to the extent possible are not identified. Any opinions expressed or conclusions drawn do not necessarily reflect the official views of any of these organizations.
93 Daniel Kaufmann, “Anticorruption Strategies: Starting Afresh? Unconventional Lessons from Comparative Analysis,” in Curbing Corruption: Towards a Model for Building National Integrity, ed. Rick Stapenhurst and Sahr J. Kpundeh (Washington, D.C.: World Bank Publications, 1999), 37.
94 Miroslav Ajder, “Corruption Claims Hold Back Bosnia: Allegations of Fraud in Government Contracts and Privatization are Pitting the Government Against Monitors and Scaring off Foreign Investors,” BusinessWeek, March 17, 2009.
95 These compliance reports may be found at the GRECO web page,http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/reports(round2)_en.asp (accessed June 15, 2009).
96 Resolution on Limiting Immunity for Parliamentarians in order to Strengthen Good Governance, Public Integrity and Rule of Law in the OSCE Region, OSCE Parliamentary Assembly, 15th sess., Brussels Declaration (July 7, 2006).