Are wealth disclosures dangerous?
Posted: April 28, 2013 Filed under: Asset tracing, Corruption, Investigative techniques, Offshore havens, Taxes | Tags: Asset disclosures 4 Comments »
On April 15, French ministers posted their asset disclosures online for the first time ever. On the same day, Obama reversed a 2012 law that required officials to post their disclosures online.
About a third of all countries in the world now require officials to publicly disclose their assets. Institutions like the World Bank and the OECD see this as a good thing. Asset declarations, they say, are crucial tools for fighting corruption and holding officials accountable. As an investigative journalist in the Philippines, I found asset statements vital to digging into conflicts of interest and the illegal accumulation of wealth by those in public office. Asset statements are mother lodes of information – and journalists in Russia, South Africa, Bosnia and Thailand, to name only a few, have found them crucial to their investigations of official wrongdoing.
There is as yet no global consensus on the merits of asset transparency. Last week, Chinese authorities detained six anticorruption activists who had been demanding that senior Communist Party officials declare their wealth. The demands come in the wake of exposés in the U.S. press, including a report that recently won the Pulitzer Prize, on the billions – yes, billions – illegally amassed by the so-called Red Nobility.
But the pushback on official disclosures comes from an unlikely quarter as well. Last Monday On April 15, President Obama signed a law that reversed a provision inThe STOCK Act of 2012, which required members of Congress, legislative staff and senior officials of the executive branch to post their financial disclosures online. As my former student Sasha Chavkin pointed out in an informative piece for the Columbia Journalism Review, the 2012 law also came on the heels of scandal – a 60 Minutes exposé on insider trading by congressmen.
For some time now, critics of asset transparency have been saying that wealth disclosures are unnecessary violations of privacy. Rather than disincentivizing corruption, they say, disclosures only provide fodder for “asset porn.” More importantly, the National Academy of Public Administration (NAPA) in Washington, DC said in a recent study that these disclosures, if posted in online databases, pose dangers to law enforcement and national security. NAPA also asserted that asset disclosures have “limited value” in terms of detecting conflicts of interest or insider trading.
On April 15, for the first time ever, French government ministers were required to publicly declare what they own, in what has been called a historic Great Revelation or Le Grand Déballage. Like elsewhere, the demand for wealth disclosure was stoked by scandal. First, an exposé on the French muckraking site Mediapart, that alleged that the budget minister, Jerome Cahuzac, had an undisclosed – and untaxed – account in the Swiss bank UBS. In March, the minister was forced to resign and is now facing tax fraud charges. Then, just weeks later, Le Monde and the International Consortium of Investigative Journalists revealed that President Francois Hollande’s close friend and campaign treasurer, Jean-Jacques Augier, had secret investments in two offshore companies in the Cayman Islands.
The asset declarations, posted on a government website, were seen as an attempt by Hollande to repair the damage from the scandals. The French president is now proposing to extend the mandatory disclosures to the entire parliament and other elected officials. This is quite revolutionary. France has so far bucked the transparency tide, even if most EU and OECD countries now require public disclosures of official wealth and the World Bank preaches the virtues of asset transparency to its clients in the developing world. As the BBC reported, French resistance remains fierce:
Muckraking in Putin’s Russia
Posted: April 15, 2013 Filed under: Corruption, Global investigative reporting, Safety | Tags: Anna Politkovskaya, Echo Moscovy, Elena Milashina. Chechnya, Forbes Russia, Novaya Gazeta, Vladimir Putin Leave a comment »
Putin aims a tranquilizer gun at a tiger at a nature reserve. Photo from premiere.gov.ru. (Creative Commons license)
Can the worst of times for media and political freedoms in post-Soviet Russia also be the best of times for watchdog reporting?
Elizaveta Osetinskyaya, the editor of Forbes Russia, the most prominent business magazine in that country, seemed to think so. It’s a paradox, she said. The Russian media is confronting some of the most formidable political and financial challenges it has faced since the fall of communism. Yet she thinks investigative reporting has never been more vibrant nor its quality better. “Nowadays you can’t hide anything,” she said,” the declarations of officials, their assets overseas, you cannot even hide your offshore accounts.”
“Second,” she continued, “Western [media] brands came to Russia in the end of the 1990s and the early 2000s, bringing high standards and technologies for investigative journalism. I started as a journalist in 1995. A lot of investigative pieces at that time came from leaks from oligarchs. This is not the way I would prefer to find information myself. Nowadays that is more possible than before. Third, despite more restrictive laws, there are now more clear and transparent rules [for businesses and for officials], such as international standards of accounting. Now we have a lot of databases. We have information about tenders. You can find a lot of information about the schemes of private companies. Fourth, there are a lot of independent bloggers who help us do our jobs.”
Osetinskaya was speaking at Columbia’s Harriman Institute, which brought in brought in five of Russia’s leading muckrakers in a forum last week. Put five Russian investigative journalists together in a room and you’re bound to have fireworks. The consensus: Vladimir Putin is bad news for for the Russian press. Since his election to a third term last year, the State Duma has recriminalized defamation and passed new laws that would authorize state censorship of critical websites. There is now far less tolerance for critical reporting than there was during the previous president, Dmitry Medvedev. At the same time, violent assaults on journalists continue.
So it was no surprise that others didn’t quite share Osetinskaya’s optimism. Elena Milashina has been for 16 years an investigative journalist for the independent newspaper Novaya Gazeta, where she continues the work of her slain colleague Anna Politkovsyaka, reporting on Chechnya and also investigating attacks on journalists. Last year, Milashina was attacked and beaten up by unknown men while on her way home. The beatings were so severe, she suffered a concussion, 14 blood clots and a broken tooth.
The offshore exposé: bigger than Wikileaks’ ‘cablegate’
Posted: April 5, 2013 Filed under: Asset tracing, Company records, Corruption, Global investigative reporting, Offshore havens | Tags: Imee Marcos, International Consortium of Investigative Journalists, Offshore havens 1 Comment »
It’s possibly the biggest single leak of documents in the history of investigative reporting. This week, the Washington, DC-based International Consortium of Investigative Journalists released a series of stories based on 2.5 million documents that its director, Gerald Ryle, had obtained while he was still doing journalism in Australia.
In the last 15 months, 86 journalists in 46 countries have been poring over the document cache. ICIJ, housed in the Center for Public Integrity, coordinated the investigation from DC, using a secure messaging system to communicate with a worldwide team of journalists and free- text retrieval software and programmers in three continents to mine the information from the documents (for more, read this account of how this amazing project was put together).
In recent years, there’s been great work done on the offshore economy, including astounding estimates made by economists, advocacy groups, international financial institutions and academics of the trillions of dollars of global wealth that is stashed in offshore havens. What makes the ICIJ’s exposé such a blockbuster, however, is that it names names, in effect puncturing huge holes in the armor of secrecy that makes offshore havens so attractive.
The ICIJ reports this week expose an array of individuals, including politicians (everyone from a Kuwaiti sheikh to Imee Marcos in the Philippines to members of the Azerbaijani ruling family), businessmen, criminals, and even a songwriter and art collector who have stashed their assets overseas. Up till now, those assets – at least those in 120,000 offshore companies and trusts now on ICIJ’s database – were cloaked in secrecy, kept away from the prying eyes of journalists, government regulators and tax collectors. But no longer.
Offshore companies are not illegal. There are legitimate reasons for housing a company offshore. But because offshore havens guarantee their clients secrecy, they have become natural havens for corruption, organized crime and tax evasion.
In a tweet last night, ICIJ said it is contemplating making a public release of its data. If that happens, more secrets are likely to emerge as journalists and others who were not originally part of the collaboration dig into the data and find their own stories. This indeed could be bigger than Wikileaks’ “cablegate,” not just in terms of the size of the leaked documents (Wikileaks had about 250,000 US State Department cables) but also in terms of the international journalistic collaboration. (Disclosure: I am a member of ICIJ and my former organization, the Philippine Center for Investigative Journalism, was part of the Offshore Project). Read the rest of this entry »
Does investigative reporting deter corruption?
Posted: March 31, 2013 Filed under: Corruption, Global investigative reporting | Tags: Global Investigative Journalism Network 4 Comments »
Detail from the 1896 mural, Corrupt Legislation, by Elihu Vedder at the Library of Congress. Photo courtesy of Wikimedia Commons.
Last week, David Kaplan, the director of the Global Investigative Journalism Network, argued that we can make a more effective case for investigative reporting if we explained more forcefully the good that it does. After all, investigative reporting is costly and risky, and as the resources for it dry up, we need to show it’s worth the investment of time and money. The evidence is there, he said in a recent post, citing a recent Transparency International survey of 3,000 businessmen in 30 countries, the majority of whom ranked investigative reporting as the most effective anti-corruption deterrent.
Businessmen are supposed to be realists. So it’s quite astonishing that, as the TI survey showed, they’re putting more faith in journalism’s power to counter corruption than in national anti-bribery laws and international conventions. Is there in fact empirical evidence for such faith? Or are the businessmen not so much impressed by the power of reporting as they are cynical about the effectiveness of anti-corruption laws?
Since the 1990s, academics as well as organizations like the World Bank Institute and the UNDP have run regression analyses using TI’s Corruption Perception Index and Freedom House’s freedom of the press ratings. The data have consistently shown that for the most part, countries with a freer press have less corrupt governments or, to be more precise, governments perceived to be less corrupt. Thus, Daniel Kaufman, the World Bank Institute’s director former director for governance, stresses the importance of a free press and of investigative reporting in particular:
Basically, the capacity of some countries of engaging in a freer way in full disclosure through the media, coupled with the capacity of undertaking investigative journalism, can make a huge difference. That raises enormously the reputational risk and, therefore, the reputational cost for the corporate sector of engaging in these practices. Similarly, it raises the costs for the public sector and the politicians.
The Institute’s conclusions, however. are based mainly on survey data; that is, on the perception of, rather than actual, corruption, which is difficult to measure. Moreover, it’s hard to isolate the impact of a free press or watchdog reporting from other factors that may be linked to the control of corruption, such as independent judiciaries, respect for civil liberties, and the strength of civil societies and political parties. Academic studies have found that countries with independent courts and responsive bureaucracies also tend to be less corrupt.
This is hardly a surprising insight. We know that watchdog reporting can be most effective in countries where there are independent courts, responsive governments and empowered citizens. Without them, the work that journalists do is unlikely to lead to reforms. Russian journalists, for example, can publicize corruption at the highest levels, and they have, but that has not improved governance under Vladimir Putin. The same can be said of countries like Azerbaijan, or perhaps even Malaysia or Thailand. Individual stories may cause a policy reversal or drive a corrupt official out of office, but it’s generally hard to hold political or bureaucratic elites accountable if they enjoy impunity. How many times have I heard journalists complain that their exposés founder on the shoals of public and state indifference? That the politicians whom they’ve proven guilty of malfeasance are elected to office again and again?
Read the rest of this entry »
How to do investigative reporting in Pakistan
Posted: December 18, 2012 Filed under: Corruption, Global investigative reporting, Nonprofit watchdogs, Taxes | Tags: Pakistan, taxes, Umar Cheema, Zardari 3 Comments »When journalist Umar Cheema launched the Center for Investigative Reporting in Pakistan (CIRP) last week, he did so with a bang: A blockbuster story that hit the headlines around the world. Two-thirds of Pakistani MPs, his report said, do not pay their taxes. Neither did President Asif Ali Zardari – famous for his spending sprees, polo games and luxurious country estates – and more than half the Cabinet.
One would think that given his history, Cheema would be more cautious about exposing wrongdoing. Two years ago, while driving home from a dinner, he was seized from his car by men in black commando garb. He was brought to a house where he was stripped naked, beaten and sexually assaulted. Unlike victims of similar abductions, Cheema spoke out and said Pakistan’s Inter-Services Intelligence (ISI) agency was responsible for the attack.
When I called him in Islamabad over the weekend, Cheema was still dealing with the furor raised by his tax story. He expected this. After all, he named names. In a 70-page booklet called, Representation without Taxation, which was released online and in a press conference last week, he listed all the members of Parliament who who didn’t pay any tax at all. He also published the names of those who had paid taxes in 2011 and the amounts they remitted to the government.
MPs roundly denied the charges and accused Cheema of being on the payroll of their rivals and of timing the report for the elections, which will likely be held in the spring. “The opposition and the administration have joined hands to wage attacks on me and malign me,” he said. But he could document each and every charge, including the last rupee of tax paid. It took six months, he said, to gather the information, verify and then verify again. He knew that he would pay dearly for any mistake. “We were doing naming and shaming,” he said, “and we had to be extra careful.”
As investigative reporter for The News, Cheema had taken on the military and the intelligence services and exposed Zardari’s corruption. Now he is on his biggest story yet.
Muckraking in digital – and democratic – Indonesia
Posted: December 11, 2012 Filed under: Corruption, Digital transition, Global investigative reporting | Tags: corruption, Indonesia, KPK, Media Development Loan Fund, Tempo Leave a comment »
Tempo Magazine is Indonesia’s muckraker par excellence.
Last week, on a visit to the modest Jakarta office of the feisty Indonesian newsmagazine Tempo, I was told about one of the magazine’s proudest moments.
Now Tempo has a lot of proud moments. Founded in 1971 in the glory days of the Suharto dictatorship, it has always been an independent and credible voice. In 1994, in what would be later remembered as marking the beginning of the end of the Suharto era, the Indonesian information ministry shut down Tempo and two other publications for reporting on a government purchase of overpriced warships. Banned Tempo journalists helped set up underground newspapers, an independent journalist’s association to counter the government-sponsored one, and because the regime hadn’t yet figured out the internet, a site called Tempo Online.
Reopened in 1999, shortly after Suharto’s fall, Tempo remains the most influential and respected newsmagazine in Indonesia. But the country has changed. Indonesia is now a democracy with competitive elections and a rambunctious and free-wheeling press. It’s also in the midst of a digital revolution. The country is one of the fastest-growing mobile and tablet markets in Asia. Mobile-phone subscriptions are cheap here, with basic monthly data plans starting at $5, giving rise to what Tempo executive Bambang Harymurti calls “Facebook phones” – inexpensive handsets used mainly for getting access to the social networking site. It’s estimated that Indonesia will have 150 million people online by 2014, making it the 11th largest internet user in the world. Most of them will likely be accessing the internet through mobile devices. Read the rest of this entry »
How do I bribe thee? Let me count the ways.
Posted: October 16, 2012 Filed under: Corruption, Investigative techniques | Tags: Bribery, China corruption 2 Comments »
In China, “elegant bribery” means using artwork to pay off officials. Photo shows a Tang dynasty copy of a famous work of calligraphy (courtesy of Wikimedia Commons).
I’m leafing through an interesting little book called, How to Pay a Bribe. It’s a compilation of articles written by journalists, lawyers and private investigators. Intended largely for companies operating overseas, the book provides tips on how to avoid being prosecuted for corruption. It’s worthwhile reading for journalists if only because it documents the various forms of state-of-the-art bribery. If there’s food porn, this is corruption porn.
Here’s a titillating quote from an unidentified oil middleman interviewed by the journalist Ken Silverstein; ”You used to give a dictator a suitcase of dollars; now you give a tip on your stock shares, or buy a housing estate from his uncle or mother for ten times it’s worth.”
There are other ways to pay a bribe. Some are tried and true, and have been seen in various places; others are country-specific, like the very discreet “elegant bribery” practiced in China, described more fully below. Here are some of the juiciest examples – both crass and elegant – of the various forms of bribe-giving chronicled in How to Pay a Bribe:
Highway robbery: Investigating corruption in road projects
Posted: August 25, 2012 Filed under: Corruption, Investigative techniques, Public works | Tags: Balkan Investigative Reporting Network, Public works corruption, tenders, World Bank Leave a comment »
Unfinished bridge in Abra province, northern Philippines. Corrupt contractors ran away with the funds for this project. (Photo from the Philippine Center for Investigative Journalism)
The Summer School sponsored by the Balkan Investigative Reporting Network ended yesterday, and as the participants got ready to leave the picturesque mountain town of Mavrovo, Macedonia, talk inevitably turned to the bad state of roads in the Balkans. Most of the journalists were driving back home, taking journeys that will last five to 11 hours on highways that have seen better days.
Many of them traced the sad state of public works in the region to corruption. It’s a lament that’s heard in many other places as well. Yesterday, the ramp of an eight-lane bridge collapsed in Harbin, northern China. Reports say the bridge was just nine months old and was the sixth major bridge to have collapsed in that country in the past year. Citizens have blamed corruption and the frenetic speed of construction for the shoddy infrastructure.
Unlocking Swiss secrets
Posted: July 18, 2012 Filed under: Company records, Corruption, Courts, Freedom of information, Global investigative reporting | Tags: Banking secrecy, Glencore, Mark Rich, Switzerland, Zug Leave a comment »
Secrecy is deeply embedded in Swiss political, bureaucratic and business culture. It’s of course not surprising that the world’s banking capital puts a premium on discretion and confidentiality. Switzerland is still a preferred location for companies and rich individuals around the world because it offers tax and other advantages, including political stability and a low level of transparency. Many journalists probing business, corruption, and even organized crime are bound to encounter either a Swiss bank account or a Swiss company in the course of their reporting. And getting information on them is not going to be easy.
But even in Switzerland, the walls of secrecy are slowly being breached. Banking secrecy there is no longer as ironclad as it used to be, after the U.S. began aggressively forcing Swiss banks to open their records as part of an effort to collect taxes from American citizens stashing their wealth overseas. Read the rest of this entry »
8 Ways to Commit Grand Corruption (Part 2)
Posted: June 29, 2012 Filed under: Asset tracing, Corruption, Global investigative reporting | Tags: BAE Systems, Joseph Estrada, Pavel Lazarenko, Prince Bandar, Suharto 2 Comments »Large bribes paid to public officials are difficult to track. Hardly ever are the bribes delivered in suitcases of cash – although that has been known to happen. More often than not, bribes are paid through bank transfers made to ”corporate vehicles” – companies, foundations and trusts – that have been set up to conceal illegally acquired wealth. As The Puppet Masters, a recent study by the World Bank, says, there’s a whole industry of ”service providers” – law firms, notaries and secretarial companies – that exists mainly to help clients hide illegally acquired assets by setting up companies and other structures that obscure their real ownership. Read the rest of this entry »
