South Sudan commits to joining resource transparency group

South Sudanese President Salva Kiir has said that his country is committed to membership of the Extractive Industries Transparency Initiative, the global watchdog which promotes good governance of natural resource industries.

Kiir made his declaration on 14th December, at the International Engagement Conference for South Sudan in Washington. His speech focused on the need for good governance in South Sudan, noting the recent passage of a Financial Management and Accountability Act by the South Sudanese parliament. He also said that he had issued a decree “that all senior government officials should declare their resources by the end of January 2012; in absence of which they will be investigated”.

Kiir's stated commitment to good governance is intended to reassure foreign investors, who will be critical to helping kickstart growth in the world's youngest country. Aside from oil, South Sudan has almost no resources and is among the poorest countries of the world. On most human development indicators it is near the bottom of the global rankings.

Tackling corruption and ensuring responsible oversight of the country's one plentiful resource will be essential to propping up development in the years ahead. Graft is widely considered to be entrenched in the government, with funds regularly siphoned off for urgent humanitarian projects. The South Sudan Anti-Corruption Commission has made almost no inroads against graft.

President Kiir's regular public condemnation of corruption may not be enough to stem the tide, but it does raise awareness among the South Sudanese people and – just as importantly – convinces his international backers that he is serious about presiding over a clean administration.

His government's steps towards new laws and mechanisms to promote good governance – such as joining the EITI- will be welcomed. The problem, however, is not the laws and regulations themselves but the political will needed to enforce them. It remains to be seen if South Sudan's weak government is able to enforce its president's tough stance against corruption.

Sources: Voice of America, Sudan Tribune

Siemens executives charged in corruption case

Six executives from Siemens have been charged in the US with conspiring to bribe Argentinian officials with $100 million, three years after the company paid out $1.6 billion to settle claims that it sought to win contracts overseas by paying bribes.

The executives have been charged in separate investigations by the Justice Department and the Securities and Exchange Commission. The Justice Department's Assistant Attorney General Lanny Breuer said that the “allegations in this indictment reflect a stunning level of deception and corruption”. As well as breaching the Foreign Corrupt Practices Act, the allegations include money laundering and conspiracy to commit wire fraud.

The alleged scheme began in the late 1990s in an attempt to win a $1 billion contract with the Argentine government. Siemens officials set up a series of shell companies and fake contracts to hide the bribes to Argentine officials.

Despite the allegations, and the after-effects of the 2008 settlement, the company appears be on track to increase its US business. According to an investigation by the Wall Street Journal the company has made significant progress in building up both business and relationships in Washington. Last year, the firm hired senior Democratic operative Camille Johnston as US corporate affairs chief, which has opened even more doors.

Whether or not the new investigation damages the company's US business remains to be seen: given its growing weight as a major player in America, it seems unlikely.

Sources: Washington Post, Wall Street Journal

UK government urged to clamp down on corruption by banks and companies

The Bond group, the UK membership body for international development organisations, has called on the British government to clamp down on UK companies and financial institutions which fuel corruption in the developing world.

Releasing a new report on 9th December – world anti-corruption day – the group said that, although the UK had a strong legal framework, failings in “enforcing bribery laws and tackling dirty money has devastating effects on developing countries, undermining good governance and exacerbating poverty”.

There has been progress, according to the Bond group, towards complying with the UN Convention Against Corruption, but there are still several areas of concern. Firstly, the guidance issued by the Ministry of Justice on the UK Bribery Act is unclear, which creates the potential for confusion and loopholes.

Secondly, the Serious Fraud Office, the UK's leading anti-corruption agency, lacks enough resources to fully deter companies from bribing foreign officials. Thirdly, many banks (75 per cent according to the Financial Services Authority) do not know the ultimate source of their funds for high-risk customers, meaning that they may be profiting from corrupt funds.

Fourthly, the UK government has failed to pressure its overseas territories and dependencies into releasing company registries, allowing them to continue operating as havens for corrupt or shady enterprises.

The report does not propose that the government should reinvent the wheel, simply that more resources should be devoted to enforcing the Bribery Act, and more effort spent on enforcing the existing anti-corruption laws.

The Bond group also calls on the government to set up “a transparent cross-government anti-corruption strategy”, which would be chaired by the UK Anti-Corruption Champion, Ken Clarke MP.

Sources: Bond Group, The Guardian

Equatorial Guinea vote highlights US corruption probe

A flawed constitutional referendum in Equatorial Guinea has strengthened the country's long-serving ruler and drawn attention to a US anti-corruption probe into his son.

The referendum, which human rights groups said was marked by fraud, removed the maximum age limit for the president, allowing ageing President Teodoro Obiang Nguema to stay in power after he turns 75 in six years' time. It also creates a new post of vice president, which his sonTeodorin Obiang Mangue is expected to fill in anticipation of an eventual dynastic succession.

The new focus on the younger Obiang has refocused attention on an announcement in October that the US Justice Department was investigating him for corruption and money laundering in the US. He is believed to have amassed a fortune of over US$100 million, despite being paid US$81,000 a year as Forestry and Agriculture Minister.

The Justice Department is seeking to seize a US$30 million mansion which Obiang owns in Malibu, as well as a private jet, a collection of luxury cars and a collection of Michael Jackson memorabilia worth US$2 million.

The cases are part of the Kleptocracy Asset Recovery Initiative, a Justice Department scheme which seizes corrupt foreign assets and corrupt funds which have been laundered in the US. At the beginning of December, Obiang began fighting the charges.

Equatorial Guinea has had a poor reputation for corruption for some time. Despite substantial oil riches, much of the population remains mired in poverty, with poor infrastructure and services, while a small ruling elite enriches itself. In 2004, the US Securities and Exchange Commission launched a probe into five US oil companies which were accused of bribing government officials in Equatorial Guinea, although the probe was inconclusive.

The legal struggle to reclaim Obiang's assets is anticipated to take a long time, and he is likely to fight the proceedings at every step. In any case, if he becomes vice-president he may decide to start spending more time back in Equatorial Guinea.

Sources: Reuters, Associated Press, AllAfrica

New Transparency International report reveals entrenched corruption

Global watchdog Transparency International has just released its latest Corruption Perceptions Index (CPI), an annual poll which tracks perceived levels of graft in countries around the world – and the overall picture remains bleak.

The CPI ranks countries from 1 to 10, with 1 being the most corrupt and 10 being the least: two thirds of countries in this year's Index ranked under 5. Perennial leaders New Zealand, Finland and Denmark are at the top of the table, with Somalia and (ranked for the first time) North Korea at the very bottom – both score just 1.0.

One trend that stands out this year, according to Transparency International, is the correlation between perceived corruption and the wave of protests that has swept the world in 2011. Most Arab Spring states fare poorly, with scores under 4 (Egypt is 112th out of 182 and Libya is 168th).

Meanwhile in Europe, the states which rank lowest are those which have seen protests and changes of government. Italy, for example, ranks 69th – below states including Macedonia, Georgia, and Slovakia.

There is no direct correlation between wealth and transparency: states like Russia ranking below Nigeria, Syria, and Eritrea, whilst Botswana beats Taiwan, Israel and South Korea. In a press release, Transparency said that high-scoring countries indicated that “over time efforts to improve transparency can, if sustained, be successful and benefit their people”.

Although the CPI is based on perceptions rather than any objective indicator, it is a useful tool for activists and civil society groups seeking to tackle corruption in their countries.

Sources: The Guardian, Transparency International

Indian opposition hit by corruption scandal

The anti-corruption campaign of the biggest Indian opposition party has suffered a serious blow with the arrest of a senior minister in a scandal involving improper sale of government land.

The Hindu-nationalist Bharatiya Janata Party (BJP), the main opposition to the ruling Congress, has been deeply critical of the government's lack of effort on tackling corruption. It has jumped on the bandwagon of a national anti-graft campaign led by civil society activist Anna Hazare, taking advantage of widespread anger about corruption for political advantage. BJP leader LK Advani has just begun a huge nationwide tour to speak out against corruption and rally support for the party.

That strategy appears to have backfired, as with unfortunate timing a court ordered the arrest of BS Yeddyurappa, chief minister of Karnataka state until he resigned in August. Yeddyurappa was arrested for his alleged involvement in a scam to sell prime government-owned real estate in exchange for kickbacks or to companies owned by members of his family. The sums involved are extremely large – the court claims that the deals cost the state US$95 million, whilst they earned Yeddyurappa around US$38 million.

The day after he was arrested, he was admitted to hospital after complaining of feeling ill. He is likely to remain there until his court appearance on 22nd October. The arrest is a major embarrassment to Advani and the BDP leadership as they begin their five-week tour, which is being seen as potentially laying the groundwork for the 2014 general elections.

Advani sought to deflect questions on the corruption scandal, before declaring that “We had cautioned Yeddyurappa earlier... When the report came he had to leave. No party can fight corruption when its own house is not in place”. Public opinion is likely to be sceptical about this attempt to gain the moral high ground, and the BJP tour has yet to make much of an impact.

Neither of the main parties can claim to be particularly clean. The BJP has previously been dogged by corruption rumours, and it is likely that Yeddyurappa is just the tip of the iceberg. Congress has been engulfed in multiple scandals, including a multi-billion dollar scheme to grant telecoms licences in exchange for huge bribes which has claimed the scalp of telecommunications minister Andimuthu Raja.

The BJP scandal will hurt the opposition but will not particularly help Congress: the most likely outcome is simply to contribute to widespread fatigue and cynicism in Indian politics.

Sources: BBC, AFP, Times of India

Corruption threatening India's future, say industry leaders

A group of senior Indian businessmen, judges and economists have warned that corruption is strangling the country's prospects for growth, and called for widespread reform to increase transparency.

The fourteen leading figures made their warnings in an open letter published in local media. It follows an earlier 'call to action' which they made in January and which focused on the 'governance deficit', corruption, the need to distinguish between dissent and disruption, and environmental issues.

Although the previous letter sparked debate in Indian media, it failed to dent India's rampant corruption. A widely-publicised campaign against graft by veteran civil society activist Anna Hazare has brought wider public attention to the issue, and it is in this context that the 14 writers decided to publish their second letter.

The signatories include the founder of the software giant Wipro Azim Premji and former central bank governor Bimal Jalan. In the letter they support the need for a Lokpal Bill, given impetus by Hazare's campaign, which would set up an independent ombudsman to investigate corruption, but stress that this is only part of the solution intended to address “episodic corruption”. They underline that ordinary Indians suffer most from corruption.

The signatories call for urgent land, judicial, electoral and police reforms to overhaul India's “antiquated laws”, but insist that debate on such reforms must be conducted civilly so as to avoid eroding public confidence. They also suggest that India should follow the UK's example of a comprehensive Bribery Act which would break the nexus between politicians and corporate interests in India.

Thirdly, the letter calls for better redressal mechanisms for victims of corruption, citing the fact that in India there are just ten judges per million people, compared to 50 in the UK and 107 in the US – without a better ratio, India's sclerotic judicial system will continue to be sluggish, making it even more difficult to tackle corruption.

The signatories are realistic about the scale of the challenge, writing that activity in India is “vitiated by corruption in almost every sphere”. Although the country's graft problem will not be solved through this letter, it does continue to keep the subject in the public discourse and put pressure on the government of Prime Minister Manmohan Singh to take action.

Sources: BBC, AFP, The Hindu

Tullow denies Uganda bribery claims

UK firm Tullow Oil has strongly denied accusations made by Ugandan MPs that it paid bribes to influential members of the country's elite – an accusation which has contributed to the suspension of all new oil deals.

As well as the graft accusations, parliament has also criticised the government's dealings with Tullow on tax grounds, arguing that Tullow's sale of stakes intended to raise capital for further investment should be blocked until a dispute over a US$472 million tax bill is resolved.

Allegations of corruption were aired in a stormy session of the Ugandan legislature on 11th October by Gerald Karuhanga, an MP for the ruling National Resistance Movement. Karuhanga tabled documents alleging that Tullow paid Prime Minister Amama Mbabazi, Foreign Minister Sam Kutesa and former Energy Minister Hilary Onek multi-million dollar sums for favourable decisions.

The officials involved all strenuously deny the accusations, as does Tullow. In a statement by chief executive Aidan Heavey, the company said that it “rejects the outrageous and defamatory accusations of corruption” and would “examine all possible legal action to protect the reputations of the company and its employees”. Heavey added that the accusations “appear to be founded on misunderstandings about how the global oil and gas industry works”.

Tullow currently owns three blocks in Uganda, and is seeking to sell off two-thirds of its stakes in the blocks to Total and the Chinese state-owned firm CNOOC. The move follows the purchase of Heritage Oil's stakes in the country's oil and gas blocks.

The legislature has now voted to suspend all new deals in the sector, including the sell-off of Tullow's stakes, until a 2010 bill regulating the oil sector – and promoting greater transparency – is passed.

The support which the suspension gathered from ruling party MPs suggests that long-time President Yoweri Museveni, who has backed the Tullow deals, is losing control of his party. He has come under increased pressure this year following a February poll marred by fraud and stirrings of popular unrest. The attack on key ruling figures suggests that domestic politics as much as concern for transparency is a key factor in the row.

The UK government, in line with the 2010 Bribery Act, has announced that it will investigate the allegations. The High Commission in Kampala told reporters that “Bribery of foreign public officials is of course an offence under UK law, and it would therefore be for the British Police to decide whether to open an investigation into allegations made against a British company”.

Sources: BBC, Wall Street Journal, Daily Monitor

Peruvian President dismisses top police in corruption purge

Peru's president Ollanta Humala has sacked 30 of the country's top police generals for corruption, in a major offensive in a war on corruption he announced in July.

The purge has forced two-thirds of the country's top police officers into retirement, including the director. His replacement Raúl Salazar has sworn to “banish any act of corruption that stains the name of the police” and continue the crackdown in the force.

Humala, a former military man, came to power in July partly because of his strong anti-corruption message. This resonated in a country which had grown used to years of massive embezzlement by the ruling elites; with approval ratings of 65 per cent, his campaign appears to have widespread public support.

In early October this message was echoed at an International Anti-Corruption Conference was held in Lima, at which the president of Congress declared that the government had the will to launch an all-out war against graft.

Critics of the government have warned that the police purge may be more complex than it seems, however. Some have accused Humala of cleaning out old officers and replacing them with his own favoured candidates in a bid to increase his influence over the police force. The promotion of dozens of army officers has also led to allegations that the president is looking to politicise the security services rather than root out corruption.

Despite concerns among the opposition and intelligentsia, many ordinary Peruvians are likely to support Humala's war on corruption. During the election campaign against Keiko Fujimori, daughter of ex-President Alberto Fujimori, he repeatedly promised more equitable division of Peru's resources and an end to the nepotism which has afflicted the country for decades.

In many polls the police has been viewed as the most corrupt institution in the country. It is likely that the population will support his efforts to eliminate corruption despite concerns over the political motivations behind the purge. Truly effective anti-corruption efforts, however, will require root-and-branch reform – not simply retiring the men at the top.

Sources: BBC, Guardian, Wall Street Journal

New SEC bribery unit boss appointed

The US Securities and Exchange Commission (SEC) has appointed veteran anti-corruption agent Kara Brockmeyer as head of its international anti-bribery team, the Foreign Corrupt Practices Act (FPCA) unit.

The FPCA forbids US firms from engaging in corrupt practices abroad, and Brockmeyer, as assistant director in the SEC's enforcement division since 2005, has spearheaded the agency's investigations of a number of US companies operating overseas.

One of the biggest investigations was into Halliburton, KBR, ENI and Technip SA in their Nigerian operations. The probe uncovered a decade-long bribery scheme connected to the construction of a Nigerian gas plant. The investigation finished in 2009 and resulted in the recovery of US$1.2 billion of funds and criminal penalties.

Brockmeyer also served as co-head of the enforcement division's Cross Border Working Group, described as a “proactive risk-based initiative focusing on U.S. companies with substantial foreign operations”. The group is an indication of the SEC's increasingly aggressive attitude towards US companies operating in foreign jurisdictions.

Starting her career in private practice, Brockmeyer joined the SEC in 2000. She began supervising investigations in 2002 before becoming assistant director in 2005. Given her record of active and aggressive investigation, it seems likely that she will continue the SEC's current strategy.

With expanded sanctions against Iran being discussed in Congress, a volatile situation in the Middle East creating investment uncertainty, and ongoing questions being asked into the activities of US firms in Africa, Brockmeyer will have plenty to investigate.

Sources: SEC, Wall Street Journal

Corruption rampant in Liberia’s nascent oil industry, says watchdog

Despite the fact that oil has yet to flow, Liberia's energy sector is already beset by corruption, a lack of oversight and a poor regulatory framework, according to campaign group Global Witness.

Working with a local group, the Liberia Oil and Gas Initiative, Global Witness has produced a report detailing the opacity and graft which runs through Liberia's oil sector. With the country due to go to the polls in October, reforming the sector “must be a priority for any new government”.

The role of the National Oil Company (NOCAL) comes under sustained criticism in the report. As well as acting as regulator of the sector, NOCAL is a profit-making enterprise which does business with the companies it regulates. In order to pass oil contracts, NOCAL paid $120,400 to the legislature between 2006 and 2008, an act regarded as bribery under Liberian law.

Chevron also comes under fire in the report, for buying a 70 per cent stake in Liberian blocks owned by the Nigerian firm Oranto, which had made a payment to the legislature – information publicly available when Chevron purchased its stake.

The legal framework governing the oil sector is, according to Global Witness, deeply anachronistic and unsuitable for the current state of activities there. Much of the legislation was drawn up in the years during and immediately after the country's brutal civil war. The institutions responsible for oversight have weak capacity and mandate, and are beset by conflicts of interest. As a result, “Liberia's oil sector is already beset by corruption and illegality”.

The Environmental Protection Agency (EPA), for instance, has extremely limited capacity to carry out the environmental assessments necessary, and a top EPA official told Global Witness that the agency was entirely unprepared for the challenges of an offshore oil and gas industry.

The report urges the Liberian government, and the government elected later this year, to begin immediate reform of the sector. In particular, it calls for a reformed oil and gas law, strengthened environmental and social assessments, and more active efforts to root out corruption and abuse of power within the sector.

Sources: Global Witness

Zambian anti-corruption candidate wins presidential election

Zambia's longstanding opposition leader, Michael Sata, is being sworn in as the country's president after a hotly contested election which he fought largely on an anti-corruption platform.

Sata, 74, won 43 per cent of the vote against the 36 per cent secured by incumbent Rupiah Banda. A tearful Banda congratulated his rival but counseled humility, warning that a term of government is temporary and that “the next election will judge you also”.

The election was generally peaceful and fair, according to monitors, although there were scattered outbreaks of violence in the capital and a number of mining towns. Some of the unrest was prompted by a media blackout, imposed after hackers posted false results showing a landslide win for Sata on the Election Commission of Zambia's website.

Sata took advantage of widespread dissatisfaction with the reign of Banda, whose Movement for Multiparty Democracy (MMD) had run Zambia for 20 years. Despite ample mineral wealth and a rising economy, material gains have not reached the majority of Zambians. Sata linked the country's poverty with government corruption, accusing the MMD of failing to deliver social and economic progress while pocketing the country's mining revenues.

MMD figures who have defected recently have also taken aim at the government's record on corruption, with one saying that “a lot of plunder” takes place. Banda's abolition of an anti-corruption watchdog in 2009, on the basis that it had failed to achieve sufficient results, also came in for widespread criticism.

Allegations of MMD patronage were used by Sata's Patriotic Front as an election tactic. The party adopted a slogan of “Don't Kubeba”, meaning “Don't tell them” – essentially encouraging Zambians to accept any bribes which the MMD offered them, but to still vote for the Patriotic Front.

Sata himself is not viewed as completely incorruptible, having served as a senior official in the MMD under late president Frederick Chiluba during an era of notorious graft. His election may give hope, however, to ordinary Zambians who have felt held back by corruption and inefficiency in their government.

Sources; BBC, Africa Confidential, Voice of America

Corruption scandal grips Kuwait

An unfolding corruption scandal has rocked Kuwaiti politics, leading to popular protests and calls for the prime minister to resign.

On 21st September, more than 5,000 demonstrators rallied in the capital Kuwait City. Led by opposition MPs and surrounded by hundreds of riot police and special forces, the protestors demanded that Prime Minister Sheikh Nasser Mohammad al-Ahmad Al-Sabah resign. “If the era of Sheikh Nasser does not end, corruption will grow bigger”, one Islamist opposition MP leading the rally declared.

The rare display of public discontent follows an investigation by Kuwait's public prosecutor into shady payments to several members of Parliament. When $92 million was transferred into the accounts of two MPs, the National Bank of Kuwait and the Kuwait Finance House went to the public prosecutor, who opened an investigation into the finances of nine MPs, almost a fifth of the total number. Local media have reported that between 15 and 20 MPs, as well as former ministers, may be investigated by the parliament.

The payments were believed to be linked to political events and testimonies, suggesting that they were intended to buy the support of lawmakers.

Although the scandal itself is significant enough – the total money involved is estimated to be as high as $350 million – it has also triggered much wider discontent against corruption in the government, and even the fundamental structure of Kuwait's political system. Youth groups have demonstrated for far-reaching reform, including the establishment of a constitutional monarchy.

The government's silence over the inquiry has fuelled public anger. Opposition figures, drawn from a broad coalition including liberals and Islamists, are now pressing for the resignation of the government as well as the establishment of a front to push for greater action against corruption.

They have also demanded that the legislature reconvenes for an emergency session on 22nd September to debate the issue. Opposition MP Jamaan al-Harbash has warned of “serious political consequences” if the government blocks the emergency session.

Sources: Kuwait Times, New York Times, AFP

Arms executives offer resignation in Italy bribery probe

Two senior executives from the Italian arms firm Finmeccanica have offered their resignations, amid corruption allegations linked to an ongoing investigation into Italian prime minister Silvio Berlusconi.

Commercial director Paolo Pozzessere announced his resignation on 16th September, followed shortly by Salvatore Metrangolo, president of a Finmeccanica subsidiary. The firm, which is 32 per cent owned by the Italian government, produces AgustaWestland helicopters and owns a raft of assets in Italy from defence to transport. Poor results and unprofitable arms have battered its share price this year, even before the latest allegations.

The corruption rumours emerged from court documents relating to investigations into Berlusconi, under pressure over his private life and allegedly corrupt dealings with shady figures from the Italian underworld. In the course of wiretapping individuals connected with the investigation, Italian police recorded Finmeccanica executives referring to paying off foreign officials in order to win tenders and contracts.

The investigations have also drawn attention to some unusual Finmeccanica agents, including Valter Lavitola, named in connection with an attempt to blackmail Berlusconi. Lavitola, who is currently on the run, served as an agent for Finmeccanica and had “frequent contact” with Pozzessere.

Neither the company nor any of its executives been charged; the resignations were advertised as an effort to safeguard Finmeccanica's reputation. If it is believed to have made bribes overseas, however, its UK subsidiaries will come under serious pressure. Paying off foreign officials is a crime under the UK Bribery Act, so Finmeccanica could soon find itself in hot water on multiple fronts.

Sources: Guardian, Wall Street Journal

Colombian oil agency boss rejects corruption claims

Armando Zamora, who resigned as head of Colombia's National Hydrocarbons Agency (ANH) last week, has denied allegations of corruption made by the country's inspector general.

Zamora, who had been director of the oil-licencing agency since 2003, was accused of using agency money for scholarships of ANH officials and their children, as well as keeping back money owed to multinational investors. He denied the charges, accusing politicians in Congress of “distorting reality” and insisting that he was going to step down anyway to focus on his academic work.

The Inspector General, meanwhile, ordered the agency to reimburse US$551 million of royalties which it had collected since 2007 to beneficiaries.

Zamora's resignation highlights the ongoing battle which the government of President Juan Manuel Santos is waging against corruption, which is still a serious problem in Colombia's political circles. He is the latest in a string of high-profile figures to resign as a result of alleged graft, including the mayor of Bogota Samuel Moreno (suspended in May) and former agriculture minister Andres Felipe Arias (jailed in July pending trial).

The ANH under Zamora has presided over a dramatic improvement in Colombia's oil and gas sector, which has attracted billions of dollars of foreign investment in recent years. Successful government offensives against the guerrillas of the FARC have been a major factor; an increasingly open and transparent investment climate, which Zamora helped to engineer, has been another.

Zamora is insistent that he and the ANH always stayed within the law. His rapid resignation and the lack of a successor to replace him, however, seems to suggest that there was some merit to the inspector general's claims.

Sources: Reuters, Colombia Reports

Egyptian steel magnate jailed for corruption

Former Egyptian steel magnate Ahmed Ezz, who was closely associated with deposed President Hosni Mubarak, has been sentenced to ten years in jail for corruption, alongside two other senior figures associated with the former regime.

Ezz built up a huge fortune in pre-revolutionary Egypt and was seen as the embodiment of the nexus between business and politics under Mubarak. In 2006, it was reported that he controlled around 70 per cent of the country’s steel and iron production, and 50 per cent of its ceramics; he is also believed to have bankrolled Mubarak’s effortless election victory in 2005 in exchange for political power.

Having secured the post of secretary for organisational affairs for Mubarak’s National Democratic Party (NDP), Ezz was critical to maintaining party discipline and to the NDP’s landslide in the 2010 parliamentary elections.

Ezz was arrested on 17th February, several days after Mubarak stepped down in the face of popular pressure, and subsequently faced public humiliation and the torching of his headquarters by protestors.

He was detained on charges of wasting public fund, and has now been convicted for granting licences without payment of fees - alongside former Trade and Industry Minister Rachid Mohamed Rachid (convicted in absentia to 15 years) and the ex-industrial development chief Amr Assal (jailed for ten years). Ezz and Assal must also jointly pay a fine of US$110 million.

The convictions represent another blow by Egypt’s revolutionaries against the country’s former business and political elite. Widespread anger at the corruption and cronyism of Mubarak’s Egypt has led to an aggressive legal campaign against former tycoons, most of whom were connected to the president’s circle. Corruption and abuse of public funds are the most common charges levelled against business figures.

The post-revolutionary anger against powerful elites has led to considerable apprehension among Egyptian businessmen, who fear being accused of conniving with the former regime and – if charged – hold out little hope of a fair trial in the current climate.

Sources: AP, BBC, Reuters

Top Iraqi corruption investigator resigns

Iraqi Prime Minister Nouri Al-Maliki has accepted the resignation of Judge Rahim Hassan Al-Uqailee, the man leading Iraq's fight against corruption, in a blow to efforts to clean up the country's government and parliament.

Al-Uqaliee, the head of the country's Integrity Commission, submitted his resignation on 8th September, citing “pressure from political parties” to cover up corruption and a lack of political support for his agency.

Despite al-Uqaliee's public frustrations with stonewalling politicians, other explanations for his resignation are already circulating in Iraq's febrile political atmosphere. One of the members of the parliamentary committee on integrity, Sabah Saadi, claimed that the ruling party was pushing al-Uqaliee to launch “false and fabricated” corruption probes against political figures including Ahmad Chalabi, the US's former protégé in Iraq.

One of Saadi's fellow committee members, however, said that al-Uqaliee's resignation was a result of his failure to produce results in tackling Iraq's rampant corruption, ranked as the fourth worst in the world by Transparency International.

A third MP, Shakir Kitab claimed that the resignation “sheds light on complicated political relations and lack of transparency and stability in the government” rather than on the activities of one or another political bloc.

On 12th September, al-Uqaliee reiterated his reasons for resigning in a public letter to the integrity committee. In it, he declared that “the fight over stealing the money of the state and its property is the unspoken part of the struggle for power in Iraq today”. Despite such obstacles, however, in 2010 the Integrity Commission issued 4,082 arrest warrants for government officials, including 197 high-level figures.

According to Iraqi MPs, al-Maliki is planning to replace al-Uqaliee with a fellow member of his Dawa Party, Ala' al-Sa'idi. It remains to be seen whether the new head of the Integrity Commission will be able to ignore the pressures and obfuscations of shady officials.

Sources: AFP, Los Angeles Times, Aswat Al Iraq

Public pressure mounting over corruption in Brazil

Across Brazil on 7th September, the country's Independence Day, thousands demonstrated against corruption in the government, which organisers called a “pandemic which threatens the credibility of institutions and the entire democratic system”.

The demonstrations come in the midst of an anti-corruption drive by President Dilma Rousseff. Since she took office in January, four ministers have resigned under pressure over corruption; several others have also been accused of graft, while dozens of lower-ranking officials have been fired or arrested.

Rousseff's campaign has begun to spin out of her control. What began as a series of low-key internal investigations to root out graft in government agencies was picked up by the Brazilian press, and has since snowballed into a nationwide campaign against what is perceived to be a widespread culture of corruption.

The drive is now threatening Rousseff's political position, as well as sparking a growing civic campaign which could leave her vulnerable before the end of her first year in office. Media reports suggest that the effects of the purge are creating speculation that Rousseff's predecessor, Luiz Inacio Lula da Silva, could return in 2014 to replace her again as president.

Since June, Agriculture Minister Wagner Rossi, Chief of Staff Antonio Palocci, Transportation Minister Alfredo Nascimento, and Defence Minister Nelson Jobim have left their posts. The president has been criticised for allowing Tourism Minister Pedro Novais to remain, despite the arrest of many of his senior aides for a scheme to embezzle ministry funds.

The cycle of accusations and counter-accusations – many made anonymously through the media - is threatening the cohesion of Rousseff's governing coalition, with some viewing it as a fratricidal campaign of personal score-settling. Many now believe that Rousseff's Worker's Party will struggle to keep the coalition intact.

The Independence Day marches represent a new phase in the anti-corruption campaign, which has previously been largely confined to the political class. It suggests that the public is no longer prepared to tolerate the patronage-based cliques which have dominated Brazilian politics for years.


The protests place Rousseff in a difficult position. Although many of the demonstrators expressed support for the president's campaign, others were angry at the entire political system – suggesting that she must maintain the momentum or face becoming a target of public anger for not going far enough.

Sources: Financial Times, BBC, UPI, Christian Science Monitor

South Sudan announces anti-corruption drive

South Sudan, the world's newest country, has pledged to tackle the culture of corruption and prosecute corrupt public officials. On 7th September the National Legislative Assembly adopted a report submitted by the country's Anti-Corruption Commission (ACC) which revealed the misuse of millions of Sudanese pounds by government agencies.

The government of President Salva Kiir has made rooting out corruption one of the new nation's top priorities, although opposition figures have accused his new Cabinet of being symptomatic of the problem.

In its report, the ACC announced that it had investigated cases pertaining to 12 million Sudanese pounds (US$4.49 million) which were embezzled or misused by government ministries, which it did not name. Cases pertaining to another 6 million Sudanese pounds were referred to other anti-corruption agencies.

These are significant sums in a country in which 51 per cent live below the poverty line. The ACC has its work cut out. The commission's chair, Pauline Riak, also set out the challenges facing the agency – chiefly a lack of adequate funding. Kiir acknowledged in August that the ACC and related anti-corruption agencies did not have sufficient qualified personnel or technical capabilities.

It seems that Kiir is serious about tackling what he refers to as the “cancer of corruption”. He has repeatedly said that theft of much-needed funds had inhibited the country's fragile development, and has encouraged his ministries to fight graft.

In particular the Interior Ministry under Alison Magaya Manoni has made tackling corruption within the police force one of its top priorities. On 6th September Manoni said that much greater attention would be devoted to investigating officers who extort money from citizens, as part of a wider process of reforming and improving the country's nascent police force.

However critics have suggested that Kiir should look closer to home in his battle against misuse of funds. His new Cabinet, approved on 31st August, comprises 29 ministers and 27 deputy ministers, each of whom receives a generous salary and expenses. Opposition leaders have complained that this is inappropriate for such a poor state.

An additional challenge, highlighted by Riak in her remarks to the legislature, is enforcing a requirement for government officials to declare their assets. To date, many have failed to do so. Without first cleaning his own house, Kiir may find it difficult to begin tackling the wider problem of corruption in the public sphere.

Sources: AFP, allAfrica, Sudan Tribune

Kenyan anti-corruption boss prepares to step down

The head of Kenya's leading anti-graft agency, the Kenya Anti-Corruption Commission (KACC), is preparing to step down after legislation was passed which will create a new agency to fight corruption.

Patrick Lumumba and his four deputies have a week to leave their offices. They will be replaced by interim directors who will run the KACC until its successor, the Ethics and Anti-Corruption Commission (EACC) is ready to absorb the old agency's staff in around three months' time.

The legislation signed by President Mwai Kibaki last week is an amendment to an anti-corruption Bill, passed by Parliament in line with Kenya's new constitution which came into effect last year. As well as fighting corruption, the new EACC will be tasked with implementing Article Six of the new constitution, which sets ethical standards for individuals seeking to enter public office.

The winding-down of the KACC and its replacement by the EACC has raised some concerns about the viability of Kenya's struggle against graft. This is the third time since 1997 that the country's main anti-corruption agency has been disbanded: the Kenya Anti-Corruption Authority was shut down in 2000, and its replacement the Anti-Corruption Police Unit was replaced by the KACC in 2003. Such a rapid turnover, the KACC argued in a leaked letter to the government, “would set a bad precedent”.

More significantly, it could prove “operationally disastrous and a fatal recoil in the fight against corruption”, according to the KACC letter. The unwieldy transition period of three months could lead to the suspension or weakening of on-going investigations, the agency argued, although the government has insisted that the interim directors will ensure that the KACC continues to run smoothly.

In any case the work of the agency has yet to yield any major successes. Although the former Foreign and Industrialisation Ministers were forced to resign after corruption allegations, no senior political figures have been convicted of graft by Lumumba's KACC. He spoke out against Kenya's culture of corruption earlier this year, warning that the country could face unrest because corruption was stifling economic development.

As recently as last week he engaged in a public dispute with assistant Tourism Minister Cecily Mbarire, accusing her of seeking to bribe him in connection with an investigation being conducted by KACC into the Ministry of Water. She has now filed a suit against Lumumba for defamation.

Sources: Reuters, Daily Nation, The Standard, Voice of America

Indian government approves anti corruption law draft, but civil society not pleased

Activist Anna Hazare describes the bill as a 'deceit on the nation' 

India's government has approved a draft of the new anti-corruption law, which will be tabled in Parliament during the upcoming session, which starts on 1st August.

The proposed legislation would see the creation of an anti corruption ombudsman, or Lokpal, with the power to probe corruption in the upper tiers of India's bureaucracy, in Parliament and in the ministries.

But many Indian anti corruption civil society activists have rejected the Lokpal Bill 2011 as insufficient as it exempts the prime minister and the judiciary.

Indian activist Anna Hazare called the bill a 'cruel joke' and said he would go on a hunger strike from 16th August in protest.

Another prominent anti corruption campaigner and former senior police officer, Kiran Bedi, said on Thursday 28th July that the government "is taking people for a ride".

The government of India's Prime Minister Monmohan Singh has been hit by a series of corruption scandals in recent months and years, which has seen Singh's previously clean image become increasingly tarnished.

The Lokpal Bill was meant to show that the government is serious about corruption, but while it included anti corruption campaigners in the bill's development, the two sides fell out over the issue of whether the prime minister should be included under the bill.

India's BJP opposition party has also criticised the bill.

"If a prime minister does something corrupt to save his seat and there is no investigation into the corruption, then what does this mean?” BJP spokesman Ravishankar Prasad was quoted by the BBC as saying.

According to Salman Khurshid, one of the government ministers in the bill drafting committee, Prime Minister Singh had wanted the prime minister's role to be brought under the Lokpal's purview, but the Cabinet decided against it.

Khurshid also said the government would introduce separate legislation to increase judicial accountability.

The bill will still have to get Parliament's approval before it becomes law. While it seems likely that it will pass – no party will want to look like it is condoning corruption - it is not a guarantee. Different forms of the Lokpal Bill have made multiple rounds through Parliament since 1968 without being enacted, according to the Wall Street Journal.

If passed, the body would be made up of 8 members, plus a chairperson. It would comprise four retired or serving judges and justices of higher courts and four individuals with at least 25 years of experience in the field of anti corruption. The chairperson would be a serving or retired Supreme Court judge.

The Lokpal members would serve five-year terms, and would be appointed by the President, based on recommendations from a team made up of the prime minister, the speaker of Parliament, the leader of the opposition and others.

Sources: BBC News, Times of India, Wall Street Journal

For more information, please see the Menas ACCS website, here. 

Diageo fined US$16 million for foreign bribery

The world's largest spirits company, Diageo, has agreed to pay over US$16 million to US authorities to settle allegation that it paid bribes to officials in India, South Korea and Thailand.

The Securities and Exchange Commission (SEC) investigated Diageo under the Foreign and Corrupt Practices Act (FCPA) for actions between 2003 and 2009.

The SEC alleged that Diageo's subsidiaries paid more than US$2.7 million in bribes, which helped it generate more than US$11 million in profits.

“As a result of Diageo's lax oversight and deficient controls, the subsidiaries routinely used third parties, inflated invoices and other deceptive practices to disguise the true nature of the payments,” the SEC said.

Diageo's Indian subsidiary, DI, allegedly paid US$1.7 million to Indian officials and hundreds of employees of government liquor stores and the Indian military's Canteen Stores Department, according to the Wall Street Journal.

According to the SEC, the “cash services fees” were used to “increase government sales orders of its products and to secure favourable product placement and promotion within the stores.”

The SEC said that as a result of the cash payments, which were obscured in accounts, put under labels like “marketing promotion”, or “market scheme settlement”, DI received increased sales, allowing to “unjustly” earn over US$11 million.

In Thailand, it is alleged that Diageo, through DT, retained the services of a Thai government and foreign political party official to lobby other officials to adopt Diageo's position in a number of tax and customs disputes.

It is alleged that from April 2004 through July 2008, DT paid approximately US$12,000 per month, for a total of nearly US$600,000. The Thai official in question was paid through a political consulting firm, for which the official acted as a principal.

Some US$15,000 was also used to reimburse the official's entertainment expenses, including those incurred on behalf of government officials. The payments were improperly recorded under labels such as "Corporate Social Responsibility", "Stakeholder Engagement" and "External Affairs".

Diageo's unit in South Korea, DK, allegedly paid more than US$86,000 to a customs official who helped the company in transfer-pricing negotiations with the South Korean government in 2004. The company took numerous other officials on European trips, and made hundreds of small payments to South Korean military officers.

The SEC charged the company with disguising the payments as legitimate expenses in its books and records and failing to establish internal controls, in violation of the FCPA.

Without admitting or denying the charges, Diageo agreed to desist from further violations and pay US$11.3 million in disgorgement, US$2.1 million in prejudgement interest and a US$3 million penalty.

Diageo, who was praised for cooperating with investigators, said it had built systems and controls to prevent illicit payments.

Sources: ChiefOfficers.net The Telegraph, Wall Street Journal

For more information, please see the Menas ACCS website, here.