Taking the Profit from Corruption

| 26/07/2011

Government decision making based on greed and corrupt deals destroys countries. It must not be ignored, swept under the carpet, or excused. Existing law can be used to prosecute come cases of corruption, but our law and the way it is enforced are not sufficient to deter corruption. If existing laws were sufficient, we would not have the problems we have.

A general outline of the law which we now have to combat corruption looks something like this. When a bribe of any kind is paid to a politician or a government employee in exchange for influencing any government decision, the common law crime of bribery is committed by those who give bribes and those who accept them. The common law offense of extortion is committed by politicians and other public officials who demand payment of any kind in exchange for securing a specific outcome in any government related matter. Our penal code also criminalises both fraud and breach of trust by public officials, and our less than perfect Anti-Corruption Law also makes certain corrupt acts criminal offenses.

Criminal law does not define the limits of what is already available in the fight against corruption. Those responsible for enforcing the law and ensuring good governance also have access to civil law. Civil law remedies can be used with considerable effect against corrupt politicians and other public officials as well as those that reward them for their corruption. Decisions by government bodies influenced by corruption can be undone by the courts. Those who use their offices to corruptly enrich themselves can be made to pay to the public treasury their unlawful gains. Asset freezing and other measures are also available to facilitate the recovery of corrupt profits.

Civil law remedies typically have the advantage of being decided on the basis of whether one or more acts or omissions was more likely corrupt than not corrupt, rather than whether guilt in relation to a crime has been proved beyond reasonable doubt. This easier to prove standard has made civil remedies quite useful as part of the fight against corruption in other jurisdictions. However, like criminal law remedies, civil law anti-corruption measures only work when those investigating corruption and those responsible forgood governance have access to expertise in civil law enforcement and act diligently, effectively and without fear or favour. How then can we make our anti-corruption regime more effective?

We need investigators and prosecutors with particular expertise in both criminal and civil anti-corruption law. We also need to ensure that our laws make available to our investigators and prosecutors the tools necessary for the task. Providing adequate tools requires specific changes to our laws that will not only deter corruption, but will also enhance the detection, prosecution and punishment of corruption.  Specifically, we need to supplement our existing laws with at least one new legislated “carrot” and several legislated “sticks” in order to make corruption less attractive to both persons offering bribes and any politician or government employee (including in this context any civil servant and any employee or board member of any statutory authority or government owned corporation) tempted to act in a corrupt manner.

The Carrot – Incentives to Report Corruption — Any person who provides information which results in a conviction relating to any corrupt behaviour by any politician or government employee ought to be rewarded with up to one-half of any money or other benefit secured by the public treasury through forfeiture or fines. We, as a country, share the benefits derived from convicting criminals and seizing their assets when our enforcement authorities work with foreign governments. We should offer the same to our own people in the fight against corruption.

A person providing information regarding possible corruption must also have access to effective legislated guaranties that they will not be victimised or otherwise adversely affected as a result of reporting suspected corruption. There are many existing examples of legislation in other jurisdictions which provide models for effective anti-corruption “whistle-blower” legislation.

Stick 1 – Criminal Penalties for Corruption– The minimum penalty for corruption involving a politician or public employee ought to be five years in prison with the maximum being life, rather than the slap on the wrist provisions which currently exist. Why should a tiny fine be a permitted penalty for corruption?

Any disguising of or attempting to disguise any payment or benefit related to a corrupt act, whether by way of commission or omission, ought to be explicitly classified in legislation as money laundering. All reporting requirements and penalties relating to money laundering ought to apply in the context of corrupt acts. Any prison sentences relating to corruption and money laundering ought to be served consecutively without exception, a practice already permitted for other egregious acts.

Stick 2 – Criminal Penalties for Failure to Report Corruption – All politicians and government employees are in some sense stewards of public money. There are legal arguments to the effect that all politicians and government employees are already under an obligation to report any evidence of corruption, but to the best of my knowledge there has never been any politician or government employee disciplined for not reporting corruption in this country. Worse, there is a general perception in recent times that reporting corruption, or even being seen by the corrupt as unlikely to turn a blind eye to their corruption, is career destroying for honest politicians and honest government employees and their families. Therefore, in addition to the whistle-blower ”carrot” noted above, and the need to change civil service rules to ensure that corrupt and corruptible politicians are never allowed to influence the civil servants that they will work with, we need clear legislation that makes a failure to report corruption a criminal offense. Conviction for failure to report corruption that he or she is aware of at a minimum should cause an elected politician or government employee who chooses not to report any aspect of corruption to be banned from all government employment of any kind, permanently. A politician or government employee who chooses not to report corruption should also lose any benefits accrued whether in the form of pensions or otherwise. In the most overt, persistent or wilful cases of failure to report corruption, politicians and government employees who choose not to report corruption ought to face years in prison. It may seem harsh to impose such penalties on those who turn a blind eye to corruption, but we cannot afford to allow indifference to corruption or intimidation by the corrupt to determine the future of our country. We need to make the reporting of corruption the only choice.

Stick 3 – Civil Forfeiture and Fines for Corruption with No Time Limitation – We need legislation which would ensure that there is no time limitation on civil claims related to corruption in any public office. Why should a corrupt politician, government employee or crony benefit if they or their friends can stay in positions of power and able to hide their thievery for a few years?

We need legislation which will ensure that any property of any kind which relates to, or to any extent is derived from, any part of any corrupt transaction or the disguising or concealment of any such transaction, is forfeited to the public treasury. In addition, a fine of three times the value of the benefit gained or sought to be gained, or the loss avoided or sought to be avoided by the corrupt individuals, ought to be imposed on each of the persons (and in the case of a company the beneficial owners) who paid or offered to pay any bribe. Such a fine should also be paid by each and every politician or government employee or other person who knowingly benefited or sought to benefit from any corrupt transaction, whether directly or indirectly.

By way of hypothetical example, if it were to be proved according to a civil law standard that a property developer offered “special pricing and financing” on oneor more luxury condos, or an exclusive real estate deal, or money to a politician in exchange for planning approval, or changes to the rules relating to building height restrictions or zoning restrictions, then the relevant property and the bribe paid would be forfeited to the public treasury. In addition, each of the corrupt developer and the corrupt politician and any knowing intermediaries would be liable to pay fines equalling 3 times the increased value of the development. This would apply irrespective of whether the bribe was paid or was offered to be paid directly to the politician/government employee or to a relative or “associate” of the politician/government employee, or to a real estate or other company in which the politician/government employee or any person connected with them, is involved. As noted above, any person providing information regarding corruption which secured the conviction of the corrupt individuals would receive up to half the value of the property confiscated and the fines paid. Were such measures to be implemented and enforced retrospectively there is no telling how much of the government’s debt might be eliminated.

To make things more effective, the law should also be clarified to ensure that any corrupt individual’s liability to pay any forfeiture or fine would not be avoided by declaring bankruptcy, and that the tracing and seizing of benefits from corrupt transactions would be fully operative. These measures should go some way to limiting the appeal of big dollar corruption, but a further provision is necessary to minimise the low level corruption which corrupt politicians and government employees typically start with.

Stick 4 – Civil Employment-Related Penalties for Corruption – Any politician or public employee found to have committed any corrupt act no matter how small, including turning a blind eye to corruption as noted above, must lose any and all government-related employment and must be permanently banned from holding any office, position or employment related in any way to government. They should also lose any pension or other benefit entitlement and should be required to repay any and all money paid to them from the public purse at any time after their first corrupt act. The pension disqualification component described is particularly important in that pension entitlement typically increases with seniority and influence. It is important to ensure that deterrence is effective for those with the greatest ability to influence government decisions.  Any person providing information leading to a conviction for corruption in this context should also receive up to half of the money recovered plus half the benefits which would have gone to the corrupt government employee or politician. This reporting “carrot” will make things much more difficult for the corrupt.

The combination of existing law and the enhanced penalties and rewards set out above, if enacted and enforced, would go a considerable way to limiting corruption in our country. Which person seeking a government concession is going to approach a politician or government employee offering a bribe if they know that they can lose their property, go to prison and pay a large fine just by making the offer? Which politician or government employee in a position to influence a government decision is going to even consider extorting a payment if they know that they might lose everything they have, plus everything they hope to have in the future, and they know that they could go to prison just for asking for payment, while the person they ask could potentially receive half of all they have for reporting their corruption?

There are increasing public demands for an end to corruption. The corrupt can be expected to oppose, to delay and to deny resources for stronger anti-corruption measures. Those that are not corrupt can be expected to welcome tougher anti-corruption measures. Ideally those politicians who even now claim that there is no corruption would be happy to prove that they genuinely believe this to be true by immediately introducing enhancements to our anti-corruption legislation at least as tough as those recommended above. After all, what could they possibly have to lose?

Category: Viewpoint

Comments (30)

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  1. Philosopher says:

    Dear People of the Cayman Islands, Let us  first acknowledge the reasons why corruption has become endemic in our Island and why we the people are the ones that must eventually cause it's demise.  There are many reasons why corruption exists and continues to grow. We're in the state  we're in because of the reasons I shall the reasons I will mention.. It all starts with greed [once you've had a taste of the good life] Greed then creates venality which causes a sense of financial security, which creates a sense of power, which causes a sense of superiority, which instills complacency, which causes a lack of due care, which creates  mediocrity, which causes a sense of malaise, which leaves one with a sense of helplessness, which causes that sense of hopelessness which  we now feel and thus we tend to do nothing. Just remember this fellow Caymanians nothing worth having comes without sacrifice. So let,s stop being intimidated by those whom  because of their so called position of power will use that position to scare you into capitulation which then leaves you even more vulnerable. So let us not be afraid to speak out when we see wrongdoing by those whom we have elected or appointed to lead us. It is our duty! Just so you don't forget they were given that opportunity and they should keep in mind that they are there  to serve you and not to rule you. They are not your masters. So until we become passionate about, and are willing to make the required sacrifice for those things which we deem important for a better Cayman, we will continue to see CORRUPTION  and all the things that go along with it.  

  2. Anonymous says:

    Here's another idea: let's have judge-alone trials for cases involving political corruption. First, Jurors may be prejudiced either for an acquittal or conviction depending on their political allegiances which may be hidden. Second, there may be intimidation if the politician happens to be in power at the relevant time. Third, having spoken to a number of local persons recently it does not seem that the concept of corruption as a serious criminal offence is well understood. Instead, it is seen by some as an acceptable way of getting things done.  

    • Anonymous says:

      ABSOLUTELY!!!!!!!!!

      You hit the nail on the head. A panel of judges would be even better, like a Supreme Court. This would minimize any possible judicial corruption and fear as well.

      Then we must institute the most severe punishments imaginable. Incarceration is too mild. I like the old British method of tying each arm and  leg to each of four horses and yelling GIDDY UP!

      Poblem solved.

       

  3. Anonymous says:

    Isupport the call for better enforcement and tougher legislation. There was much talk months ago about making Cayman a jurisdiction where legitimate international  businesses could establish bricks and mortar headquarters. We will not attract such businesses so long as any whiff of corruption surrounds those in positions of power. We should be very concerned about the quality of business corruption attracts. We should also ensure that no one with any power in Cayman is corrupt.

  4. Anonymous says:

    Good ideas. I'd like to suggest some discussion on Stick 4, however. In Wednesday's iNews there is a delightful article of a young man, who admits to previous theft from an employer, who is being hired by the courts office after a period of 'rehabilitation'. (Note the half-quotes, the article explains it properly.) Depending on how 'corruption' is defined we might end up banning from any possibility of future employment people who are caught & already punished for 'low level corruption'. Should these people be trusted again? Not right away. But we need to recognise a problem in our small society of reintegrating prisoners into the community. I have no solutions to offer but someone who is convicted of, say, taking money from till of one of the government agencies that receive money and then loses their job and serves time in jail or some other penalty assessed by the courts should not, arguably, be banned from applying for a job as a landfill worker, if they can't find employment elsewhere. The punishment should fit the crime and a lifetime employment ban from the country's largest employer may not allways fit the crime.

  5. Anonymous says:

    I agree. We need to enforce the laws we have and to bring in tougher ones. We cannot expect to keep doing the same thing (nothing) and expect to get different, or in the present context, actual results.

  6. nauticalone says:

    Very well written article. I agree completely!

  7. Anonymous says:

    What about Civil Servants going to a conference and choosing to stay at the most expensive hotel among a choice of many, costing several hundred dollars additional per person (x # of people traveling). Doesn't everyone deserve a 5 star property when traveling on the government dime?

    It's only a likkle bit more. And a likkle bit more and a likkle bit more…

     

  8. tim ridley says:

    AD has written another learned and intriguing treatise. But I think he misses the real nub of the issue. We have plenty of laws to deal with corruption and other criminal behaviour. What we are missing is the commitment and the resources to enforce them effectively and efficiently. Let us therefore focus our efforts not on passing more legislation: let us focus on the much harder part, successful enforcement.

    It may also be uncharitable, but accurate, to point out that AD's party and Government (PPM) had the opportunity to get their weight behind all this when they were in power. They apparently chose not to do so, and are now left to lob shells from the sidelines. It may be rather late now for the Road to Damascus.

    Tim Ridley

    • Libertarian says:

      Ridley

      I agree with your first paragraph. Turks and Caicos Islands (before the 2009 takeover) had a Constitution and Laws that could had been enforced to combat the corruption there. The question is – Are we ever going to learn to use what we have for the best interest of the people?

      I appeal to the Governor, the party leaders, and those with authority in the Cayman Islands:  do what is best for the Caymanian people!

    • Anonymous says:

      Tim,

      You are undoubtedly correct to point out the importance of enfocement, as does AD.

      The other points you attempt to make however seem to be wide of the mark. You presume a great deal regarding the identity of AD without much evidence. I suggest that your analysis of whether our laws are sufficient suffers from the same. May I suggest that before you decide whether our current laws are sufficient, that you take a careful look at what other common law jurisdicitions which have overcome corruption problems have put in place.

      • tim ridley says:

        I refer you to the first quarter 2010 issue of the Cayman Financial Review focusing on global corruption. The issue contains a wide range of articles on the international fight against corruption and the anti corruption regimes in various countries. The articles were the result of my investigation of the relevant laws in various countries.

        My point is not that our Laws are in great shape; it is that we should not deflect our attention from effective enforcement of the Laws we have, by demanding new legislation as the solution.

    • Anonymous says:

      You're right concerning the lack of will to enforce existing legislation. Too often we have seen cases which have not been prosecuted for "insufficient evidence" which could have been prosecuted with some real effort in the investigation.

      Seeing that it was the PPM that passed the Anti-Corruption Law, 2008 (with all its imperfections) I think that is a little unfair, Tim. They are hardly in the same camp.

      • tim ridley says:

        I am only too well aware that the PPM Government enacted the AC Law in 2008. There is little doubt that this will have been at the "prompting" of the UK (also considering its new Bribery Act) in the implementation of its international treaty obligations. The then Cayman (PPM) Government was advised on several occasions (and in some detail) that the AC Law and the AC Commission was defective and corrective action should be taken before the AC Law came into effect on 1st January 2010. This advice was repeated to the UDP Government. As I have said before, the silence was deafening.

        • Libertarian says:

          The Anti Corruption Bill – http://law – was enacted on the 30th of June 2008 under PPM's tenure before they lost to UDP on the 20th of May 2009. So really this was a PPM's law that should have been established. Thank you, Mr. Ridley for showing us this plain fact. We can all learn a lesson from our mistakes.

          • Anonymous says:

            I think I made that point before Mr. Ridley did. While the law is imperfect it did make a major stride forward.

            Interesting that when the same argument is made regarding the Rollover provisions being enacted by the UDP Govt it is blamed on the PPM who "implemented" it although the Law was actually in force before the PPM came to power. In both cases the succeeding Govt had the power to amend the Law if they wished.       

            • Libertarian says:

              True.  It is not too late for our local politicians to make a positive difference. Grounds for a another TCI fiasco is not what this country need, and those who are supporting such an intervention, do not have the people of these islands and their democracy at heart.  

  9. Anonymous says:

    Sir,  I always read your articles and only wish we could have a principled man such as yourself as Premier!

  10. Loren says:

    Well written however in the case of BOT there is big stick that beats the local administration out of office, enforces their own BIG stick which has just as much dirt on the stick that was intended to be used as a broom as is the case in TCI. May I remind you that dirt swept from under the carpet to under the bed is still dirt.

     

     

    • Anonymous says:

      Did not see any recommendations for British direct rule in the article.   

      • Libertarian says:

        I think Loren is just making an observation here: Tackling corruption, boils down to whether we subject ourselves to a full British intervention; or, whether the British are so kind hearted enough as to allow democracy to work in the Cayman Islands and our Laws / Constitution enforced. We can't run and hide from these realities and say all is well with Cayman when there are those who will use the theme of "corruption" for their own ends. The Constitution / Laws we have now, may not be capable enough to effectively fighting corruption, but full British intervention is not a democratic remedy. A democratic remedy would be to simpy amend the Constitution / Laws and ensure stronger checks and balances. Those crying for British intervention and a setting up of a UK dictatorship does not mean these islands well and the reputation of our financial center. TCI is feeling the brunt of a dictatorship, reduced to a welfare state that will for years to come effect the people's economy.Nobody who loves Cayman, want such things to happen to these islands?

        • Anonymous says:

          I certainly agree with your views re direct British rule. However, I think the point of introducing more effective legislation and enforcement is to give no excuse for such draconian intervention. Corruption exists in every country, including the UK. The issue is whether there are effective mechanisms to deal with it when it does arise.  

  11. Anonymous says:

    Brilliant. I hope that our governor and all our politicians take steps to bring in legislation exactly as you suggest.

  12. Anonymous says:

    Another timely and brilliantly written article. Thank you, Mr. Duckpond.  

  13. Anonymous says:

    I love your sticks. I would like to add stick #5 to the pile which states that anyone found to be lying to law enforcement when questioned on matters of corruption and other crimes as well receive a minimum sentence of 10 years just for lying.  Lying causes more time and expense for investigators which could easily be avoided by getting the truth out of those being questioned the first-time around. People should be told up front before questioning that if their statements are untruthful or misleading that they may be liable for the minimum 10 year prison time for such statements.  Catching honest criminals is much easier than trying to  catch one who covers up and lies. Such a penalty would give the criminal an incentive to co-operate. Work smarter not harder.

    Similarly, we could remove the incentives for drug related crimes by using civil law to identify those who seem tobe living above their means. For instance, someone who has never had a job but drives an expensive car and wears lots of bling. If they cannot account for having legitimately obtained their expensive life style then there should be a way to go after their"ill gotten gains". This is practiced in other coutries with much success and removes the motivation for living the life of crime. It is starting to appear to some of our young that crime pays way better than education. We can reverse this trend by confiscating the fruits of the criminals' labour.

    XXXX

    • Patriot says:

      All that our "young" need to do is look at the many examples all around them of the older generation who have gotten very rich with ill-gotten gains and seem to have gotten away with it. The street level violence today is the ugly byproduct of this. Everyone knows these things and these people but they have bought levels of high social stature and are running the same system which they are and have abused. The Cayman Islands are corrupt as hell itself and that is painfully obvious, no matter how many churches are built. The UK government seems unwilling to do anything about it, exposing conjecture of the possibility of a purposeful tactic to then come in after the shit hits the fan and impose direct rule as an ulterior motive for the lack of good governance so evident. The myriad examples here are common knowledge to many but nothing real is being done about it. The conflict which will, without doubt, arise from this profligate malfeasancethreatens to tear this country apart even more. What has to be done is obvious but there seems to be no real will to change this and thus the Cayman Islands are going to be getting even worse. The fox is in the henhouse, what in the hell is so hard to understand about that? If one is not willing to deal with that then one is guilty of either complicity or collusion. The truth scares the hell out of so many so called respectable people in Cayman that the chances, short of a revolution, of stemming this tide of outright theft, fraud and complete dishonesty seem not to stand the proverbial snowball's chance in hell. This is shaping up to a situation which will not end well at all, it is sociological cannibalism and the perpetraitor/s are hiding in plain sight and continue with impunity because they are running the show, whether they are worthy of their position or not.

       

      • peaceful protest man says:

        Thank you Patriot for your post. We are trying to curtail crime among our youth and neglecting to do anything about the crimes being committed by our leaders.

        This is a strategy that can not work!

        So goes the leaders of any country, so goes the people.

        Our leaders have been stealing and lying for many years and this has now fromed a part of culture..