Thank you, Leonard, for that generous introduction. I am delighted to be here today, and honored to join you all on the occasion of this important, 12th International Investigators Conference.
The World Bank is a historic institution. Founded at Bretton Woods, it is an engine of economic development throughout the world, and a shining light in the fabric of our international institutions. At the outset, I want to recognize Leonard McCarthy for his leadership as Integrity Vice President. The World Bank is a leader in the worldwide fight against corruption – an institution that others look to – and Leonard has been at the helm of the Institutional Integrity Department over the critical period of the past three years.
Last week, not far from here, President Barack Obama delivered a historic speech. He addressed the sweeping change that is occurring in North Africa and throughout the Middle East, and he explained why the United States must “speak to the broader aspirations of ordinary people,” and act in a way that “advances self-determination and opportunity” wherever they are in short supply.
As the Assistant Attorney General of the Criminal Division at the Department of Justice, I am privileged to lead nearly 600 lawyers who enforce the nation’s federal criminal laws and help to develop and implement our criminal law policy. Today, I want to speak with you about how the Criminal Division’s work – in particular, our comprehensive approach to fighting corruption – supports the goals set forth by President Obama last week, and forms a critical piece of our government’s collective effort to capitalize on this historic moment.
I am honored to have the occasion of the Franz-Hermann Brüner Memorial Lecture to place our role in this context, and to advance the anti-corruption aims to which Mr. Brüner was so committed. A prosecutor for nearly two decades; Director General of OLAF, the European Commission’s Anti-Fraud Office, from 2000 until his death in 2009; and a member of numerous international anti-corruption bodies, Mr. Brüner dedicated his life to battling corruption and fraud across the globe. And I know from members of the Criminal Division and the U.S. Attorney’s Office in Miami who have worked closely with OLAF on a series of cigarette smuggling cases, that Mr. Brüner was not only an exceptional public servant and inspirational leader, but he was also a delightful and lovely man.
By now, it is well understood that the uprisings taking place in North Africa and the Middle East began with the confiscation of Mohammed Bouazizi’s fruit cart in a small town in Tunisia in December, and his subsequent self-immolation. As the President said last week, Bouazizi’s “act of desperation tapped into the frustration felt throughout the country,” leading hundreds and then thousands of protesters to take to the streets and demand the ouster of a dictator who had held power for more than 20 years.
Why did Bouazizi and his countrymen and women feel so desperate? There were undoubtedly many reasons. The reason I want to focus on is the pervasive corruption they were up against.
Corruption is commonly defined as the “abuse of entrusted power for personal gain.” Bouazizi faced corruption at the most personal level; his fruit stand and his electronic scale – in other words, his livelihood – were arbitrarily taken from him by a municipal inspector, who also humiliated him with a slap across the face, and authorities who refused to give him back his property. Bouazizi’s tale is not unique across North Africa and the Middle East; and, of course, the problem of corruption is not limited to that region of the world.
Corruption corrodes the public trust in countries rich and poor, and has particularly negative effects on emerging economies. When a developing country’s public officials routinely abuse their power for personal gain, its people suffer tremendously. At a concrete level, roads are not built, schools lie in ruin, and basic public services go unprovided. At a more abstract, but no less important, level, political institutions lose legitimacy, threatening democratic stability and the rule of law, and people begin to lose hope that they will ever be able to improve their lot. As the President put it last week, you cannot reach your potential when you “cannot start a business without paying a bribe.”
There are of course many ways in which the U.S. government addresses the problem of corruption abroad. As the head of Criminal Division, I want to focus on three: our criminal prosecution efforts; our work to build the prosecutorial and law enforcement capacity of foreign nations; and our emerging focus on recovering and repatriating the proceeds of foreign official corruption.
Let me start with our prosecution of corrupt officials in the United States. In this country, we do not contend with the same, systemic corruption that Mohammed Bouazizi was facing. We have the right to choose our leaders through free and fair elections; we have a justice system designed to hold all people – whether rich or poor, powerful or not – accountable; and self-determination is a hallmark of the American way.
Nevertheless, corruption remains a serious problem here, and we treat it that way. At the Justice Department, we have a dedicated group of criminal prosecutors – in the Public Integrity Section – whose sole task, along with the nation’s 94 U.S. Attorneys’ Offices, is to prosecute corruption cases involving federal, state, and local officials. These are not easy cases. But they are absolutely essential to preserving the integrity of our democratic institutions.
Moreover, we could not be effective abroad if we did not lead by example here at home. And you can see from our cases that we do not shy away from prosecuting powerful people. Last week, we secured a five-year prison sentence for a former Senate Majority Leader in Puerto Rico who pleaded guilty to soliciting hundreds of thousands of dollars in exchange for proposing legislation, preventing legislative projects from being voted on, and other official acts. Earlier this year, a federal jury in San Juan convicted a second Puerto Rican Senator for engaging in another bribery scheme. Two weeks ago, a federal jury in Richmond, Virginia, convicted Phillip Hamilton, a former member of the Virginia House of Delegates, for attempting to secure a paid position at a university in exchange for introducing legislation to fund the position.
As we speak, the U.S. Attorney’s Office in Chicago is in trial against the former governor of Illinois on multiple corruption counts; and the Public Integrity Section is preparing for trial in the largest public corruption case ever prosecuted in Alabama, against four Alabama state legislators and several lobbyists and businessmen who allegedly engaged in a scheme to fix a specific piece of legislation, in exchange for millions of dollars.
I could give you literally dozens of other examples. But the bottom line is this: At home, we pursue corruption at every level. This is important for our domestic stability – it strengthens the legitimacy of our democratic institutions, and shows that no person here is above the law; and it is important for the work we do internationally – it shows the global community that we practice what we preach.
In the Criminal Division, we also investigate and prosecute corruption abroad – primarily through our enforcement of the Foreign Corrupt Practices Act. The FCPA was the first effort of any nation to specifically criminalize the act of bribing foreign officials. The statute was enacted in the wake of the Watergate scandal, which led to the resignation of President Richard Nixon in 1974 and resulted in a dramatic plunge in Americans’ overall trust in government.
In 1976, following certain prosecutions for illegal use of corporate funds arising out of Watergate, the U.S. Securities and Exchange Commission issued a report in which it determined that foreign bribery by U.S. corporations was “serious and sufficiently widespread to be a cause for deep concern.” S.E.C. investigations revealed that hundreds of U.S. companies had made corrupt foreign payments involving hundreds of millions of dollars. With this background, the Senate concluded that there was a strong need for anti-bribery legislation in the United States. “Corporate bribery is bad business,” the Senate Banking Committee said in its report on the legislation. “In our free market system it is basic that the sale of products should take place on the basis of price, quality, and service. Corporate bribery is fundamentally destructive of this basic tenet.”
That was true then, and it’s true now. And over the two-plus years of this Administration, we have dramatically increased our enforcement of the FCPA. The numbers speak for themselves. In 2004, the Justice Department charged two individuals under the Act and collected around $11 million in criminal fines. In 2005, we charged five individuals and collected around $16½ million. By contrast, in 2009 and 2010 combined, we charged over 50 individuals and collected nearly $2 billion.
And we are only moving forward. Earlier this month, we secured the first jury conviction ever against a corporation in an FCPA case. The case, which also resulted in trial verdicts against the company’s president and its CFO, involved a scheme to pay bribes to Mexican government officials at CFE, a state-owned utility company.
Last week, the former CEO of a Miami-based telecommunications company pleaded guilty to conspiring to pay bribes to government officials in Honduras in connection with a scheme to secure contracts from Hondutel, the state-owned telecommunications authority. Last month, the former vice-president of sales for Europe, Africa, and the Middle East at the multi-national valve company Control Components Inc., or CCI, pleaded guilty to conspiring to bribe government officials in Saudi Arabia, Qatar, and other countries.
I could give you dozens of other examples, from countries across the world, including in Africa and the Middle East. But the point is this: FCPA enforcement matters. When U.S. businesspersons, foreign executives, and even foreign officials know that they risk liability under the FCPA and related statutes, behavior changes. In addition to motivating U.S. and foreign corporations to change the way they do business – something that I believe is already happening – the threat of liability can help corporations resist corrupt demands from foreign officials, which can lead the officials themselves to alter their practices. Beyond that, through our FCPA enforcement, we are also sending a signal to ordinary people – to Mohammed Bouazizis across the globe – that we stand with you: we support you in your desire to have fair and transparent institutions, and to have the chance to compete in marketplaces large and small.
Another important component of our efforts is the work we do in helping foreign countries build up the capacity to investigate and prosecute corruption cases on their own. Since 1991, in partnership with the U.S. Department of State, we have placed legal advisors in dozens of countries around the world, including throughout North and Sub-Saharan Africa and the Middle East, to work with foreign prosecutors and judges to develop and sustain effective criminal justice institutions. As just one example, until the recent unrest in Yemen forced us to evacuate, we had a legal advisor in Sanaa embedded with Yemen’s Supreme National Authority for Combating Corruption. And next month, we expect to deploy an Anti-Corruption Advisor to the emerging government of Southern Sudan, who will be embedded with the Anti-Corruption Commission there.
Since 1986, also in partnership with the State Department, we have also placed non-lawyer law enforcement professionals in dozens of countries abroad, in an effort to help foreign nations improve their capacity to investigate misconduct and corruption. In Iraq, for example, we assisted in building up the investigative capability of the Iraq Commission of Integrity, the governmental body tasked with investigating government corruption.
Last week, I visited Ghana and Liberia as part of a joint Justice and State Department mission to raise awareness of transnational illicit networks, and emphasize our partnership with West African nations to defeat those networks and the corrupting effect they have on democratic governments. As part of our commitment to this partnership, we will be sending a legal advisor to Ghana next month.
This capacity-building work is crucial – as crucial as our domestic prosecutions. It shows our faith in the rule of law; it helps countries that have the will to improve; and it forms part of the U.S. government’s multifaceted approach to improving the conditions for democracy abroad. That’s why, together with the Department of State, we devote as many resources to this work as we do.
There is one final aspect of our approach against corruption that I want to discuss with you today: our new Kleptocracy Asset Recovery Initiative. You heard President Obama say last week that the United States “will help newly democratic governments recover assets that were stolen.” In the Criminal Division’s Asset Forfeiture and Money Laundering Section, there is a dedicated group of prosecutors focused on doing exactly that.
The goal of the Kleptocracy Asset Recovery Initiative, which Attorney General Holder announced last July and which my team and I have been working to build over the past year, is to identify the proceeds of foreign official corruption, forfeit them, and repatriate the recouped funds for the benefit of the people harmed.
In the context of a criminal prosecution, a court can order forfeiture, upon conviction, as part of the defendant’s sentence. Thus, for example, if we were to bring a criminal case against a kleptocrat in the United States, we would be able to seek criminal forfeiture of his or her stolen assets.
Often, however, it may be impractical or impossible to bring a criminal prosecution against a kleptocrat. He or she may be immune from prosecution, beyond the jurisdiction of the United States, or otherwise unavailable. In these circumstances, the Kleptocracy Team can bring a civil forfeiture action to recover the stolen property. This is sometimes referred to internationally as non-conviction based confiscation.
The Kleptocracy Team recently brought its first cases, and we expect more to come in the near future. Let me provide a specific example. Diepreye Solomon Peter Alamieyeseigha, also known as DSP, was the elected governor of the oil-producing Bayelsa State in Nigeria from 1999 until his impeachment in 2005. According to court papers, DSP’s official salary for this entire period was approximately $81,000, and his declared income from all sources during the period was approximately $248,000. Nevertheless, as governor, DSP accumulated enormous wealth through corruption and other illegal activities. He acquired at least four properties in the United Kingdom worth approximately $8.8 million, he had money in bank accounts around the world, and he also acquired property in the United States. When he was ultimately arrested at Heathrow Airport in 2005, the Metropolitan Police Service in London found approximately $1.6 million in cash in his house.
In March and April of this year, we brought two separate civil forfeiture actions to recover over $1,000,000 in what we allege are DSP’s ill-gotten gains. In Maryland, we are seeking forfeiture of a private residence worth more than $600,000, and in Massachusetts we are seeking forfeiture of close to $400,000 in a Fidelity brokerage account.
We were able to bring these cases, even though DSP long ago absconded to Nigeria, because the law permits us to bring a civil action against the corrupt proceeds themselves rather than against the person to whom they belong.
At the World Bank, I know you understand the Kleptocracy Initiative’s importance, because you have been working hard to assist in the return of stolen assets and to promote non-conviction based confiscation abroad through the Stolen Asset Recovery Initiative, or StAR.
Like our criminal corruption prosecutions of domestic officials, our FCPA investigations, and our capacity-building efforts, our work to recover and repatriate the stolen assets of foreign corrupt officials sends the message that we believe in the dignity of every citizen, and stand against foreign leaders who steal from their people. The Kleptocracy Initiative cannot alone create hope where there is none, or bring respect to ordinary people who have not been shown enough. But we believe it is an extremely important building block in our approach to one of the world’s most intractable, and corrosive, problems.
Franz-Hermann Brüner was born in September 1945, weeks after the end of World WII. He knew about crucial moments in history. For the people of North Africa and the Middle East, this is one of those moments. The President last week called where we are today a moment of “historic opportunity,” comparing Mohammed Bouazizi’s fatal act of defiance with the Boston Tea Party and Rosa Parks’s refusal to give up her seat.
Prosecutors and law enforcement professionals in the Criminal Division of the Department of Justice are working hard to fight corruption at every level, at home and abroad. This work is one way in which we send the message loud and clear that public officials who abuse their power for personal gain – whether they are in the United States or the emerging democracies of North Africa and the Middle East or anywhere else around the world – are on the wrong side. And we will keep working and keep fighting to hold them to account. Thank you.