Juhani Grossmann
Director, Green Corruption / Senior Advisor for Central and Eastern Europe
Juhani Grossmann directs the Basel Institute’s Green Corruption programme and is Senior Advisor for Central and Eastern Europe, in which role he heads the Institute’s Representative Office in Ukraine. He joined the Basel Institute in April 2020.
As Director of the Green Corruption programme, he provides strategic oversight of the 20-member team located in eight countries, consisting of financial investigations and corruption prevention experts. The team advises law enforcement on the financial elements of crimes that affect the environment as well as building robust corruption prevention systems at natural resource agencies and state-owned enterprises. The Green Corruption programme’s strategy for 2025-28 envisions a strategic prioritisation of engagements related to forestry, critical minerals and renewables.
As Senior Advisor on Central and Eastern Europe, Juhani leads the Basel Institute’s multi-faceted support to Ukraine since the wide-scale invasion in 2022. This includes advisory work to Ukrainian Ministries, agencies and state-owned enterprises, and close collaboration with Ukrainian civil society with the aim of strengthening the integrity of Ukraine’s Restoration efforts.
Prior to joining the Institute, he spent close to 20 years in Indonesia, the Philippines, Ukraine and Russia leading anti-corruption and good governance programmes, advising governments and civil society on internal controls and compliance, public service complaint-handling systems, strategic communications, access to public information, election oversight and integrity, and campaign finance regulation.
Juhani holds a Master’s degree in Public Management from Hertie School of Governance in Berlin, Germany, as well as an MA in International Conflict Resolution and a BA in Political Science, both from Landegg International University in Switzerland.
Publications
Corruption risk assessments and illegal wildlife trade enforcement
This Practice Note:
- Summarizes experiences and lessons from conducting corruption risk assessments (CRAs) with authorities responsible for investigations and prosecutions of illegal wildlife trade (IWT) cases in three countries in Africa and Latin America. It seeks to demonstrate the value of adopting a collaborative approach to CRAs, illustrates potential avenues for pursuing such an approach when the right factors are in place, and demonstrates how mapping the criminal justice process provides a solid starting point to identify critical vulnerabilities. The note also highlights factors that might recommend another approach, for example where collaboration cannot be assured.
- Highlights some common risks that emerged from the CRAs in the three countries and that may negatively affect the progress of IWT cases in other countries. Still, corruption risks vary among countries and agency contexts, and it is not always feasible for practitioners to conduct or initiate a CRA. These general insights can help point practitioners to possible vulnerabilities to look out for.
The practice note was developed by team members of the Basel Institute’s Green Corruption programme as part of a wider research collaboration between the Basel Institute and the TNRC project consortium.
Takeaways
- Effective enforcement against illegal wildlife trade (IWT) and related crimes is a vital component of wildlife conservation, but corruption risks within law enforcement agencies can undermine their ability to investigate and prosecute such cases. Supporting agencies to identify, evaluate, prioritize, and mitigate their corruption risks can help improve enforcement outcomes, assign scarce resources to areas that pose the highest risks, and build trust and cooperation with other agencies and stakeholders.
- This TNRC Practice Note describes the lessons and insights from a three-country corruption risk assessment (CRA) exercise, using a collaborative approach that involves engaging with agency staff and relevant stakeholders to illuminate and systematically evaluate major risks. This is a sensitive process that requires strong relationships with agency leadership and a deep understanding of local political, social, and economic factors.
- In all three countries, mitigating high-priority corruption risks in law enforcement agencies required a constructive, pragmatic, and sustained approach. Working jointly and acknowledging agencies’ political, capacity, and resource constraints can therefore represent a viable alternative to simply penalizing corrupt practices through investigations and audits.
- Experience suggests that mapping the criminal justice process’ decision points is a crucial first step that builds shared understanding across stakeholders and helps identify corruption risk areas. It can take substantial investments of time to produce such maps, but that investment is usually warranted as it ensures researchers and stakeholders are speaking the same language.
About the TNRC project
The TNRC project seeks to improve biodiversity conservation outcomes by helping practitioners to address the threats posed by corruption to wildlife, fisheries and forests. TNRC harnesses existing knowledge, generates new evidence, and supports innovative policy and practice for more effective anti-corruption programming on the ground.
A USAID-funded project, TNRC is implemented by a consortium of leading organizations in anti-corruption, natural resource management, and conservation: World Wildlife Fund (WWF), the U4 Anti-Corruption Resource Centre at the Chr. Michelsen Institute, TRAFFIC, and the Terrorism, Transnational Crime and Corruption Center (TraCCC) at George Mason University.
Targeting Profit: Non-Conviction Based Forfeiture in Environmental Crime
Environmental criminals and their corrupt facilitators get rich by destroying our planet and its natural resources. This publication for the Targeting Natural Resource Corruption (TNRC) project explains how and why to confiscate their illicit assets – with or without a criminal conviction.
The introductory overview of asset recovery tools to tackle environmental crime was a collaboration between the Basel Institute’s Green Corruption programme and International Centre for Asset Recovery. It is part of a wider research collaboration between the Basel Institute and the TNRC project consortium.
Takeaways
- Using legal powers to confiscate assets can be an important element of enforcement against environmental crime because it targets the profit motive for environmental crime and disrupts the financing of further criminal activity.
- Confiscating illicit assets does not require an individual to be convicted. Many countries have judicial procedures to confiscate assets derived from criminal activity without the need for a specific criminal conviction.
- This procedure, referred to as non-conviction based forfeiture (NCBF), can be an effective way to target the profits from environmental crimes, where corruption and money laundering are frequently significant components.
- Understanding and applying anti-corruption and anti-money laundering laws in their country is vital for enforcement practitioners to be able to pursue criminals’ assets more effectively. Early coordination with anti-corruption and financial intelligence authorities will assist in this.
- NCBF is no different to the process of criminal investigation and prosecution, in that it depends on the degree to which good governance, strong and accountable institutions, and a well-functioning justice system are present in a country. Prior to engaging NCBF for environmental corruption cases, risks should be assessed in a similar manner to the risks of existing law enforcement and prosecution practices in a given country.
About the TNRC project
The TNRC project seeks to improve biodiversity conservation outcomes by helping practitioners to address the threats posed by corruption to wildlife, fisheries and forests. TNRC harnesses existing knowledge, generates new evidence, and supports innovative policy and practice for more effective anti-corruption programming on the ground.
A USAID-funded project, TNRC is implemented by a consortium of leading organizations in anti-corruption, natural resource management, and conservation: World Wildlife Fund (WWF), the U4 Anti-Corruption Resource Centre at the Chr. Michelsen Institute, TRAFFIC, and the Terrorism, Transnational Crime and Corruption Center (TraCCC) at George Mason University.
Green Corruption - interview with Miljøkrim
This in-depth interview with Professor Mark Pieth and Juhani Grossmann, Team Leader - Green Corruption programme at the Basel Institute on Governance, was conducted by Marianne Djupesland and Nina Norset Little of Økokrim, the National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway.
It covers:
- What “green corruption” means and examples of cases of green corruption.
- The link between weak governance and environmental crime.
- Sectors that are particularly prone to green corruption, such as wildlife, mining, illegal logging, waste trafficking and fishing.
- The responsibility of European countries, companies and financial institutions to tackle green corruption, even if the negative effects are felt elsewhere.
- Legislative gaps that mean money laundering from environmental crimes is not prioritised in some countries.
- The role of Collective Action in fighting corruption relating to environmental crime and in promoting environmental sustainability
- The essential of prosecutors in fighting green corruption.
The interview appears in Økokrim’s December issue of “Miljøkrim”.
Corrupting the Environment: insights on corruption, the environment and illicit trade
This collection of insights on corruption, the environment and illicit trade emerges from the monthly Corrupting the Environment webinar series between December 2020 and August 2021.
A joint initiative of the Basel Institute on Governance and the Organisation for Economic Co-operation and Development (OECD), the series brought together leading voices from the public and private sectors, academia and civil society. In lively panel discussions, they explored critical trends and shared recommendations for addressing the corruption that is destroying our planet and people’s opportunities for sustainable development.
The publications below are adapted from summaries published on the Basel Institute following each event.
Working Paper 37: The Green Corruption paradox: Natural resource management and environmental corruption in Indonesia
This Working Paper details the findings of a survey of Indonesians’ perceptions of corruption, the economy and the environment in July 2021.
The survey was a joint initiative of the Green Corruption team at the Basel Institute on Governance and leading Indonesian pollster Lembaga Survei Indonesia (LSI). It consisted of a national public opinion survey covering 2,580 respondents and in-depth interviews with 30 private-sector representatives working in various natural resource sectors.
The survey reveals what we call the Green Corruption paradox: Conflicting, and arguably mutually exclusive, views on all three topics can co-exist. Despite seeing the presence of and being deeply concerned about corruption and environmental degradation, people tend to focus on livelihoods when times are hard.
People also, according to the survey data, favour economic structures that appear to channel the benefits of natural resource utilisation more directly to citizens. In Indonesia, this means rejecting private companies – particularly foreign-owned – in favour of state-owned enterprises (SOEs) and people’s cooperatives.
The report ends with five key recommendations that can inform Indonesian policy and the interventions of donors and civil society organisations concerned with conservation, anti-corruption and sustainable development.
About this Working Paper
This research was made possible with the generous support of the American people through the USAID CEGAH programme.
The publication is part of the Basel Institute on Governance Working Paper Series, ISSN: 2624-9650.
It is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND 4.0).
Suggested citation: Grossmann, Juhani, Rizka Halida, and Tara Suryandari. 2021. “The Green Corruption paradox: Natural resource management and environmental corruption in Indonesia.” Working Paper 37, Basel Institute on Governance and LSI. Available at: https://baselgovernance.org/publications/natural-resource-management-and-environmental-corruption-indonesia-survey-report
Perspectives 2: The role of public-private partnerships in combating illegal wildlife trade
Illegal wildlife trade (IWT) is in the global spotlight thanks to its alleged role in triggering the coronavirus pandemic. It is sparking vivid debate among communities of experts not just in conservation, but in business, finance, technology, anti-corruption forces and law.
One such debate is taking place in the ranks of litigation service providers and economic crime experts of the International Academy of Financial Crime Litigators and IWT specialists at the Basel Institute on Governance.
This short series presents their different expert perspectives on topics crucial to combating IWT.
In this edition, Juhani Grossmann, IWT Team Leader at the Basel Institute on Governance and Bruce Zagaris, Partner at Berliner Corcoran & Rowe, and Fellow of the International Academy of Financial Crime Litigators, explore the impacts of illegal wildlife trade on business.
News and blog
Ukraine’s place in Europe’s defence industry: could compliance catalyse integration?
Ukraine is already central to Europe’s security. Its defence manufacturers are increasingly eligible for participation in the rapidly growing EU defence procurements. However, unless Ukraine’s defence manufacturers are able to meet strict EU anti-corruption and ESG standards, they risk being shut out of EU supply chains. Europe needs Ukraine’s battlefield-tested innovation and production capacity, yet compliance gaps and unclear expectations are slowing integration. Juhani Grossmann, who leads the Basel Institute’s anti-corruption programme in Ukraine, explains how joint actions to overcome compliance barriers can help secure Ukraine’s place in Europe’s defence ecosystem and strengthen our collective security. Ukraine’s central role in EU defence The last three and a half years have been hard fought in Ukraine. Ukrainian resilience on the battlefield is legendary. The unparalleled military support from Ukraine’s allies, fused with its own relentless technical innovation, have forged bonds that could define Europe’s emerging security infrastructure. Daring political decisions by Ukraine and its allies have hastened this integration. Among them: the European Union has adopted the Security Action For Europe SAFE mechanism, using its combined fiscal firepower to raise low-cost loans on capital markets to encourage joint military procurement. SAFE explicitly includes Ukrainian firms in its stringent corporate and sourcing geographical origin requirements, which are designed to stimulate a native European defence industry. This recognises both Ukraine’s ongoing contribution to Europe’s security and the value of the country’s combat-driven technical innovations. From this angle, Ukraine’s defence industry is now even more critical to the EU than the UK, historically the continent’s dominant player. Europe is vulnerable – but can’t meet its demand for defence hardware The United States’ interest in taking responsibility for European and global security is waning, while Russia continues to probe Europe’s hard and soft defences. Feeling justifiably vulnerable, European nations have therefore committed to a huge increase in defence spending, which could reach EUR 2 trillion over the next five years. Yet EU defence industry leaders struggle to manufacture defence equipment in sufficient quality and quantity to meet the unprecedented demand and lack the battlefield-tested innovations that are at the core of Ukraine’s industry. Ukraine could help meet demand for military equipment Partly due to the above dynamics, deep public debates are taking place in Ukraine about lifting a de facto ban on the export of military goods in place since the full-scale invasion. The government is establishing defence production offices in Berlin and Copenhagen to facilitate limited export. This sounds counterintuitive, considering the devastating shortage of materiel at the front. Yet the truth is: Ukraine’s military is simply unable to afford all the weaponry that its manufacturers can deliver. So, the economic argument for export is strong: Selling excess capacity for a profit could generate significant revenue. That revenue could be used for economies of scale in production as well as for research and development. The resulting taxes would allow the state to increase the procurement of materiel for its own troops. In a confirmation of the compelling market forces, Ukrainian drone manufacturers have started investments in Europe to set up production outside of Ukraine. They certainly have products that would be marketable: their innovation has resulted in weekly software updates and continued hardware improvements. The more traditional howitzers, tanks and armoured personnel carriers are cost competitive and highly scalable. Battlefield command and control software is reported to be top notch. What could derail Ukraine’s integration in EU defence markets On the surface, the pieces of the puzzle of European defence are aligning neatly. But one major obstacle needs to be cleared for a healthy and thriving trade: Ukrainian defence manufacturers must meet EU standards on anti-corruption compliance and related environmental, social and governance ESG matters. These include issues such as sustainable sourcing of aviation fuel, employee protections and human rights across the supply chain, as well as good governance of these topics. They also include regulations and standards on integrity and anti-corruption. The defence sector globally is struggling to meet many of these requirements. And Ukraine’s fast-growing innovators have understandably not prioritised such matters over the wartime need to deliver at speed. Without a rapid move to address this shortfall, Ukraine’s innovators could be shut out from European markets. The EU defence industry – and its citizens – would in turn be deprived of crucial expertise, leaving all allies weaker and poorer. Temptations would mount to soften standards, as is already the case with fiscal probity requirements when it pertains to military spending. That would be a mistake for both Ukraine and its European allies. Instead, overcoming these challenges could be a boost for both the EU and the Ukrainian defence industry and further cement their partnership. Robust internal controls bring many benefits The measures required to attain EU standards on anti-corruption compliance and related ESG topics are no doubt arduous. Solid internal control systems, which can produce verifiable data, will need to be established. But that brings solid benefits. Information from internal control systems will help to convince customers that the products they are literally entrusting their lives to are reliable, safe and effective. It will provide the basis for ESG reporting in future. And while the effectiveness of Ukraine’s defence systems is convincingly demonstrated through frontline usage, as its defence industry matures, it could greatly benefit from the efficiencies that robust internal control systems bring. Challenges meeting EU regulations European defence firms are eager to work with Ukrainian partners, yet are finding it difficult to meet their own regulatory obligations at the same time. We see several reasons for this: Sourcing of components is swift, creative and results driven. Without control systems, companies might struggle to verifiably certify their ability to meet the SAFE requirement that 65 percent of the weapon’s value must originate from EU/EEA/EFTA member states or Ukraine. Corporate ownership structures in Ukraine can be challenging for due diligence – particularly when it comes to establishing ultimate beneficial owners of companies. There is a lack of consensus on what good anti-corruption and ethics policy implementation looks like. This leaves Ukrainian partners unsure of the priorities, direction and speed of any required internal reforms. Track and trace measures are insufficiently robust. This makes it hard to reliably avoid sanctions violations in the procurement of components and to ensure environmentally sustainable sourcing of raw materials. Wartime lack of physical access to sites makes traditional verification mechanisms impossible. These obstacles are formidable and have the potential to threaten otherwise promising partnerships. There is a joint path forward Thankfully, we see a strong desire on both sides to navigate a path through these obstacles. Reforms are progressing fast. Ukrainian Defence Industry, the holding company for the majority of state-owned defence manufacturers, has made impressive strides in adopting reforms at the top level. It is gradually cascading these down to the 50+ companies under its purview, including the producers of such notable products as the Lyutii drone, the Neptune subsonic cruise missile , the Bohdana howitzer and the Stugna / Skif anti-tank missile. While a long road remains to reform these highly traditional producers, the political will and technical capacity at the top are formidable. Anti-corruption policies are being implemented. The more established private manufacturers are increasingly adopting and publicising ethics and anti-corruption policies. They are also implementing and developing channels for reporting violations of integrity standards, and organising contractual activities based on ethical and compliance requirements. Engagement is strengthening. European manufacturers, who act as both suppliers and potential customers, are keen to engage more closely with their existing or potential Ukrainian partners to smooth the compliance obstacles as their relationships develop. These manufacturers are also keen to bolster their own contextual understanding of the operating environment in Ukraine, allowing them to manage the reputational and legal risks more professionally. Corruption is being investigated and prosecuted. Ukraine’s National Anti-Corruption Bureau NABU and Specialized Anti-Corruption Prosecutor’s Office SAPO are making significant headway in pursuing officials and company representatives who are willing to use criminal behaviour, including corruption, to personally benefit from wartime deprivations. Risk prevention measures are underway. The National Agency on Corruption Prevention NACP is leading the process of conducting a comprehensive risk assessment in the defence sector. International support is there. Increasingly, Ukrainian and international policy and advisory supporters are engaging in the sector. This includes the International Forum on Business Ethical Conduct for the Aerospace and Defence Industry IFBEC , NATO’s Building Integrity programme and Norway’s Centre for Integrity in the Defence Sector CIDS . The Basel Institute on Governance has recently commenced efforts in this space through funding from Norway. Together, these efforts have the potential to make significant progress in overcoming obstacles. How to accelerate progress While progress is happening, it is still insufficient given the urgency of the security situation in Europe. That is why we propose the following five catalysts: Set clear compliance requirements. EU member states at the forefront of defence procurement should spell out their internal control and anti-corruption requirements in plain and detailed terms. This would enable Ukrainian firms to participate in projects, either in collaboration with EU partners or independently. Providing early support and education would help potential Ukrainian partners meet these standards quicker. Improve implementation and verification systems. Industry associations should strengthen their anti-corruption standards and/or guidance by creating clear systems for implementation, verification and measurement. Allow time to comply. Companies should share their subcontracting compliance requirements with prospective partners well ahead of procurement deadlines, and work with them to build the systems needed to meet these standards. Share risk insights. Independent corruption risk assessment findings in the defence manufacturing sector, in both Europe and Ukraine, should be shared widely within the professional community. Collective integrity standards. Private manufacturers in Ukraine should create joint anti-corruption standards, ideally through a Collective Action approach – i.e. involving all relevant stakeholders working together in a trust-based environment over a sustained period of time. This would help stop individual companies using corrupt practices while others play fair, and reduce compliance costs for individual companies. At the Basel Institute we are proud to continue and expand our work in this space with the generous support of Norway. We welcome partners to join these efforts and help ensure Ukraine’s defence innovation becomes a permanent pillar of Europe’s security.
Mitigating corruption risks in Ukraine's restoration: new report
Today, the Basel Institute on Governance jointly published a report with Ukraine's National Agency on Corruption Prevention and State Audit Service on corruption risks in Ukraine's civil infrastructure restoration efforts. With damage from the Russian aggression estimated to exceed EUR 500 billion, safeguarding state and foreign donor investments in restoration projects is imperative. The report highlights 10 key priority risks and suggests mitigation measures. These cover areas such as establishing clear prioritisation criteria for projects, improving public procurement processes and strengthening oversight for construction projects. The report, Assessment of corruption risks in the construction, reconstruction and renovation of civilian infrastructure of Ukraine , is available here in Ukrainian on the NACP website. The Basel Institute and our Kyiv-based team contributed to its development with the support of Switzerland. The launch event brought together key stakeholders in the restoration process, including Members of Parliament, representatives of the Ministry for Development of Communities and Territories of Ukraine, the State Agency for Restoration and Development of Infrastructure of Ukraine, the Accounting Chamber of Ukraine, the Antimonopoly Committee, the National Anti-Corruption Bureau, as well as representatives of local self-government and the private sector. Juhani Grossmann, who leads the Basel Institute's support to Ukraine on anti-corruption, delivered introductory remarks highlighting the centrality of a robust and independent anti-corruption infrastructure to safeguard restoration funds. These are found below: Dear colleagues, dear friends, It is a pleasure to be with you today and discuss this crucial topic: restoring Ukraine's infrastructure and services efficiently and transparently, making the best use of limited funds. Allow me to start by acknowledging the exceptionally challenging circumstances you operate under and my appreciation for your continued bravery in the light of seemingly impossible obstacles. As members of the European family, your sacrifices made at the front are the investment in our collective European security. You are protecting the family, a fact which we have to treat with respect. It is my ardent hope that we will be able to honour these sacrifices by jointly building a Ukrainian future that makes today’s deprivations worthwhile. Family members support each other, and so we at the Basel Institute seek to support you. A top priority for us is to provide the tools you need in the face of unprecedented challenges. Those of us not in the military space provide support to the extent of our own capacity. For us at the Basel Institute, that means supporting your efforts to combat corruption – an enemy you have been fighting for decades, and an enemy that continues to have the potential to threaten your ability to mount an effective defence and restoration of your country today. Corruption is such a complicated topic: most of us just want to wish it away, like a bad dream, but unfortunately, it continues to be a reality. That does not mean it is stagnant. Like any enemy, it adapts, mutates, strengthens or weakens, depending on how we treat it. Ukraine’s relentless fight against corruption over the last decade has meant that you, in turn, have been able to hone your anti-corruption weapons. Conceptually similar to your relentless military innovation, you have step by step built your anti-corruption arsenal to a degree where Ukraine’s anti-corruption infrastructure – consisting of specialised agencies, decentralised corruption prevention officers, robust civil society and independent media – met some of the highest global standards and often exceeded that of Western counterparts. There is a dedicated international standard about the independence of anti-corruption agencies, called the Jakarta Principles. This highlights the importance of ensuring independence in the appointment of the leadership, continuity in the agencies’ work and budgetary autonomy, as well as protecting employees from malicious civil and criminal proceedings. I don't say this lightly: when I travel around the world to the countries with which I work, and tell them about the fact that you continue to robustly pursue corruption during a full-scale war, my colleagues tell me they wish they had your anti-corruption infrastructure. We understand that this anti-corruption infrastructure is not something that was achieved easily. Rather, you had to fight for every law to remain intact, strengthen every regulation repeatedly to address residual risk, build and protect every case against obstacles, shepherd every risk assessment to the mitigation stage and then negotiate, argue, cajole and convince opponents to have these mitigation measures implemented. I know how carefully you considered the recruitment of every detective, analyst, prosecutor and judge. And the resulting system has been impressive – a national treasure. You should be proud of it, as should all Ukrainian citizens and leaders alike. We have certainly been privileged to be associated with it. The value of this anti-corruption infrastructure to Ukraine is not only sentimental. It is also of crucial importance as a counter-message to those who say – often without any personal experience or understanding of the issue – that any money or resources sent to Ukraine will only fuel corruption. It is also a crucial counter-message to russian propaganda which loves to portray Ukraine as hopelessly corrupt. You, the anti-corruption institutions, helped us build the arguments against these sceptics: How can Ukraine be hopeless, we argue, if it has managed to decrease corruption perceptions by 5 points between 2019 and this year, showing one of the best results in the region? How can Ukraine be hopeless if it manages to investigate, arrest and convict high-level corrupt officials? How can Ukraine be hopeless if the maturity of its anti-corruption institutions, as recently assessed by the OECD, surpasses many of those in OECD member countries? How can Ukraine be hopeless if it has one of the most transparent public procurement systems? How can it be hopeless if its public service digitalisation has drastically decreased opportunities for rent-seeking by bureaucrats? How can Ukraine’s restoration be hopeless if it has as sophisticated a corruption risk analysis as the one we are presenting today? These are real-life arguments that result in real-life financial, political and military support because they confirm your responsible stewardship of the support you receive. They have allowed us to say that Ukraine is not a corrupt country; it is a country that fights corruption. To those of you in the anti-corruption community: thank you for your hard work over the last 12 years to build and sustain this anti-corruption infrastructure against extraordinary odds. We understand that this week’s efforts have changed the landscape drastically, but fighting corruption remains as important as ever. Your work has been inspiring us, and we will continue to support Ukraine’s anti-corruption aspirations to safeguard this essential dimension of your national defence and restoration.
How tackling green corruption can help us get ahead in the race to net zero
Juhani Grossmann and Amanda Cabrejo le Roux explain the strategic re-focusing of our Green Corruption programme on energy and climate: What is “green” corruption and why does it matter? Green corruption refers to corruption and other financial crimes and governance failures that harm the environment and hinder global efforts to combat climate change. It’s the reason crimes such as illicit deforestation, mining and wildlife trade continue to be multimillion-dollar illegal industries making organised criminals rich at the expense of our planet and the livelihoods of local communities. Green corruption also diverts crucial investments intended for renewable energy and other climate-related projects. Adapting to humanity’s changing energy needs in a just and sustainable manner are challenging enough. We cannot afford to let corruption undermine these generational challenges. What are some key achievements of the programme so far? We are proud that since its launch in 2018, the Green Corruption programme has contributed to significant strides in tackling corruption affecting the environment. Our programme started with an enforcement focus: applying “follow the money” approaches to environmental crimes like illegal wildlife trade and illegal logging. In practice, that means mentoring and training law enforcement officers of national partner agencies to investigate financial transactions that fuel environmental crimes, including between criminal groups and corrupt facilitators. And ideally, to seize and confiscate illicit profits or assets used in the crimes. That’s the only way to get beyond the low-level perpetrators – such as poachers – to the high-level facilitators and organised crime networks. And the only way to take the profit out of the crime, reducing the incentives to engage in it. At the end of 2024, assets worth around CHF 29.6 million were being targeted in 56 cases directly supported by our advisors. We had quite a few “firsts” – like Uganda’s first ever indictment for tax evasion and money laundering against a wildlife trafficking syndicate, Malawi’s first ever corruption cases related to natural resource crimes, Peru’s confiscation of over CHF 3 million in assets related to forestry and gold trafficking, and Indonesia’s first ever conviction on money laundering in relation to an illegal logging case. Behind the headlines lie many more positive steps towards changing mindsets and the priorities of law enforcement agencies to go after the finances of environmental criminals. Our prevention work rapidly grew as we and our partners realised the chronic under-investment in building systems that strengthen resilience to corruption in the environmental sector. Government agencies and state-owned enterprises in countries as diverse as Indonesia, Malawi, Ukraine and Bolivia have now begun to systematically assess and address corruption risks that are affecting their ability to carry out their important functions of protecting the environment and natural resources. Our prevention specialists supported these in applying our bespoke methodology of assessing and prioritising corruption risks and implementing targeted mitigation measures. We developed a customised internal controls maturity assessment tool to reflect the historic lack of investment in this space, which meant that mainstream assessment tools were insufficiently granular at the first stage of maturity to reflect nuances and chart paths to growth. As result of our partnerships, mitigation measures have been institutionalised in many agencies – for example: in Malawi through the creation of Internal Integrity Committees in environmental agencies; in Ukraine through the empowerment of anti-corruption officers to participate in key decision-making processes; in Ecuador by reducing unsupervised discretion in environmental inspections; in Indonesia in the adoption of conflict of interest regulations in the management of timber sales; and in Peru through the automation and digitalisation of numerous permitting and licensing processes related to the wood value chain. Also pleasing to see are the many collaborations and partnerships that have sprung from our work. In Latin America, for example, forestry officials in Peru, Bolivia and Ecuador are now collaborating on protecting the Amazon rainforest through corruption prevention. Still, targeting and preventing corruption tends to be a lonely effort. So, we have established the Countering Environmental Corruption Practitioners Forum together with WWF, TRAFFIC and Transparency International as a support network, and it has now grown to over 800 members and four working groups. There are frequent meetings and collaborations between practitioners dedicated to tackling corruption and improving governance, and those specialised in environmental conservation or climate initiatives. It’s a sign there’s much appetite and energy for action against green corruption Why is now the time to focus on the energy transition? Whatever happens in these volatile times, one thing is certain: we’ll continue to see growing demands for energy transition and climate mitigation and adaptation. The urgency of tackling the energy transition, and the rapid increase in investments from both the public and private sectors, leaves the door wide open to criminals and the corrupt seeking to profit at the expense of investors and donors – as well as the planet. A clear example in this space is the growing geopolitical centrality of critical minerals and rare earths. The rapid rise in demand has been accompanied by particularly fragile governance structures, intense political and economic subsidies, and even warfare. Our experience shows that these are all breeding grounds for corruption. We are therefore prioritising efforts to analyse and mitigate corruption risks in this space in Bolivia, Indonesia and Ukraine. Ensuring that the energy transition is safeguarded from corruption is essential for achieving net-zero goals. As outlined in our Working Paper on good governance and the just transition, corrupt practices can jeopardise renewable energy investments and hinder the development of clean energy infrastructure. Rapidly emerging market-based solutions to stimulate responsible behaviour, such as carbon offsets, are also affected by weak governance systems and opportunities for corruption. The fast-evolving and highly technical nature of these activities only increases this risk. Corruption risks similarly threaten the effectiveness of climate mitigation and adaptation efforts. If funds are embezzled, used fraudulently or diverted to benefit powerful elites, that’s bad for donors and investors. And it’s bad for local communities, many of which are also directly affected by climate change. On the other hand, there are opportunities. Using corruption risk management tools and enhancing enforcement capabilities can help companies and governments to create thriving, profitable supply chains of critical minerals needed for renewable energy facilities, electric vehicles and the like. What does this shift in priorities mean in practice? Through our Green Corruption programme, we are adapting to this evolving landscape by sharpening our focus on transition minerals and the renewable energy sector. We will continue our dual approach of prevention and enforcement, working closely with long-standing partners in Ukraine, Indonesia, Madagascar, Malawi, Uganda, Peru, Bolivia and Ecuador. Some things you might see us doing in the next years: Strengthening transparency and anti-corruption measures in the extraction and trade of lithium, nickel, germanium and other minerals and rare earths essential for the energy transition. Customising financial investigation and asset recovery tools to the specifics of the energy transition. Working with governments, financial institutions and civil society to safeguard energy transition and climate mitigation funds from corruption, fraud and related crimes. We will continue full force our ongoing engagement related to metals gold in particular and the forestry sector, which remain highly strategic. In other areas, such as illegal wildlife trade, fisheries and waste, we will be more discerning, carefully assessing the potential of engagements prior to pursuing them. What impact do we hope to achieve? By applying our expertise to emerging climate and energy challenges, we want to contribute to measurable improvements in the energy transition, environmental conservation, climate change mitigation and equitable economic development. Through these efforts, our Green Corruption programme will continue to play a vital role in ensuring that the green transition is not only sustainable but also just, transparent and a win-win for all: businesses, local communities and society at large – as well as our planet.
How corruption threatens the forests of Ukraine: launch of Environmental Corruption Deep Dive report
Your browser does not support the video tag. The Basel Institute has published a comprehensive new analysis of corruption and illegal logging in Ukraine. Juhani Grossmann, who leads the Basel Institute’s Green Corruption programme, explains what it covers and why the report comes at a crucial time for Ukraine and its partners. Ukrainian forests cover over 10 million hectares – about the size of Iceland, or 2.5 times the size of Switzerland – mainly in the western and northern parts of Ukraine. Their preservation is key for the rich ecosystems and climate benefits that Ukrainian forests represent and the communities that depend on them. Economically, the full-scale Russian attack on Ukraine in 2022 has drastically heightened the relative value of the previously under-utilised role that forests play in the national economy. This is because Ukraine’s main industrial areas are located in occupied and fought-over territories and a large share have thus become dysfunctional. Forests, thankfully, are largely located in the “safe” areas of Ukraine and thus remain a largely intact resource. Corruption: an ever-present threat to Ukraine’s forests Continued attacks on civilian infrastructure are creating high demand for forest products to generate heat and be used in reconstruction efforts. The Ukrainian Government has recognised the sector’s increased importance by creating a new state-owned enterprise, Forests of Ukraine. However, corruption still fails to appear at the core of the discussions in the governance of the forestry sector. In this regard, Ukraine is unfortunately no different from many of the other countries in which the Basel Institute’s Green Corruption programme operates: environmental corruption prevention efforts are a low priority everywhere. For Ukraine’s forests to play their role in its reconstruction, significant reforms are needed: both its sustainability and governance are currently insufficient to meet this challenge. - Without sustainability, any short-term benefits of exploiting forests will be outweighed by the long-term harm to Ukraine’s environment and economy. - Without solid governance systems, corruption could undermine even short-term reconstruction benefits. First Environmental Corruption Deep Dive The report, in English and Ukrainian, is the first in a new Environmental Corruption Deep Dive series of research papers by the Basel Institute on Governance. The research series is funded by the Principality of Liechtenstein, which provides core funding to the Basel Institute's Green Corruption programme. It seeks to take systematic stock of the pre-war governance and corruption issues in Ukraine’s forestry sector. It reveals significant challenges as governance reforms have not yet had a significant effect. Considering that the EU is tightening its transparency and sustainability requirements for forestry products, and that the EU makes up the majority of Ukraine’s wood products exports, these reforms are increasingly urgent to ensure this vital market remains accessible. This report identifies a typology of the main corruption patterns that enable illegal logging, involving both private actors and culprits within national authorities. It illuminates, among other corruption patterns, the challenge of corruptly obtained permits allowing illegally sourced wood to be sold and exported “legally” and contributing to the governance issues. And it proposes targeted recommendations for European authorities, Ukraine's Verkhovna Rada and Cabinet of Ministers, and relevant Ukrainian government agencies. Building back greener We urge all actors to come to the table at this critical time and take stock of corruption challenges and anti-corruption efforts in Ukraine’s forestry sector so far. And, based on their knowledge, to play their parts to ensure that Ukraine’s forestry sector does not become the reconstruction effort’s Achilles’ heel. It is our hope that this pre-war stock-taking will enable Ukraine to rebuild back better and greener. Download and launch event - Download the report in English and Ukrainian. - View a summary of the launch event on Wednesday, 5 April 2023.
Corruption in gold mining and recycling
A summary of Juhani Grossmann’s remarks at Basel Gold Day II on corruption risks in gold supply chains. He highlights experiences from our Green Corruption team, explains why recycled gold might not be as ethical as it sounds, and ends with two broad recommendations for companies, state-owned enterprises and regulators in the gold trade. Gold is a fascinating commodity for those of us seeking to address corruption linked to environmental crimes. Its value chain is high in corruption risks, not least due to its high financial value to size ratio, complex sourcing structure and high emotive value. The origin of a particular piece of gold is easy to obscure through refining. And as Mark Pieth’s book Gold Laundering points out, the consequences of corruption in the gold trade are severe for people and for the environment. Despite the plethora of standards around gold, and the detailed and advanced due diligence guidance, their implementation is patchy and effectively excludes significant parts of the globe. The OECD has tackled this issue with various practical resources including some excellent FAQs related to corruption risks in the mining sector. The Financial Action Task Force FATF report on gold also highlights numerous money laundering and corruption challenges. Corruption: a multi-use tool to undermine the gold trade Our global Green Corruption teams see many of those concerns playing out in real life, including: In Indonesia, Parliamentary Speaker Setya Novanto was caught on tape trying to extort a private jet from the operator of the Grasberg gold mine as part of the government’s takeover of the mine. The Governor of Southeast Sulawesi, Nur Salam, operated a complex web of corruption-fuelled mining licenses that was constantly adjusted in favour of the highest bidder. Both officials were subsequently convicted of corruption offences. In Peru, we see the highly publicised risks in Madre de Dios, to take just one example, and sophisticated efforts to smuggle gold from informal artisanal and small-scale mines ASM into legitimate supply chains. In Bolivia, gold is crucial to the economy, making up 6.2 percent of GDP. Yet there is also clearly an urgent need to strengthen the resilience of regulators against untoward influence and corruption in order to protect the integrity of national parks. In numerous countries, corruption is used to avoid effective environmental impact assessments, to issue fake export permits and certifications and to ward off inspections. When wrongdoing is uncovered, corruption helps to stymie law enforcement efforts. This severely undermines conservation goals and the rights of local communities. It also further complicates assurance inside the gold value chain. Recycled gold is no less risky As these challenges are well documented in the mined gold sector, and assurances are particular challenging in the ASM field, there is an increasing search for alternative sources of gold to meet the high demand. Some consider recycled gold or “recyclable gold” in the OECD’s terminology to be a safer source since it comes from gold that was already in circulation, primarily in the jewellery industry. Recycled gold now reportedly makes up 25-30 percent of annual gold use. Some companies even market their use of recycled gold as the more ethical choice over freshly mined gold. Opting for what is considered a lower-risk product has three challenges, however: First, it is not clear what “recycled” gold encompasses. Definitions vary and many participants at Basel Gold Day II agreed they were too broad and vague. Second, the risk factors for recycled gold are not nearly as well studied and understood as those of mined gold. Third, the belief that the risk factors are lower might mean less due diligence. Are corruption risks for recyclable gold different? If so, how? While there is little detailed research on this, here are some initial considerations: The corruption risks inherent in the original feedstock have not disappeared. While the legal liability for these might be limited, it doesn’t mean the gold is obtained without corruption. Companies trading recycled gold, according to the Financial Action Task Force FATF , tend to be itinerant due to their low start-up costs and thus perform only minimal due diligence. High demand for recycled gold makes it tempting to launder problematic mined gold, for example gold from conflict zones, into the recyclable value chain. When recycled gold is traded across borders, if faces the same corruption risks related to licenses and permits as mined gold. The high-cash, low-scrutiny nature of recyclable gold buyers puts them at major risk for money laundering. Proper checks, strong internal controls While more research is needed to study the corruption risks related to recycled gold, these are certainly not negligible. What can be done about them? First, companies using recycled gold should apply the full due diligence suggested by the OECD, covering the whole value chain where needed according to a risk-based approach. Second, regulators and state-owned enterprises involved in the gold trade need to get serious about managing their internal corruption risks. This requires strengthening the independence and capacity of internal control, investigation and audit bodies to uncover wrongdoing. It also requires continuous internal corruption risk assessments, the development of mitigation measures, and agile verification of their effectiveness. More The Basel Institute’s Green Corruption programme provides assistance and capacity building to environmental agencies with enforcement powers, as well as to law enforcement partners targeting environmental crime. The team also works to prevent corruption seeping into regulatory or conservation authorities and state-owned enterprises engaged in activities of high environmental importance. Learn more about Basel Gold Day in 2020 and 2022.
FCPA Blog: Corruption and money laundering are destroying the planet
This blog was originally published on the FCPA Blog, which was discontinued in February 2024. The release on October 4 of the 11th Basel AML Index drew attention not only to its ranking of money laundering risks in 128 countries but for its stark message: in a fast-changing world, progress in addressing money laundering and terrorist financing risks is not moving fast enough. This year’s report explains that a small improvement in risks relating to the quality of countries’ anti-money laundering frameworks is offset by increased risks in four other areas measured by the Basel AML Index: corruption and bribery, political transparency, financial transparency, and political/legal risks. But while money laundering continues to be a major problem from year to year, the factors that contribute to money laundering risk are evolving. One such evolution is the growing realization that money laundering weaknesses are enabling criminals to profit from harming our fragile environment. This is why this year’s Index includes a new environmental crime indicator in its set of now 18 indicators. What does environmental crime exactly have to do with money laundering risk? And what does the initial data show? Corruption and money laundering are destroying the planet. Environmental crimes like illegal wildlife trade, forestry crimes, illegal mining and waste trafficking are destroying our natural resources and threatening sustainable livelihoods. Together they are said to make up the world’s fourth largest criminal industry after drug trafficking, human trafficking and counterfeiting. Estimates indicate that environmental crime produces massive illicit proceeds, estimated at $110 billion to $281 billion each year. It is growing at an annual 5–7 percent, more than the pace of global economic growth. While such estimates make numerous assumptions and are thus to be taken with a grain of salt, they nonetheless indicate the scale of the problem. The global community is only just starting to realise the many roles that corruption plays in facilitating environmental crimes, with some outstanding efforts that lead the charge. Research is also highlighting the myriad ways in which criminals launder the massive illicit proceeds, thereby fuelling our present environmental catastrophe. The decision to include the environmental crime data was made at the annual review meeting of the Basel AML Index, which draws experts from across sectors and geographies. The review helps to ensure that the methodology continues to be relevant and to reflect current evolutions in the anti-money laundering and counter financing of terrorism AML/CFT landscape. The inclusion aligns with the strong recommendation of the Financial Action Task Force FATF that environmental crimes should be considered predicate offences for money laundering. This recommendation in turn echoes statements by other bodies, from the UN General Assembly to the European Union, Eurojust and INTERPOL and the UN Environment Program, that it is essential to tackle the financial drivers of environmental crimes – the corrupt deals and the money laundering that facilitate criminal activity and make it profitable. Until now, reliable data on countries’ risks of environmental crime were lacking. The Global Organized Crime Index has changed this. First published in 2021 by the Global Initiative Against Transnational Organized Crime GITOC , the expert-led assessment looks at both levels of criminality and resilience to organised crime in the 193 countries covered. The Basel AML Index uses data from GITOC’s index on crimes involving flora, fauna, and non-renewable resources such as minerals. The new indicator is assigned a 5 percent weight, matching existing indicators on human trafficking and narcotics trafficking. We are thereby attempting to elevate the importance of this frequently overlooked crime. Initial insights. Based on the data, the average global score for environmental crime is 3.62 out of 10, where 10 is the maximum risk. This sounds fairly low, but there is great variation between jurisdictions – from the highest risk score of 8.33 Democratic Republic of the Congo to the lowest of 0.19 San Marino and Iceland . Sub-Saharan Africa has the dubious honour of being the region with the highest risks of both environmental crime and money laundering. Cameroon, the Democratic Republic of Congo, Madagascar, Mozambique, and Tanzania and perform particularly poorly. Next up is the region of East Asia and the Pacific, where environmental crime scores are high for Cambodia, China, Indonesia, Myanmar, the Philippines, and Vietnam. Interestingly, there is almost 100 percent correlation between a low risk of money laundering and a low risk of environmental crime. Andorra, Finland, Iceland, New Zealand, San Marino, Slovenia, and Sweden, for example, all perform among the best countries in both. A similar trend, but with a less strong relation, is observed in high-risk countries. For instance, a high risk in the overall money laundering score correlates with high risks of environmental crime for the Democratic Republic of the Congo, Cambodia, Cameroon, China, Madagascar, Myanmar, Mozambique, Vietnam, and Zimbabwe. What do we need? First, more and better data. While reliable enough to be included in the Basel AML Index, the Global Organized Crime Index is based on expert-led desk research from open sources. While GITOC has gone to some length to reduce these biases, having more than one source of data to rely on would allow for greater research depth. The FATF and its regional bodies have started to assess jurisdictions’ risks associated with environmental crime as part of their rolling program of mutual evaluations. However, this assessment is conducted only as a part of the existing FATF Recommendation 1 and Immediate Outcome 1 on understanding ML/TF risks and applying a risk-based approach to address them. More focus on this issue is needed to provide the kind of disaggregated and detailed data we really need on different types of environmental crime and their links to money laundering. Second, more action. The Basel Institute’s Green Corruption program is seeing fast-growing demand for technical assistance in applying existing tools designed to combat corruption and other financial crimes to tackle environmental crimes. For example, governments are increasingly realising the value of conducting parallel financial investigations in cases of illegal wildlife trade and forest crimes, as the FATF recommends in the above-linked report. This enables law enforcement officers to identify and disrupt not only the poachers and illegal loggers, but the high-level traffickers and their corrupt facilitators who profit from the crimes. While appreciation for the importance of these parallel investigations is growing, they are still too frequently an afterthought to seizures and arrests. The countries in which the Green Corruption program is currently active suffer medium to high risks of environmental crimes, according to the Global Organized Crime Index data. Indonesia, our newest country of operation, is evaluated as having a high risk, at 7.41 out of 10. In Latin America, Bolivia and Peru score 6.3 and 6.85 respectively. In Sub-Saharan Africa, Malawi 4.07 and Uganda 6.17 also face significant challenges. Efforts to address the environmental crimes that are threatening these countries’ sustainable development need to go hand in hand with improving resilience to money laundering.
The Green Corruption paradox: how Indonesians view corruption, the environment and economic development
Emerging economies have long struggled with the question of how to combine economic development with sustainable use of natural resources. How does corruption factor into this combination? Our recent survey of Indonesians’ attitudes to corruption, environmental degradation and the economy reveals what we call the Green Corruption paradox: Conflicting, and arguably mutually exclusive, views on all three topics can co-exist. Despite seeing the presence of and being deeply concerned about corruption and environmental degradation, people tend to focus on livelihoods when times are hard. People also, according to the survey data, favour economic structures that appear to channel the benefits of natural resource utilisation more directly to citizens. In Indonesia, this means rejecting private companies – particularly foreign-owned – in favour of state-owned enterprises SOEs and people’s cooperatives. Given that the governance structures of both remain weak, as evidenced in part by numerous corruption cases involving SOEs, this “trust credit” creates tremendous expectations of SOEs’ future behaviour. This can only be ensured through the systematic mitigation of corruption risks in these vast, crucial and proliferating institutions. This requires bold leadership that has historically been provided by the Corruption Eradication Commission KPK . Unfortunately, our survey shows a steady and significant decline of trust in the KPK, losing 20 points from 90% to 70% in the last five years, with the lion’s share of the loss occurring since late 2019. Fears, beliefs and contradictions – what the survey revealed Together with Lembaga Survei Indonesia LSI , the leading Indonesian pollster, we ran a national public opinion survey conducted via telephone in July 2021 covering 2,580 respondents. In-depth face-to-face interviews also took place with 30 private-sector representatives working in various natural resource sectors. According to the survey data, Indonesians harbour great reservations about corruption levels generally. The share of the public that says corruption has increased over the last two years is at its second highest level 60% in the five years that LSI has been measuring this question. The survey also revealed serious concerns about high levels of corruption in the natural resource sector specifically, and about worsening environmental degradation. Yet despite this, two thirds of respondents say they believe that some profitable industries based on Indonesia’s rich natural resources, including plantations for palm oil and rubber, are not harmful to the environment. Moreover, even when environmental degradation is clearly the result of natural resource exploitation, a majority believes that this is acceptable because of the economic benefits that it brings. This attitude may be exacerbated by the depressed economic situation: a full two-thirds of the participants see the current state of the economy as bad or very bad. Despite this pessimistic assessment of both the economy and overall corruption levels, trust in government remains high. A full three quarters of participants believe the government can be trusted to be a steward of the environment. The same percentage say the government is doing its best to balance economic growth and environmental degradation. This trust in government, including in agencies in charge of natural resource management, cohabitates uncomfortably with citizens’ assessment of the level of corruption in these sectors. When asked about a wide array of activities to utilise natural resources, respondents who had an opinion were between two and three times more likely to say that corruption is widespread or very widespread. Clearly, citizens are not naïve about the governance risks that natural resource exploitation brings with it. So, the public generally is concerned about corruption and environmental degradation. People also have strong concerns about worsening corruption in the country overall and high levels of corruption in natural resource exploitation in particular. One would think that these concerns would make natural resource sectors highly unattractive. Yet this is not the case. Based on our analysis of the survey data, we believe the economic benefits of natural resource exploitation are what lead respondents to suspend their otherwise highly sceptical attitude when it comes to the harmfulness of some environmental practices. This uncomfortable acceptance of natural resource exploitation is further emphasised when a majority of the respondents say that where environmental degradation occurs, it is outweighed by the economic benefits the exploitation brings. Resource nationalism is alive and well Concerns about corruption and the environment, one might suppose, could lead to a welcoming of foreign investors with their environmental, social and governance ESG -friendly ratings and compliance systems. This would be a mistake, however, as according to the survey the Indonesian public is highly critical of any involvement of foreign companies – or even any foreign investment – in the natural resource field. The share of respondents that support curbs on foreign investment in environmental exploitation is between four and seven times higher depending on the sector than those who do not desire such curbs. This is despite the significant economic hardship the country is experiencing. This severe dislike of foreign companies is not because they are perceived as more corrupt or more polluting. Rather, the top three reasons are all variations of resource nationalism: foreign companies don’t have Indonesian interests at heart, Indonesia should not compromise its independence, and the expectation that state revenue will be greater without foreign companies. Economic benefits of natural resource exploitation should flow to citizens Who, then, should be managing Indonesia’s natural resources? Clearly not Indonesian companies, as the public is overwhelmingly critical of them too. In no sector do more than 14% of respondents support private companies exploiting natural resources. The answers, according to respondents, are people’s cooperatives and SOEs. Cooperatives are at least twice as popular as private companies mining and up to four times more popular fishing . A majority of respondents also strongly endorsed SOEs and claimed they can be trusted to manage natural resources for the benefit of the people. Both preferences appear to rest on the belief that natural resources are a public good that should be used to directly improve people’s economic conditions. Private companies that are profit-driven are not seen as sufficiently concerned about this. Recommendations Albeit extensive, this is a single survey at an unusual time in history and we should be wary of drawing strong conclusions. Nevertheless, we believe the results point to some clear takeaways that can inform Indonesian policy and the interventions of donors and civil society organisations concerned with conservation, anti-corruption and sustainable development. Rebuild trust in the KPK as Indonesia’s principal anti-corruption institution. Recent legal, administrative and political measures that have undermined trust in the KPK need to be urgently reversed to restore the agency’s moral authority and ability to lead the highly complex fight against environmental corruption. Only interventions that address economic, governance and environmental concerns together stand a chance to succeed. The close connection between economic, governance and environmental concerns means that any efforts at conservation must address all three of these points. This heightens the complexity of government reforms and donor programmes in any of these areas. Yet it is essential: working in isolation will only lead to efforts being undermined. Foreign investors need to grow thick skin. Resource nationalism is a significant obstacle to both foreign investment in the natural resource sector and foreign-supported and -implemented conservation programmes. Foreign actors in the natural resource field need to ensure their systems are sufficiently robust to withstand certain public and likely political criticism. Strengthen SOE governance. The strong preference of the public for SOEs in the management of natural resources places a tremendous responsibility on both the government and the SOEs themselves. Numerous corruption scandals and conflicts of interest are evidence that this public trust is on credit and must still be earned through tough political decisions, inspired reforms, methodical implementation and diligent monitoring. Support cooperatives in enhancing their governance. Strengthening the governance systems of cooperatives is likely more diffuse and painstaking than undertaking the same exercise in SOEs. However, it should not be neglected considering the environmental, economic and political importance of sectors in which cooperatives are strongly present, such as fishing. Learn more Download the paper. The report was made possible with the generous support of the American people through the USAID CEGAH programme. Find out more about the Basel Institute’s Green Corruption programme.
Lighting the path ahead at the intersection of environmental degradation, illicit trade and corruption
Are we at a turning point in the fight to save our planet from the ravages of environmental crime and corruption? Possibly. The ongoing pandemic, caused by a zoonotic disease, has brought home the fact that environmental degradation is already altering our lives. Hopes that this was a one-off disruption and that we could soon return to the way things were have been dashed. It is now frighteningly clear that the pace of abuse of our planet keeps accelerating and the next crisis looms around the corner. But there is light as well as darkness. The increasingly loud chorus calling for environmental conservation has diversified significantly. Technical experts from all fields understand that they need to not only alter their individual behaviour, but also determine how their know-how can be part of the solution. How expertise in illicit trade and corruption can play a role Experts in both illicit trade and corruption are increasingly prominent voices in this chorus. Both are particularly relevant. Why? First, because actors engaging in environmental degradation at an industrial scale actively utilise the global trade infrastructure. The abuse spans logistics, finance, regulatory and dispute mechanism frameworks, and more. Secondly, the measures put in place to protect the environment, and government efforts to punish those who violate them, are frequently undermined by unprincipled actors and corrupt officials. Bribery, extortion, conflicts of interest, fraud and other forms of financial crime are widespread. This is why the tools that the counter-illicit trade and anti-corruption communities have honed over decades are highly relevant to efforts to reduce environmental crime and the consequent degradation. Relevant anti-illicit trade tools range from customs strengthening efforts and transparency and tracking mechanisms to supply chain due diligence in the extractive industries. Anti-corruption measures targeting weaknesses closely associated with environmental crime include asset recovery and financial investigations, building systems to prevent opportunities and lower incentives for extortion, and controlling corporate corruption risks. Join us for a virtual dialogue series: Corrupting the environment The Organisation for Economic Co-operation and Development OECD and the Basel Institute on Governance are among the organisations working to apply these tools to existing efforts to counter environmental crime and degradation. Together, to explore progress, challenges and lessons learned, we are hosting a monthly series of virtual dialogues in late 2020 and the first half of 2021. Under the banner of "Corrupting the environment", the events will bring together leading experts from all sectors and corners of the world to explore the intersection between environmental degradation, illicit trade and corruption. Please join us for the series launch on Wednesday, 9 December 2020, International Anti-Corruption Day. Find out more and register here.
A future without pandemics = a future without illegal wildlife trade
Our current struggles have highlighted in drastic fashion that unilateral solutions are no longer sufficient to challenges that are increasingly global and multi-disciplinary. At the end of last year, covid-19 was a local flu in a city few of us had ever heard of. When news emerged that wildlife trade might have triggered the virus’s emergence, it highlighted the continued risk of zoonotic disease that governance weaknesses in wildlife trade pose. Since then, the virus has truly gone global and unmasked the structural governance challenges which continue to hobble humanity’s response to this tiny organism. Global collaboration from the ground up Anyone glancing at the international news will be struck by the breakdowns in East-West communication on everything from trade and technology to peace and security. It’s tempting to say that global governance is in shambles and that politicians are “fiddling while Rome burns”. Yet there are some islands of constructive collaboration – and some big bridges between those islands as well – thanks to multi-stakeholder initiatives involving the private, public and third sectors. One standout example of such dialogue is United for Wildlife, a coalition of leading private sector firms committed to combating illegal wildlife trade. They are grouped in two Taskforces according to two crucial pieces of infrastructure traffickers seek to exploit: the financial and transport systems. Led by the Duke of Cambridge, the Taskforces encompass Western as well as Asian, African and other firms dedicated to denying wildlife traffickers access to their services. At the Basel Institute, we co-organise monthly webinars for Taskforce members through our Intelligence Sharing System, which generates, analyses and facilitates information exchanges on trafficking between members, law enforcement and civil society. This has helped to enable quick and targeted action in numerous cases already. Listening to the locals A noteworthy highlight from these regular exchanges is the member firms’ willingness to listen to and adopt best practices wherever they might come from. More often than not, this is from firms in countries most affected by the illegal trade in Africa and Asia. Many of these have made exceptional strides in adjusting their compliance systems to the changed reality of wildlife trading during covid-19. One example is conducting sophisticated analysis of financial flows in areas near national parks to identify increases in poaching. Another is quickly altering algorithms tracking the online sale of illegal wildlife, which has increased as governments in destination countries crack down on both legal and illegal wildlife markets. Exchanging with the experts This spirit of listening and openness to ideas was also present at a recent webinar by United for Wildlife, hosted by the Duke of Cambridge. The webinar featured a real balance of multi-disciplinary experts from around the world, providing over 800 participants with the latest analysis on the origins, trends and future actions needed. We contributed an anonymised first-hand account from a former poacher. Hearing the experiences of someone intimately involved in the trade helped participants better understand recent analysis on poaching trends provided through the Intelligence Sharing System. Designing our path to resilience Listening to experts and those with first-hand experience in this way will help us all achieve the Duke’s call to members to contribute to rebuilding society better. “Right now,” he said, “there is a real chance to ensure that the urgent steps that the world must take to prevent future zoonotic disease pandemics are designed in a way that also helps to eradicate the illegal wildlife trade.” Find out more about what the Basel Institute is doing to help contribute to global efforts to fight illegal wildlife trade.
The role of public-private partnerships in combating illegal wildlife trade
In this article, Juhani Grossmann, IWT Team Leader at the Basel Institute on Governance, explores the role of public-private partnerships in tackling illegal wildlife trade IWT . This is the second article in our short series of perspectives on IWT and financial crime, in collaboration with the International Academy of Financial Crime Litigators. White elephant or panacea? Public-private partnerships and their role in wildlife protection ============================================================================================ Public-private partnerships PPPs have tremendous potential in areas where government might not have sufficient resources or know-how to implement an otherwise valuable project. Classic examples are large infrastructure undertakings, where government sees the need for its development, but is not able to commit the required funds. The common risks associated with PPPs are that businesses aren’t able to recoup the funds invested and cut costs to the point where services provided are no longer sustainable. Too frequently, we find huge PPP infrastructure projects abandoned. In the case of the illegal wildlife trade IWT , some PPP challenges are not unique: difficulties in adequately reflecting both the government and the private partners’ interests in contractual language, including predicting long-term trends accurately; the ability to provide proper oversight over contracts once signed; unforeseen consequences. Can conservation be a business? The most visible IWT-specific PPPs relate to the commercial utilisation of wildlife resources through tourism. This frequently includes wildlife park management on behalf of the government by private entities, both non- and for-profit. Their sustainability is a challenge even in good times, with the biggest entity, African Parks, relying for 86% of their needed resources on grant donations. PPPs also frequently provide vital services beyond the protection of wildlife and habitats for human communities surrounding protected areas, including employment opportunities, loan programs, educational and health initiatives, veterinary services, and conflict prevention and mitigation. As with all PPPs, there are pluses and minuses. On the negative side, less scrupulous for-profit operations struggle with their stated conservation objectives or even function as a cover for poaching. On the positive side, some for-profit consultancies are offering strategic advice to countries on how to manage their parks and maximise profits, while ensuring conservation goals are met. No tourists, no protection? In light of covid-19 and the almost complete stop of international tourist arrivals, the financial calculations underpinning the wildlife park management PPPs are crumbling. New revenue streams are actively being considered for both public and private park management. These include conservation bonds or the sale of commodities that might be co-located with protected wildlife, such as sand and non-protected plant species. As these options are being considered, parks that are important from a conservation perspective, but had previously represented an insignificant contribution to tourism revenue streams, might become more financially viable. Unfortunately, the track record of extractive enterprises operating within and near protected areas or fragile landscapes has largely been unsatisfactory, including the facilitation and enabling of serious wildlife crime. Any such utilisation will thus have to be preceded by the herculean tasks of: a strict and well-considered regulation b a strengthening of government and civil oversight, as well as c bolstering of internal and external anti-corruption defences. Covid-19 supercharges reputational risk An additional area where cooperation between the private and the public sector has proven exceptionally fruitful is United for Wildlife, a coalition of transport and financial firms who are determined to prevent traffickers from accessing their networks, without which they are unable to ply their trade. The members work actively with government especially law enforcement agencies to report wrongdoings. We at the Basel Institute on Governance have been fortunate to be actively engaged in the process through operating the information-sharing system and see first hand the positive impact that such cooperation can have. While the partnerships are not overtly commercial in nature, members are certainly conscious of the legal and financial risk of IWT. The recent association of IWT with zoonotic diseases and thus covid-19 has caused the reputational risks for companies found to be facilitating the illegal wildlife trade to skyrocket. Change is already happening Even before covid-19, transport firms have been excellent at collaborating through United for Wildlife with local law enforcement agencies to provide valuable information on illegal goods that pass through their logistical networks. Heathrow Airport, itself a PPP through operator BAA Limited, has been utilising data parsed from government seizures to develop an AI-driven baggage screening system for illicit wildlife products. Financial institutions, on the other hand, are increasingly sensitised towards transactions related to IWT and developing sophisticated models to identify and report those to financial intelligence units and other regulatory bodies. The dismantling of the notorious Kromah trafficking network in East Africa was strongly supported by collaboration between law enforcement and financial institutions. Thankfully, this collaboration has not suffered as a result of pandemic-related travel and meeting restrictions. Rather, the partners have quickly embraced the opportunities that technology provides and continue to collaborate actively to disrupt and dismantle criminal networks putting wildlife- and human- communities at risk. To view the alternative perspective on this topic by Bruce Zagaris, Partner at Berliner Corcoran & Rowe, and Fellow of the International Academy of Financial Crime Litigators, see The Academy's website or download the PDF.
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