Brazil
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Money dirtying: shining a light on how clean money turns into bribes
There’s a lot of attention to the laundering of “dirty money” – but very little about how clean money can be turned into bribes, kickbacks or payments to terrorists. Together with David Jancsics, I examined the money-dirtying strategies at the heart of one of the world’s most dramatic corruption scandals: the Lava Jato or Car Wash case. How did the multinational company Odebrecht manage to secretly channel millions in legitimately earned funds to bribe politicians and bureaucrats across the continent? Our article Turning Legally Obtained Resources into Illegal Payments: A Money Dirtying Scheme attempts to answer this question and to explore the networks of individuals and entities that made the schemes possible. Exploring the concept and practice of money dirtying could help practitioners get a more holistic view of major financial crime cases. It could also potentially lead to new ways to prevent, detect and intercept illicit financial flows. What is “money dirtying”? We use the term “money dirtying” to refer to the process by which clean, legitimate resources are turned into illicit payments used for corruption, the financing of terrorism and other illegal activities. The term was originally coined to describe the mechanisms of terrorism financing in the late 1990s and early 2000s. Following the terrorist attacks of 9/11, researchers worked to understand the financial structures that allowed Al-Qaeda to finance the attacks. We have repurposed the term to fit the field of corruption, but the underlying idea is the same. What are the typical characteristics? On the face of it, money dirtying has similar characteristics to money laundering: Complex, multi-layered schemes using redundant payments and fake contracts to make funds difficult to trace. The use of specialised professionals who can create sophisticated financial infrastructures and know all the tricks to evade detection. The use of informal actors such as halawadars or doleiros to escape regulatory radars. Often transnational, with money, resources and information shared along a cross-border network of individuals and entities. What makes it different to money laundering? The key differences lie in the purpose and the direction of the flow. Money laundering seeks to clean dirty money by reintegrating it into the legal financial system. It is a circular system, where the funds return to their point of origin. Money dirtying serves to transfer money undetected from the bribe giver to the bribe taker. It is linear. For example, in our case study, the money took the following route: In reality, it looked more like this: The Lava Jato case The Lava Jato case Operation Car Wash was a major judicial investigation launched in Brazil in 2009. Initially focused on money laundering and illegal activities linked to a car wash company, it quickly expanded into one of the largest corruption investigations in history. By the early 2010s, investigations and plea deals had exposed the intricate financial structures and corrupt management systems of the Odebrecht Group at the heart of a web of illicit payments in countries across the region. Unlike other cases, there is significant public information available about Lava Jato thanks to judicial investigations, journalistic work, academic studies and other reports. This allowed us to map and analyse the “money dirtying” network in detail. The case is also an ideal case study in advanced corruption schemes. It was large, long-running and used complex, multi-layered networks that spread across the world. Skeleton and muscles To map the complex networks of the Odebrecht Group’s money dirtying networks we looked at the data in two ways: We analysed the transactions, performing a social network analysis and looking at the “skeleton” of the network – how it was shaped, where transactions centred and how they moved. At the same time, we tried to understand the substance of the network. If you like, the muscles surrounding the skeleton. We read interviews and wiretaps, and looked at personal histories to understand the relationships between people in the network and how they operated together. We then created a coherent framework of both the “skeleton” and “muscles”. This includes a description of each role and its function within the network. So what? Paying more attention to how legitimate funds are channelled towards illegal activities can help anti-corruption practitioners to gain a more holistic view of major corruption schemes. With the increase in internal controls and regulatory scrutiny, those that engage in corruption are forced to use more sophisticated methods than just declaring bribes as “consultancy fees”, for example. A better understanding of these methods could help inform stronger internal controls and compliance systems. This focus also helps practitioners to see how some of the same methods – legal structures in offshore financial centres, shell companies, professional enablers, informal value transfer service providers for example – can be misused not only for money laundering but for other parts of a corruption scheme. The research also showcases the power of social network analysis in mapping the key individuals and entities involved in transforming clean money into illicit payments. Combined with evidence of their relations and interactions, this can create a valuable source of information for both law enforcement and the development of evidence-based strategies for targeting corrupt networks. Learn more Organisational forms of corruption networks: the Odebrecht-Toledo case Quick Guide 4: Social network analysis in combating organised crime and trafficking Research Case Study 3: Exposing the networks behind transnational corruption and money laundering schemes
B20 Brazil rings in a new era for Collective Action
We are thrilled that anti-corruption Collective Action has received fresh impetus under the Brazilian presidency of the B20 – the voice of business of the G20 intergovernmental forum. This reflects a shift in mindset among global business leaders, towards recognising the power and necessity of multi-stakeholder collaboration for anti-corruption and integrity. Fostering Collective Action initiatives is one of three policy recommendations of the B20 Integrity and Compliance Task Force. These were handed over to G20 leaders at the B20 Summit in São Paulo on 25 October 2024. A Key Performance Indicator or KPI will track countries’ adoption of concrete Collective Action approaches and initiatives, based on the data in the Basel Institute’s B20 Collective Action Hub – which itself has been selected as a B20 legacy project. So what’s new and why does it matter? Return of the Integrity & Compliance Task Force "I was pleased to represent the Basel Institute at this year’s Summit, joining political and business leaders from around the world plus representatives from international organisations and financial institutions. The Basel Institute has supported the B20 process for over a decade, including this year as Network Partner to the Integrity & Compliance Task Force." – Scarlet Wannenwetsch, Senior Specialist, Collective Action The B20 Integrity & Compliance Task Force has existed since 2011, with the exception of the Chinese and Indian presidencies. It convenes a variety of stakeholders engaged in anti-corruption, compliance, integrity and transparency in business. Unlike other B20 Task Forces it has a direct counterpart: the G20 Anti-Corruption Working Group. It is thus a powerful voice for business integrity on the global stage. Its recommendations also reflect evolving understandings of how businesses should integrate ethics and integrity into their systems and value chains. Responsible business, ethical leadership and Collective Action The Task Force’s 2024 recommendations include longstanding B20 priorities that encourage the implementation of integrity and anti-corruption measures to enhance responsible business. New this year, there is also a focus on promoting ethical leadership to cultivate inclusive growth. Though anti-corruption Collective Action has been a reoccurring theme under the B20 over the past 12 years, this year we are pleased that: Collective Action is one of only three recommendations. This highlights the weight and importance given to Collective Action as a tool for companies to engage and lead in the fight against corruption. The Collective Action recommendation is specific. It calls on B20 and G20 leaders to stimulate Collective Action by “promoting collaboration of public sector, private sector, and civil society to strengthen integrity and resilience in the value chain”. There is a strong focus on “developing specific approaches for situations related to environmental and human rights issues”, recognising the synergies between ethical business and these areas. The recommendation calls on governments to strengthen their own engagement in Collective Action, calling out Integrity Pacts and High-Level Reporting Mechanisms that help to protect public procurement from corruption and unfair practices. A Key Performance Indicator KPI will enable scrutiny and monitoring of countries’ uptake of Collective Action approaches and initiatives. This is a first in the history of the B20. The B20 Collective Action Hub has been chosen as one of five B20 Brazil legacy projects. This demonstrates clear buy-in and support for the continuation of the KPI and key Collective Action tools beyond the current B20 cycle. Tracking support for Collective Action among G20 countries The newly developed 2024 Collective Action KPI measures the number of G20 governments that are engaged in or provide support to at least one Collective Action initiative. The scope of “G20 countries" is wide, comprising core members and associated members, including all countries in the African Union and the European Union. The measurement is based on data from the B20 Collective Action Hub, which has a global database of Collective Action initiatives. Currently, 43 of the 96 G20 governments – or 45 percent – support or are engaged in at least one Collective Action Initiative. This result demonstrates the success of two decades of effort by the Basel Institute and others who champion multi-stakeholder approaches to business integrity. But it also highlights room for improvement. The aim is to reach 100 percent by 2030. This new KPI allows the B20 and the Collective Action community to track something many companies and practitioners identify as crucial for the success of Collective Action: government support. Government support for Collective Action strengthens incentives for companies to engage and invest in corruption prevention. Learn more Download the 2024 B20 Integrity & Compliance Policy Paper View the panel discussion on day 2 of the B20 Summit in Brazil Learn more about the B20's work on integrity, compliance and Collective Action
New GAFILAT guide: Why asset recovery laws need to align with human rights and other international standards
A new guide to non-conviction based forfeiture published by GAFILAT, the Latin American body of the Financial Action Task Force FATF sets out good practices for this powerful but under-used form of asset recovery legislation. It also emphasises the need for laws to align with both domestic constitutions and international human rights standards. The GAFILAT guide was drafted by Oscar Solórzano in collaboration with the region’s Asset Recovery Network RRAG . Oscar is Head of Latin America at the Basel Institute on Governance and a Senior Asset Recovery Specialist with many years of experience supporting government partners across Latin America in high-profile, complex cases of corruption and asset recovery. In this Q&A, he explains the approach, relevance and impact of the Guía de Buenas Prácticas sobre Extinción de Dominio y Decomiso no Basado en Condena , which was published by GAFILAT in 2024 and financed by EU member states through the COPOLAD III cooperation programme. COPOLAD III is a consortium led by the Italo-Latin American Association IILA and FIIAPP of the Spanish Cooperation. 1\. What is the guide about and who is it for? This is a guide to good practices in non-conviction based forfeiture for Latin America. It analyses the existence and implementation of non-conviction based forfeiture mechanisms in the 18 GAFILAT countries, which provided useful data during the drafting process and very detailed comments during the review. The guide contains an analysis of economic criminality in Latin America and the public policy response. It also addresses the essential concepts and standards applicable to non-conviction based forfeiture, presents case studies and explores available data from GAFILAT countries. Policymakers, legislators, law enforcement and judicial practitioners, law students and civil society – including journalists who report on these complex topics – will benefit from the guidance. 2\. Why is there a need for guidance? The expansion of non-conviction based forfeiture legislation has accelerated in Latin America in recent years, and not necessarily in the most coordinated or harmonised way. In line with the updated FATF standards relating to asset recovery, it is expected that it will continue to expand in the region. In effect, the FATF’s updated Recommendations 4 and 38 make the adoption of non-conviction based forfeiture laws mandatory and seek to ensure that decisions based on these laws can be enforced internationally. The guide therefore appears at an ideal time. It proposes a way to harmonise this type of law while respecting the legislative diversity that exists in the region. 3\. The idea is that non-conviction based forfeiture can reduce economic and organised crime – even without the threat of criminal convictions. Can you justify that? Economic crimes are perpetrated for the purpose of obtaining illicit economic advantages. Laws that reduce such economic advantages are a concrete step forward. And jurisdictions with more powerful and varied legal tools are more likely to see their crime rates decrease, simply because there is a concrete societal response to the criminal phenomenon. Without comprehensive asset recovery laws and an effective judicial apparatus to implement them, various incentives for engaging in profitable criminal activity arise. Some studies show that the lack of effective legal mechanisms targeting criminal assets has, among other things, allowed an explosion of organised and economic crime in Latin America in all its manifestations. The same goes for the growth of public-sector corruption. Assets stolen through corruption have rarely been confiscated in the past, when asset recovery was only possible in the context of criminal proceedings. It is naïve to think that a legislative instrument alone can change the reality of crime in Latin America, where the most fearsome drug cartels operate and, according to all international indices, corruption is rampant from north to south. However, the empirical experience I have gathered while working for almost 15 years in this part of the world indicates that there is a positive difference in the criminal situation of countries that effectively implement asset recovery mechanisms. A robust legal toolkit for asset recovery also alters the behaviour of criminal organisations, which have to bear higher costs to develop more sophistication in their criminal activities or simply relocate their activity to jurisdictions less equipped with legal tools and the ability to wield them. In Peru, to take a positive example, non-conviction based forfeiture is proving a powerful way to get at numerous politicians who have been accused of corruption, but where criminal proceedings seem to be never-ending. The independence of Peru’s non-conviction based forfeiture law from criminal procedures allows prosecutors to target assets even if their owners inevitably slip through the nets of justice. 4\. What does the guide show about the prevalence and success of different forms of non-conviction based forfeiture in the region? On paper, there has been a lot of progress in the adoption of non-conviction based forfeiture in Latin America. Only two countries in the region do not have any form of non-conviction based forfeiture law. The most predominant form is arguably Extinción de dominio, which has existed for 13 years. Ten out of the 18 countries have incorporated it into their legal arsenals and apply it in various forms and degrees. Extinción de dominio is a flexible law that can operate in civil, criminal or administrative matters, or even completely independently. It has developed specific concepts that make it possible to broaden the grounds for asset forfeiture. It lists an extensive catalogue of rights of the defence which, as stated in the Guide, seem to go far beyond the internationally established standard. In practice, however, recovery rates remain modest in relation to the volume of criminal assets generated in and flowing through the region. The best practices guide argues that a lack of effective implementation of existing laws partially explains the poor performance. The quality of implementation is influenced by political, economic and social interests. These are not necessarily addressed in the guide, which limits itself to technical and legal issues. However, the guide proposes some concepts and comparative practices that have the modest objective of guiding national authorities in applying this indispensable tool. 5\. What are success factors and challenges? In many Latin American countries, non-conviction based forfeiture is only taking its first baby steps. But from a Darwinian perspective of law – i.e. survival of the fittest – I observe that the laws that thrive are those that align with international standards and the constitutional rights of the countries that adopt them. In other words, those laws that develop around recognised global standards and practices but that are also designed to work in specific local contexts. Since 2020, together with my colleagues and many passionate and competent local partners, I have implemented programmes promoting non-conviction based forfeiture laws in the region. That experience has helped me to see that there is a group of countries that have what we can call a “European” approach to the issue, and whose laws apply only in a narrow set of scenarios. Others have more hard-hitting practices that evoke the laws used in countries such as the United States, and have transposed common law practices and principles into civil law frameworks without further reflection. Despite an increase in asset recovery rates, in many cases this has led to distortions and challenges, which are partially explored in the guide. 6\. What does the guide tell us about non-conviction based forfeiture in international cases? International asset recovery is a very different animal from domestic asset recovery and has political implications. That said, since 2014 several Latin American countries have tried to pierce the once impenetrable veil of the European financial system with non-conviction based forfeiture procedures. Switzerland and then Luxembourg were the first European countries to accept these laws as valid, in particular in relation to decisions based on Extinción de dominio. Today, almost all countries accept provisional measures based on these laws and some can directly enforce the resulting decisions. Even if the practice of enforcing non-conviction based forfeiture judgments is not abundant, we hope that the new standards adopted by the FATF on this matter will help to accelerate international asset recovery. 7\. The guide emphasises the need to align laws with international human rights standards. Why? In my opinion, this is fundamental. It is inconceivable that the ideals of justice can be achieved to the detriment of human rights. Rather than a random matter left to the discretion of states, respecting human rights in the adoption of non-conviction based forfeiture laws is an international treaty obligation. Most countries adhere to the so-called control of conventionality doctrine, i.e. the obligation to align any domestic legal instrument or practice with binding rules arising from international treaties such as the American Convention of Human Rights. This presupposes that the adoption of any domestic rule and practice on non-conviction based forfeiture must respect human rights and the practice of human rights courts. This is a condition sine qua non of any asset recovery law. The guide cites two examples of setbacks to the use of non-conviction based forfeiture laws in the region on the basis of human rights deficits. We can agree or disagree with the premises used by the countries’ High Courts to reach their conclusions. But what is clear is that a lack of consideration for human rights can also play a paralysing role. This challenge is vividly illustrated in Peru right now, where the Ombudsman has filed a claim against the use of non-conviction based forfeiture with the Constitutional Tribunal on the grounds that it could violate the right to property and the principle of the presumption of innocence. On a more positive note, a human rights lens can enhance the application of this type of law, especially in the context of international cooperation. On the one hand, more attention to human rights brings more legitimacy and acceptance to laws and therefore better recovery rates. On the other hand, a human rights lens also offers national legislators the ability to adopt more incisive standards when there are, for example, elements of organised crime or other exceptional conditions that make the application of some human rights more flexible. 8\. How does the guide help navigate the human rights topic in practice? As the guide explains through a study of the jurisprudence of the European Court of Human Rights, the issue is constantly evolving. The guide provides Latin American legislators and practitioners with examples of how to develop the human rights approach in a clearer way and enables them to critically review concrete non-conviction based forfeiture cases in various parts of the world. It emphasises two human rights that are central to non-conviction based forfeiture: the right to property and the right to a fair trial. This will be enormously beneficial in ensuring that new or revised non-conviction based forfeiture laws in Latin America are in line with the updated FATF Recommendations. The guide advocates for the adoption of laws that are in harmony with human rights principles and specifies that their international enforcement is a recognised standard. Similarly, the interpretative notes to the revised FATF Recommendations 4 and 38 – and the very coherence of the FATF system – indicate that the respect for human rights is fundamental to the adoption and application of these laws. The human rights perspective is likely to be an important element in the forthcoming fifth round of FATF Mutual Evaluations in GAFILAT countries, where the technical compliance and effectiveness of these laws with FATF standards will be under the microscope. Learn more See the Guía de Buenas Prácticas sobre Extinción de Dominio y Decomiso no Basado en Condena . Read a related blog by Oscar Solórzano: FATF seeks to change the landscape of international asset recovery: what this means for Latin America.
FCPA Blog: Strong leadership breathes new life into B20 Integrity & Compliance Task Force
This blog was originally published on the FCPA Blog, which was discontinued in February 2024. 2023 was a mixed bag for the business integrity community. On the one hand, the B20 – the voice of business of the G20 forum of major economies – had no Integrity & Compliance Task Force under the Indian Presidency. That was a major missed opportunity for all of us who care about raising standards of business integrity around the world. The B20 Integrity & Compliance Task Force is a unique platform to discuss and build consensus among businesses on compliance and integrity topics across G20 countries. It provides an opportunity to present G20 governments with specific issues for consideration and implementation. On a more positive note, the OECD Integrity Forum and U.S.-led Summit for Democracy discussions highlighted the private sector’s critical role in the fight against corruption, particularly in high-risk sectors such as infrastructure and energy. 2023 also finished on a high note: For the first time, the UN Conference of the States Parties CoSP in Atlanta included a forum dedicated to business integrity. More than 500 companies supported a call to action on business integrity, which was presented to government delegates at the CoSP. Upon taking over the G20 Presidency in December, Brazil announced that the B20 Integrity & Compliance Task Force would be re-introduced. The Task Force will be led by renowned Brazilian business leader, Claudia Sender, with the Brazilian National Conference of Industry CNI leading the B20 overall. As the B20 kicks off in Rio de Janeiro at the end of January, strong participation and engagement of the Brazilian and global business community can be expected – including on the integrity agenda. Business integrity: the backbone of the wider business agenda 2023 offered some sobering reminders of the need for continued efforts by companies and governments to manage their corruption risks. A notable example was the corruption case in Portugal’s renewable energy sector, which led to the resignation of the Portuguese prime minister. Fueled by geopolitical tensions, corruption is evolving, and economic, social, and political systems are shifting alongside it. “To stay abreast of these interconnected challenges, companies need to look beyond their internal processes, to increase their engagement in policy platforms and in spaces for dialogue with their communities”, says Robin Hodess of The B Team, a long standing B20 Task Force member. Active business participation in multi-stakeholder settings can help ensure that new standards, laws, and policies reflect business realities including stakeholder demands and can be effectively implemented. The B20 Task Force at the forefront of efforts to advance business integrity As a multi-stakeholder group with a strong and international business representation, the B20 Integrity & Compliance Task Force has achieved tangible impacts under previous G20 Presidencies. For example, it was one of the first business groups to recommend the introduction of public digital beneficial ownership registers and transparent and competitive procurement processes. Both of these issues continue to be front and center for business integrity – and corporate transparency is key to global efforts to curb illicit financial flows. The B20 also co-authored with the G20 a guidance document on Compliance for SMEs and worked on an Anti-Corruption Technology Road Map to promote integrity and compliance. Current debates about the impact of artificial intelligence on business will no doubt have huge implications for business integrity as well in the years to come. The ongoing focus on transparency makes business integrity efforts key to the wider agenda for economic transformation, such as the just energy transition. Disclosure on company policies, processes, and impact – whether on anti-corruption or on carbon – helps create accountability, which is critical for businesses and their commitments to a sustainable economy, as the Task Force noted across the past few B20 cycles. Transparency is also a key element for stakeholder engagement, which is increasingly part of the business integrity agenda. The B20 is a community of practice not just a process One positive takeaway from the hiatus of the Integrity & Compliance Task Force in 2023 was the continued engagement and commitment of previous Task Force members. Together, we worked to integrate key transparency and business integrity topics in other task forces. As a group, we have also been proactive and vocal in the process to reinstate the Integrity & Compliance Task Force during the 2023/24 Brazilian B20 Presidency. Members met regularly, despite having no official home in the B20. We updated a guidance document that captures a range of good practices and learnings for incoming B20 presidencies, such as: Promoting consistent engagement between the Integrity & Compliance Task Force and the G20 Anti-Corruption Working Group, which advises the G20 leaders on anti-corruption topics. Ensuring consistency, continuity, and follow-up across G20/B20 Presidencies, including by tracking progress. Enhancing governance in Task Force management. This all reflects what makes the B20 anti-corruption workstream unique: the voice and historical knowledge of its community. Looking forward Through the Task Force, the business integrity community is actively engaged in shaping the B20 process rather than the other way around. This allows for community ownership. It also means there is impact on the wider business community beyond the recommendations made to the G20 every year. Under the Brazilian leadership, the B20 in 2024 promises a re-invigorated Integrity and Compliance Task Force, whose work is cut out for it. The community of practitioners committed to business integrity is ready for the challenge. To find out more about the Integrity and Compliance work at the B20 or to join the informal community, see the Basel Institute’s resource pages and reach out to Robin Hodess, The B Team, rh@bteam.org.
Fighting corruption in Latin America: Can Collective Action help close the gaps?
As we expand our efforts to support Collective Action against corruption in Latin America, Private Sector Specialist Andrea Prieto takes stock of existing initiatives in the region. She and representatives from some of the initiatives discussed the Collective Action approach to fighting corruption in Lima, Peru at the Eighth Integrity Week organised by Alliance for Integrity. También disponible en español. Changing the status quo Covid-19, inflation and social unrest have sent Latin America into economic stagnation. Corruption exacerbates the region’s economic woes. It is estimated to cost the region’s economies a staggering USD 220 billion annually and is responsible for about 50% of the total effect of the economic slowdown. Nobody but the corrupt benefits from corruption. It inhibits economic development, discourages investment, hinders innovation, distorts markets and increases the cost of doing business. But there is good news. There is a growing understanding that action on corruption is a collective responsibility that requires the cooperation of the public, private and also civil society sectors. This shift has led to: New regulations for the private sector; a greater emphasis on corporate accountability; demand for corruption prevention programmes and strategies at the corporate level. In parallel, businesses in Latin America are increasingly developing sustainable business strategies. These look beyond short-term profits towards sustainable long-term growth that not only benefits the company, but strengthens economic stability and competitive markets. As a result, the private sector in Latin America has become more engaged in the fight against corruption. Building trust through Collective Action A lack of trust between private-sector actors and other stakeholders is a critical hurdle to advancing the anti-corruption agenda. Collective Action offers a tried-and-tested methodology to build trust and develop collaborative approaches across stakeholder divides. These collaborative approaches support the design and implementation of corruption prevention measures and initiatives that are effective even in challenging contexts. The B20 Collective Action Hub by the Basel Institute on Governance has mapped more than 60 Collective Action initiatives operating across a range of sectors in 12 countries in Central and South America. These initiatives range from joint declarations to anti-corruption certification schemes. We also see tools to safeguard public procurement, like Integrity Pacts and High Level Reporting Mechanisms. The following initiatives give a taster of different types of initiatives and their impact: Collective Action leading to regulatory reform One successful example of how Collective Action can lead to legal or regulatory reform is the Maritime Anti-Corruption Network MACN . The MACN is a global business-led network that aims for a maritime industry free of corruption. In Argentina in 2014, the MACN detected, through its anonymous incident reporting system, reports of irregular demands for money for routine inspections in bulk carriers in Argentina. The bribery was estimated at approximately USD 30 million a year. It affected not only those forced to pay bribes to get the paperwork they needed, but also the overall international trade of Argentine agricultural products. The higher costs and the increased legal risk had begun to discourage foreign companies from continuing to trade in the country. The MACN worked with trade unions and chambers of commerce to identify corruption risks, gather relevant actors, build trust and find ways to solve the issue. Thanks to this action and by collective agreement, the Servicio Nacional de Sanidad y Calidad Agroalimentaria National Agri-food Health and Quality Service reformed the regulatory framework in November 2017. This resulted in the adoption of a modern control system that digitises the management of inspections and establishes a system of cross controls. The Collective Action process was expanded to include the training and monitoring of all public and private actors in the new system. It is estimated that bribes decreased by more than 90 percent, significantly reducing the cost per ship of entering Argentina harbours. Integrity as aspirational: Collective Action to recognise companies Companies increasingly see the value of publicly demonstrating their integrity credentials. In 2010, the Instituto Ethos of Brazil a civil society organisation collaborated with the country’s Comptroller General to develop the Pro-Ética “Pro-Ethics seal Pro-Ethics Seal. This is a system to publicly recognise companies that implement effective integrity and compliance programmes and that are committed to the integrity agenda. The concept was later adopted by the Brazilian Ministry of Infrastructure. It gained even more prominence in the wake of the Lava Jato scandal, which forced both the government and businesses to recognise the importance of corruption prevention measures. The mechanism continues to have impact. In 2020–21, more than 327 companies applied for recognition. Of these, 195 met the eligibility requirements and were evaluated, and 67 were approved. In 2022-23, 84 companies gained approval. The tool has been recognised as a good example of Collective Action since the deliberations on the approval of the companies are carried out by the Pro-Ethics Committee. This is made up of institutions from the public and private sectors, with national representation and committed to the promotion of corporate integrity. The success led Paraguay to implement a similar "Integrity Seal" programme Integrity Seal, demonstrating the potential for replication of such initiatives. In 2023, Paraguay’s government publicly recognised 30 companies, of which 17 were large companies and 13 small/mid-sized enterprises SMEs . Collective Action for cross-sector learning Collective Action can bring people together to learn how to improve business integrity. One example is the Red para la Formación Etica y Ciudadana Network for Ethics and Citizenship Education in Colombia, which provides spaces for reflection and training on ethics in business environments. Through its flagship programme “The Integrity Chair” Colombian Chair on Citizenship, Integrity and Anti-Corruption, implemented with the National University of Colombia, the network has brought together more than 15 partner organisations from the public sector, civil society, academia, business and professional sectors in ethics trainings. Since its creation, the Chair has trained more than 5,500 students and more than 1,600 citizens. The network also runs mentoring programmes for the design and implementation of anti-corruption Collective Action initiatives. Collective Action to level the playing field Collective Action initiatives can also help to level the playing field for businesses, including SMEs. One example is the Empresarios por la Integridad Entrepreneurs for Integrity initiative in Peru. This business-led network provides anti-bribery certification as well as integrity training for SMEs. At the time of writing, 49 companies had achieved certification and a project to promote integrity among SMEs in the construction sector is underway in several regions of the country. Fertile ground for new initiatives – we are here to help The growth and impact of Collective Action initiatives in Latin America show that the region is fertile ground for multi-stakeholder collaboration against corruption. In the context of growing awareness of corruption, and where corruption scandals are frequent, Collective Action has an opportunity to gain greater legitimacy as an effective way to promote integrity. And importantly for Latin America’s current economic situation – to build a more competitive and transparent playing field for doing business. As shown in the examples above, Collective Action initiatives can influence the way business is done, either at the sectoral level, extending their impact to new actors such as SMEs in the Peruvian case, or broadening initiatives to expand at the regional level as in the case of the "Sello de Integridad" Integrity Seal . At the Basel Institute, we are actively supporting this approach and the next generation of Collective Action initiatives. Our Collective Action mentoring programme provides tailored and context-specific support to organisations that promote business-led and multi-stakeholder initiatives for anti-corruption. We also contribute to ongoing efforts to build a regional community of practice that allows the exchange of good practices and the potential for cross-regional collaboration.
Publications
B20 Brazil 2024 Integrity and Compliance Task Force: Policy Paper test
This Policy Paper was prepared by the B20 Brazil Integrity and Compliance Task Force. In this document, B20 members call for stronger actions from the G20 in 3 key areas:
- Recommendation 1: Encourage the implementation of integrity and anti-corruption measures to enhance responsible and sustainable governance in business.
- Recommendation 2: Stimulate Collective Action, engaging the Public Sector and value chains to uphold integrity.
- Recommendation 3: Promote ethical leadership to foster inclusive growth.
Organisational forms of corruption networks: the Odebrecht-Toledo case
Actors in grand corruption schemes often conspire and deliberately create sophisticated networks to extract huge amounts of public resources from government systems. They hide such conspiracies behind hybrid formal/informal arrangements.
Using a mixed methods approach, this study investigates the corruption scheme initiated by former Peruvian President Alejandro Toledo and the Brazilian construction giant Odebrecht Group. We argue that separating the networks of the client (Odebrecht) and the agent (Toledo) sides provides analytical leverage for studying complex corrupt arrangements.
We found that the organisational forms designed by corrupt actors on either side were essential to ensuring the secret and safe operation of the network. Introducing the concept of organisational form into corruption research helps better understand the nature of these networks. We also found that different parts of the networks are shaped by different types of corruption. The article concludes with implications for practice.
Working Paper 47: Conflict of interest legislation in Brazil, South Korea and the European Union: International case studies
This Working Paper presents international case studies of legal frameworks addressing conflicts of interest and highlights common challenges, opportunities and lessons for practitioners and other interested stakeholders. The report covers three contexts: two national (South Korea, Brazil) and one supranational (the European Union).
The analysis is based on the international standards in the 2020 guide Preventing and Managing Conflicts of Interest in the Public Sector, produced by the World Bank Group, OECD and UNODC at the request of the G20 Anticorruption Working Group.
The Working Paper is published in the context of the USAID Indonesia Integrity Initiative (INTEGRITAS) project, which supports the Government of Indonesia in preventing corruption via enhancing civic engagement and strengthening integrity in the public and private sectors. The case studies and analysis will be of value to anyone interested in drafting, revising or monitoring conflict of interest legislation in any context.
Open-access licence and disclaimer
The publication is part of the Basel Institute on Governance Working Paper Series, ISSN: 2624-9650. You may share or republish the Working Paper under a Creative Commons CC BY-NC-ND 4.0 licence. Please acknowledge the Basel Institute on Governance and link back to this page.
Suggested citation: Costa, Jacopo. 2023. ‘Conflict of interest legislation in Brazil, South Korea and the European Union.’ Working Paper 47, Basel Institute on Governance. Available at: baselgovernance.org/publications/coi.
This study was made possible by the support of the American people through the United States Agency for International Development (USAID). The contents are the sole responsibility of the Basel Institute on Governance and do not necessarily reflect the views of USAID or the United States Government.
Research Case Study 3: Exposing the networks behind transnational corruption and money laundering schemes
Corruption is increasingly understood as a form of collective, social behaviour. It slips easily across borders and involves sophisticated financial strategies and transactions to launder the stolen money.
Yet the nexus between corruption and money laundering is poorly understood. So too are the structures, functions and mechanisms that enable these crimes.
We applied analytical tools to reveal the complex networks behind a corruption and money laundering scheme involving Odebrecht and Peru’s former president. The insights can support strategic approaches to fight transnational corruption.
Best Practice Guide on Anti-Corruption in Agribusiness
Drawing upon good practices identified in anti-corruption Collective Action initiatives in Brazil, this Guide serves as a compass to guide agribusinesses and other sectors that are interested in promoting ethics and transparency in their daily business practices.
This is the English version of “Guia de Boas Práticas Anticorrupção da Agroindústria”.