U.S. ‘Kleptocracy’ Initiative Key to Mideast Future

Attorney General Eric Holder

Outrage at corruption is the common denominator of the upheaval sweeping the Middle East.

It was corruption at the fruit market, where a fruit vendor set himself ablaze after being exploited by arrogant police, which sparked the revolution that ousted Tunisia’s leader. In Egypt, university graduates who couldn’t get a job without some connection to the Mubarak family occupied Tahrir Square.

Arab leaders are now scrambling to boost salaries and subsidies. But that’s unlikely to quell the outrage caused by years of pervasive corruption. Bribery has infected everything from university life (professors expect them for grades to graduate), access to government jobs and the private wealth of public officials.

As Washington tries to connect with the aspirations of people across the Middle East, helping them expose corruption is one way to do it.

Egyptians are already taking the first steps. The Egyptian public prosecutor has detained the former prime minister and President Hosni Mubarak’s two sons, Alaa and Gamal, on suspicion of corruption. Mubarak himself is under investigation in an embezzlement inquiry.

But reformers are demanding more action, and could use help in developing a comprehensive approach.

The good news is this plays into an Obama administration sweet spot. The Justice Department has launched an unprecedented campaign against international bribery and corruption. Its new, and aptly named, “Kleptocracy Asset Recovery Initiative” may prove most important in the Middle East. It has been set up to target and recover proceeds of foreign official corruption that have been laundered into or through the U.S.

In the 30 years since Congress passed the anti-bribery law, the Foreign Corrupt Practices Act, the Justice Department’s criminal division has never been so busy. Over the past year, the U.S. government has imposed the most criminal penalties in international bribery-related cases in any single 12-month period, with far more than $1 billion in fines. No one is immune — both multinational corporations and private individuals engaged in international business have been swept up in the anti-bribery dragnet.

The goals of this new effort were clarified by the chief of the Justice Department’s criminal division, Lanny Breuer, in November. “Our FCPA enforcement program serves not only to hold accountable those who corrupt foreign officials,” Breuer said, “but in doing so it also serves to make the international business climate more transparent and fair for everyone.”

The business community has taken notice. More than half of all multinational companies are shelving partnerships with agents, distributors, consultants and joint ventures due to concerns about liability in anti-corruption regulations, according to the latest State of Anti-Corruption Compliance survey of multinationals by Dow Jones.

The Justice Department is extending its focus well beyond U.S. borders. A significant portion of its corporate inquiries have involved foreign companies or U.S. subsidiaries of foreign companies. Actions against foreign companies for inadequate internal compliance programs and against U.S. companies for bribes by their foreign joint-venture partners have resulted in settlements in the hundreds of millions of dollars.

In this way, the U.S. government is extending anti-corruption prosecution as far afield as its jurisdiction will allow. It is also helping other countries to prosecute corruption. For example, the Justice Department recently worked with Indonesia’s attorney general’s office to set up a 50-prosecutor anti-corruption task force.

But the Kleptocracy Initiative is a pivotal program. Once fully implemented, the initiative will allow the Justice Department to recover assets on behalf of countries victimized by high-level corruption, building on the U.S.’s already robust anti-bribery enforcement.

No cases have been filed yet, since the Kleptocracy Initiative has only been up and running for a few months. But it represents a concrete commitment to recover foreign corruption proceeds. The Obama administration should accelerate and bolster this effort.

As Washington engages in an anti-corruption campaign around the world — and claims the moral right to raise these issues with foreign countries — we must remember that we do not have a record at home beyond reproach. Corruption has been pervasive in our financial system and examples of domestic political corruption are well publicized.

But the fact that widespread outrage about corruption is a major motivator for the revolutions throughout the Middle East creates an opportunity for Washington to connect with aspirations of a people seeking change.

In past, we may have abetted the very dictators that have been toppled in the Middle East. Now, helping the region’s new leaders fight corruption is not only a response to mass outrage, it reinforces prospects for democracy in the Middle East.

Mark Brzezinski is an attorney at McGuireWoods who specializes in anti-corruption compliance. This essay was originally published for Politico. Photo credit: AP Photo.

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