Odebrecht see Operation Carwash

OECD Anti-Bribery Convention

A legal instrument enacted by the OECD which establishes standards for the parties to criminalize bribery of foreign public officials in international business transactions.

The Convention was signed in 1997 and came into force in 1999. All 38 OECD member states are signatories, along with six other countries: Argentina, Brazil, Bulgaria, Peru, Russia and South Africa. Signatories are required to put into place domestic legislation that is in compliance with the Convention, and this has underpinned key laws such as the UK Bribery Act and France's Loi Sapin II.

The negotiations to agree the Convention were strongly supported by the government of the United States, where multinational companies had expressed concerns that the strong anti-bribery provisions of the FCPAmeant they were not operating on a level playing field when compared to overseas competitors for whom foreign bribery was not illegal. The Convention was also strongly encouraged by Transparency International.

The Convention is organized into 17 articles that cover themes including: the definition of the offence of bribery of foreign public officials, the responsibility of legal persons, sanctions that should be imposed for this offence, provisions for mutual legal assistance, and, most significantly, the responsibility of legal persons (in other words, making companies legally liable for bribe-paying by their employees). There are a series of related documents that help the reader to better understand the scope of the Convention, including Guidelines and Commentaries, as well as formal update Recommendations from 2009 – covering among other areas facilitation payments and demand-side bribery – and 2021, covering areas including companies’ anti-bribery compliance procedures, use of non-trial resolutions for bribery cases and whistleblower protection.

The OECD Convention is widely considered to be one of the most important and successful international anti-bribery instruments, ascribed both to its focus on a single important issue and the rigour of its implementation review mechanism for monitoring signatory countries’ implementation and enforcement through the OECD Anti-Bribery Working Group.

Tangentopoli: case study

An extensive bribery scheme uncovered in Italy by the Mani pulite investigation into political corruption in the 1980s and 1990s.

Tangentopoli translates as “Bribesville” or “Kickback City” and refers to a corruption scandal that shook and then reshaped Italian politics in the 1990s (Onorato n.d). The term has since become shorthand for a system of clientelism in which informal taxes (or bribes) were routinely paid to politicians by private business to obtain public contracts and favourable policies. The politicians then funnelled a portion of the bribes to fund their political activities.

The original judicial investigation, known as Mani pulite or “clean hands”, was initiated in 1992 by Judge Antonio Di Pietro in Milan, and rapidly spread to other areas of the country. The investigation was pivotal in exposing corrupt networks throughout Italy connecting politicians, public servants, private companies and organized crime/the Mafia. The fallout from the scandal was significant. It is estimated that 5,000 individuals were under suspicion. In addition, over half of members of parliament were indicted; 400 city and town councils were dissolved; and the value of payments for government contracts was estimated at about $4 billion a year. In the northern part of Italy, political parties ran the system, but in the south organized crime was also involved (Koff & Koff 2000: 2).

As the investigation unfolded and the extensive nature of the criminality became apparent, it increasingly de-legitimized the political institutions themselves. A significant finding was that the corruption was not related to one-off rule violations or bad apples, but rather had become systemic: institutionally tolerated and part of how the system worked. Coinciding with an economic downturn and revelations of mafia involvement in national politics arising from separate investigations into organized crime, the Tangentopoli scandal led to a large public outcry and a substantial rupture of the Italian political system. Many political leaders, including former prime ministers Bettino Craxi and Giulio Andreotti, were discredited or forced to resign and the major parties either dissolved or radically restructured; this is sometimes described as the end of the First Republic.

Yanukovych, Viktor: case study

A former Ukrainian politician who has been widely accused of corruption and links to Russia.

Victor Yanukovych served as both president (2010– 14) and prime minister (2002– 05, 2006– 07) of Ukraine. His presidency collapsed amidst the Maidan Revolution, following Yanukovych's decision to prioritize Russian ties over cementing Ukraine's political and economic association with the European Union. Tension was further sparked by high levels of perceived corruption and the power of oligarchs in Ukrainian politics.

In the wake of the violent protests Yanukovych, along with many other ministers, fled Kyiv and in his absence the Rada voted to remove him from power and hold elections on the grounds that he had reneged on his con-stitutional duties. Yanukovych labelled the action a coup. In 2019, he was found guilty by a Ukrainian court of treason and sentenced to 13 years imprisonment for his role in suppressing the pro-Western protests in 2014 (which led to 88 deaths) and aiding Vladimir Putin in his aggression against Ukraine once he had fled the country (Roth 2019). He remains in exile in Russia (see strategic corruption).

The charges against Yanukovych are extensive. He has been accused of corruption, embezzlement, cronyism, and vote-rigging. While in power Yanukovych was known to privilege his family and friends with public money and contracts in what has been described as a form of state capture. He was also accused of embezzling some $70 billion in state assets and moving them to offshore financial centres, leaving Ukraine in a dire economic situation (Walker & Grytsenko 2014). On his departure from Kyiv in 2014 Yanukovych's luxurious compound on the outskirts of the city was accessed by the public and photographed for the first time. Within its 345 acres, among other indulgences, it accommodated an extravagant home and a private zoo; and papers discovered in a nearby river also suggested lavish spending by the family (BBC 2014).

RDP

Kickback

A variant of bribery characterized by agreement or collusion between the two parties in a transaction.

Those involved agree in advance to share of the proceeds or benefits of the transaction. The kickback may be in the form of cash, gifts, or other services.

Kickbacks can be a feature of contract awards, with a proportion of the contract value being given personally to the individual awarding the contract; but can also be used in other contexts, such as rewarding someone for the award of a lucrative contract or making an appointment to a powerful position. Kickbacks occur in both the public and private sectors. The term derives from the concept that the person receiving the illicit benefit kicks back part of the benefit to the party responsible for granting the benefit.

Kickback is also the title of an influential corruption-related podcast.

RDP

Kleptocracy

A government in which corrupt individuals rule on the basis of extensive self-enrichment rather than the public interest, expropriating the wealth and resources of the state and of private citizens.

Derived from the ancient Greek terms klept (steal) and kratos (rule, as in democracy or autocracy), the term was originally used in the early nineteenth century, but has been applied with great frequency over the past two decades. Kleptocracy is defined in the US Strategy on Countering Corruption as “a government controlled by officials who use political power to appropriate the wealth of their nation. Can include state capture”. The related term kleptocrat describes the key individual(s) directing and benefitting from a kleptocracy.

The term overlaps with the concepts of grand corruption and state capture. However, some of the key characteristics of kleptocracy are only partially shared by those other concepts:

• • The principal beneficiaries of the accumulated wealth are those at the apex of state power, with prominent roles in government, or their close family and associates;

• • The prime objective of governing is personal enrichment, and the maintenance of power in order to safeguard and extend the wealth;

• • The process of accumulating the wealth does not necessarily take place within the law;

Illegal wildlife trade

Illegal trade in protected and endangered species, which often involves bribery, other forms of corruption, and money laundering.

There is no universally accepted definition of the term, but the UNODCdescribes the illicit/illegal wildlife trade (IWT) as: “the illegal trade, smuggling, poaching, capture, or collection of endangered species, protected wildlife (including animals or plants that are subject to harvest quotas and regulated by permits), derivatives, or products thereof ”.

Related terms such as “wildlife trafficking”, “wildlife and forest crime” and “illegal trade in wildlife, timber and fish” also have a variety of interpretations. Domestic laws often focus on the particular risks and activities located in their own jurisdiction, with appropriate definitional adjustments.

The UNODC estimated the value of the trade in ivory and rhino horns to be $630 million between 2016 and 2018, a scale which could not be achieved without the involvement of organized crime and associated money laundering. FATFmonitors the trade and associated regulations through its Environmental Crime division. Illegal elements of wildlife trading, including poaching and smuggling, are often facilitated by corruption, for example through bribery of law enforcement or border officials.

RB

Further reading

UNODC 2020. World Wildlife Crime Report 2020: Trafficking in Protected Species. New York: United Nations.

UNODC n.d. “Criminalisation of wildlife trafficking”. https://www.unodc. org/e4j/en/wildl ife-crime/mod ule-3/key-iss ues/crim inal izat ion-of-wildl ife-traffick ing.html.

Illicit enrichment

The process whereby an individual builds and maintains a level of wealth or a lifestyle that is not explicable through their lawful income.

Illicit enrichment has been widely adopted as a criminal offence to tackle corruption, having the advantage that it is not necessary to provide evidence that links an individual to a specific or tangible act of corruption (some-times known as a predicate offence).

The concept of illicit enrichment was present as early as the 1930s in Argentina where a congressman sought to take action against public officials who displayed wealth incommensurate with their official salaries. Legislation relating to the offence of illicit enrichment was introduced in various jurisdictions throughout the twentieth century including Hong Kong, India and Egypt.

Quality of government

An effort to assess governments in terms of their “quality”, conceived in terms of factors such as competence, reliability, trustworthiness, and the provision of public services. High quality of government is assumed to provide resilience against corruption.

The construction and measurement of such a concept allows for research on the relationship between corruption and quality of government. Scholars use slightly different specifications and different ways of collecting data. However, one very widely used measure is produced by the Quality of Government (QoG) Institute at the University of Gothenburg, in Sweden. For EU member states, the Institute collects data from Eurostat on approximately 450 variables at the subnational level, while the QoG Expert Survey on public administration covers more than 100 countries.

EDB

The study of corruption and the practice of fighting corruption have become more sophisticated in the last 25 years, and with that comes complexity and technical jargon. This dictionary is an introduction to this vocabulary and aims to help students and practitioners understand the key concepts and how they are used, while acknowledging that meanings change, usage evolves, and new ideas sometimes require new terms to describe them.

We have taken several editorial decisions that warrant explanation. Each entry starts with a one-line definition; this is our editorial effort to provide clarity and a go-to workable definition for rapid reference or easy application. For some terms, this is enough, or needs only to be complemented by a brief elaboration. But for the most widely used or important concepts, policies, or tools, we also provide context. Depending on the type of entry, this might include an explanation of what is contentious about the concept, how its usage has changed over time, or what key assumptions it relies upon. A standard entry is around 200 words long, with some longer pieces on key subjects at either 500 or 1,000 words, and some case studies at 750 words. Many entries could have a long list of references and sources. Our choice here was to add references where there is a specific idea or contribution that should rightly be attributed but to avoid referencing for commonly known and discoverable facts. We do not provide a comprehensive literature review for each topic, but we do flag some key texts and suggest a limited selection of further reading.

As a dictionary of corruption, each term is written with that in mind: it will be clear to readers that subjects like fraud or the World Bank have their own long heritage of analysis and academic research, but here we focus specifically on how such subjects relate to corruption. We also highlight links among different entries in the dictionary, allowing curious readers to deepen their understanding of corruption by tracing these paths across the book.

The dictionary is a collective effort. It draws on the expertise of a wide community of scholars from around the world, meaning that any one entry is likely to be written by one of the foremost experts on that topic.

Capital flight

Large-scale outflows of capital and financial assets from a country deemed risky to a destination seen as safer, often triggered by a crisis such as a political or economic event.

Capital flight can be both illegal and legal. For example, a foreign investor redirecting investments to more stable jurisdictions when political risks arise is typically legal. It may be illegal for a company or a citizen to move assets abroad if the government has introduced capital controls.

Corruption may be a cause of capital flight, particularly when it goes hand in hand with an expectation that there may be arbitrary seizure of assets. Such movements may be particularly detrimental to less-developed economies as they both reduce the capital available for internal investment and damage the confidence of external investors.

RB

Cardin– Lugar amendment

An amendment to the Dodd– Frank Act which required companies to disclose payments, such as “signature bonuses”, given to foreign governments in exchange for developing and extracting their oil, gas or mineral resources.

Bipartisan sponsorship by Senators Ben Cardin and Richard Lugar led to the Cardin– Lugar amendment (also known as “Cardin– Lugar”) being enacted into law in the US as Section 1504 of the Dodd– Frank Act. This anti-corruption provision aimed to increase transparency in the private sector by directing the Securities and Exchange Commission (SEC) to issue a rule requiring all companies listed in the US, both foreign and domestic, to report the details in their annual report and accounts of all payments made by the companies to governments. It also hoped to reduce what is known as the “resource curse”. Section 1504 covers all energy companies including foreign oil giants such as BP, Shell, and Total as well as state-owned oil companies from China, Russia and Brazil, such as PetroChina, Gazprom and Petrobras, by dint of their relationship with the US markets.

Thirty countries have since adopted equivalent mandatory disclosure rules for companies listed on their stock exchanges, allowing companies to submit the same reports in multiple jurisdictions and creating a level playing field. Implementation of Cardin-Lugar was delayed after heavy lobbying of the SEC by the oil and gas industry, which sought to restrict the definitions of which payments should be disclosed.

1MDB and Najib Razak: case study

Prime minister of Malaysia's embezzlement of $731 million through a state-owned investment fund.

Najib Razak is the former prime minister of Malaysia, and this case concerns his connection with the 1Malaysia Development Berhad (1MDB) corruption scandal. 1MDB was a state-owned wealth fund set up in 2009 to finance infrastructure and foreign investment in Malaysia. The fund's purpose was to boost the country's economic development. The international exposure of 1MDB was raised in 2015 when Malaysian officials were involved in arranging bonds worth of billions of dollars, with Goldman Sachs playing a prominent role in the financial arrangements – the CEO was reporting directly to Razak – arranging three bonds worth $6.5 billion for 1MDB with fees totalling $593 million, much higher than the average fees for equivalent work.

Between 2009 and 2014, Razak's associates embezzled more than $4 billion from the 1MDB fund, out of which $750 million was paid into his personal bank accounts in Switzerland, Singapore and the US. Razak and his associates, including his wife, had expended millions of dollars for their personal use, which included purchasing a $260 million yacht and a $35 million private jet, and accruing $85 million in Las Vegas gambling debts. In 2015, 1MBD's activities came under scrutiny when it missed payments owed to banks and bondholders, and an investigation was initiated. In the same year, some 227,000 leaked documents led to allegations that Razak had personally received $731 million from 1MBD just before the 2013 election, which his United Malays National Organisation (UMNO) party had won. The documents were leaked by whistleblower Xavier Justo who took refuge in Thailand; however, he was arrested and imprisoned after a guilty plea extracted under duress.

In response to the allegations, the Malaysian anti-corruption agency (MACC) launched an investigation which was stopped by Razak, who fired the attorney general. He further sacked four ministers who had raised concerns about the scandal and ordered the arrest of four officials working for the MACC (Ellis-Petersen 2020). Similarly, any international cooperation for ongoing corruption investigations in the US, Switzerland and Singapore was also terminated. This resulted in the appointment of a new attorney general in 2016 who cleared the prime minister of the alleged wrongdoing and declared that the issue had “comprehensively been put to rest”.

Panalpina: case study

FCPA case involving a Swiss logistics and freight forwarding company that had paid extensive bribes for the benefit of its clients, illustrating the illegality of facilitation payments.

In 2010, Panalpina and five of its clients in the oil and gas services sector agreed to pay combined civil and criminal penalties of approximately $236 million to the US Department of Justice and Securities and Exchange Commission for violations of the Foreign Corrupt Practices Act (FCPA). The penalties resulted from bribe paying between 2002 and 2007 in at least seven countries, including Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan.

Panalpina's logistics business involved the import and export of goods and supporting its clients with customs clearance. Court documents show that during this period Panalpina systematically engaged in bribery to negotiate customs processes. US authorities estimated the total bribes paid by the company over this period at $49 million but these ranged significantly in size, from small cash payments to payments of up to $75,000 per transaction. The bribes served various purposes, including allowing Panalpina and its customers to avoid fines, inspections, and audits; to speed up approvals; to provide false documentation; and often to simply look the other way and allow Panalpina to avoid the customs process all together.

In Nigeria for example, Panalpina provided an express delivery service known as “Pancourier”. It charged a premium for this expedited service which allowed customers to by-pass customs procedures, telling them that no government paperwork or receipts would be provided by the Nigerian Customs Service (NCS). Panalpina also helped large oil and gas clients avoid customs duties on Temporary Import Permits for equipment such as oil rigs and support vessels. Panalpina maintained this service by making hundreds of weekly and monthly payments to government officials in Nigeria working in the NCS, the Port and Maritime Authorities, Immigration Authority, the Police, and Department of Petroleum.

Panalpina's employees had various ways of describing these payments, such as “processing fees”, “sunshine”, and “apples”, using around 160 different terms in Nigeria alone. In some cases, Panalpina characterized the extra fees to public officials as facilitation or facilitating payments. This is a term which originates from the FCPA and allows a limited exemption from pros-ecution for payments to expedite or secure the performance of a “routine governmental action”.

Rational choice

A framework for understanding and modelling individual decisions, which assumes that human behaviour reflects self-interested goals and preferences. It is the foundation of most theories that seek to explain why actors engage in corrupt activities.

The premise of rational choice theory is that people are strategic, rational actors who make purposeful choices that are intended to maximize their own individual utility and attain a goal that makes them better off (e.g., in terms of material resources or access or power). Individuals’ preferences are assumed to be well-defined, fixed and ranked consistently, and individuals are assumed to act instrumentally to achieve their goals. This means that they use available information to anticipate consequences and weigh the pros and cons (or costs and benefits) of all distinct options, construct a hierarchy of choices based on the expected utility, and select the option with the highest expected utility.

An early version of rational choice theory assumed that the outcomes of each decision were known fully ex ante, making the decision-making process straightforward. Later versions incorporated the idea that most decisions entail some degree of risk and uncertainty, hence the decision-maker must also evaluate the probabilities of each possible outcome and account for this in their calculations about the best option.

Originating in economics, rational choice theory has been adapted for use across the social sciences and its insights also inform the study of corruption. Although rooted in methodological individualism, rational choice assumes that individual decisions, when aggregated, provide insights for analysing collective outcomes and socio-economic and political trends at the macro level. Game theory is often used to study interactions among rational agents, and the effects of those interactions for collective outcomes.

Rational choice explanations of corruption fall broadly into three groups. The first sees corruption as a collective action problem akin to the prisoner's dilemma. Individuals have incentives to pursue their own self-interest, rather than to cooperate and favour the common good.

The second explanation views corruption as a principal– agent problem. Corruption is seen as the abuse of public authority for private gain. Agents (i.e., bureaucrats) are supposed to act on behalf of principals (i.e., citizens) to provide public goods, but agents have incentives to maximize their own interests rather than those of the principal.

G20 Anti-Corruption Working Group (ACWG)

An initiative established in 2010 to provide the G20 with recommendations on how to combat corruption on an international level.

The G20 ACWG aims to promote and strengthen the implementation of global anti-corruption regulatory frameworks, by leveraging the authority of the G20, an intergovernmental forum comprising 19 countries and the European Union. The ACWG produces multi-year action plans that are updated periodically to prioritize anti-corruption action points in several areas, including the ratification of relevant anti-corruption conventions, promotion of international cooperation, reducing the enforcement gap, and strengthening standards of transparency and integrity in the public and private sectors.

The ACWG cooperates with relevant international organizations such as UNODC, OECD, the World Bank, International Monetary Fund and the Financial Action Task Force (FATF). It also works closely with other G20 Working Groups on pertinent anti-corruption issues to determine best practices in tackling corruption. Accordingly, the group prepares annual reports to track member implementation of commitments and prepares outputs in the form of high-level principles aimed at developing anti-corruption laws, policies, and procedures in the G20 countries.

AA

Gatekeepers

Professional firms and financial institutions in the regulated sectors which are a potential entry point for those involved in money laundering who are seeking to place and layer dirty money into the global financial system.

The Financial Action Task Force (FATF) and domestic regulatory authorities regard as gatekeepers those in the regulated sectors who play a key role in opening or closing the door to dirty money. The gatekeepers are covered by AML laws and regulations and are usually expected to have in place AML compliance procedures. The term is considered more neutral and less pejorative than the designation professional enablers.

RB

Gender and corruption

A sub-field of corruption studies that explores and seeks to explain relationships between the social meanings that people associate with the sexes and various aspects of corruption.

The sub-field is concerned with the amount, and forms, of corruption that prevail in particular contexts and among different gender groups, the facilitating dynamics around corruption, and the impact of corruption.

Jakarta Principles

A set of sixteen principles designed to “ensure the independence and effectiveness of anti-corruption agencies”.

The Jakarta Principles were agreed by current and former heads of anti-corruption agencies, anti-corruption practitioners and other global experts. They were subsequently endorsed by the International Association of Anti-Corruption Authorities (Panama 2014), and noted – although not formally endorsed – by the United Nations Convention against Corruption states parties.

The Principles cover key areas such as accountability, how to maintain independence from political or other external interference, and financial arrangements. While the Principles have been criticized for being insubstantial in parts, they are also regarded as the most widely recognized set of guiding principles for anti-corruption agencies.

JL

Jeitinho

A Portuguese term used widely in Brazil to describe obtaining an advantage or solving a given problem by seeking reciprocal favours.

Described by DaMatta (1991) as “a clever dodge to bend the rules”, jeitinho utilizes different strategies of employing social capital, communication skills or personal resources in order to achieve individual goals, and may involve circumvention of social norms or formal regulations to accomplish this. The word literally translates to either “little way” or “knack”, which implies that it is both personalized, and dependent on the individual's skills in articulating the request to receive a jeitinho.

The related expression “jeitinho simpático” (meaning “nice way”), suggests positive connotations of harmony, resourcefulness, politeness and creativity. However, the expression “jeitinho malandro” (meaning “rogue way”) indicates the role of jeitinho in potentially corrupt acts such as bending the rules to grease the wheels of bureaucracy; this may involve the use of manipulative approaches characterized by dishonesty, deception and the violation of integrity standards in order to gain an undue advantage.

AAA

Further reading

DaMatta, R. 1991. Carnivals, Rogues and Heroes: Toward a Sociology of the Brazilian Dilemma. Notre Dame, IL: University of Notre Dame Press.

De Paiva, F. 2018. “Jeitinho (Brazil)”. In A. Ledeneva (ed.), The Global Encyclopaedia of Informality, Volume 1: Towards Understanding of Social and Cultural Complexity. London: UCL Press.

Economic crime

Illegal activity that involves money, assets, or finance. Corruption can be a form of economic crime when the benefits or losses that result from its commission are financial. Also referred to as financial crime.

Economic crime and corruption are often erroneously conflated. There are some important distinctions between the terms.

Corruption is not always a crime: there is a broad consensus in the social sciences that certain practices may be corrupt, even if they are not proscribed by law (see legal corruption). The private gain derived from corruption need not be financial or money based. Often gains are much broader, involving social status gains or the consolidation of power. The avoidance of loss or the gratification gained by harming others might also constitute the private gain from the commission of a corrupt act.

Economic crime encompasses a much broader range of activities than those involving corrupt actors. Crimes such as theft and fraud can be committed by anyone in society, as opposed to corrupt acts, which characteristically involve actors invested with some form of entrusted power. Money laundering is an example of an economic crime, which is often related to corruption and corrupt networks, but does not in itself constitute corruption unless it involves an abuse of entrusted power.

RDP

Further reading

Button, M., B. Hock & D. Shepherd 2022. Economic Crime: From Conception to Response. Abingdon: Routledge.

Gottschalk, P. 2010. “Categories of financial crime”. Journal of Financial Crime 17(4): 441– 58.

Lord, N. & M. Levi 2023. “Economic crime, economic criminology, and serious crimes for economic gain: on the conceptual and disciplinary (dis)order of the object of study”. Journal of Economic Criminology, 100014.

Electoral fraud/vote buying

Interference with or the manipulation of aspects of an election or improper influence over voters to shape the result.

There are many ways of fraudulently influencing elections. Where this is done in ways that abuse entrusted power to achieve a private gain, such behaviour is likely to be corrupt. The private gain might include a benefit accrued by a political party rather than an individual.

Danske Bank: case study

The largest known case of money laundering, in which up to €200 billion from Russia and other laundromat schemes was channelled through the Estonian branch of a large Danish bank between 2007 and 2015.

The issues at Danske Bank date back to November 2006 and its acquisition of the Finnish bank, Sampo Bank, along with its subsidiaries in Estonia, Latvia, Lithuania and a recently acquired bank in Russia. Since the 1990s, Sampo Bank in Estonia had developed a portfolio of non-resident customers, in particular serving Russian clients. Following the acquisition, the branch operated with a high degree of independence. Danske Bank Estonia had its own IT systems which meant customers were not covered by the group's risk monitoring systems.

The non-resident portfolio in Danske Bank Estonia is the main focus of investigations into money laundering. There were around 10,000 customers in total in the portfolio between 2007 and 2015. By 2013 the branch held 44 per cent of all deposits for non-resident customers in Estonian banks. In the relevant period, profits from the portfolio represented 40– 79 per cent of the branch's annual profits, and were an important source of income for the Danske Bank group as whole. Deposits originated from customers in various countries including Russia (23 per cent), Latvia (12 per cent), Cyprus (9 per cent) and the UK (4 per cent).

From 2007, Estonia's financial regulator, the Estonian Financial Supervisory Authority (EFSA), raised repeated concerns about money laundering risk with Danske Bank. The bank nonetheless continued to grow the non-resident portfolio over the next six years. The bank also declined to scale back the business in 2013 after the US bank J.P. Morgan ended its correspondent banking relationship with Danske Bank Estonia due to concerns around its money laundering controls.

Investigations escalated in December 2013 after a whistleblower, Howard Wilkinson, head of the bank's trading business in the Baltics from 2007 to 2014, came forward. He told the bank's Executive Board that the Estonia branch had “knowingly continued to deal with a company that had committed a crime”.

Sanctions

Anti-corruption sanctions are a foreign policy tool used by governments to freeze the assets of designated individuals and/or entities and deny their entry into the sanctioning government's country.

An individual or entity that has been selected by the country's relevant authorities to be sanctioned is called a designated person.

There are various anti-corruption sanctions regimes, with different definitions of corruption and varying scopes as to what illicit activities they cover. The first to be developed was the Global Magnitsky Act, implemented by the US in 2016, which covers human rights abuses as well as corruption. The UK's Global Anti-Corruption Sanctions Regime was implemented in April 2021, and Australia and Canada also have dedicated anti-corruption sanctions.

Notable figures who have been designated for corruption include Teodoro “Teodorin” Obiang, vice-president of Equatorial Guinea, under the UK Global Anti-Corruption Sanctions Regime, and Israeli international businessman Dan Gertler under the US Global Magnitsky regime.

MCH

Sarkozy, Nicholas: case study

Former French president convicted of corruption in relation to political financing in 2021.

Already known for his lavish tastes and celebrity lifestyle, Sarkozy's presidency was dubbed “bling-bling” by his critics. However, in the years after leaving office he faced several allegations relating to corruption, including influence peddling and illegal campaign financing.

In March 2021, Sarkozy was sentenced to three years in prison (two years suspended) for corruption and influence peddling, while in September of the same year he was sentenced to one year under house arrest for ille-gal campaign financing. He remained under investigation for claims that he received money for his 2007 campaign from Libyan dictator Colonel Gaddafi to the tune of €50 million and faced further allegations of influence peddling for a Russian insurance firm in 2019.

Throughout, Sarkozy maintained his innocence and was prepared to appeal against the convictions. His wife Carla Bruni publicly condemned the case and Sarkozy himself has since accused the judiciary of “hound-ing” him.

In the first conviction, Sarkozy was on trial with his lawyer, Thierry Herzog, and senior judge Gilbert Azibert. He was accused of attempting to bribe Azibert for confidential information about a judicial inquiry. The inquiry was of interest to Sarkozy because it was investigating whether he had accepted illicit funds from L’Oreal heiress Liliane Bettencourt to support his 2007 presidential election campaign. Sarkozy was ultimately cleared of wrongdoing in this instance.

BAE Systems: case study

UK-based aerospace and defence company with global operations that faced multiple allegations of bribery, notably in contracts between Saudi Arabia and the UK, giving impetus to the campaign for the UK Bribery Act.

The Al-Yamamah arms deal between the UK and Saudi Arabian governments spanned three decades and was worth over £43 billion. The first Memorandum of Understanding signed in 1985 included the procurement of 72 Tornado aircraft, other equipment and extensive maintenance and support contracts to the Royal Saudi Airforce. The final contract agreed in 2007 was for the supply of 72 Eurofighter combat aircraft. BAE Systems acted as the prime contractor on the deals. The Saudi government paid for arms by transferring a reported 300,000 barrels of oil per day to a dedicated account managed by the UK Ministry of Defence.

While the first allegations of corruption around the deal emerged in the Middle Eastern press in the mid-1980s, in the UK the issues came to public prominence in 2003. An investigation by two journalists at The Guardian, based initially on documentary research in the National Archives, revealed substantive concerns of corruption in the Al-Yamamah contracts. This included allegations that up to £6 billion may have been paid to agents and intermediaries on the contracts, commonly disguised using companies in offshore financial centres.

The investigation identified Prince Bandar bin Sultan Al Saud, son of the then Saudi Defence Minister, as a key beneficiary of the commissions. It also described a £60 million slush fund operated by BAE Systems to entertain Saudi officials on foreign visits. Employees from a travel agency, Travellers World, later made allegations that funds were used to provide cash, luxury gifts, holidays and prostitutes to Saudi officials overseeing the contracts. Investigators have estimated that the price of the contracts was inflated by 32 per cent to generate funds for commissions.

The UK Serious Fraud Office (SFO) began investigating the deals in 2004 but their work was abruptly brought to a halt in December 2016 after intervention by the then-attorney general and then-prime minister Tony Blair. Although national security reasons were cited as the rationale for dropping the investigation, the closure of the investigation also took place in the context of final negotiations for the 2007 sale of Eurofighter jets.