When President-elect Joe Biden takes office in January, he will immediately face a dizzying array of short- and long-term crises – not least an economy at risk, an uncontrolled pandemic and looming climate change. Despite this already crowded agenda, the Biden government cannot forget to make way for another priority: the fight against corruption. If Biden is serious about restoring trust in the rule of law and democracy at home and abroad, as he affirmed during his campaign, the fight against corruption is vital. However, to do so effectively requires honesty about United States’ own failings and swift action to correct them in the first 100 days of administration, as well as a solid foreign policy agenda that will see the erection of new barriers to illicit gain and gain resuming the role of a global anti-corruption leader and supporting those struggling for accountability in their own countries.
Of course, the United States cannot be an effective rule of law advocate abroad without putting a house in order. The US campaign funding system is often referred to abroad as “legalized bribery,” and Washington’s reputation for corruption has only deteriorated in the past four years. In the TRACE bribery risk matrix, in which the risk of bribery is assessed in 194 markets, the USA has fallen eight places in the ranking from 15th to 23rd place since last year. According to TRACE Matrix, cases of bribery and corruption have skyrocketed across government, including at the highest level of the executive, since 2016. Over the same period, public sector theft – theft or misappropriation of public resources – has become more common and fewer government officials are punished for their wrongdoing. In the meantime, the federal government has given social groups less consideration when choosing providers – a trend that conveys an image of nepotism and favoritism in Washington. These shifts coincided with a decline in civil society participation, as shown by the TRACE matrix, and a head-on attack on the media that left civil servants less exposed to non-governmental controls.
All of these domestic problems must be recognized and addressed with transparency and accountability. Aside from the basics, such as refraining from unpaid attacks on the press, Biden should implement his proposed ethical reforms for the U.S. government: stronger protection for whistleblowers, mandatory financial disclosure by candidates for federal office, and greater autonomy for government guards.
In the meantime, the Biden government should act swiftly in the fight against corruption abroad to address the most pressing priorities. First, it should deny corrupt foreign actors access to US markets where they can wash and stow their looted goods. Under current regulations, foreign kleptocrats have a number of tools at their disposal for pumping dirty money into the US financial system. Behind the anonymity of easy-to-establish shell companies, they – in most American cities – are free to buy real estate for cash, with no control, visibility or accountability. These loopholes allow criminals to hide their wealth while damaging the American community: with their homes often vacant, housing becomes less affordable and nearby small businesses run out of revenue.
The Biden administration can take clear steps early on to make the US financial system far less hospitable to corruption of foreign money. Even before Biden takes office, Washington will remove the anonymity of Shell companies as part of a bipartisan reform incorporated into this year’s National Defense Authorization Act, expected to become law this month. The Biden government should build on these advances by imposing transparency and due diligence in the high dollar industries popular with kleptocrats, such as real estate, private planes, super yachts, luxury cars, and hedge funds.
Biden can also address corrupt foreign money in the United States at its source. He has already pledged to prosecute kleptocrats overseas by continuing the Obama and Trump era practices of applying targeted sanctions, seizing stolen assets, and denying visas to warn corrupt actors and hold them accountable. However, its administration should make these programs more transparent and complement existing instruments with innovative approaches. Some countries – including the UK, Ireland, Australia and Singapore – require potential investors to clarify the source of questionable money with “unresolved investment contracts” and reverse the burden of proof. The Biden administration could ask Congress to subject foreign investors to similar policies and embed unresolved property rules on the Interagency Committee on Foreign Investment in the United States.
The regulation of US advocacy institutions would create additional barriers to corruption of foreign funds. Since lobbying nonprofits are not required to disclose foreign donors, nothing prevents kleptocrats, including those with close ties to foreign governments, from covertly funding nonprofits that play a key role in influencing U.S. policy. To prevent such actors from indirectly participating in US policy making, Biden should urge Congress to require all lobbying organizations to publish a list of their foreign donors. It should also more consistently enforce the Foreign Agent Registration Act, which requires persons representing the interests of foreign countries to disclose both their ties to those governments and information about their related finances.
While trying to reset US leadership internationally, the president-elect has the option of defining the fight against corruption as a global priority for democratization, security and human rights. The Summit on Democracy, already proposed by the Biden team, provides an important opportunity to renew US commitment to anti-corruption, anti-authoritarianism and human rights worldwide. However, the test of its effectiveness will be in the next few steps: it will be important to commit to a concrete agenda, iterative meeting and accountability for all parties to show that Washington is fully committed to combating the kleptocracy and those it runs is invested in the authoritarian regime.
With all of this, the Biden government cannot only show solidarity with Democrats in other countries – it must actually help them in their pursuit of transparency and accountability. Popular movements in favor of democratic accountability often collapse because of a lack of resources, organization or access to information. Biden should therefore work with Congress to pass the remaining provisions of the bipartisan Crook Act, which would help fight corruption overseas by allocating resources to countries on the verge of democratic transition to support their civil society organizations and theirs to strengthen objective journalism. The proposed legislation has received widespread support and some of its provisions are included in the Defense Act of 2021 – but key financial support measures are still pending. Journalists and activists play an important role not only in exposing misdeeds, but also in demanding reliable financial information on government contracts and tax returns from officials. The United States should endeavor to support these government controls around the world.
In addition, bribery cases are complex and require specific legal and accounting expertise, and the United States allies rely on them for anti-corruption training. The Biden Administration can assist them by stepping up staff exchanges between the FBI and the Department of Justice to provide support and training in countries developing anti-corruption investigation and enforcement programs.
Concrete action to fight corruption will be essential if the United States is to restore leadership and strengthen global governance. So far, the signs are encouraging that the President-elect will be busy studying this issue. In his victory speech on November 7th, Biden vowed to join the forces of decency and fairness to lead the country out of an era of toxic politics, cynicism and distrust. In the past few years he has written and spoken a lot about the need to resist the creeping authoritarianism that is taking hold in so many parts of the world. Biden should know that the threat of corruption is one of the most daunting barriers to achieving that vision – and if he acts soon, the world will see that trust and fairness have a chance to fight.