Washington goes after foreign corruption with CROOK Act

By Walt Finch


FOREIGN corruption is in the sights of Washington as it puts aside the usual partisan infighting to unite on a new piece of legislation that would create a fund to assist foreign governments in countering corruption and kleptocracy. 

The CROOK Act would add an extra $5million penalty against corporations or entities fined over $50 million for bribing foreign officials under the Foreign Corrupt Practices Act, which would then go into an “Anti-Corruption Action Fund”.

The Biden administration has made countering kleptocracy one of the pillars of its foreign policy and exposing corruption is something that they are going to dedicate time and resources to, according to Secretary of State Anthony Blinken.

Corruption is a growing force on a global scale, enabling figures from authoritarian regimes such as China to expand influence by paying bribes in Africa, or kleptocratic regimes such as the military junta in Myanmar to wrest power from the democratic government.

It links the politicians, security forces and drug cartels of Guatemala in a vortex of crime and violence that drive people to migrate north, and in Lebanon it has been blamed for the devastating explosion that rocked Beirut in 2020.

Standing for Countering Russian and Other Overseas Kleptocracy (CROOK), kleptocracy is defined as a government that uses its political power to steal its nation’s wealth for the personal use of its own officials. The money raised for the “Anti-Corruption Action Fund” would go to foreign countries in order to prevent or fight such kleptocratic corruption. 

“It could go to foreign countries to help them build democratic institutions and rule of law systems, to help build up their anti corruption legal or regulatory frameworks or to support other existing US diplomatic or foreign assistance programs that themselves go after corruption,” Scott Greytak, Advocacy Director for Transparency International US, told Redaction Politics.

“There is no durable, in law, designated anti corruption fund that the US government funds. And so what CROOK would do is, for the companies that are the most egregious violators of the Foreign Corrupt Practices Act, these folks who are fined settlement penalties above $50 million.” 

“There’s not a lot of them, but there are some big heavy hitters. CROOK would add a $5 million fine to that. And that could be used specifically for nothing but investing in programs, activities, you name it, in other parts of the world, in order to go after corruption.”

Preventing foreign corruption and strengthening the democratic, rule of law-based institutions of foreign governments is not just seen as an altruistic goal in Washington, but central to the US national interest. 

“Anti-democratic forces use misinformation, disinformation, and weaponised corruption to exploit perceived weaknesses and sow division within and among free nations, erode existing international rules, and promote alternative models of authoritarian governance,” President Joe Biden wrote in the Interim National Security Strategic Guidance. “Reversing these trends is essential to our national security.”

Mr Greytak ascribed the rise in foreign corruption to two phenomena; how authoritarian regimes come to power, and how they stay in power. 

“We’ve seen in so many different parts of the world democratic backsliding in the rise of authoritarian regimes and authoritarian governments. And one of the ways that those folks get into power is through the use of corruption. 

“Then, once those regimes are already in power, in countries like China and Russia, the way that they grow their influence is by using corruption strategically. To enter new markets to win contracts to grow regional influence in developing areas. And there’s no question that these, we call them kleptocracies, these are scaling upward. 

“I think one of the real innovations of the CROOK Act is it’s one of the first pieces of legislation that uses kleptocracy throughout, and introduces this new concept to move us beyond the idea of just a few bad apples, but to a regime that is truly run by folks who are dependent on stealing from their people.”

One of the challenges that the “Anti-Corruption Action Fund” would face would be how to disburse funds assigned to fight corruption to regimes that are corrupt, which Mr Greytak acknowledged.

“When you find out that the former Prime Minister of Malaysia was involved in a billion dollar bribery scheme, you can’t just take that money and give it back to the Malaysian administration. There are so many complexities about how to ensure that that money is not just going to be stolen again. And that is without doubt definitely part of the calculation. 

“That’s why this bill is interesting because it taps into those pipelines that already exist. The State Department, USAID and the Defense Department know how to do this. So it’s really about making available those new anti corruption dollars, that’s the innovation here. We’re not trying to reinvent the wheel about the appropriate judgment and discretion of those agencies in doing their bread and butter. We’re trying to give them more resources in order to advance the broader anti corruption mission.”

The CROOK Act still needs to go through the House Foreign Affairs Committee in the Senate Foreign Relations Committee, but it enjoys solid bipartisan support with senators on both sides of the aisle putting their name to it.

“Hopefully this is something that can be passed in the next few months,” Mr Greytak said.


Featured Image: Pixabay

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