Arguments or Excuses? Common Reasons I Hear to Avoid Reparations for Corruption Cases

By Dr. Juanita Olaya Garcia

In a previous post, I discussed why it is vital to address the collective damages of corruption. I have been discussing these issues since approximately 2005, and rarely do I find anyone disagreeing in principle. The trouble comes with implementation. Despite existing frameworks and interest, actual practice falls short. This sequel explores the common excuses I hear for not implementing reparations – and my take on ways to address them.

1. Collective damage arising from corruption? I don’t know how to repair that.

Even in jurisdictions with a tradition of addressing victims’ reparations, I have heard prosecutors and judicial authorities often say that they don’t know how to do so in cases of corruption. Eroded trust in institutions, for example, is actually something difficult to grasp. Even in cases of material public goods, complications and questions abound because of lack of imagination or generous amounts of bureaucracy. For example, “Do the reparations need to be directly related to the public good affected by corruption?” Or, “We can’t reopen a procurement process for something that has been awarded already.” Or, “This was corruption in IT services delivery. What should I give the citizens as reparation, internet access?”

Curiously, this is an obstacle both in trans-national and national cases. Brazil has faced difficulties in deciding how to manage reparations in the leniency agreement with J&F Investments S.A., the holding company of the meatpacker JBS, initially approved in 2017. Although the case involved bribery and fraud in meat exports, it was initially suggested that a portion of the fine would go to address social damages in the areas of health and education, or other critical areas for the Brazilian people.

My take on it? This problem is easily solved, as solutions already exist. I do think that reparation should be as close to the “problem” as possible and aim to be transformative, in that it changes the situation that led to the corruption in the first place. If that is difficult or unclear, it is feasible to find other high-impact areas. This was the case of BAE in Tanzania. The reparation in this defense-related corruption case was allocated to education. Reparation is one area ripe for collaboration with civil society to generate ideas that provide for sufficient (and contextually relevant) accountability to ensure reparation reaches those it is intended to. If one lacks ideas on how to effectively repair the damage, I would suggest asking the victims what “reparation” should look like.

2. Reparation in that country? I would have to give the money back to the corrupt!

This is closely related to the previous reason and a complex one to deal with. It partly stems from the problem that in many transnational processes, only governments are able to take part as victims. This leaves out assets or damages related to initiatives led by non-state actors, or even by cases involving state actors outside the executive. France is currently in the later stages of discussing a transformative bill that will enable it to provide reparation directly to victims in other jurisdictions.

My take on it? Enforcement officials don’t always have to give the reparation to governments – they can choose other ways! In many cases, enforcement authorities have the capacity to decide where, how, and with whom reparation is enacted. In other cases, a change in the law will be enough. Several options have been tested: a special trust fund, a new institution, or funds paid through a trusted existing program. Among the most recent ones is cash transfers through the National Social Safety Net Project in Nigeria, using funds returned by Switzerland from illicitly acquired funds by former President Abacha. This involved a tripartite agreement between both governments and the World Bank, who monitors the use of the funds, with additional monitoring by Nigerian civil society.

3. Perpetrators should have a say in how reparations take place. 

A related problem is that often, particularly with reparations agreed within settlements, the perpetrators retain power over the management of the reparations, such as how they are allocated, by whom, or in which amount. This problem is even worse if the perpetrator is still in government or is related to the current government. For example, the settlement with Teodoro Nguema Obiang Mangue, son of Equatorial Guinea’s dictator in the US (see here and here), requires the perpetrator’s agreement on the selection of a charity to receive and manage the funds. Why would a perpetrator need to define the destination of the reparation?

My take on it? Enforcement authorities don’t need to involve the perpetrators, nor do I see how due process would require that. The perpetrator’s involvement blocks otherwise viable solutions by not granting his consent, like resorting to trusted institutions or involving civil society, instances usually denied by a perpetrator who still has access to power. With this mindset, there is little chance to empower an independent entity to guard the destination of the funds or to ensure they are used in the interest of the citizens, not the perpetrator.

4. Collective damage can’t be measured, so it can’t be repaired. 

I often hear some actors claiming that a precise measurement of the social damage is necessary in order to address reparation. They seem to expect that reparations should be 1 to 1 to the damage. This position is often accompanied with pseudo-scientific attempts to measure collective damages which often can’t be measured, especially the most important one: eroded collective trust. Even if feasible, a single measurement methodology wouldn’t solve this problem.

My take on it? This perspective assumes that only what can be measured can be damaged, which relies on a false logic. It is also of little practical use. First, most corruption reparations are funded by the “residue” – what is “left over” after paying fines and fees against assets confiscated, leaving little room to make reparation based on any quantification of the damages. Second, many of the current reparations cases occur through settlements, as close to 80% of corruption related enforcement happens through settlements. The amounts for reparation are thus negotiated. While a precise measurement of the damage would be helpful for that negotiation, we can and should turn to rougher measurements that are imprecise, but nonetheless point to accurate impacts.


A rough measurement is better than no measurement. There is a lot of room for error. For example, in a recent case, Geneva’s General Attorney dropped charges and returned a yacht valued at $120 million to Teodorin Obiang, deeming the other assets involved as sufficient for reparations. While the grounds for the decision are still unknown, this had serious consequences. There fewer funds available for the reparation because the other assets were luxury cars whose value was only $23 million.

The difficulties of measurement are also better managed with in-kind or other symbolic forms of reparation. Imagine instead that Switzerland or France had granted medical treatment to Equatorial Guinean citizens equivalent to the assets seized in Paris. Or, that users were exempted from highway toll payment for a period of time equal to what was awarded to a company who won the construction contract through corrupt means. In considering what sufficient and proper reparations are, impact and proportionality to the damage is more important.

5. If anything goes to reparation, then it should all be for anti-corruption efforts.

This is part of “not knowing how” to repair the damages. A few cases have designed reparations to operate that way, directing funds only to anti-corruption activities. One of the most well-known is the Siemens Integrity Initiative.

My take on it? Resourcing anti-corruption efforts is good and laudable. The problem with this in conjunction with reparations, however, is that it leaves the true damages unaddressed and citizens still bear the consequences. If citizens don’t see the connection between the reparation and an improvement in their quality of life and well-being, the whole point of fighting corruption is missed. There is a risk of moral hazard: if reparation doesn’t reach the citizens, instead seen as a fundraising path for the anti-corruption “community,” such reparation is not fulfilling its restorative purpose. It may then be difficult to avoid the perception that you have anti-corruption groups working on it primarily for self-serving purposes. I have not been praised for saying this, but we need to discuss it.

Transparency International Brazil sought to deal with this issue cleverly by suggesting a mechanism to deal with the reparations foreseen in the leniency agreement of the meat packer JBS case: a list of topics where reparation funds could be used, with anti-corruption being one, after health and education projects, among others. They also excluded themselves from accessing the funds during the initial rounds.

I think we need to continue seeking solutions through experimentation. We need to try, in collaboration with governments, citizens, and academics. Even if the perfect solution is not at hand, learn from it and go on to the next one. Let’s not let our excuses get in the way of truly addressing the consequences of corruption.


About the author

Dr. Juanita Olaya Garcia has over 25 years of experience and a proven track record in the areas of good governance, sustainability, human rights and anti-corruption. Her hands-on-work in all regions of the world have made her a renowned expert in the field.  Her specialty lies at the intersection between law and society. Having worked with different national and international institutions, with the public sector, academia and civil society, among them Transparency International, Juanita launched her independent private practice in 2008, based in Berlin, Germany.  In her practice, Juanita focuses on empirical research, organisational development and expert advice helping initiatives, organisations and institutions turn paper into practice and implement change processes. https://juanitaolaya-impactools.com

4 thoughts on “Arguments or Excuses? Common Reasons I Hear to Avoid Reparations for Corruption Cases

    • June 9, 2020 at 12:30 pm
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      Thanks for sharing that article Narayan. Indeed victim compensation in asset recovery processes is also an important issue.

      Reply
  • May 16, 2020 at 1:37 pm
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    Two tricky issues we had in UK, not covered here, seem to be critical to making progress. First, the over-emphasis by UK courts on the need to identify specific victims in order for compensation to be considered. NGOs have gone down this rabbit hole trying to develop overly-complex methods. All unnecessary as the solution found in the BAe case, referenced in the piece, testifies.

    Second, the problem of attributing the compensation between victim countries when dealing with settlements that cover a company’s dealings across multiple locations. Assessing relative damage has bedevilled these cases, and often led to court giving up awarding compensation at all as being ‘too difficult’ to gauge.

    Neither of these is insurmountable. Possibly more so is the US legal attitude that considers, in settlement cases, the ‘victim’ to be the US itself, and therefore regards keeping the money justified. That looks increasingly untenable.

    All suggests the bigger problems are in our own legal traditions and ways of working, not any insolvable problem at the user end

    Reply
    • June 9, 2020 at 12:34 pm
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      Phil, thanks for this thoightful comment. As mentioned elsewhere, I agree with you those issues you mention are worth adding to the list. I also agree with you in that current problems are not insolvable and that different ways of working could bring a lot of progress. One thing I experience more and more is the need for enforcement officers to see vicil society involvement less as a blockage and more as an opportunity to get support. This doesn’t go without civil society, in many cases, making a better effort at understanding what enforvement officials go through too. It is at the end a matter of working better together.

      Reply

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