For a wide range of legal, political and pragmatic reasons, anti-corruption prosecution is being used to isolate threats to global security and encourage popular support for regime change. In the effort to rein in rogue nations and organizations without resorting to war, officials are increasingly relying on innovative uses of anti-corruption laws not only against terrorists and tyrants, but also against companies that have assisted them.
Terrorists and criminal organizations rely on corruption, coupled with violence, to gain and maintain state sponsorship and protection — if not full control over nations. Officials are now responding by supplementing the traditional tools of diplomacy, economic sanctions and export controls with far-reaching anti-corruption prosecution targeting companies and individuals profiting through bribery with such regimes and organizations.
The effectiveness of this strategy enables authorities to publicize the results of their anti-corruption efforts through international media outlets, digital networks and smart devices, fomenting domestic dissent in the hopes of leading to political and legal reforms. The immediacy and magnitude of the threats posed by rogue nations, terrorist organizations and global criminal enterprises — and the necessary resourcefulness of regulators – now more than ever require corporations engaged in international commerce to continue to ensure that their controls are adequate, say David N. Lawrence, Jeremy Maltby, Stephen Labaton, Ronak D. Desai and Matthew H. Lawrence in this opinion piece.
Enforcement of anti-corruption laws is rapidly emerging as an important weapon against transnational threats to global security. With increasing frequency, officials are catching parties and conduct that otherwise have evaded the more traditional efforts of diplomacy, economic sanctions and export controls. To sustain regulatory pressure and inspire popular support for regime change, authorities will strategically leverage their efforts through traditional and online media sources, social networks and smart devices. For corporations engaged in international commerce, regulators appear to be issuing a new but familiar warning in the high-stakes arenas of compliance and risk management — caveat emptor.
Around the world, there is a clear nexus between corruption and rogue regimes. Increasingly, terrorism and organized criminal activity have deployed corruption and violence to secure state sponsorship and, in growing instances, outright control of nations. Necessity is driving Western allies to search for innovative, non-military means to combat threats such as terrorism, nuclear proliferation, money laundering, organized crime, narcotics and arms trafficking, illicit transference of military technology, cyber-attacks and human rights violations. These dangers pose formidable challenges to traditional avenues for enforcement and diplomacy.
Risks and Responses
Right now the world confronts a host of risks. Iran is apparently developing nuclear weapons, while sponsoring terrorism and engaging in cyber-attacks against Western institutions. Syria is plagued by a violent civil war with unpredictable political outcomes. An opaque nuclear North Korea continues to pose regional threats. The current range of official responses reflects the magnitude of the stakes involved. These measures — diplomacy, trade restrictions, legal prosecutions, espionage, sabotage, drone attacks, cyber-warfare and support of dissident activities — seek the necessary political, economic and personal pressures to effect change without war. The “clear and present” nature of these continuing threats, however, has now forced authorities to think creatively about enhancing the customary options.
Traditionally, economic and political isolation through expansive sanctions and export controls has constituted one of the United States’ most effective tools of statecraft. The rationale underlying these efforts against targeted regimes is straightforward — force behavioral and political change by shutting down the flow of capital, trade, resources and expertise; deny political elites the fruits of their positions; and foment domestic political opposition by imposing broad economic hardship. Recent high profile enforcement actions against corporations conducting business with Iran have underscored the potency of these regulations and the resolve of U.S. and foreign authorities to proceed forcefully. Officials have also demonstrated their creativity by using the media, social networks and political hearings to increase the pressure on the international business community to comply with these trade restrictions. These efforts appear to be having an acute economic impact on Iran. One can hope this will result in meaningful negotiations.
Yet even when sanctions and export controls are comprehensively implemented (as with Iran), their long-term sustainability poses challenges. Like all laws, the effectiveness of sanctions and export controls has been undermined, at times, by intentional evasion, jurisdictional limitations and competing policy objectives. Historically, sanctions against South Africa and Iraq, for example, were repeatedly circumvented, often through corruption. Longstanding U.S. sanctions against Cuba unfortunately have not achieved broad international support, and have generated tensions and legal disputes with allies. Russia and China have refused to fully support efforts against Iran, Syria and North Korea. Some observers even contend that the imposition of sanctions and trade controls can actually strengthen — rather than weaken — political resolve within targeted nations.
Other tools face similar difficulties. The United Nations and international diplomatic efforts have failed to successfully engage with Iran, Syria, North Korea and other transnational threats. There are continuing questions about the efficacy, legality, and morality of covert actions such as assassinations, drone attacks, and cyber-warfare—all of which create risks of backlash and other recriminations.
A race is on. Every day it becomes clearer that, if direct military action is to be avoided, the traditional range of foreign policy, enforcement and political options may need to be reexamined. (To read the full opinion piece, click here.)