1 Colin Nicholls et al., Corruption and the Misuse of Public Office (1st edn., Oxford University Press, 2006), para.1.01.
2 Nicholls et al., Corruption, paras.1.01–1.02.
3 See David Kraft, ‘English Private Law and Corruption: Summary and Suggestions on the Development of European Private Law’, in The Civil Consequences of Corruption (Olaf Meyer (ed.), Nomos, 2009), 207, 208.
5 Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, adopted by the Negotiating Conference on 21 November 1997, in force since 15 February 1999 [‘OECD Convention’].
6 OECD Convention, Art. 1(1).
7 United Nations Office on Drugs and Crime, The Global Programme against Corruption: UN Anti-Corruption Toolkit (3rd edn., 2004), ch. 1.
8 U.N. Office on Drugs and Crime, Global Programme against Corruption, ch. 1.
9 Jose Rosell and Harvey Prager, ‘Illicit Commissions and International Arbitration: The Question of Proof’ (1999) 15 Arb. Int’l 329.
10 W. Michael Reisman, Folded Lies: Bribery, Crusades, and Reforms (Free Press, 1979), 2.
11 In recent commentaries on corruption under international investment law, there has been some preference to conceptualize corruption within the broader principles of fraud and other illegalities that may attend foreign investments vis-à-vis host States. See e.g. Andrew Newcombe and Lluis Paradell, Law and Practice of Investment Treaties (Kluwer, 2009), 282; Gabriel Bottini, ‘Legality of Investments under ICSID Jurisprudence’, in The Backlash Against Investment Arbitration (Michael Waibel et al. (eds.), Kluwer, 2010), 297.
12 ‘The term extortion may be reserved for those situations in which the capacity of the official to withhold a service or benefit otherwise required by law exceeds the capacity of the private party to sustain the loss of that service or benefit.’ Reisman, Folded Lies (n 10), 38.
13 Susan Rose-Ackerman, Corruption and Government: Causes, Consequences, and Reform (Cambridge University Press, 1999), 53 n. 10, citing Ian Ayres, ‘Judicial Corruption: Extortion and Bribery’ (1997) 74 Denver U. L. Rev. 1231, 1236–7.
14 See Chapter 4, section B.
15 See Stephanie Strom, ‘Web Sites Shine Light on Petty Bribery Worldwide’, N.Y. Times, 6 March 2012 (calling such payments ‘“retail corruption”, the sort of nickel-and-dime bribery, as opposed to large-scale graft, that infects everyday life in so many parts of the world. [...] [I]n August 2010  they started ipaidabribe.com, a site that collects anonymous reports of bribes [...]. About 80 percent of the more than 400,000 reports to the site tell stories [...] of officials and bureaucrats seeking illicit payments to provide routine services or process paperwork and forms.’)
16 Unlike public sector corruption, private bribery has not received the same attention from international institutions, and no general convention has thus far been established to curtail such practices. See generally Günter Heine et al. (eds.), Private Commercial Bribery (International Chamber of Commerce, 2003 edn.).
17 ‘[T]here is no unanimity about the policy goal(s) which private-sector bribery law should vindicate. Is the purpose to curb unfair competition, penalize violations of loyalty due to employers and/or to an economic system, or ensure the protection and proper management of corporate assets? Or a plurality of purposes?’ Heine et al., Private Commercial Bribery (n 16), 3.
18 While some countries criminalize private sector bribery, most continue to consider the problem within the ambit of either unfair competition, breach of trust or fiduciary duty, or tortious interference with employment obligations. See Heine et al., Private Commercial Bribery (n 16), 4.
19 U.K. Home Secretary, White Paper: Raising Standards and Upholding Integrity: The Prevention of Corruption, Cm 4759, June 2000: ‘Corruption is like a deadly virus. Left unchecked it weakens economies, creates huge inequalities and undermines the very foundations of democratic government.’
20 Attorney General for Hong Kong v. Reid  A.C. 324, 330 (Templeman, J).
21 Gabriel Ben-Dor, ‘Corruption, Institutionalization, and Political Development: The Revisionist Theses Revisited’ (1974) 62 Comp. Pol. Stud. 63, 65.
22 J.S. Nye, ‘Corruption and Political Development, A Cost-Benefit Analysis’ (1967) 61 Am. Pol. Sci. Rev. 417, cited in Padideh Ala’i, ‘The Legacy of Geographical Morality and Colonialism: A Historical Assessment of the Current Crusade Against Corruption’ (2000) 33 V and. J. Transnat’l L. 877, 900.
23 Bertrand Russell tied this sentiment to the industrial revolution, when societies experiencing the jump from subsistence to surplus were no longer forced (as they were in medieval times) to hand over their surpluses to rulers; instead, it became ethically ingrained upon citizens to feel a duty to support the ruling classes. ‘To this day, 99 per cent of British wage-earners would be genuinely shocked if it were proposed that the King should not have a larger income than a working man. The conception of duty, speaking historically, has been a means used by the holders of power to induce others to live for the interests of their masters rather than for their own.’ Bertrand Russell, In Praise of Idleness (1932), available at: <http://www.zpub.com/notes/idle.html>.
24 Jared Diamond, Guns, Germs and Steel (W.W. Norton, 1999), 276.
25 Diamond, Guns, Germs and Steel (n 24), 276.
26 See William Easterly, The Elusive Quest for Growth (MIT Press, 2001), 247–8 (‘Two different kinds of corruption could affect growth: decentralized corruption and centralized corruption. Under decentralized corruption, there are many bribe takers, and their imposition of bribes is not coordinated among them. Under centralized corruption, a government leader organizes all corruption activity in the economy and determines the shares of each official in the ill-gotten proceeds. [...] [A] strong dictator will choose a level of corruption that does not harm growth too badly, because he knows his rake-off depends on the size of the economy. A weak state with decentralized corruption doesn’t have this incentive to preserve growth. Each individual bribe taker is too small to affect the overall size of the economy, so he feels little restraint on getting the most out of his victims.’)
27 For an extended discussion, see Max Weber, ‘The Three Types of Legitimate Rule’ (Hans Gerth trans.) (1958) 4 Berkeley Publications in Society and Institutions 111.
28 One would not have to look far for examples of these oscillations; the developments in contemporary Russia over the last 25 years, from the fall of communist party rule to Boris Yeltsin up through the presidencies of Vladimir Putin, are a prime example.
29 See e.g. ‘Pakistan: A Great Deal of Ruin in a Nation’, The Economist, 31 March 2011 (‘[d]emocracy in Pakistan has been subverted by patronage. Parliament is dominated by the big landowning families, who think their job is to provide for the tribes and clans who vote for them. Except for the Jamaat-e-Islami, parties have nothing to do with ideology. The two main ones are family assets—the Bhuttos own the PPP, and the Sharifs... own the Pakistan Muslim League.’)
30 W.F. Wertheim, Indonesian Society in Transition (W. van Hoeve, 1956), 86.
31 Or, in Weber’s words, when societies are organized hierarchically and collectively (instead of individualistically, where equal treatment applies to all persons), societies tend to be controlled by certain groups and governed by social convention instead of law: ‘The firm appropriation of opportunities, especially of opportunities for domination, always tends to result in the formation of status groups. The formation of status groups in turn always results in monopolistic appropriation of powers of domination and sources of income [...] Hence, a status society always creates [...][the] elimination of individuals’ free choice [...] [and] hinders the formation of a free market.’ Max Weber, On Charisma and Institution Building (S.N. Eisenstadt (ed.), University of Chicago Press, 1968), 177–80.
32 Max Weber, Economy and Society III (G. Roth and C. Wittich (eds. and trans.), Bedminster Press, 1968), 159.
33 A number of empirical studies have shown, in various times and contexts, that perceptions of corruption are not significantly correlated to levels of foreign direct investment. See e.g. Alberto Alesina and Beatrice Weder, Do Corrupt Governments Receive Less Foreign Aid?, Nat’l Bureau Econ. Research (Working Paper No. 7108, Cambridge, MA) (1999) (insignificant finding between perceived corruption and investment, using foreign direct investment data from 1970–95); Pierre-Guillaume Méon and Khalid Sekkat, ‘Does the Quality of Institutions Limit the MENA’s Integration in the World Economy?’ (2004) 27 The World Economy 1475–98 (no significant impact of corruption on inflows of foreign direct investment for a small sample of middle eastern counties).
However, other studies provide evidence that corruption does indeed have a negative effect on foreign direct investment. See S.-J. Wei, ‘How Taxing is Corruption on International Investors’ (2000) 82 Rev. Econ. & Stat. 1–11 (detects a significant negative impact of corruption on FDI between 14 course and 45 host countries in 1990–91, e.g. an increase in the corruption level from that of Singapore to that of Mexico is equivalent to raising the tax rate by over 20 per cent); J. Graf Lambsdorff, ‘How Corruption Affects Persistent Capital Flows’ (2003) 4 Econ. Gov. 229–44 (in a cross-section of 64 countries, corruption decreases capital inflows, e.g. an increase in Tanzania’s level of integrity to that of the U.K. increases net annual capital inflows by 3 per cent of GDP).
34 Interview conducted in Hong Kong, June 2008 (on file with author).
35 Rose-Ackerman, Corruption and Government (n 13), 9.
36 ‘Bribery is regarded as immoral by most Americans, but this is not the universal view, and there are many people, among them heads of some of our multinational corporations, who regard it simply as another form of taxation.’ R. Rovere, Letter from Washington, New Yorker, 3 March 1977, 113.
37 Susan Rose-Ackerman, Corruption and Government (n 13), 2.
38 See Rose-Ackerman, Corruption and Government (n 13), 2, citing Jadish Bhagwati (ed.), Illegal Transactions in International Trade (North Holland Publishing, 1974).
39 Jadish Bhagwati (ed.), Illegal Transactions in International Trade (North Holland Publishing, 1974), cited in Vito Tanzi and Hamid Davoodi, Corruption, Public Investment, and Growth, IMF Working Paper WP/97/139 (1997).
40 Rose-Ackerman, Corruption and Government (n 13), 178.
41 Rose-Ackerman, Corruption and Government (n 13), 3 n. 3, citing Shang-Jin Wei, How Taxing Is Corruption on International Investors?, National Bureau of Economic Research Working Paper 6030 (1997).
42 See Bert Hofman et al., ‘Corruption and Decentralization’, in Decentralization and Regional Autonomy in Indonesia: Implementation and Challenges (Coen Holtzappel and Martin Ramstedt (eds)., ISEAS Publishing, 2009), 99.
43 See Hofman et al., Corruption and Decentralization (n 42), 104.
44 See Hofman et al., Corruption and Decentralization (n 42), 106.
45 Rose-Ackerman, Corruption and Government (n 13), 13.
47 Reisman, Folded Lies (n 10), 58. Professor Reisman then recalls an observation made by scholars about the function of ‘the bribery of patronage and corruption’ in getting legislation enacted within the vast and heterogeneous population of New York: ‘although deals are denounced with regularity, they are an essential tool of the democratic process. The alternatives to ‘deals’ are legislation by fiat, in which the chief executive employs almost dictatorial powers’, 58–9.
48 One particularly unsightly example of corruption in the developed world from the 1970s involved payments made by virtually all major oil companies (including Exxon, Mobil, Chevron, Total, British Petroleum, and Shell) at that time to Italian political parties (including the Christian Democrats and the Socialist Parties) in order to obtain favourable legislation. In some cases, the payments made were calibrated against expected profits (a 5 per cent cut). Reisman, Folded Lies (n 10), 65–7 (citations omitted).
49 Interview of Jack Abramoff reprinted in David Sirota, A Reformed Jack Abramoff? (n 46).
50 ‘[Y]ou also can’t give any gratuity: a meal, tickets to ball games, nothing indirectly, directly, not even a glass of water. Basically, cut out entirely the bribe. And that’s what it is. It’s not polite to say it, but that’s what it is. It’s a bribe. Whenever you’re giving money or you’re conveying some financial interest to a person who works for the government, and you are lobbying to get things from them or you’re trying to get something from them, you’re bribing them, that’s it.’ Interview of Jack Abramoff reprinted in David Sirota, A Reformed Jack Abramoff? (n 46).
51 See Citizens United v. Federal Election Commission, 558 U.S. 8 (2010).
52 Under the Philippine Omnibus Election Code, for example, ‘[i]t shall be unlawful for any person, including a political party or public or private entity to solicit or receive, directly or indirectly, any aid or contribution of whatever form or nature from any foreign national, government or entity for the purposes of influencing the results of the election.’ Batas Pambansa Blg. 881, Sec. 96 (1985, as amended).
53 The matter of foreign participation in U.S. election campaigns and in lobbying has long been debated. Current United States law prohibits foreign States and nationals from contributing to federal, state, or local elections. Nevertheless, loopholes exist allowing American subsidiaries of foreign corporations to establish separated segregated funds for the purpose of campaign fund-raising. ‘“Foreign” Campaign Contributions and the First Amendment’ (1986) 110 Harv. L. Rev. 1886, 1903. In the 2010 case of Citizens United, the U.S. Supreme Court held that the First Amendment prohibited the U.S. government from restricting political broadcasts during elections even when such broadcasts were funded by corporations or unions. While the majority in the Citizens United decision did not deal with the issue of foreign contributions, the four dissenting justices concluded that foreign nationals have no such First Amendment rights.
54 Methanex Corporation v. United States of America, NAFTA/UNCITRAL Arbitration Rules, Final Award on Jurisdiction and Merits dated 3 August 2005. For a detailed summary of Methanex v. US, see Chapter 6, section B.
55 Methanex, Part III, Ch. B, para. 38.
56 Methanex, Part III, Ch. B, para. 46.
57 ‘[I]f you’re going to get a contract and you’re going to get a government relationship that isn’t appropriate or you’re lobbying them, you shouldn’t be able to give one dollar politically. You basically should be prohibited from giving any contribution politically to any federal member or anybody who is running for federal office.’ Interview of Jack Abramoff reprinted in David Sirota, A Reformed Jack Abramoff? (n 46).
58 Reisman, Folded Lies (n 10), 48.
59 Elaborating upon familiar principles of judicial conflict-of-interest, the U.S. Supreme Court stated: ‘Courts, in our system, elaborate principles of law in the course of resolving disputes. The power and the prerogative of a court to perform this function rest, in the end, upon the respect accorded to its judgments. The citizen’s respect for judgments depends in turn upon the issuing court’s absolute probity. Judicial integrity is, in consequence, a state interest of the highest order.’ Republican Party of Minn. v. White, 536 U.S. 765, 793 (2002).
60 ‘Unfortunately, this sort of corruption has become an epidemic in Africa and the Middle East.’ Craig Smith, ‘Tough Days to be a French Oilman’, N.Y. Times, 27 March 2007, quoting Nicolas Sarkis, Director of the Arab Center for Petroleum Studies, Paris.
61 Smith, ‘Tough Days’ (n 60).
62 Smith, ‘Tough Days’ (n 60).
63 See Smith, ‘Tough Days’ (n 60). (‘A lot of the oil majors actually are going to have to move toward Total’s model rather than the other way around,’ said Jon Rigby, an oil analyst with UBS in London, ‘as they replace volumes from the United States and the North Sea.’)