Anti-capture, anti-corruption reform
Across dozens of opportunities for concrete interventions to tackle the corporate capture of the State, arguably more ink has been dedicated to writing about how to reform public institutions than any other category.
Thefollowing ideasfor how State institutions can address and stop corporate capture hold enormous potential for adaptability and scalability in other institutions, sectors, and geographies across the world. Moreover, the interoperability of different tools, strategies, and innovations — for example, beneficial ownership disclosures, public procurement regulation, and due diligence laws form a powerful triangle for advocates wherever they are— helps strengthen these reforms. Naturally, reforms to the object of capture— State institutions and the public decision-making that occurs within them —are a sensible place to focus.
- Constitutional reform:In an all-inclusive constitutive assembly that lasted for two years, South Africa completed drafting its new constitution, which is perhaps the most forward-thinking, human rights-inclusive, progressive constitution in the world. With it, South Africa enshrined numerous economic, social, and cultural rights protections that are almost unheard of in other countries. Nevertheless, decades later, the country entered one of its most difficult periods in recent memory as the Zondo Commission began investigating widespread and grand corruption involving all levels of the State, including President Jacob Zuma. In Chile, following years of civil unrest and political turmoil, Gabriel Boric was elected to the presidency in a resounding victory. However, shortly after, his proposal for a progressive, sweeping constitutional reform was overwhelmingly rejected by voters. The lesson? Constitutional reform is both difficult to achieve and arguably more difficult to comply with. That said, it is the Holy Grail of institutional reform — the full weight of the rule of law to support your efforts.
According to Devi Pillay from Public Affairs Research Institute (PARI), “South Africa’s constitution is very visionary for socioeconomic and political rights. And it envisions what the State should be and for who it is supposed to serve. But fundamental structural problems continue and haven’t been able to change, save select cases where the Government has been forced to act, such as the Treatment Action Campaign, when civil society forced the Government to provide AIDS treatments. But this is an expensive route. If you are in a position of power, the constitution gives you the power to do that, but you still need people in government that actually want to make change happen.”
- Anti-State capture regulator:In June 2022, whenJustice Raymond Zondohanded the final report of the Zondo Commission toPresident Cyril Ramaphosa,he included numerous recommendations for administrative, electoral, institutional, and judicial reform in South Africa.Two of his recommendations — when taken together, albeit without explicitly saying so — effectively call for an anti-capture regulator to permanently investigate State capture allegations going forward.According to PARI, “Regarding oversight, the Commission proposed various reforms to be considered by Parliament, including the establishment of an oversight committee on the Presidency, the introduction of a constituency based electoral system, and various interventions to improve the effectiveness of oversight committees. (…) The Commission recommended the establishment of a permanent commission to investigate, publicly expose acts of state capture and corruption in the way that this Commission did over the past four years, [and] make findings and recommendations to the President.” In effect, one commission to oversee the presidency and another for State capture specifically would create an anti-State capture regulator. As of early 2024, President Ramaphosa had not yet responded to these recommendations.
- Stop Corporate Capture Act:In the U.S. Congress, Representative Pramila Jaypal (D-Wash.), chair of the Congressional Progressive Caucus, introduced theStop Corporate Capture Act (H.R. 6107)in December 2021. According to Public Citizen, “The Stop Corporate Capture Act includes a series of bold and aggressive structural reforms:
- First, the legislation would ensure consumers, workers, and regular people get a seat at the rulemaking table by establishing an Office of the Public Advocate, which would be the voice of the public in the rulemaking process.
- Second, the legislation would prevent corporations from misleading agencies or challenging agency science with bogus studies – a tactic repeatedly used by Big Tobacco, Big Oil, and others (…). The bill would require the disclosure of funding sources and any conflicts of interest connected to studies sent to agencies for consideration. In addition, agencies would be prohibited from considering studies that haven’t been peer reviewed and got 10% or more of their funding from regulated industries.
- Third, the bill would remove loopholes and bottlenecks that corporations exploit to delay and block public protections. (…) For example, the bill would bring much-needed transparency and accountability to the U.S. Office of Information and Regulatory Affairs (OIRA) – the federal clearinghouse for regulatory activity – which historically has weakened and blocked new consumer, worker, and environmental protections in response to corporate lobbying.
- Fourth, the legislation would stop the U.S. Supreme Court from overturning new regulatory protections based on fringe legal doctrines, as the court recently did when it prevented the government from protecting workers against COVID.
- And finally, the bill would empower everyday Americans to bring citizen lawsuits holding government agencies accountable for failing to enforce the law when corporations get caught violating the rules.”
- Revolving door legislation:In Mexico, in November 2019, the legislature approved one of President Andrés Manuel López Obrador’s priorities, the Ley Federal de Austeridad Republicana, which contains one of the most ambitious measures of his administration, the so-called Fourth Transformation: to “separate political power from economic power,” also known as regulating the revolving door phenomenon. “Although in Mexico, a good number of high officials have moved smoothly between the government and the private sector, the issue had not received special media or regulatory attention. This changed with the Federal Law of Republican Austerity, whose Article 24 states that public servants classified as senior management who leave their positions cannot work in companies they have supervised, regulated, or have privileged information about, for a period of 10 years.” Nevertheless, shortly after, the Supreme Court of Mexico declared the 10-year cooling-off period unconstitutional, alleging a disproportionate violation of the right to freedom of work.
- Anti-bribery laws:Globally through theOrganisation for Economic Co-operation and Development (OECD) Anti-Bribery Conventionand nationally through numerous anti-bribery laws such as theU.S. Foreign Corrupt Practices Actand theUK Bribery Act,companies are subject to liability for supplying public officials with payments to induce favorable treatment. In the Global South, a promising example for other countries is Brazil where, following the well-documented Lava Jato bribery scandal that spread like wildfire across Latin America, it passed the Clean Company Act. “[By] integrating key elements of the U.S. and U.K. anti-bribery legislation (e.g. extraterritorial jurisdiction), incorporating case resolution alternatives that have proven effective in the U.S. (and mimicked enthusiastically in the U.K.), and fostering cooperation, information-sharing, and other global anti-corruption trends, Brazil has created a successful template with which to maximize the enforcement capabilities of the authorities charged with carrying out the powerful mandate of the Clean Company Act.”
- Regulating corporate political engagement:The OECD identified several lobbying-related risks and recommends the following:
- “Lobbying registers: Voluntary or mandatory public registries in which lobbyists and/or public officials must disclose information on their interactions. Information disclosed may include the goal of the lobbying, its beneficiaries, and the targeted decisions.
- Open agendas: A requirement for certain categories of public officials to publish their agendas online, including their meetings with external organisations and interest groups.
- Legislative footprint: A comprehensive public record of private parties’ influence on a decision or regulation/piece of legislation. The information disclosed can be a table or a document listing the identity of stakeholders met, public officials involved, the object and outcome of their meetings, as well as an assessment of how the inputs received were factored into the final decision.”