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95–572 2015

COMBATING CORRUPTION IN THE OSCE: THE 

LINK BETWEEN SECURITY AND GOOD GOVERNANCE 

HEARING 

BEFORE THE

COMMISSION ON SECURITY AND 

COOPERATION IN EUROPE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

NOVEMBER 19, 2014 

Printed for the use of the 

Commission on Security and Cooperation in Europe 

( 

Available via http://www.csce.gov 


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COMMISSION ON SECURITY AND COOPERATION IN EUROPE 

LEGISLATIVE BRANCH COMMISSIONERS 

SENATE HOUSE 

BENJAMIN CARDIN, Maryland, 

Chairman 

SHELDON WHITEHOUSE, Rhode Island 

TOM UDALL, New Mexico 

JEANNE SHAHEEN, New Hampshire 

RICHARD BLUMENTHAL, Connecticut 

ROGER WICKER, Mississippi 

SAXBY CHAMBLISS, Georgia 

JOHN BOOZMAN, Arkansas 

CHRISTOPHER SMITH, New Jersey, 

Co-Chairman 

JOSEPH PITTS, Pennsylvania 

ROBERT ADERHOLT, Alabama 

PHIL GINGREY, Georgia 

MICHAEL BURGESS, Texas 

ALCEE HASTINGS, Florida 

LOUISE MCINTOSH SLAUGHTER, 

New York 

MIKE MCINTYRE, North Carolina 

STEVE COHEN, Tennessee 


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COMBATING CORRUPTION IN THE OSCE: THE 

LINK BETWEEN SECURITY AND GOOD GOVERNANCE 

NOVEMBER 19, 2014 

COMMISSIONERS 

Page 

Hon. Benjamin L. Cardin, Chairman, Commission on Security and Cooperation in Europe .............................................. 1 

Hon. John Boozman, Commissioner, Commission on Security 

and Cooperation in Europe ..................................................... 3 

Hon. Sheldon Whitehouse, Commissioner, Commission on 

Security and Cooperation in Europe ...................................... 13 

Hon. Robert Aderholt, Commissioner, Commission on Security and Cooperation in Europe .............................................. 16 

WITNESSES 

Dr. Halil Yurdakul Yigitgu ̈den, Co-ordinator of OSCE Economic and Environmental Activities, Organization for Security and Cooperation in Europe .......................................... 4 

Shaazka Beyerle, Senior Advisor, International Center on 

Nonviolent Conflict .................................................................. 6 

Anders A ̊ slund, Senior Fellow, Peterson Institute for International Economics .................................................................. 8 

APPENDICES 

Prepared Statement of Hon. Benjamin L. Cardin .................... 22 

Prepared Statement of Hon. Christopher Smith ...................... 23 

Prepared Statement of Anders A ̊ slund ...................................... 24 

Prepared Statement of Dr. Halil Yurdakul Yigitgu ̈den ........... 26 

Prepared Statement of Khadija Ismayilova .............................. 38 

Prepared Statement of Shaazka Beyerle .................................. 41 

RFE/RL’s Coverage of Corruption in the OSCE Region .......... 44 


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COMBATING CORRUPTION IN THE OSCE REGION: THE LINK BETWEEN SECURITY AND 

GOOD GOVERNANCE 

NOVEMBER 19, 2014 

COMMISSION ON SECURITY AND COOPERATION IN EUROPE, 

Washington, DC. 

The hearing was held from 10:02 a.m. to 11:15 a.m. EST in Room 

SVC 203/202 Capitol Visitor Center, Washington, D.C., Senator 

Benjamin L. Cardin, Chairman of the Commission on Security and 

Cooperation in Europe, presiding. 

Commissioners present: Hon. Benjamin L. Cardin, Chairman, 

Commission on Security and Cooperation in Europe, Hon. Robert 

Aderholt, Commissioner, Commission on Security and Cooperation 

in Europe, Hon. John Boozman, Commissioner, Commission on Security and Cooperation in Europe, and Hon. Sheldon Whitehouse, 

Commissioner, Commission on Security and Cooperation in Europe. 

Witnesses present: Anders A ̊ slund, Senior Fellow, Peterson Institute for International Economics; Dr. Halil Yurdakul Yigitgu ̈den, 

Co-ordinator of OSCE Economic and Environmental Activities, Organization for Security and Cooperation in Europe; Khadija 

Ismayilova, Host of ‘‘Isden Sonra’’ (‘‘After Work’’), RFE/RL Azerbaijani Service; Shaazka Beyerle, Senior Advisor, International 

Center on Nonviolent Conflict. 

HON. BENJAMIN CARDIN, CHAIRMAN, COMMISSION ON 

SECURITY AND COOPERATION IN EUROPE 

Mr. CARDIN. Good morning. Welcome to this hearing of the Helsinki Commission. I particularly want to welcome our witnesses 

that are here for participating in this very important hearing. Yesterday I had a chance to speak to the Helsinki plus 40 group that 

was in town from the parliamentary assembly to look at where we 

need to progress. 

At that time, I acknowledge that the Helsinki agreement which 

will celebrate its 40th anniversary in the next year, has accomplished, I think, much more than was ever thought possible when 

it was first conceived almost 40 years ago. It has achieved, I think, 

two basic principles. And that is that good governance and human 

rights are critically important to stability and growth of a country. 

And secondly, the commitments that are made under Helsinki 

are not just the internal concerns of that country, but are of international concern to those countries that are members of the Helsinki process. So for all those reasons, I think we have been exVerDate Sep 11 2014 01:26 Aug 19, 2015 Jkt 095572 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\A572.XXX A572

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tremely successful over a 39-year period in bringing about a sea 

change, not just within the OSCE but also globally. 

Today’s hearing, I think, is particularly important because it 

deals with the subject of combatting corruption on the OSCE region, the link between security and good governance. To me, this 

is the key—an area that has not gotten the same degree of attention as some of the other issues within the OSCE. 

It hasn’t had quite the attention of the human rights dimension, 

although we certainly understand that an honest government is a 

basic right of all the citizens of its country. And it has not gotten 

the same type of exposure as military security has within the 

OSCE process. So we very much look forward to the discussion of 

combatting corruption and how we go about doing it. 

Democratic societies function best with a high level of trust in 

each other and the institutions that underpin democracy. Corruption undermines that trust, and thus undermines the very foundation of democracies. Research has shown a high correlation between failed states and endemic corruption. 

That’s not to say that every country doesn’t have some degree of 

corruption, including the United States of America. We understand 

that. But we also understand that those countries that are successful, have in place mechanisms to deal with corruption. They have 

independent judiciaries, they have a free media that acts as a 

watchdog against corruption and are committed to dealing with 

corruption at any level of government. 

But unfortunately there are countries within the OSCE that 

have not made that fundamental commitment. The upheaval and 

turmoil that we have witnessed over the past couple of years is 

surely one of the most convincing pieces of evidence that we have 

to show the link between corruption and security. The spark that 

lit the fire in Tunisia was a street vendor sick of paying bribes to 

the police. That’s what was the spark in Tunisia. 

In Ukraine, the corruption that had plagued that country for decades only intensified recently. And a major component of the EuroMaidan protests—the revolution of dignity—was the people’s disgust with pervasive governmental corruption. With the election of 

President Poroshenko in May and a new, pro-European parliament 

elected last month, Ukraine has a real opportunity. While it is not 

an easy environment given Russia’s aggression and de-facto control 

of parts of Ukraine, some steps have already been taken. But much 

more needs to be done. 

In Russia, corruption and consolidation of power at the center 

has allowed the Putin government to undermine the legitimacy of 

its judiciary, silence independent journalists and systematically deprive NGOs of the ability to operate freely. 

In Hungary, the U.S. recently announced that six Hungarians 

were determined to be ineligible to enter the United States under 

the authority of Presidential Proclamation Number 7750, which 

makes individuals excludable when there is credible information 

that those individuals are either engaging in or benefiting from corruption. The head of the Hungarian Tax Authority has publicly 

stated she is one of the six. 

We went to great extremes in the Congress to underscore the individual human rights violations against Sergei Magnitsky and 


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passed the Magnitsky Act, which made it clear in regards to Russia 

that we will not allow individuals who have committed gross violations of internationally recognized human rights to visit our country and use our banking system. We did that to underscore our outrage that Russia did not hold those officials accountable—in the 

Sergei Magnitsky tragedy—accountable for their actions. 

But in Hungary, the U.S. administration is using the basic tools 

it has to exclude individuals from our country that have participated in significant corruption within their own country. There are 

disturbing trends in Hungary, making it more difficult for civil societies and independent media to report on and combat corruption. 

This includes the expansion of criminal penalties for defamation 

using emergency parliamentary procedures and the subsequent 

threat to use those provisions against those raising concerns about 

the tax authority and the National Bank. 

So we have challenges. And it’s not just in one country, two countries and three countries. We have challenges that the OSCE needs 

to confront. We need to figure out how we can develop the type of 

strategies that we have in the other baskets in the OSCE within 

the economic basket as to how we can deal with corruption within 

the OSCE and be a model for the global community. 

With that, I’m pleased that Senator Boozman is here, an active 

member of the Commission, and I call upon him for any opening 

comments that he would like to make. 

HON. JOHN BOOZMAN, COMMISSIONER, COMMISSION ON 

SECURITY AND COOPERATION IN EUROPE 

Mr. BOOZMAN. Well, I appreciate you holding the hearing, Mr. 

Chairman, and as you pointed out—and I certainly associate myself 

with your remarks—the importance of this particular topic. So 

again, I look forward to the testimony. Thank you very much. 

Mr. CARDIN. Well, thank you very much. Again, it’s a pleasure 

to have you here today. 

Let me turn to our witnesses. Unfortunately, Ms. Ismayilova is 

not here. We had invited her to join us today. She’s an investigative journalist with Radio Free Europe/Radio Liberty in Baku. She 

was not able to join us today because of a travel ban imposed on 

her by the government of Azerbaijan. She has provided a written 

statement and copies have been distributed and will be made part 

of our hearing. And we regret that she is not able to join the panel 

today. 

I would like to welcome Dr. Yigitgu ̈den, who has been the coordinator of the OSCE economic and environmental activities since 

February 2013. He is a former senior Turkish diplomat with extensive experience in the energy sector. 

We also have Ms. Beyerle, who is a visiting scholar at the Center 

for Transatlantic Relations at the School of Advanced International 

Studies at Johns Hopkins University. She is also a senior adviser 

with the International Center on Nonviolent Conflict. This year she 

published a book, ‘‘Curtailing Corruption: People Power for Accountability and Justice.’’ 

And finally, we have Mr. A ̊ slund, who is the senior fellow at the 

Peterson Institute for International Economics. He’s an expert on 


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economic policies in Russia, Ukraine and Eastern Europe, and he 

focuses on the broader implications of economic transition. 

The complete bios of all of our witnesses have been distributed 

and made available to all. And let me start, if I might, with Dr. 

Yigitgu ̈den. 

DR. HALIL YURDAKUL YIGITGU ̈ DEN, CO-ORDINATOR OF OSCE 

ECONOMIC AND ENVIRONMENTAL ACTIVITIES, ORGANIZATION FOR SECURITY AND COOPERATION IN EUROPE 

Dr. YIGITGU ̈ DEN. Thank you very much, Mr. Chairman. 

Chairman Cardin, Senator Boozman, ladies and gentlemen, it is 

a pleasure for me to testify today at the U.S. Helsinki Commission 

to members of the United States Congress. I appreciate the opportunity to be at the U.S. Congress today, and I am privileged to be 

a part of a hearing on combatting corruption. 

Before I continue, may I respectfully ask that my prepared statement, along with the ‘‘Information Note on the implementation of 

the 2012 Dublin Declaration on Strengthening Good Governance 

and Combatting Corruption, Money Laundering and the Financing 

of Terrorism’’ provided earlier to the commission be put into the 

record? 

Mr. CARDIN. Without objection, that report will be put into the 

record, and without objection, all of the witnesses’ statements will 

be made part of our record. And you may proceed as you wish. 

Dr. YIGITGU ̈ DEN. Thank you very much, Mr. Chairman. 

Mr. Chairman, today I testify in front of you in my capacity of 

the coordinator of OSCE economic and environmental activities. 

Economic and environmental matters represent an important element of OSCE’s approach to security. 

To tackle challenges in this area, my team cooperates on the 

ground with our current 15 OSCE Field Operations, organizes an 

annual economic and environmental forum and holds a yearly implementation meeting to assess progress and identify future priorities. The office works closely with the organization’s chairmanship 

and performs under the guidance of the economic and environmental committee and the secretary-general. 

Our activities include anti-money laundering, transport and security, gender-sensitive labor migration, border and customs policies, 

water management, controlling dangerous waste, climate change, 

sustainable energy and involving the public in decisions affecting 

the environment. With other international partners, the OSCE is 

also an active member of the environment and security initiative. 

Today I will concentrate my speech on our work in the area of 

good governance and combating corruption. 

Good governance and transparency affect economic efficiency and 

growth and thus remain among key elements of the OSCE’s comprehensive approach to security. 

The increasing importance of good governance issues requires 

continuous dialogue. Therefore, adopted in Dublin in 2012 by all 

participating states of the OSCE, the Declaration on Strengthening 

Good Governance and Combating Corruption, Money Laundering 

and the Financing of Terrorism provides the OSCE and my office 

with a strong mandate. The declaration emphasizes that ‘‘good governance at all levels is fundamental to economic growth, political 


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stability and security.’’ The document calls upon the OSCE ‘‘to continue providing valuable assistance to participating states upon 

their request, also in sharing among themselves, through the 

OSCE platform for dialogue, national experiences gained and good 

practices.’’ 

There is a need to enhance efficiency and transparency of public 

institutions, implement higher standards of integrity and improve 

asset declaration systems to identify possible corrupt activities in 

the OSCE area. I am pleased to note that the OSCE supported 

training activities to develop increased awareness, professional capacity and knowledge in prevention and repression of corruption 

and money laundering produced results in 2014. For example, with 

the assistance of the OSCE, Kyrgyzstan was removed from the Financial Action Task Force grey list. 

The OSCE has been selected to chair the newly established AntiCorruption Working Group in Tajikistan to lead coordination efforts engaging civil society and other public bodies on anti-corruption issues and initiatives. In partnership with the World Bank, we 

supported towards money laundering and terrorism national risk 

assessments in Croatia, Montenegro and the former Yugoslav republic of Macedonia this year. 

Distinguished members of the commission, money laundering 

and corruption are interlinked, and oversight and law enforcement 

authorities must have adequate skills and resources to conduct investigations and prosecutions of these phenomena. Contemporary 

crimes do not stop at national borders, and cross-border exchange 

of information becomes essential. 

Therefore, one of our flagship events this year was a workshop 

on cross-border cooperation against corruption and money laundering for government officials from Central Asia, South Caucasus 

and Eastern Europe that took place in Vienna in early October. 

The event, co-organized with the United Nations Office on Drugs 

and Crime and Eurasian Group on Combating Money Laundering 

and Financing of Terrorism brought together 50 participants from 

financial intelligence units, anti-corruption and law enforcement 

agencies, financial institutions and specialized international organizations. Participants and experts discussed links between corruption and money laundering, ways to counter cross-border movements of proceeds of corruption, domestic coordination in identifying, tracing and recovering illicit assets, use of legal persons and 

other legal arrangements to conceal criminal assets. Participants 

were also introduced to good practices for the drafting of mutual 

legal assistance requests as well as the use of regional networks to 

facilitate co-operation in asset forfeiture and recovery. I would like 

to express my gratitude to the government of the United States for 

providing financial support to this event. 

The acknowledgement of the negative effects of the lack of appropriate economic governance by the political leaders and policymakers can be seen in numerous developments in the OSCE area. 

Therefore, participating states should take advantage of the platform of OSCE offers and its capacity to produce results similar to 

those mentioned above. 

There is a need to enhance transnational cooperation among participating states as well as other international actors in the area 


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of good governance. We remain convinced that the enhanced efforts 

should be supported to develop and deliver tailor-made capacitybuilding activities, to deploy anti-corruption measures, strengthen 

national financial intelligence units and build additional corruption 

prevention mechanisms. 

Mr. Chairman, by 2015 my office also plans to publish a new 

OSCE Guide on Combating Corruption. The old one is 10 years old, 

so we are near to finalizing a new one. It will consist of five parts 

and 21 chapters written by more than 40 contributors. The OSCE 

publication is being prepared in close cooperation with the Office 

of Democratic Institutions and Human Rights, Office of the Special 

Representative for the Freedom of the Media and major actors in 

the anti-corruption area, UNODC, OECD, Council of Europe’s 

GRECO group, Anti-Corruption Academy in Vienna and Basel Institute of Governance. 

In conclusion, let me assure you that my office, jointly with the 

OSCE network of field operations and partners, will continue conducting targeted regional and national awareness-raising and 

training activities. We will also endeavor to mainstream good governance in our other economic and environmental activities by incorporating transparency and anti-corruption elements wherever 

relevant. 

Thank you very much again for the opportunity to serve as a witness at this hearing today. I very much look forward to our discussion and also to our continued cooperation. Thank you very much. 

Mr. CARDIN. Thank you for your testimony. 

Ms. Beyerle. 

SHAAZKA BEYERLE, SENIOR ADVISOR, INTERNATIONAL 

CENTER ON NONVIOLENT CONFLICT 

Ms. BEYERLE. Thank you, Chairman Cardin, for your leadership 

in drawing attention to corruption, particularly in OSCE participating states. And thank you, Senator Boozman, for coming today 

and for your interest. I know you both are very busy. 

It’s an honor to participate in this hearing and to share with you 

conclusions and recommendations from new research on the positive role of citizens in impacting corruption, including in the OSCE 

region. It’s fitting today that Congress will commemorate the 25th 

anniversary of the nonviolent Velvet Revolution and will honor the 

late Vaclav Havel. 

Since thousands of jangling keys rang through the air in Prague, 

citizens continue fighting and impacting corruption and impunity. 

Around the world and in some OSCE countries, literally millions 

of people have wielded nonviolent power to gain freedom, freedom 

from corruption. 

The focus of my research is on what civic actors and citizens, exerting their collective power, have been doing to curb corruption as 

they themselves define it and experience it. 

Sixteen cases were documented and analyzed in depth from 

around the world, including in four OSCE participating states: Bosnia and Herzegovina, Italy, Russia and Turkey. 

And recently, as Senator Cardin mentioned, in Hungary, thousands have mobilized against a corrupt, increasingly authoritarian 


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regime and an Internet tax designed to thwart the free flow of information. 

But the good news is that citizens organized in nonviolent campaigns, movements and community initiatives are vital protagonists in combating corruption. And as importantly, these homegrown efforts generally don’t require huge amounts of money, nor 

do they usually need external financial assistance. It’s the ingenuity, creativity, resources and voluntary participation of ordinary 

people that provide the foundation for action. They’ve achieved notable outcomes, which were summarized in my written testimony. 

One example is the Movement to Defend Khimki Forest in Russia, where citizens have stalled the bisection of an old growth stateprotected forest from a large highway and illegal development that 

involves mysterious shell companies around the world and the 

French firm, Vinci. Both the European Bank for Reconstruction 

and Development and the European Investment Bank have pulled 

out of the project, and the Paris prosecutor is now investigating 

Vinci for financial crimes. 

During my research, I asked activists what they need from external actors. They implore the international community, of course including the U.S., EU and OSCE, to look beyond formal NGOs. They 

say pay attention to and engage directly with civil society organizations and informal civic groups when they visit your countries or 

seek contact with your diplomatic missions on the ground. We don’t 

need to put them through a convoluted process controlled by NGO 

gatekeepers to reach you. 

Second, threats and repression are the norm rather than the exception. Therefore, protection and solidarity can be critical when 

activists and their families request it. 

Based on my research, allow me to offer these additional recommendations. Some are not new but reinforce good practices underway. 

Sometimes civil society initiatives do seek financial assistance, 

but they want modest amounts for self-organization and capacitybuilding, not large amounts for formal projects designed by external actors. 

Also, the worst thing international actors can do is throw large 

sums of money at homegrown grassroots civic initiatives or to encourage them to turn into formal conventional NGOs. They don’t 

need that to succeed. 

When it’s wanted, provide legal and technical support and access 

to information that civil society may not be able to acquire in their 

own countries. 

A third recommendation is—where censorship and intimidation 

are rife—amplify civil society voices by supporting their online information and news outlets, alternative satellite television programming and multilingual international outlets such as Radio 

Free Europe and Radio Liberty. The bill that’s now in the Senate 

to revamp Radio Free Europe and Radio Liberty is exactly the kind 

of measure that’s valuable. 

Fourth, use top-down multilateral approaches, such as the 

United Nations Convention Against Corruption, and democratic 

mechanisms, in third party countries, such as our own, to support 

civil society movements and campaigns targeting corruption and 


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impunity—for example, the aforementioned Paris prosecutor investigation of Vinci and congressional hearings such as the one we are 

having today. 

Lastly, please target global financial corruption. Legislative and 

institutional measures to curb illicit financial transactions and the 

conversion of ill-gotten gains into legitimate businesses and properties can disrupt systems of corruption that civil society is fighting 

in OSCE participating states. I’ve heard voices from civil society 

herald the Magnitsky Act. I’d like to thank you, Senator Cardin, 

and also Senator John McCain, for your efforts to extend the law’s 

reach through the Global Magnitsky Human Rights Accountability 

Act. And I’d like to share with you that I was present when Sergei 

Magnitsky’s mother, Natalia, received the 2011 Transparency 

International Integrity Award given to her son after his death. And 

I will never forget the sorrow that was etched in her face when she 

came up to the stage to receive the award. 

In conclusion, allow me to share a few lessons from this research. 

First, citizens bring a missing component to the anti-corruption 

struggle. They bring extrainstitutional pressure to push for change 

when power holders are corrupt and are unaccountable, and when 

institutional channels are blocked or ineffective. 

Second, traditional top-down approaches are based on a flawed 

assumption that once anti-corruption structures are put into place, 

illicit practices will naturally change. But as we know and as we 

see, unfortunately, that’s not always the case. Indeed, how can we 

expect those benefiting from corruption within institutions to be 

the ones to curb it? 

A third conclusion from my research is that top-down and bottom-up approaches are complementary and definitely not mutually 

exclusive. Both are needed, and they create valuable synergies. 

Lastly, citizens don’t fight corruption in the abstract. They do so 

to overcome poor unaccountable governance, poverty, displacement, 

organized crime and other forms of oppression and injustice. We 

can learn from their approach. 

In closing, allow me to pay tribute to the leaders, organizers and 

regular citizens who courageously and creatively are curbing corruption and abuse, one of whom is in the room today from Bosnia 

and Herzegovina, Srdjan Blagovcanin. They prove that while corruption brings out the worst in people, fighting corruption can 

bring out the best. Thank you for your attention, and I look forward to your questions. 

Mr. CARDIN. Well, thank you very much for your testimony. 

Mr. A ̊ slund. 

ANDERS A ̊ SLUND, SENIOR FELLOW, PETERSON INSTITUTE 

FOR INTERNATIONAL ECONOMICS 

Mr. A ̊ SLUND. Thank you very much, Mr. Chairman, Senators 

Boozman, Whitehouse. Thank you very much for this opportunity 

for me to speak on what I consider a very important topic: corruption in Ukraine and how we can defeat it. And my message to you 

is that it can be done, but it has to be done now (hard and fast) 

by the new government. 

Ukraine today is in a triple crisis. The worst is of course the military aggression from Russia, and that has caused an aggravation 


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of the financial crisis, but the underlying crisis in Ukraine is its 

old internal enemy, that is corruption, and that’s what I’m going 

to talk about today. But all these threats need to be fought at once, 

and Ukraine needs all the international support it can get. 

Your words about the importance of good governance today, Mr. 

Chairman, ring very true with regard to national security for 

Ukraine. They all go together. Ukraine would not be in this national security crisis without its severe corruption. 

Ukraine ranks 144 out of 177 on Transparency International corruption perception index so this is a profoundly corrupt country. 

The corruption really reached its peak under President Viktor 

Yanukovych, and indeed, the corruption, together with repression, 

were important reasons why he was ousted. 

The fight against corruption must start at home, and it must 

start from the top and with a political cleansing of the top. And 

this process started, as you mentioned, on October 26 when 

Ukraine elected a new government which has a solid reform majority. Among these 423 new deputies, most are new deputies. They 

have not been in the old, rather corrupt situation before. 

Many, a few dozen of the new deputies are anti-corruption activists. These are not likely to be silenced or bribed. But the new parliament which is soon to convene, it needs now to form a new coalition government, and it should start to act both against the financial crisis and against corruption. 

After the politics comes the state. Ukraine’s public service is 

widely considered pervasively corrupt. Cleansing Ukraine from its 

corruption will require several interrelated measures, and Estonia 

and Georgia show how you clean up the government. 

To begin with, the state needs to reduce its regulatory role by 

abolishing a lot of old Soviet regulations which have now just been 

used for extortion. The deputy prime minister, Volodymyr 

Groisman, said recently that Ukraine has 80 different inspectorates 

controlling organs and controlling departments, and he argued that 

at least 60 should be closed down. These organs do not work in 

order to improve regulation of a state, but they are organs in order 

to extort money from the citizens and repress them as well. 

Minimizing state interference in the economy, whether by 

privatizing state-owned assets or cutting regulations, reduces opportunities for corruption. In October, Ukraine adopted a law on 

lustration. It scrutinizes top officials which have served in high positions in corrupt agencies. This entails the creation of an independent commission to scrutinize all top judges and prosecutors in 

Ukraine because you can’t have an independent judiciary that is 

independently corrupt. It has to be cleaned out from outside. 

Since the early 1990s, all the truly rich in Ukraine made their 

money on gas trade. It functions like this: you buy gas at a low 

state-controlled price and you sell it currently at a 12 times higher 

price. In that way, a few billion dollars are made by very few people each year in Ukraine. There’s one way of solving it: unify the 

energy prices. The common objection is that this will have social 

costs, but give compensation to the poor for the social costs, (real 

cash compensation); the World Bank is very skillful at doing this. 

They’ve done so in more than 30 countries, notably in Latin America, where administration is often worse than in Ukraine. So this 


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is possible, and it has to be done. This is not a matter of social cost. 

It’s a matter of fighting corruption, because the people that control 

the gas trade have normally owned Ukrainian politics. 

Another source of major corruption is public procurement. The 

general perception under Yanukovych was that 50 percent was a 

normal kickback for a public contract. The government officials 

now say that 20 percent of all public contracts were stolen, which 

sounds low, but that would be 2 percent of GDP. What is needed 

is a law on public procurement that it be open and transparent. 

Such a law has been adopted, and it is important that the new government really implements it. 

Of course, the tax system is another major source of corruption. 

The tax police have been the most repressive organ in Ukraine. A 

lot of changes need to be done in the tax system to clean it up, simplify it, in particular, abolish the tax police. Taxation should not be 

a matter of repression. It should be transparent and legal. 

Coming to the international side, there are two things that are 

important. One is the association agreement with the European 

Union, which is a document of nearly 3,000 pages. It’s a laundry 

list of reform laws that Ukraine needs to adopt. And the European 

Union is offering technical assistance to get that done. The Ukrainian people have made a choice for Europe, and if they stick with 

it and pursue reform with determination, they have the best 

chance to clean out the Augean stables of a long-corrupt system. 

The other international organization that plays a major role in 

Ukraine is International Monetary Fund. So far, it’s mainly IMF 

demands that have done away with corrupt practices such as the 

strong demand for a decent procurement law. And of course, the 

United States is the biggest shareholder in the IMF. The United 

States also engages directly in Ukraine through bilateral assistance, through USAID. It rightly engages in Ukraine’s energy reforms, which, as I’ve mentioned, will be crucial for controlling toplevel corruption in Ukraine, and on top of that, improve state finances and energy efficiency and national security. 

So my final words are that the United States has a major interest in the economic and legal success of a democratic and friendly 

Ukraine, and the United States can do a great deal in this regard. 

Thank you, Mr. Chairman. 

Mr. CARDIN. Thanks. Let me thank you very much for your testimony. We’ve been joined by Senator Whitehouse—it’s nice to have 

him here—and Congressman Aderholt, who is vice president of the 

parliamentary assembly. So it’s good to have our colleagues here, 

and I thank Senator Boozman for his being here. I know he has 

the Veterans Committee that’s meeting, so thank you for your attention. 

I want to comment first, Mr. A ̊ slund, on your point about 

Ukraine. I was at the Millennium Challenge Corporation’s celebration last night of its 10th anniversary. It’s a development assistance program that we have in the United States which is pretty 

consequential. There’s significant funds that are made available to 

try to deal with poverty through economic growth in countries 

around the world. 

But a precondition is that the country must have in place the 

mechanisms to deal with corruption and good governance. And it’s 


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a competitive fund and the funds are not made available unless we 

in fact move forward on that. And it has had great success. It’s 

known in our country as one of the most transparent agencies in 

government. It’s consistently ranked number one in that regard. 

I’d contrast that to what the United States has done in Iraq. We 

made substantial funds available for economic growth and saw so 

much of that siphoned off in corruption and corrupt governance. So 

you’ve given a—I thought a very strong list of benchmarks that 

must be achieved in Ukraine for it to be successful, and that we 

all are very much engaged in stopping Russia’s incursions into 

Ukraine and doing what we can to help the Ukrainian people be 

able to maintain an independent country. 

We are very much engaged in dealing with their economic needs 

on the international front. But it seems to me that there has to be 

a very open, transparent process in Ukraine, and benchmarks and 

accountability. And that we’re not doing the people of the Ukraine 

any favor if the current changes end like the Orange Revolution 

ended, without progress being made. So how do we go about setting 

up that system of accountability and benchmarks so that, in fact, 

Ukraine—the people of Ukraine at the end of the day will not only 

have an independent country that is safe from the incursions of 

Russia, but also one that has good governance so that their people 

can share the wealth of their country in a fair manner? 

Mr. A ̊ SLUND. Thank you. This is very much the key question, Mr. 

Chairman. And my answer to this is what Ukraine needs to do a 

lot from top down to, front-load the program, do all these major 

things that can be done straightaway immediately. And to this, we 

have a problem with the finances. Ukraine now is running out of 

international reserves. The exchange rate is plummeting. Inflation 

is rising. The banks are collapsing because of that. At least half of 

the banks are in fact bankrupt and need to be closed down or recapitalized. 

So in this situation you really need to do away with everything 

that is corrupt on the state budget—clean it out altogether. Otherwise, Ukraine will be in a financial meltdown within, say, four 

months. So it’s really critical. So therefore, Ukraine doesn’t have 

time. The United States, as one of the closest countries to Ukraine, 

needs to say: You do it now, otherwise you are cooked. 

Mr. CARDIN. Dr. Yigitgu ̈den, can you tell us whether—how you’re 

working within Ukraine to deal with following up on some of the 

points that Mr. A ̊ slund mentioned? 

Dr. YIGITGU ̈ DEN. Mr. Chairman, we were continuously contacting 

the Ukrainian delegation in Vienna at OSCE and Ukraine authorities and our presence in Kiev. Finally, after three visits to the site, 

meeting with the authorities with the ministry of justice, ministry 

of interior and the financial intelligence units, we could design a 

program to work with the Ukrainian authorities. I must say, we 

are very thankful for the United States; the different agencies from 

the United States are working closely with the Ukrainian authorities on asset recovery issues. This is very helpful for the government. 

And we designed upon their request a project on anti-money 

laundering and combatting financing of terrorism field. With our 

presence in Ukraine, we will be assisting the state financial moniVerDate Sep 11 2014 01:26 Aug 19, 2015 Jkt 095572 PO 00000 Frm 00015 Fmt 6633 Sfmt 6602 E:\HR\OC\A572.XXX A572

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toring service of Ukraine—this is their financial intelligence unit— 

in designing and launching a national system for national risk assessments. This system would assist the Ukrainian financial intelligence unit and other relevant government agencies in identifying, 

assessing and understanding money laundering risks and enhanced 

capacities for the implementation and the development of national 

anti-money-laundering and counterterrorism financing regime. 

The project will gather national and international experts, forming an expert group that will collect and analyze data for the national risk assessment, covering main financial sectors of the national economy like banking, insurance, stock exchange, et cetera. 

It will also review, analyze and provide recommendations to design 

and amend relevant laws, regulations and set parameters to enforce measures to mitigate money laundering and terrorism financing risks. 

Key beneficiaries of this project will be the state financial monitoring service of Ukraine and the state training institution for experts on financing monitoring. This morning I received an email 

that we got a request from Ukrainian side. They want to study the 

system in Lithuania. So from 1st till 5th of December, we will 

bring them together with the Ukrainian authorities to work on this 

field, to learn from their experiences. And we will continue next 

year to work with the Ukrainian authorities. 

Mr. CARDIN. I think that’s very helpful. And I applaud your efforts. I think it would be very useful for you to make available to 

the OSCE community the progress that Ukraine is making on the 

points that were brought out in Mr. A ̊ slund’s testimony. What are 

they doing about regulatory reforms? What are they doing about 

procurement and state-owned enterprises, the independence of a judiciary free of corruption? What are they doing about energy sector 

reform? What are they doing about their tax system? 

I think all those are obvious areas that breed corruption. And the 

solutions may be difficult to achieve politically, but we know that 

they need to progress toward doing that. So I think the more transparency that we show on that, I could just tell you that, speaking 

as this senator, we’re going to help the Ukrainian people, but we’re 

not going to provide funds that are being used for corruption. And 

sometimes you have to make some tough decisions if the money 

isn’t getting to where it’s intended. So advertising the progress on 

these fronts, I think, would be extremely helpful to us. 

I want to ask one other question if I might, to Ms. Beyerle. You 

mentioned civil societies, which I think are critically important 

here, and how we finance civil societies. We have just completed 

the Berlin plus 10, dealing with anti-Semitism. Ten years ago there 

was a conference in Berlin that dealt with the challenges in antiSemitism and an action plan was developed. And as I understand 

it, the final statement by the chair in office indicated that we must 

show more economic and political support for civil societies in fighting intolerance and anti-Semitism. 

And it seems to me the same challenge is here in corruption, that 

we do need to do a more effective job in supporting the work done 

by civil societies. Do you have some specific suggestions as to what 

the OSCE could do in adding to the strength of the role of civil societies in fighting corruption? 


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Ms. BEYERLE. Thank you. I do know that the OSCE engages with 

civil society and that various NGOs can be accredited to be a part 

of some of the meetings with member state participating countries. 

And I know that they interact with civil society on the ground in 

countries and they conduct things like integrity trainings for officials in countries. But my recommendations are really simple, and 

not very expensive. I would urge the missions on the ground to engage more actively with civil society organizations that are not traditional NGOs, to engage with civic groups that are mobilizing citizens together, to involve them in activities that they do, to give 

them access to meet with officials who are coming from the OSCE 

itself, to monitor their status when they face harassment and intimidation. These are the kinds of things that are helpful. 

Other things that could be interesting—and Dr. Yigitgu ̈den 

would be able to answer if it’s possible within the parameters of 

the OSCE, but I do think there is a way to do it—is to encourage 

more civil society peer exchanges. For example, it was mentioned 

that there is a plan to bring Ukrainian officials to Lithuania to 

meet their counterparts at the government level, to learn from 

their counterparts in Lithuania. That can also be very important 

at the civil society level. Peer-to-peer exchanges, bring people who 

are active—who are actively fighting corruption on the ground together from different countries within the OSCE and even with 

people who have successfully impacted corruption outside the 

OSCE—to share their experiences and insights. 

So in addition, I would suggest—and again, this could be something for the OSCE and other external actors—is to work with civil 

society groups to produce anti-corruption mechanisms—in which 

they have provided input. There is a notion that we have in the 

people power realm of collective responsibility. And we need to 

bring in to deliberations about what should be done, for example, 

to reform government ministries—to bring in voices from the citizenry can be very important because they actually have the insights about how corruption functions within a government ministry, or within a government office. They actually have good ideas 

and good suggestions about how to address it, how to disrupt it. 

And they actually can play a role, for example, through monitoring 

of activities that tend to be corrupt. 

So I’ll leave it at that and I would be happy to discuss it further 

later. 

Mr. CARDIN. Well, thank you very much. Senator Whitehouse. 

HON. SHELDON WHITEHOUSE, COMMISSIONER, COMMISSION 

ON SECURITY AND COOPERATION IN EUROPE 

Mr. WHITEHOUSE. I’m a former prosecutor. I was the attorney 

general of my state. And I was the United States attorney, the federal prosecutor for my state. And in addition to the importance of 

an independent and incorruptible judiciary, it’s, to me, equally important that there be prosecutive capabilities so that the independent and honest judiciary have cases before them to work on. 

That does not seem to be a skill set that has been very well maintained in the Ukraine. It’s a skill set that doesn’t last very well in 

corrupt political environments. It’s the antithesis, frankly, to a corrupt political environment. 


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So rebuilding that prosecutive capability seems to me vital. In 

that regard, both the National Association of Attorneys General 

and the National District Attorneys Association and the United 

States Department of Justice have very considerable assets of experience and capability in that area. And I’ve spoken to those organizations about trying to get more involved specifically in the 

Ukraine. I think they offer a couple of things. The first they offer 

is added resources, training, mentorship and so forth. 

They also add a bit of a defense, I guess I’d say, against efforts 

to have the corruption world intrude into and force its effects into 

these types of decisions, not because—just to use the example of 

the Ukraine—not just because the Ukrainian prosecutors won’t be 

as honest as any other prosecutor, but because it gives them an additional tool in their arsenal to say, well, you know, I just can’t 

buckle on this because we’ve got all these folks from out of the 

country watching and you have to understand that that’s just the 

way it is right now. And I think that gives a boost from 

anticorruption efforts. 

So I would urge that we continue to try to seek the support of 

what’s called NAAG, the National Association of Attorneys General, the NDAA and the Department of Justice in putting that kind 

of resources in place, on location, in the offices, both to develop the 

capability and to provide a counterpoint, I guess I’d say, to people 

who are saying quietly to somebody, you know, you’re getting too 

excited about this. This is, you know, really something that you 

needn’t be looking into so much. And if you really want to protect 

your budget and your people, you know, I think you’d be making 

a mistake to concentrate so many of your resources in this case, 

blah, blah, blah. 

That’s the way in which the corruption force works its will 

against prosecutors. And if they’re in a position to say, you know, 

I appreciate that but I’ve got an office full of people who are going 

to blow the whistle on it if we try. And it’s—don’t blame me. This 

is just the situation we all live in. I think that hardens up the prosecutive capability. So I’d love to hear your thoughts on that and 

happy to support. 

Rhode Island is one of the few states—there are three of them— 

in which the attorney general is also the district attorney. So we 

did all of the criminal prosecutions, all the felony prosecutions, 

most of the misdemeanor prosecutors—everything that wasn’t a 

municipal offense. And so I’m one of the rare people who has actually been a member of the NDAA and the National Association of 

Attorney Generals and a former U.S. attorney. So I’m very happy 

to work with you to try to make sure we’re steering the resources 

in that direction. I think it’s very important and I’d love to help. 

So your comments to that. 

Mr. A ̊ SLUND. Thank you. I presume that’s for me. Thank you 

very much, Senator Whitehouse. I think that this is really critical. 

As happens now in Ukraine, hardly any of the Yanukovych gang 

has been properly prosecuted. Who is most easy to pay off? You can 

guess. The prosecutors have massive power. The best way for them 

to make money is not to pursue a case. Of course, there might be 

something that is missing in the case, we don’t know, but it’s very 

remarkable none of them has been properly prosecuted. 


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Ukraine has 10,000 prosecutors, 20,000 judges. Probably both 

numbers should be halved. It’s a very large number if you compare 

with any Western country. What’s important is that they become 

decent and honest, because this is a pervasively corrupt institution. 

The top prosecutors appoint the lower prosecutors. Since the top 

prosecutors have been corrupt for a long time, they make sure that 

they don’t get any unnecessarily honest prosecutors around them. 

So therefore, what you need to do is to take out the top. This is 

what the governing is doing through the new law on lustration. It 

has sacked approximately 100 top prosecutors. That’s where we 

need to start. Then what you said here, another element is to get 

the international assistance in that you need to have an international council that assesses prosecutors. It’s pretty easy to see if 

people are corrupt or not in these cases. 

This is what East Germany did. They went through all the 

judges and all the prosecutors. They undertook a complete 

lustration of the civil service. Ukraine needs to do that, particularly 

in these two areas—prosecutors and judges. It’s not only technical 

assistance. You really need to have peer-controlled over appointments. There are a lot of Ukrainian-speaking judges in North 

America, in Canada and the United States. This is a good resource 

the U.S. and Canada can draw on. 

And there are lots—there are thousands of young lawyers in 

Ukraine who are disgusted by what they see. They have primarily 

gone into the private sector, to commercial law, in order to avoid 

being drawn into the dirty legal system. They know the laws. They 

know how to work as lawyers. So there is a resource. These are the 

people who should be brought in, but then, of course, they have to 

be properly paid, and if you make them much fewer, then you could 

get it done, and this is critical that the United States can help with 

technical assistance in this area. 

Mr. WHITEHOUSE. Well, thank you, and let me thank Chairman 

Cardin for his leadership in this commission. He’s very active, and 

perhaps this is an issue we could put on our commission docket as 

something to consider how we can encourage NAAG and (DAA ?) 

and the Department of Justice to work together to help support 

this kind of activity, particularly in the Ukraine, but wherever it’s 

a problem. 

Mr. CARDIN. Well, let me just thank Senator Whitehouse for that 

suggestion. We make significant resources available here, and I 

think perhaps one of the most valuable things we could do is provide the technical assistance, but also the oversight for accountability. I must tell you, we are not going to be too patient on seeing 

progress made to deal with corruption, nor will the people of 

Ukraine be too patient here. They have a history of taking things 

into their own hands in the streets if they’re not satisfied about 

what is happening. So I think it’s important that we do that, and 

I think you’re absolutely right. We have the capacity to really help 

them understand what needs to be done, but just as importantly, 

evaluate as progress is being made as to whether they’re achieving 

that or not. 

Congressman Aderholt. 


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HON. ROBERT ADERHOLT, COMMISSIONER, COMMISSION ON 

SECURITY AND COOPERATION IN EUROPE 

Mr. ADERHOLT. Thank you, Mr. Chairman. Mr. A ̊ slund, let me 

just go back to what you were saying about the number of prosecutors and judges in Ukraine. That was—you said 10,000 prosecutors, 

20,000 judges? 

Mr. A ̊ SLUND. Yeah. 

Mr. ADERHOLT. Which you said, by Western standards, would be 

quite high. What contributed to that, and were they given out as 

just positions that just—sort of give you a little history about that? 

How that happened or came about? 

Mr. A ̊ SLUND. Well, it’s the old Soviet system. If you look up on 

the police force, Ukraine has 300,000 policemen. Britain, which is 

substantially larger, has 120,000 policemen. Part of it is that the 

Soviet Union, as a share of the population, had the largest number 

of jail mates—prisoners in the world. The U.S. is also high in this 

regard, but the Soviet Union was higher. And therefore, you had 

an overcapacity. The Soviet Union had a murder rate that was the 

same as in the United States—at the peak, around 1990, of eight, 

nine murders per 100,000 population. So it was very high, and it 

hasn’t been cleaned up. So this is largely a Soviet inheritance. 

Mr. ADERHOLT. So it’s a holdover from the Soviet days? 

Mr. A ̊ SLUND. Yeah. 

Mr. ADERHOLT. Of course, as I’m sure you know, President 

Poroshenko spoke at a joint session of Congress just a few months 

ago here in Washington, and we very much appreciated his coming 

and speaking to the joint session. One of the things that would be 

interesting, as far as President Poroshenko and the prime minister—you know, how committed, in your opinion—and I’ll open 

this up to any on the panel—do you think that they truly are to 

fighting corruption? 

Mr. A ̊ SLUND. I do think that they are committed, but they always 

have other interests. They are both highly competent, and it was 

a wonderful speech that President Poroshenko gave here to the 

joint session of Congress, but the truth of the pudding is in the eating. We have to see that they really deliver. In order to be in politics, you have to consider many interests, and the question is how 

you manage to do it well. 

Mr. ADERHOLT. You’d put them on a scale quite high as their— 

you think they’re committed to it. Of course, what happens is another question, but as far as their commitment at this point—you 

see as—you see them as quite committed? 

Mr. A ̊ SLUND. Knock wood, that’s my view. 

Mr. ADERHOLT. Yeah. Any assessment from the other—— 

Mr. YIGITGU ̈ DEN. I would say there are two ways to fight against 

corruption. One, to work closely to train prosecutors, financial intelligence units, Ministry of Interior officials and so on. On the 

other side, to make the legislation simple and understandable for 

every citizen. Citizens, they don’t understand the complexity of legislations. Sometimes, they are, I would say—may be exaggerated— 

happy to pay bribes to achieve something, to get something, because it’s sheer impossible for them to go to—to this difficult legislation, so we should encourage countries in this regard—EU should 


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play a role to simplify legislations in this region that the people can 

understand, and it’s no room for corruption there. 

This will be a best way. We are trying to mainstream our activities, not only working with the authorities fighting against corruption and anti-money-laundering, but also in other areas. We work 

in the field of customs and transportation trade facilitation with 

our (booklet?); we organize trainings with best practices from 200 

best practices from all over the world. How the customs procedures 

can be simplified that trade can be facilitated much faster, and 

there is less space for corruption in customs areas. 

Similarly, in the environmental field environmental good governance via the huge network of Aarhus centers, we are increasing the 

awareness of the ordinary citizens how they can access to the information in the environmental decision-making process, whether the 

authorities there are corrupt and they give, say, permission without consulting with the population. I think we need to mainstream 

all activities in all areas that the citizens are aware, first of all, 

about their rights, and secondly, they have a simple legislation, 

simple rules that they can understand, and there is no room for 

corruption. Thank you. 

Mr. CARDIN. Thank you. Ms. Beyerle. 

Ms. BEYERLE. Thank you. I would second what my two co-panelists said and provide an example. Ukraine and other countries may 

now face the opportunity—and it’s a good opportunity—to change, 

revamp, reform laws on the books. And laws can be complicated, 

as was mentioned, or they can be simple. They can also be userfriendly to citizens, or they can prevent or be obstacles to citizens 

using the laws. So a key law—for example, is the right to information or freedom of information, as we call it in the United States. 

The laws can be convoluted, or they can be something that anyone can use. And when it’s something that anyone can use, this becomes a tool, a weapon that society can use to fight corruption. And 

these kinds of activities are what reinforce the top-down efforts 

that have been described today. So, for example, in India, the Right 

to Information Act was actually developed through constitutional 

lawyers and legal experts from civil society, and after a 10-year 

movement—social movement—it was passed. It is one of the 

strongest freedoms of information acts in the entire world, and 

there is now a movement in India—the 5th Pillar movement— 

training and encouraging citizens to use this on a daily basis to actually thwart corruption that they face in their daily lives. 

The corruption that’s manifested from the activities that the panelists have discussed—for example, corrupt judges, corrupt judicial 

systems, corrupt bureaucracies; all go hand-in-hand. Consultation 

with experts and grass-roots leaders from civil society can provide 

a different perspective that can be built into the top-down changes 

that are being developed. 

Mr. A ̊ SLUND. Sorry—may I add here, many laws have been 

adopted recently in Ukraine. In the spring, there was the adoption 

of freedom of information act. In October, last month, a package of 

anti-corruption laws was adopted. That includes electronic registers 

for all enterprises. Most big enterprises in Ukraine are owned by 

anonymous offshore companies, so their real owners are not formally known. That’s also true of real estate and property that you 


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don’t know actually who owns it, and now they are demanding to 

have registers, electronic registers that would be publicly available 

to everybody. The very important law on prosecution was finally 

adopted. This was what Viktor Yanukovych was not prepared to accept because in the old Soviet system, the prosecutor was superior 

to the judge, so the prosecutor could until now go in and change 

a verdict of the court, which is just the old Soviet system. 

And—let’s see. What else? Yeah, and of course, law on money 

laundering has also been adopted every much because of demands 

from the international community. Also a law on an anti-corruption 

bureau which has special rights to go after top officials that appear 

to be corrupt, which several other post-Communist countries have 

done to clean up because the prosecutors cannot be trusted to deal 

with top officials. Thank you. 

Mr. ADERHOLT. Thank you, Mr. Chairman. 

Mr. CARDIN. Let me make an observation, and that is that this 

hearing has been extremely helpful, and I thank all three of our 

witnesses for their—for their testimony and more importantly for 

your contributions to this—to this area. I remember during the 

early days of our discussions on trafficking in this commission, this 

commission took up this issue many years ago. And we knew that 

every country needed to improve, but there were some countries 

that were problematic in dealing with trafficking. And it took a 

long time, but we were able to obtain I think objective standards 

for evaluation. And of course, the United States Congress passed 

the Trafficking in Persons report, which evaluated the progress 

being made in every country, including the United States, and 

pointed out progress where it could be continued, but then established different tiers with consequences if you don’t at least reach 

certain tiers of progress. 

I think we need the same effort with corruption. I thought the 

testimony today has laid out some fundamentals that are—need to 

be in a country in order to have acceptable institutional protections 

against corruption—the independent judiciary and prosecutors, or 

laws on how government deals with procurement, and there are 

others that may not be present in Ukraine which are pretty clear 

are necessary in order to have the protections against corruption. 

And as I said, every country can improve, including the United 

States. We understand that. So I think such an evaluation might 

be very, very helpful. 

Part of that, of course, is having an independent judiciary and 

allowing investigative journalists. And once again, I regret that Ms. 

Ismayilova is not here. Azerbaijan is a friend of the United States. 

We have a very close relationship on many issues. And I would just 

urge Azerbaijan to understand the importance of protecting independent journalists and allow independent journalists to be able to 

carry out their work, and Azerbaijan will be a stronger country as 

a result of those types of activities. I think that’s an important 

point for us to mention. We have the ministerial meeting coming 

up in December in Basel. We’ll have a transition between the Swiss 

chair in office and the Serbian chair in office. And I just hope that 

we would be more visionary as to how we want to elevate the work 

on this subject, and we look forward to working with you, doctor, 


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as to how we can underscore that importance and continued ability, 

the institutional presence in that regard. 

I’ve been informed by staff that Canada this week will be considering a transparency issue in regards to extractive minerals. As 

you know, we passed a transparency provision here in the United 

States. Europe has also acted on transparency. When Ms. Beyerle, 

you mentioned the sources of corruption, we know that trafficking 

is a source of funds for corruption in organized crime. We know 

that corruption on the use of the minerals of a country and supporting a corrupt government’s sources of corruption, we know illicit drugs and illicit arms, all these are sources that fund corruption. And as Mr. A ̊ slund’s pointed out, unfortunately, public service 

in some countries is a source of corruption. 

So I think all this gives us a way to really elevate this issue to 

a much more important area. And bottom line, it deals with the 

same principles of Helsinki, OSCE, the security of our country is 

based upon stable countries around the world, and you can’t have 

stable countries if you don’t have good governance; you can’t have 

good governance if you have corruption. 

Senator Whitehouse. 

Mr. WHITEHOUSE. I’m good. 

Mr. CARDIN. Thank you all very much for your contribution. 

Mr. WHITEHOUSE. Appreciate this very much. 

Mr. CARDIN. Appreciate it very much. 


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A P P E N D I X 


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PREPARED STATEMENTS

PREPARED STATEMENT OF HON. BENJAMIN L. CARDIN, CHAIRMAN, COMMISSION ON

SECURITY AND COOPERATION IN EUROPE

Good morning and welcome to this hearing of the Commission on Security and 

Cooperation in Europe. We have a panel of distinguished witnesses with us today 

to discuss combating corruption in the OSCE Region and the link between security 

and good governance. 

Combating corruption may be the most important task we face today. 

Democratic societies function based on a high level of trust in each other and the 

institutions that underpin democracies. Corruption undermines that trust, and thus 

undermines the very foundation of democracies. Research has shown a high level 

of correlation between failed states and endemic corruption. 

That’s not to say we don’t have corruption in democracies. We do. But the level 

of corruption is not as high and having strong institutions such as an independent 

judiciary and an independent media are integral to keeping corruption in check. 

The upheaval and turmoil that we have witnessed over the past couple of years 

is surely one of the most convincing pieces of evidence that we have to show the 

link between corruption and security. The spark that lit the fire in Tunisia was a 

street vendor sick of paying bribes to the police. 

In Ukraine, the corruption which has plagued that country for decades only intensified during the regime of Viktor Yanukovych. A major component of the EuroMaidan protests—the ‘‘revolution for dignity’’—was the people’s disgust with pervasive governmental corruption. With the election of President Poroshenko in May and 

a new, pro-European parliament elected last month, Ukraine has a real opportunity. 

While it is not an easy environment given Russia’s aggression and de-facto control 

of parts of Ukraine, some steps have already been taken, but much more needs to 

be done. 

In Russia, corruption and consolidation of power at the center has allowed Putin’s 

government to undermine the legitimacy of its judiciary, silence independent journalists and systematically deprive NGOs of the ability to operate freely. 

In Hungary, the U.S. recently announced that six Hungarians were determined 

to be ineligible to enter the United States under the authority of Presidential Proclamation Number 7750 which makes individuals excludable when there is credible 

information that those individuals are either engaging in or benefiting from corruption. The head of the Hungarian Tax Authority has publicly stated she is one of the 

six. 

This is clearly an exceptional measure and I’m sure not undertaken lightly. On 

the contrary, I believe, this reflects on other developments which have made it more 

difficult for civil society and independent media to report on and combat corruption. 

This includes the expansion of criminal penalties for defamation using ‘‘emergency’’ 

parliamentary procedures and the subsequent threat to use those provisions against 

those raising concerns about the Tax Authority and the National Bank. 

I’d like to turn now to our witnesses for their contribution. Unfortunately Khadija 

Ismayilova, an investigative journalist with Radio Free Europe/Radio Liberty in 

Baku, was not able to join us today because of a travel ban imposed on her by the 

Government of Azerbaijan. She has provided a written statement and copies have 

been distributed. We regret that she is not able to join us here for the hearing. 

I’d like to welcome Dr. Halil Yurdakul Yigitgu ̈den, who has been the Co-ordinator 

of OSCE Economic and Environmental Activities since February 2013. He is a 

former senior Turkish diplomat with extensive experience in the energy sector. 

Next is Ms. Shaazka Beyerle, who is a visiting scholar at the Center for Transatlantic Relations at the School of Advanced International Studies at Johns Hopkins 

University. She is also a Senior Advisor with the International Center on Nonviolent Conflict. This year she published a book, ‘‘Curtailing Corruption: People 

Power for Accountability and Justice.’’ 

Finally, Mr. Anders A ̊ slund is Senior Fellow at the Peterson Institute for International Economics. He is an expert on economic policies in Russia, Ukraine, and 

Eastern Europe, and he focuses on the broader implications of economic transition. 


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1Professor of Global Affairs at New York University’s School of Professional Studies—Center 

for Global Affairs (http://www.vice.com/enlca/read/how-the-invasion-of-ukraine-is-shaking-upthe-global-crime-scene-1106. 

PREPARED STATEMENT OF HON. CHRISTOPHER SMITH, CO-CHAIRMAN, COMMISSION ON

SECURITY AND COOPERATION IN EUROPE

Thank you, Mr. Chairman, and to everyone joining us this morning. Combating 

corruption has been a priority of this Commission almost since its inception, and 

I am delighted that we are spending some time today with the OSCE Economic Coordinator and our other witnesses to further our understanding of this important 

topic. 

Corruption in the public sector fuels many of the ills that plague OSCE states— 

among them is certainly trafficking in human beings. In case after case after case, 

we have seen examples that show corruption was responsible for the border guard 

turning a blind eye to the victim, and was responsible for police colluding with traffickers to thwart a rescue, and was responsible for the prosecutor refusing to bring 

charges against a trafficker. 

I have been fighting human trafficking for over fifteen years and am the author 

of the landmark United States’ Trafficking Victims Protection Act of 2000, and its 

2003 and 2005 reauthorizations. These laws created a bold new strategy that included sheltering, asylum and other protections for the victims, long jail sentences 

and asset confiscation for the traffickers, and tough sanctions for governments that 

fail to meet minimum standards. They also created the annual Trafficking in Persons Report, which evaluates nearly every country’s progress toward achieving the 

minimums standards to eliminate trafficking over the previous year. 

We have seen enormous progress in so many countries, but fighting corruption remains one of the most difficult—and critical—aspects of combatting human trafficking. Victims need to know that if they come forward, or if they share their stories with prosecutors after rescue, they will be safe and justice will be done. Corrupt 

government officials need to know that no one is above the law and that their crime 

of exploiting those they are supposed to protect will not go unpunished. 

No country is immune to corruption, including our own. Just this year in Washington, D.C., two policemen were caught in separate instances of human trafficking. 

One, sadly, took his own life before trial. The other was sentenced to 7 years in prison, with 10 years of supervision after release. 

While we all hope that our governments and law enforcement are free of corruption, a lack of prosecutions for corruption can be a bad sign. Ukraine is at a turning 

point in many respects, not the least of which is whether it will ensure that its public servants are in office to serve the country, rather than their own prurient interests. Ukraine is to be commended for making anti-corruption legislation, which was 

adopted in October, a priority for the new parliament. 

As Dr. Mark Galeotti’s 1 research has recently indicated, Russian criminal networks have moved in to take advantage of Crimean port of Sevastopol and the influx of $4.5 billion in development funds from Russia. Many are concerned that Crimea will become an international center of organized crime. While we must do nothing that implies recognition of Russia’s illegal occupation of Crimea, we should do 

everything we can to hold Russia responsible for any smuggling and trafficking in 

Crimea—and anything we can to stop it. 


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2 ‘‘Iz 80 inspektsii i kontrol’nykh organov dolzhno ostat’sya maksim 20—Vladimir Groisman,’’ 

Pravitel’stvennyi Portal, July 30, 2014, Available at http://www.kmu.gov.ua/ (accessed on July 

31, 2014). 3 Ekonomichna Pravda, September 11, 2014. 4 ‘‘Pervy zamministra kabmina Parakyda; Na goszakupkakh vorovalas’ kazhdaya pyataya 

grivna (First Deputy Minister of the Cabinet of Ministers Parakuda: In State Procurement 

Every Fifth Hryvnia Was Stolen),’’ Focus, October 20, 2014. 

PREPARED STATEMENT OF ANDERS A ̊ SLUND

Mr. Chairman, I would like to thank you for this opportunity to speak on an important topic, how the new Ukrainian government can fight corruption. At present, 

Ukraine faces three imminent threats. The greatest threat is of course Russian military aggression. As a consequence of this war, Ukraine is in a horrendous financial 

crisis, but it also needs to deal with its old internal enemy, corruption. All these 

three threats need to be fought at once, and Ukraine needs all the international 

support it can get. 

Ukraine is pervasively corrupt. Transparency International ranks Ukraine 144 

out of 177 countries on its corruption-perception index. Corruption was at the heart 

of popular discontent with the deposed regime of former President Viktor 

Yanukovych, and widespread graft helps explain why the economy stalled in 2012 

and 2013. Kiev must tackle this problem urgently. 

The scale of the alleged graft under the previous administration is breathtaking. 

Prime Minister Arseniy Yatsenyuk has accused the Yanukovych regime of stealing 

$37 billion from the state—equal to one-fifth of Ukraine’s GDP in 2013—during its 

four years in power. The ouster of Yanukovych in February has created an opportunity to confront corruption in Ukraine. 

The fight against corruption must start from the top. Politics must come first. 

Ukraine’s political institutions have been thoroughly corrupted. Oleh Rybachuk, the 

chief of staff to former-president Viktor Yushchenko, runs a nongovernmental organization that has examined the apparent expenditures and legally declared incomes 

of the 450 members of parliament who sat from 2007 to 2012. Mr. Rybachuk’s NGO 

found that only a handful of these members could have plausibly claimed to live 

solely off their official incomes. 

Political cleansing at the top is the necessary precondition for Ukraine combating 

corruption. This process has started. On October 26, Ukraine carried out free and 

fair parliamentary elections. Out of the 423 deputies, a majority has never been parliamentarians before and a large number of anti-corruption activists were elected. 

They are not likely to be bribed or silenced. The new parliament is soon to convene 

and a new coalition government needs to be formed swiftly and start acting to fight 

both the financial crisis and corruption. 

Next comes the cleansing of the state. Ukraine’s public service is widely considered pervasively corrupt, as many people who have tried to secure a business license 

could attest. Cleansing Ukraine of its corruption will require several interrelated 

measures. Estonia and Georgia have shown the way. To begin with, the state needs 

to limit its regulatory role by abolishing or merging many state agencies. Deputy 

Prime Minister Volodymyr Groisman has stated that Ukraine has ‘‘80 different 

inspectorates, controlling organs, and control departments in ministries.’’ He argued 

that at least 60 should be closed and a maximum of 20 remain.2 Minimizing state 

interference in the economy—whether by privatizing state-owned assets or cutting 

regulations—reduces opportunities for corruption. 

In October, Ukraine adopted a law on lustration, which scrutinizes or ousts officials who have served in high positions in corrupt agencies. This entails the creation 

of an independent commission scrutinizing all the top judges and prosecutors in 

Ukraine and dismissing those found to have engaged in graft. 

Since the early 1990s, the truly rich in Ukraine have made their fortunes on trade 

with natural gas, imported from Russia or produced in Ukraine. At present, the domestic price of natural gas produced by state-owned companies is a paltry $30 per 

1,000 cubic meters, while the market price is twelve times higher. Deputy Prime 

Minister Volodymyr Groysman has said that gas worth $2.5 billion a year was sold 

this way under Yanukovych.3 The obvious resolution of this problem is to unify the 

energy prices at a market level. Then this corruption would finally be eliminated. 

The deregulation of gas and electricity prices in this case must be seen as a matter 

of combating corruption, not as a social issue. Poor households could be fully compensated with a minor share of the current budget cost. 

Another major source of corruption is public procurement. Under Yanukovych, 

kickbacks of 50 percent were considered normal. One of the new government officials claimed that the total embezzlement of procurements amounted to only onefifth.4 Public procurement must be made open and competitive. Ukraine has reVerDate Sep 11 2014 01:26 Aug 19, 2015 Jkt 095572 PO 00000 Frm 00028 Fmt 6621 Sfmt 6621 E:\HR\OC\A572.XXX A572

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cently adopted a law on public procurement requiring open public tenders, and voters should demand their leaders follow that law to the letter. Considering that total 

public procurement in Ukraine is about $12 billion a year, and 2 percent of GDP 

could be kept away from corrupt operators through better procurement this would 

be a great gain of $2.4 billion. 

The new government should also cut public expenditures, and corrupted subsidies 

must be eliminated. The tax system also needs to be simplified and the tax police 

abolished, to shield taxpayers from lawless persecution. 

In October, Ukraine also promulgated a package of anti-corruption laws. These 

laws aimed at a more appropriate definition of corruption, greater transparency, and 

the creation of a new independent investigating organ, the Anti-Corruption Bureau 

for the investigation of top level officials suspect of corruption. At the same time, 

Ukraine tightened its legislation against money laundering. 

By signing the Association Agreement with the European Union, Ukraine has 

committed itself to adopting hundreds of reform laws, while the European Union 

has committed itself to providing substantial technical assistance in drawing up new 

laws and reorganizing state agencies. The Ukrainian people have made a choice for 

Europe. If they stick with it and pursue reform with determination, they will have 

their best chance to clean out the Augean stables of a long-corrupt system. 

The other major international organization that plays a major role in Ukraine is 

the International Monetary Fund, in which the United States plays a key role in 

the as its biggest shareholder. The United States also engages directly in Ukraine 

through bilateral assistance through USAID. It rightly engages in Ukraine’s energy 

reforms which will be crucial not only for state finances and energy efficiency but 

also for the improvement of governance in Ukraine. The United States has a major 

interest in the economic and legal success of a democratic and friendly Ukraine. 

Mr. A ̊ slund is a senior fellow at the Peterson Institute for International Economics 

and author of ‘‘How Ukraine Became a Market Economy and Democracy’’ (Peterson 

Institute, 2009). He is currently completing a book ‘‘Ukraine: What Went Wrong and 

How to Fix It.’’ 


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PREPARED STATEMENT OF DR. HALIL YURDAKUL YIGITGU ̈ DEN

Mr. Chairman, today I testify in front of you in my capacity of the Co-ordinator 

of OSCE Economic and Environmental Activities. Economic and environmental matters represent an important element of the OSCE’s approach to security. To tackle 

challenges in this area, my team co-operates on the ground with our current 15 

OSCE Field Operations, organizes an annual Economic and Environmental Forum 

and holds a yearly Implementation Meeting to assess progress and identify future 

priorities. The Office works closely with the Organization’s Chairmanship and performs under the guidance of the Economic and Environmental Committee, a body 

of representatives of the OSCE’s participating States, and the Secretary General. 

Our activities include anti-money laundering, transport and security, gender-sensitive labour migration, border and customs policies, water management, controlling 

dangerous waste through to sustainable energy, climate change, and involving the 

public in decisions affecting the environment. With other international partners, the 

OSCE is also an active member of the Environment and Security Initiative. Today 

I will concentrate my speech on our work in the area of good governance and combating corruption. 

Global political and economic challenges call for additional efforts in the area of 

good governance, including measures aimed at increasing transparency, accountability, integrity and sound financial management. Good governance and transparency affect economic efficiency and growth, and thus remain among key priorities of the elements of the OSCE’s comprehensive approach to security. 

The increasing importance of good governance issues requires continuous dialogue. Therefore, adopted in Dublin in 2012 by all participating States of the OSCE, 

the Declaration on Strengthening Good Governance and Combating Corruption, 

Money-Laundering and the Financing of Terrorism provides the OSCE and my Office with a strong mandate to promote good governance principles. The Declaration 

emphasizes that —I quote—‘‘good governance at all levels is fundamental to economic growth, political stability, and security’’—end of quote. The document calls 

upon the OSCE—I quote—‘‘to continue providing valuable assistance to participating 

States upon their request, also in sharing among themselves, through the OSCE platform for dialogue, national experiences gained and good practices’’—end of quote. 

The need to enhance efficiency and transparency of public institutions, implement 

higher standards of integrity and improve asset declaration systems to identify possible corrupt activities in the OSCE area remains, and we have and will continue 

working in these areas. I am pleased to note that the OSCE supported training activities to develop increased awareness, professional capacity and knowledge in prevention and repression of corruption and money laundering produced results in 

2014. For example, with the assistance of the OSCE, Krygysrtan was removed from 

the Financial Action Task Group (FATF)’s ‘grey list’. The OSCE has been selected 

to chair the newly established Anti-Corruption Working Group in Tajikistan to lead 

coordination efforts engaging civil society and other public bodies in anti-corruption 

issues and initiatives. In partnership with the World Bank, we rendered components 

of technical support towards money laundering and terrorism National Risk Assessments in Croatia, Montenegro and the former Yugoslav Republic of Macedonia. 

Distinguished members of the Commission, money laundering and corruption are 

intertwined, and oversight and law enforcement authorities must have adequate 

skills and resources to conduct investigations and prosecutions of these phenomena. 

Contemporary crimes do not stop at national borders and cross-border exchange of 

information becomes essential. Therefore, one of our flagship events this year was 

a workshop on Cross-border Co-operation Against Corruption and Money Laundering 

for government officials from Central Asia, South Caucasus and Eastern Europe 

that took place in Vienna in early October. The event, co-organized with the United 

Nations Office on Drugs and Crime (UNODC), and Eurasian Group on Combating 

Money Laundering and Financing of Terrorism (EAG) brought together 50 participants from financial intelligence units, anti-corruption and law enforcement agencies, financial institutions and specialized international organizations. Participants 

and experts discussed links between corruption and money laundering, ways to 

counter cross-border movements of proceeds of corruption, domestic coordination in 

identifying, tracing and recovering illicit assets, use of legal persons and other legal 

arrangements to conceal criminal assets. Participants were also introduced to good 

practices for the drafting of Mutual Legal Assistance requests as well as the use 

of regional networks to facilitate co-operation in asset forfeiture and recovery. I 

would like to express my gratitude to the government of the United States for providing financial support to this event. 

The acknowledgement of the negative effects of the lack of appropriate economic 

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velopments in the OSCE area. Therefore, participating States should take advantage of the platform the OSCE offers and its capacity to produce results similar to 

those mentioned above. There is a need to continue fostering trans-national co-operation among participating States as well as other international actors in the area 

of good governance offering best practices and opportunities to share experiences. 

We remain convinced that the enhanced efforts should be supported to develop and 

deliver tailor made capacity building activities, to deploy anti-corruption measures, 

strengthen national financial intelligence units, and build additional corruption prevention mechanisms. 

Most of our work benefits from close co-operation with OSCE Field Operations. 

Their presence on the ground enables them to collaborate with governmental and 

non-governmental stakeholders thus assisting their host countries in implementing 

their commitments in the OSCE’s second dimension, thus providing an invaluable 

contribution to our joint work. 

Mr. Chairman, by 2015 my Office also plans to publish OSCE Guide on Combating Corruption. It will consist of five parts and 21 chapters with inputs provided 

by more than 40 contributors. This OSCE publication is being prepared in close cooperation with ODIHR, Office of the Special Representative for the Freedom of the 

Media and major actors in the anti-corruption area such as the UNODC, OECD and 

Council of Europe’s Group of States against corruption (GRECO) and Basel Institute 

of Governance. The topics covered by the Guide will stretch from anti-corruption 

strategies and bodies, conflict of interest and public procurement regulations to the 

role of the media, lobbying, mutual legal assistance requests and investigations. 

In conclusion, let me assure you that my Office jointly with the OSCE network 

of Field Operations and partners will continue conducting targeted regional and national awareness-raising and training activities. We will also endeavour to mainstream good governance in our other economic and environmental activities by incorporating transparency and anti-corruption elements wherever relevant. 

Thank you very much again for the opportunity to serve as a witness at this hearing today. I very much look forward to our discussion and also to our continued cooperation. 

Thank you. 


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INFORMATION NOTE ON THE IMPLEMENTATION OF THE 2012 DUBLIN DECLARATION ON

STRENGTHENING GOOD GOVERNANCE AND COMBATTING CORRUPTION, MONEYLAUNDERING AND THE FINANCING OF TERRORISM

Introduction 

The Ministerial Council Declaration on Strengthening Good Governance and Combatting Corruption, Money-Laundering and the Financing of Terrorism adopted in 

Dublin in 2012—MC.DOC/2/12 (Dublin Declaration) reiterates that ‘‘good governance at all levels is fundamental to economic growth, political stability, and security. 

Good public and corporate governance, rule of law and strong institutions are essential foundations for a sound economy, which can enable participating States to reduce poverty and inequality, to increase social integration and opportunities for all, 

to attract investment and to protect the environment’’. 

The document enlists commitments of participating States (pS) aimed at enhancing their capacities and strengthening co-operation in combating corruption, money 

laundering and the financing of terrorism and calls upon the OSCE and its network 

of Field Operations ‘‘to continue providing valuable assistance to participating 

States upon their request, also in sharing among themselves, through the OSCE 

platform for dialogue, national experiences gained and good practices’’. 

Since the adoption of the Dublin Declaration, the Office of the Co-ordinator of 

OSCE Economic and Environmental Activities (OCEEA) and the OSCE Field Operations, in co-operation with partner organizations, have assisted pS in implementing 

relevant commitments stemming from a number of OSCE Ministerial Council and 

Permanent Council Decisions, as well as on the OSCE Strategy Document for the 

Economic and Environmental Dimension. Activities have included support in implementation of the United Nations Convention against Corruption (UNCAC), prevention of corruption, promoting integrity in public service, regulatory reform, preventing conflict of interest, national risk assessments in anti-money laundering and 

countering the financing of terrorism (AML/CFT), leveraging AML to combat trafficking in human beings, implementing the Financial Action Task Force (FATF) recommendations and standards, asset disclosure by public officials, engagement of 

civil society and the public sector in combating corruption, and others. 

These activities have often been cross-dimensional in nature and engaged the 

OSCE Office for Democratic Institutions and Human Rights, the OSCE 

Transnational Threats Department and its relevant units, and other offices of the 

Organization. 

Tasked by the Swiss 2014 OSCE Chairmanship, this Note, structured on main 

components of the Dublin Declaration, is designed to reflect on the OCEEA and the 

Field Operations activities, while discussing remaining challenges and achieved successes. 

Good governance and transparency 

CHALLENGES

Citizens expect a State to protect legitimate economic activities from corruption, 

money laundering and other illegal and criminal practices by establishing clear 

rules and regulations to govern the economic relationships and consistently enforcing them. The quality of and adherence to these rules have an impact on internal 

markets, as well as on fostering trust in public and democratic institutions, and attracting foreign investment. Good public and corporate governance are key factors 

of sustainable economic growth and economic development, thus contributing to national and regional stability and security. In the face of the current global economic 

difficulties, stronger efforts towards enhanced good governance are particularly 

needed in the OSCE region and beyond. 

It is worth underlining that good governance is not about making ‘correct’ decisions; it is about promoting the respect for key principles in the decision-making 

process that includes accountability, transparency, participation, respect of the rule 

of law, responsiveness, equity and inclusiveness, as well as effectiveness and efficiency. 

Increasing transparency of public expenditure and budget making procedures, legislative reform, audits and public procurement procedures, are important measures 

towards garnering participation of citizenry in government and improving trust. 

However, these transparency measures are ineffective if not made in such a way 

that they may be understandable and easily accessible to the public. Improving the 

efficiency of public administration, combined with greater transparency in the public 

sector and higher standards of integrity in the behaviour of public servants, is esVerDate Sep 11 2014 01:26 Aug 19, 2015 Jkt 095572 PO 00000 Frm 00032 Fmt 6621 Sfmt 6621 E:\HR\OC\A572.XXX A572

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5 UN Conference of the States Parties to the United Nations Convention against Corruption, 

Open-ended Intergovernmental Working Group on the Prevention of Corruption, Fifth session, 

Vienna, 8–10 September 2014, https://www.unodc.org/documents/treaties/UNCAC/ 

WorkingGroups/workinggroup4/2014-September-8-10/V1404178e.pdf. 6Transparency International, Setting a high bar for conduct, http://blog.transparency.org/2012/ 

07/19/codes-of-conduct-a-tool-to-clean-up-government/. 7OECD, Government at a Glance 2013, 2013, http://www.keepeek.com/Digital-Asset-Management/oecd/governance/government-at-a-glance-2013lgovlglance-2013-en#page3. 

sential in strengthening corruption prevention capacities and mitigating corruptionrelated risks. 

The ‘‘soft-law’’ tool of introducing codes of conduct and ethical principles of behaviour for public servants is widely used throughout the OSCE area. In particular, 

asset declarations, receipt of gifts and employment opportunities prior to, during 

and after leaving public service—are usually covered in codes of conduct to prevent 

conflicts of interest. 

In September 2014, the Open-ended Intergovernmental Working Group on the 

Prevention of Corruption of the Conference of the States Parties to the UNCAC encouraged the States Parties ‘‘to establish and strengthen asset declaration systems 

applicable to public officials, aimed at the identification and resolution of conflicts 

of interest’’.5

Asset and private interest disclosure by decision makers remains among the essential tools for effectively managing conflict of interest. According to the 

Organisation for Economic Co-operation and Development (OECD), among the 34 

member countries of the Organisation, of which 27 states are the OSCE pS, 86 percent require their top decision makers in executive and legislative structures to disclose their private assets.6 However, less than half of the OECD Member States perform internal audits of the submitted information for accuracy.7

Yet, many pS have introduced income- and asset-disclosure systems for public officials. In order for these systems to be effective they first need to contain high risk 

categories of public officials as well as their family members. Also, oversight authorities and law enforcement must have adequate skills and resources to conduct 

audits and investigations. Moreover, it is important for countries to engage in crossborder exchange of information on politically exposed persons (PEPs) and for banks 

to make logical connections between PEPs and known business associates. An asset 

disclosure system whose accuracy cannot be verified is ineffective. 

Conflict of interest legislation still remains underdeveloped in many countries and 

it may not regulate abuse of authority of public officials in such areas as influence 

peddling or procedures for awarding public procurement contracts. For instance, 

business relations or political party affiliations between members of public procurement award selection panels of contracting entities and bidders are often overlooked. Indeed, public procurement is an area particularly prone to corruption, especially in sectors like construction, maintenance services and waste management, 

owing to deficient control mechanisms and risk management. 

Corruption in public procurement procedures siphons off scarce public resources, 

often results in shoddy public works and erodes the trust of citizens and businesses 

in government. The level to which a state’s public sector is held accountable through 

the rule of law and procedures and decisions are made transparent to its citizens, 

correlates highly with the degree of citizens’ trust, and in turn, the level of stability 

and security. Public procurement has been identified by the OECD and UNODC as 

a main risk area sector of significant concern. 

A transparent and fair public procurement system is perhaps the most visible 

measure of a government’s public accountability. In the absence of a transparent 

and fair system of using public funds, particularly in times of economic downturn, 

citizens’ trust in government wains and the perception that government funds are 

being misused or misappropriated dangerously grows. 

OCEEA activities in good governance and transparency since 2013: 

The OCEEA and several OSCE Field Operations, often in co-operation with the 

UNODC, have supported efforts to raise awareness and facilitate the implementation of the UNCAC. The below listed workshops were designed and conducted for 

relevant public officials, civil society and private sector representatives and intended 

to assist states in preparing for review under the UNCAC. They included, inter alia, 

components dedicated to asset disclosure mechanisms, codes of conducts for civil 

servants, transparency in public procurement, whistle-blower protection, conflicts of 

interest and international co-operation. 

In April 2013 in Astana, the OSCE, UNODC and OECD co-organised a regional 

workshop entitled Sharing Good Practices and Lessons Learned from Development 

and Implementation of Anti-Corruption Preventive Policies. 


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In April 2013 in Ashgabat, the OCEEA and the UNODC co-organised a national 

training on Mechanisms to Increase Integrity in Public Service and Prevent Corruption and the Laundering of its Proceeds. 

In June 2013, in Jurmala, Latvia, the OCEEA, the OECD Anti-Corruption Network for Eastern Europe and Central Asia and the UNDP co-organised an expert 

seminar on Prevention of Corruption, Effective Measures and Their Practical Implementation: Institutional and Sectorial Approaches. The seminar was followed by a 

separate workshop for representatives of Central Asian countries on income and 

asset declaration systems and conflict of interest legislation as tools for preventing 

corruption. 

In September 2013 in Tashkent, the OSCE and UNODC co-organised a two-day 

national training workshop on Mechanisms to Increase Integrity in Public Service 

and Prevent Corruption. 

In March 2014, in Dushanbe, the OCEEA participated in and contributed to a 

workshop on Anti-corruption prevention measures—Progress made, future priorities 

and the role of civil society in the prevention of corruption in Tajikistan co-organised 

by the OSCE Office in Tajikistan and the UNODC. 

In June 2014, in Tirana, the OCEEA, the OECD, the OSCE Presence in Albania, 

the UNDP and the UNODC co-organised a regional expert seminar on Prevention 

of Corruption—Main Trends and Examples of Successful Practice in Eastern Europe 

and Central Asia. 

In October 2014, in Vienna, the OCEEA, the UNODC and the EAG held a regional training on Cross-border Co-operation Against Corruption and Money Laundering. 

SUCCESSES: GOOD GOVERNANCE AND TRANSPARENCY

Regulatory reform in Armenia 

In 2012, Armenia’s National Center for Legislative Regulation, supported by the 

OSCE Office in Yerevan and several other donors, launched a 2-year Rapid Regulatory Simplification Project which aimed at reviewing and streamlining regulations 

and increasing transparency in 17 sectors of the Armenian economy. Known as the 

‘‘regulatory guillotine’’, the reform makes use of best international practices to assess and streamline the national regulatory frameworks affecting business activity 

and the daily lives of citizens. By the end of 2013, 7 priority sectors had been reviewed and legislation streamlined to reduce ‘‘red tapes’’ on businesses and citizens. 

The overall estimated impact on the Armenian economy is calculated to represent 

the equivalent to 0.5 percent of national GDP. The project is being continued in its 

second phase. 

OSCE supported Good Governance Resource Centre in Turkmenistan 

The OSCE Centre in Ashgabat, in partnership with the Government of 

Turkmenistan, supported the establishment of a Good Governance Resource Centre 

that was officially opened on 1 May 2014 in Ashgabat. Located at the premises of 

the Ministry of Finance, the Centre offers diversified information, conducts educational events and provides expert information on good governance. It also offers 

access to a library and specialized databases and periodicals. In addition, the Centre 

works with relevant government authorities on developing national legal acts and 

regulations on AML/CTF measures in compliance with FATF standards. Following 

recommendations identified on 2 September 2014 at a round table in Ashgabat, a 

report with recommendations to enhance good governance practices will be submitted to the Ministry of Finance and the Parliament of Turkmenistan later this 

year. The Centre is an innovative initiative within the OSCE context as it provides 

a long-term approach towards the promotion of good governance practices in 

Turkmenistan. 

Manual on the Role of Responsible Authorities in Preventing Conflict of Interest developed in Albania 

In 2013, with the support of the OSCE Presence in Albania, the High Inspectorate 

for Declaration and Audit of Assets and Conflict of Interest (HIDAACI) of Albania 

developed and published a Manual on the Role of Responsible Authorities in Preventing and Controlling Conflict of Interest. The Manual aims to assist 580 responsible authorities in all the central and local public institutions to more effectively 

detect, prevent and resolve cases of conflict of interest. The publication is intended 

to be a reference tool for officials, civil society, business community, law students 

and researchers. It is available on the HIDAACI website and it is being used by 

its staff for training purposes. 


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8 European Commission, Report from the Commission to the Council and the European Parliament, EU Anti-Corruption Report, Brussels, 3.2.2014, COM(2014) 38 final, http://ec.europa.eu/ 

dgs/home-affairs/e-library/documents/policies/organized-crime-and-human-trafficking/corruption/ 

docs/acrl2014len.pdf. 9 Based on statistics provided by the ‘‘Corruption perceptions index’’ which measures the perceived levels of public sector corruption in 177 countries and territories, http:// 

cpi.transparency.org/cpi2013/. 10 UNODC Executive Director Yury Fedotov’s statement at the third International Conference 

on Small Island Developing States (SIDS), http://www.unodc.org/unodc/en/frontpage/2014/August/unodc-warns-of-small-island-states-vulnerability-to-corruption-during-global-meeting-insamoa.html 11 Notably the UNCAC, Council of Europe anti-corruption legal instruments, including the 

Resolution (97) 24 on 20 Guiding Principles for the fight against corruption and the recommendations No. R (2000) 10 on codes of conduct for public officials and No. R (2003)4 on common rules against corruption in the funding of political parties and electoral campaigns. 

Ukraine goes digital in combating corruption 

The OSCE Project Co-ordinator in Ukraine assisted local self-government authorities in one of the regions to develop and launch a digitized public service provision 

system. In 24/7 mode, service recipients (citizens and the private sector) can 

download the necessary forms and keep track of service requests that have been 

submitted to a virtual government office. The system makes public service provision 

more transparent and efficient and thereby significantly reduces corruption risks. 

Combating corruption, money laundering and the financing of terrorism 

CHALLENGES

The EU Anti-Corruption Report issued in February 2014 identifies corruption as 

a phenomenon which impinges on good governance, sound management of public 

money and competitive markets, and, in extreme cases, undermines the trust of citizens in democratic institutions and processes. According to the Report, corruption 

costs the European economy approximately 120 billion euros per year. 

Eurobarometer survey results show that 76 percent of EU citizens believe that corruption is widespread and 56 percent think that the level of corruption in their 

country has increased since 2011.8

Only twenty OSCE participating States scored 60 or above and ten even had a 

score of less than 30 on the latest Transparency International Corruption Perception 

Index where 0 is for ‘‘high corruption’’ perception and 100 is for ‘‘low corruption’’. 

The average score among the assessed OSCE participating States is approximately 

54.4.9

As indicated by the UNODC in September 2014, the importance of preventing corruption through the promotion of good governance has ‘‘increasingly come to the 

fore, notably in the ongoing dialogue on the post–2015 development agenda’’.10 Yet, 

despite relevant obligations in line with international instruments,11 prevention of 

corruption has been mostly understood as part of law enforcement activities. This 

creates a major challenge for the implementation of corruption prevention measures 

and implementation of the good governance reforms as per the UNCAC and highlighted in the Dublin Declaration. 

Fifty six OSCE participating States have ratified or acceded to the UNCAC. Fifty 

six are members of the Egmont Group of Financial Intelligence Units and all 57 are 

members of the Financial Action Task Force (FATF) and FATF-style regional bodies. 

Although repressive measures alone are not sufficient to tackle corruption in an 

effective manner, the ability of a judicial system to impose dissuasive criminal sanctions plays a major deterrent role and is a clear sign that corruption is not tolerated. Indeed, several factors can influence the efficiency of law enforcement and 

prosecution forces in investigating corruption, such as the estimated extent and nature of corruption they must address, the balance with preventive measures, the capacity and resources at their disposal, the potential obstacles to investigations, including the effectiveness of the judiciary. In particular, judicial independence, as 

well as proper funding of investigative and judicial authorities, is imperative in establishing effective anti-corruption and AML/CTF measures. 

Ensuring the rule of law requires drafting and implementing legislation that regulates selection and promotion procedures, independent oversight, and independent 

budgets for the judiciary. Investments in judicial and investigative bodies quickly 

bring returns which is evident in functioning assets seizure and forfeiture systems. 

Asset recovery represents one of the major challenges for the OSCE pS in the 

good governance area. Chapter V of the UNCAC reaffirms that asset recovery, that 

includes tracing, freezing, confiscation, and repatriation of crime and corruption proVerDate Sep 11 2014 01:26 Aug 19, 2015 Jkt 095572 PO 00000 Frm 00035 Fmt 6621 Sfmt 6621 E:\HR\OC\A572.XXX A572

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12 UNODC, UN Convention against Corruption: Progress report 2013, 25 November 2013, 

http://www.transparency.org/whatwedo/pub/unlconventionlagainstlcorruptionlprogressl 

reportl2013. 13Parliamentary Assembly of the Council of Europe, Promoting an appropriate policy on tax 

heavens, 5 April 2012, http://assembly.coe.int/ASP/XRef/X2H-DW-XSL.asp?fileid=18151 

&lang=EN. 14The World Bank and the UNODC, The Stolen Asset Recovery Initiative (StAR), http:// 

star.worldbank.org/star/. 15 EU, Directive of the European Parliament and of the Council on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union, PE-CONS 121/13, 5 

March 2014, http://register.consilium.europa.eu/doc/srv?l=EN&f=PE%20121%202013%20INIT. 16 Council of Europe, European Committee on Legal Co-operation (CDCJ), Recommendation 

CM/Rec(2014)7 of the Committee of Ministers to member States on the protection of whistleblowers, https://wcd.coe.int/ViewDoc.jsp?Ref=CM/Rec(2014)7&Language=lanEnglish&Site=CM 

&BackColorInternet=C3C3C3&BackColorIntranet=EDB021&BackColorLogged=F5D383. 

ceeds stored in foreign jurisdictions is an international priority in the fight against 

corruption. Modern advancements of financial, transportation and communication 

infrastructures allow corrupt ‘politically exposed persons’, among others, to conceal 

massive amounts of stolen wealth overseas by using differences in legal systems and 

bank secrecy in some recipient countries. 

According to the Report of the Conference of the States Parties to the UNCAC 

in 2013, ‘‘all efforts should be made to conduct a financial investigation into assets 

illegally acquired and to recover such assets through domestic confiscation proceedings, international cooperation for purposes of confiscation or appropriate direct 

recovery measures.’’ 12

A report by the Parliamentary Assembly of the Council of Europe on corruption 

and tax heavens 13 refers to the Stolen Asset Recovery Initiative of the World Bank 

(StAR) 14 and the UNODC that analysed 150 grand corruption cases and found a 

direct link between large-scale corruption by high-level public officials and the concealment of stolen assets through opaque shell companies, foundations and trusts. 

The report highlights the root problems concerning tax havens, such as (fiscal) bank 

secrecy, lack of transparency and effective public oversight, regulatory dumping, 

predatory tax arrangements and abusive accounting techniques inside multinational 

enterprises. 

Successful conviction of corruption cases, money laundering and terrorism financing crimes—from identification through prosecution, sentencing and finally stolen 

asset recovery—requires a multi-layered, multi-disciplinary and multi-national approach calling for effective national legislative frameworks, compliant with international standards, as well as co-operation among investigative and financial oversight authorities at national and international levels among Financial Intelligence 

Units (FIUs), law enforcement and prosecutors. 

In addition, improved international co-operation requires further engagement by 

pS to sign bilateral and multilateral treaties and agreements on assets recovery and 

co-operation in criminal matters. In this respect, the recent adoption of a directive 

on the freezing and confiscation of proceeds of crime in the EU is a promising signal.15 The directive aims to make it easier for national authorities to confiscate and 

recover the profits made from cross-border and organised crime. 

Whistle-blowers’ protection in public and the private sectors is also necessary to 

encourage individuals to come forward with information on corruption. Guarantees 

must be put in place that a person who discloses to relevant authorities allegations 

of corruption suffers no retaliation. The Council of Europe has issued the Recommendation no. CM/Rec(2014)7 of the Committee of Ministers to member States 

on the protection of whistle-blowers,16 including a series of principles to guide member States when reviewing their national laws or when introducing legislation and 

regulations or making amendments as may be necessary and appropriate in the context of their legal systems. 

OCEEA activities in combating corruption, money laundering and terrorism financing since 2013: 

In the area of anti-corruption, anti-money laundering and combating the financing 

of terrorism, the OCEEA has worked on assisting pS in the implementation of the 

main international instruments, in particular the UNCAC, 40 + 9 FATF Recommendations, the UN Convention for the Suppression of the Financing of Terrorism, the UN Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances and the 3rd EU Directive on Combating Money Laundering. The 

Office has closely co-operated with the UNODC, World Bank, the OECD, the 

Egmont Group, the Council of Europe, the EAG, Basel Institute on Good Governance and others. 


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In December 2012, the OCEEA launched the ‘‘OSCE Handbook on Data Collection 

in support of Money Laundering and Terrorism Financing National Risk Assessments’’. A Russian language version has been released in October 2014. The Handbook provides guidelines on improving data collection in an effort to combat money 

laundering and the financing of terrorism. It is also intended to inspire further dialogue and co-operation among national authorities and other stakeholders to stimulate an exchange of experiences and good practices among states in the OSCE region 

and to raise awareness of the importance of comprehensive data collection for informed decision-making. 

In August 2014, the OCEEA jointly with the OSCE Office of the Special Representative and Co-ordinator for Combating Trafficking in Human Beings, and the 

OSCE Transnational Threats Department/Strategic Police Matters Unit released a 

research paper on ‘‘Leveraging Anti-Money Laundering Regimes to Combat Trafficking in Human Beings’’. The paper, which combines research findings from various publications and seminars from 2008 to the present, focuses on trafficking in 

human beings as a specific type of transnational crime that also gives rise to corruption practices. 

From 2013 to date, the OCEEA has supported efforts of the OSCE Field Operations aimed at promoting and offering training based on the ‘‘OSCE Handbook on 

Data Collection in support of Money Laundering and Terrorism Financing National 

Risk Assessments’’. 

In partnership with the World Bank, the OCEEA has also rendered components 

of technical support towards National Risk Assessments (NRAs) in Kyrgyzstan (May 

2013), Croatia (March 2014), Montenegro (March 2014) and the former Yugoslav Republic of Macedonia (May 2014). A NRA is a process by which countries identify the 

threat of money laundering activity in their jurisdiction, the vulnerability of the 

country in terms of its ability to prevent and intercept specific types of illicit financial activity and its resulting impact. 

In addition, the following training and capacity building events were organised for 

relevant officials from Financial Intelligence Units, the Prosecutor’s Office, Ministry 

of Interior/law enforcement officials, the banking sector and others. 

In March 2013, in Tashkent, the OCEEA and the OSCE Project Co-ordinator in 

Uzbekistan, held an international training on the revised FATF International 

Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation. 

In April 2013, in Borovoe, Kazakhstan, the OCEEA in co-operation with the 

World Bank and Kazakhstan’s Committee for Financial Monitoring, the OSCE Centre in Astana, and the US Embassy in Kazakhstan held a two-day national workshop on the revised FATF international standards. 

In May 2013, in Bishkek, the OCEEA supported a workshop on Money laundering 

risks in Kyrgyzstan which was jointly organised by the OSCE, the World Bank and 

Kyrgyzstan’s State Financial Intelligence Service. 

In May 2013, in Podgorica, a series of meetings were held with the OCEEA’s participation to further advance the draft of the National Action Plan to Prevent and 

Suppress Terrorism, Money Laundering and Terrorism Financing. 

In October 2013, in Durre ̈s, Albania, a regional conference on Strengthening Cooperation on AML/CFT and Fighting Corruption in South Eastern Europe was 

organised together with the OSCE Presence in Albania, and the Albanian General 

Directorate for the Prevention of Money Laundering. 

In November 2013, in Ashgabat, the OCEEA jointly with the OSCE Centre in 

Ashgabat organised a national training workshop on Mechanisms to prevent money 

laundering. 

In December 2013, in Athens, the OCEEA together with the OSCE Mission to 

Serbia and the Financial Intelligence Unit of Greece held a working meeting of practitioners from Serbia and Greece to share challenges and good practices in linking 

anti-money laundering and anti-corruption efforts. 

SUCCESSES: COMBATING CORRUPTION, MONEY LAUNDERING AND THE FINANCING OF

TERRORISM

OSCE Guide on Combating Corruption 

The OCEEA has established close links with experts from organizations such as 

the UNODC, OECD, Council of Europe/GRECO, UNCITRAL, Basel Institute on 

Governance/International Centre for Asset Recovery, the European Commission and 

International Anti-Corruption Academy as well as with ODIHR and FoM in developing the OSCE Guide on Combating Corruption. The topics covered by the Guide 

will stretch from international and regional initiatives, anti-corruption strategies 

and bodies, conflict of interest and public procurement to role of the media, lobVerDate Sep 11 2014 01:26 Aug 19, 2015 Jkt 095572 PO 00000 Frm 00037 Fmt 6621 Sfmt 6621 E:\HR\OC\A572.XXX A572

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bying, mutual legal assistance, investigation, AML and asset recovery. The Guide 

is expected to be finalized in 2014. 

OSCE/OCEEA partnership frameworks in the area of anti-corruption and AML– 

CFT 

Since 2005, the OSCE has the observer status to the Organisation for Economic 

Co-operation and Development (OECD) Anti-Corruption Network for Eastern Europe and Central Asia (under the Istanbul Anti-Corruption Action Plan). 

Since 2006, the OSCE has the observer status to the Eurasian Group on Combatting Money Laundering and Financing of Terrorism (EAG). 

Since 2008, the OSCE has the observer status to the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the 

Financing of Terrorism (MONEYVAL). 

Since 2011, on a bi-annual basis, the OSCE and the UNODC issue Joint Action 

Plans. 

In March 2011 the OSCE and the International Anti-Corruption Academy concluded a Memorandum of Understanding concerning co-operation. 

Since 2012, the OSCE has the observer status to the Egmont Group of Financial 

Intelligence Units. 

Since 2013, the OSCE has the observer status to the Financial Action Task Force 

(FATF). 

In October 2013, the OSCE and the UN Development Programme (UNDP) concluded a Memorandum of Understanding. 

Improving public procurement transparency and the prosecution of corruption in Serbia 

Since 2013 the OSCE Mission to Serbia has continued to focus on assisting the 

host country with creating a transparent and efficient public procurement system 

and training law enforcement and prosecutors on investigating alleged violations. 

The Mission has moderated peer-to-peer meetings among public procurement bodies 

and law enforcement and prosecutors on enhancing co-operation on identifying risks 

and sharing timely information on alleged corruption with criminal investigators. 

The Mission has trained 20 prosecutors in charge of public procurement corruption 

through specially developed case studies based on past alleged corruption in public 

procurement in Serbia. In 2014 the Mission has provided support to the development of a NGO-run public procurement transparency website that contains information on tenders, awarded contracts, procurement selection boards and bidders to 

allow citizens and journalists to track how public funds are spent and potentially 

identify alleged breaches of conflict of interest. 

Monitoring assets disclosures of public officials and AML/CFT: the Greek model 

The Hellenic Anti-money Laundering and Counter-terrorist Financing and Source 

of Funds Investigation Authority serves both as Greece’s Financial Intelligence Unit 

(FIU) as well as its monitoring body of public officials’ assets and income disclosures. The Authority is staffed by seconded officials from various ministries and law 

enforcement agencies and is headed by an independent prosecutor. According to this 

set-up, the authority can investigate bank accounts and determine whether officials 

have accurately disclosed their income and assets. In this way corruption and money 

laundering investigations are handled within the same institution. 

Kyrgyzstan removed from the FATF ‘grey list’ in 2014 

Following the OSCE Centre in Bishkek assistance, in July 2014, Kyrgyzstan was 

removed from the FATF’s ‘grey list’ and would no longer be subject to the FATF’s 

monitoring process under its ongoing global process of compliance with requirements on AML/CFT. The decision was announced at the third FATF Plenary meeting in June 2014 in Paris certifying Kyrgyzstan’s ‘‘demonstrated significant 

progress’’ in addressing the strategic AML/CFT deficiencies identified in their mutual evaluation reports and the action plans agreed with the FATF. The OSCE has 

been assisting Kyrgyzstan in increasing the capacity of the country’s financial bodies to adopt modern investigative and countering methods, and implement legislation that addresses the recommendations of the FATF. Moreover, in March 2013, 

the OSCE Centre in Bishkek opened a new Training Centre of the State Financial 

Intelligence Service, and held several training courses for officers from the Service. 

More than 400 officers from various ministries and agencies have been trained on 

modern methods of AML. 


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17http://www.oecd.org/corruption/acn/istanbulactionplan/ 

Civil society and private sector 

CHALLENGES FOR CIVIL SOCIETY

Effective anti-corruption measures require a participatory approach among governments, civil society, business communities and academia to foster citizens’ trust 

and create a social consensus on non-tolerance of corruption. Monitoring the implementation of reforms, engaging in the development of new policies and regulations, 

evaluating the effectiveness of those already in place, and providing a barometer of 

public opinion for the government are the main fields of action for civil society actors in corruption prevention. However, non-government organizations across the 

entire OSCE region still face significant challenges in building a sustainable and 

balanced dialogue with the government and acquiring access to government information. This prevents civil society to fully play its monitoring and evaluating role 

vis-a`-vis government institutions. 

Moreover, it is critical to mainstream a gender-balanced approach when promoting good governance measures as all-inclusive and requiring accountability from 

state institutions. Persistent gender disparities limit women’s ability to fully participate in the decision-making processes in social, economic, and political life. Such 

gender-based exclusion compromises the prospects for good governance, as well as 

economic growth and prosperity. Therefore, if not already launched, legal reforms 

are required to promote gender equality that would enable women, individually or 

collectively, to participate in the decision-making processes thus contributing to 

building more equal and inclusive societies. Women participation in civil society activities is an essential component to ensure civic engagement, participatory development and good governance. 

Further training of civil society on such issues as conducting statistical surveys, 

public awareness campaigns, issuing ‘shadow reports’ and participating in budget 

making processes is needed to make it a viable and constructive partner to government. Also, many governments require further support in identifying ways in which 

civil society, the private sector and the public may contribute to their anti-corruption policy measures. Public-private partnerships should be further developed on environmental, humanitarian and other issues, including trade and investment policies. Moreover, business communities, academia and civil society may be involved 

in awareness raising campaigns and surveys on ease of doing business matters and 

economic growth policies. 

CHALLENGES FOR PRIVATE SECTOR

According to the OECD Istanbul Anti-Corruption Action Plan that includes Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Ukraine and Uzbekistan, ‘‘legal gaps remain in many countries with regard to bribery and trading in 

influence’’.17 In addition, ‘‘business integrity’’ is a relatively new issue in the region. 

The governments are yet to implement systematic measures to promote business integrity while the private sector has a potential to become a strong participant in 

the fight against corruption. 

Bribery, as a basic form of corporate corruption, has detrimental effects on political, economic, social and environmental areas. To address bribery more effectively, 

legislation should include provisions of criminal liability for bribing public officials, 

corporate liability for failure to prevent bribery, differentiation between notions of 

offering, promising, giving, requesting, agreeing to receive and accepting a bribe, as 

well as envisaging a requirement for corporate entities concerning implementation 

of ‘‘adequate procedures’’ in order to prevent bribery. 

There are many useful resources available to help businesses manage internal 

and external corruption risks and implementing anti-corruption policies, including 

Transparency International’s Business Principles and the International Chamber of 

Commerce’s Rules of Conduct. A number of industry sectors have also developed sector specific guides, specialist codes of practice and transparent procurement agreements. In addition specialized anti-corruption risk management frameworks have 

been established to help mitigate against bribe solicitation and demands for ‘facilitation payments’, including international initiatives such as RESIST (Resisting Extortion and Solicitation in International Transactions) and international legal instruments such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. 


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SUCCESSES: CIVIL SOCIETY AND THE PRIVATE SECTOR

Civil society and government partnership in Kazakhstan 

In 2012, the OSCE Centre in Astana, in co-operation with the Ministry of Transport and Communications, the NGO ‘‘Azamatyk Kuryltay’’ (People’s Convention), as 

well as with construction companies, local authorities, the World Bank office and 

Soros Foundation in Kazakhstan began supporting civil society participation in the 

national and local Transparency and Sustainable Development Expert Councils 

(TSDECs) for monitoring the ‘‘Western Europe—Western China’’ international road 

construction project, which crosses five of Kazakhstan’s regions and connects Europe 

and Asia. Through this project, in 2013 a platform for dialogue and co-operation was 

created for stakeholders involved in or affected by the construction works along the 

road. This work helped build the foundations of permanent, self-sustainable TSDEC 

multi-stakeholders’ structures in the five regions. In 2014 TSDECs were introduced 

in two additional regions where new road construction projects are envisaged. 

OSCE supports anti-corruption efforts in Tajikistan 

The OSCE Office in Tajikistan brought together international expertise, key state 

representatives and civil society to increase knowledge of international anti-corruption standards needed to strengthen economic growth and security. The Office conducted workshops on the essentials of the UNCAC and worked with Transparency 

International to further support state representatives and civil society organizations. Under the Development Co-ordination Council, which is composed of international organizations and donors in Tajikistan, the Office has been selected to 

chair the newly established Anti-Corruption Working Group. The goals of this Working Group are to: (i) support the integration of anti-corruption measures in joint development initiatives between development partners and the government, (ii) provide forum to engage in dialogue between the international community and the government on progress towards meeting the obligations of international anti-corruption treaties and initiatives to which Tajikistan is committed, including, but not limited to UNCAC, FATF, the OECD Istanbul Action Plan, (ii) provide structured coordination mechanism with civil society and other public bodies on anti-corruption 

issues and initiatives. 

WORKING TOGETHER FOR PROGRESS

There is still a strong need in the OSCE region for technical support in drafting 

and revising current normative frameworks that complies with international standards on anti-corruption, AML and CFT. Capacity building measures are also needed 

to allow the effective enforcement of such standards and norms as well as enhance 

co-operation at national and international levels. 

It is paramount to avoid fragmentation of efforts in preventive and repressive 

measures to combat corruption, money laundering and the financing of terrorism. 

In particular, there is a strong need to enhance trans-national co-operation among 

participating States as well as other international actors, as well as co-ordinate at 

national level between relevant agencies, central and local authorities. 

The OSCE/OCEEA and the OSCE Field Operations have pursued co-ordinated efforts aimed at delivering training activities, raising awareness through national, regional and international events, and providing technical advice and support to drafting and implementing legislation in line with the Dublin Declaration principles. The 

challenge is to avoid duplication and complement the mandates and on-going activities of other international actors, through joint programming, agreements, and collaborations. Indeed the field presence and the long-standing OSCE confidence-building expertise and platform will continue representing the added value of the Organization vis-a`-vis its current and future partners, such as the UN, OECD, Council of 

Europe, World Bank and others. 

Particular attention will be devoted to the promotion of national risk assessment 

mechanisms among pS to identify vulnerabilities and threats of money-laundering 

(ML) and financing of terrorism (FT) and strengthen the capacities of Financial Intelligence Units to undertake financial crime investigations on ML/FT and corruption. The OSCE/OCEEA will also continue supporting training activities to develop 

increased awareness, professional capacity and knowledge in prevention and repression of corruption and ML/FT. The training activities will be designed for public officials and representatives of the private sector and the civil society. 

The OCEEA will also continue supporting its partner organizations in awareness 

raising activities and delivery of training programmes, building upon established 

contacts, local presence and relevant expertise. 

Furthermore, the OCEEA will endeavour to mainstream good governance in its 

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tion and AML/CFT elements where relevant. Good governance aspects, already introduced in the field of cross-border trade and transport facilitation and border management, will also be available in the areas of gender-sensitive labour migration and 

women economic empowerment. The OCEEA will also devote particular programmatic attention to the activities in the area of corruption prevention, thus also 

recognizing the importance of the Chapter II of UNCAC on ‘‘Preventive Measures’’. 

Also, the OCEEA will continue to work with the OSCE’s 15 Field Operations as 

the latter support their host countries in implementing their good governance commitments, including rendering support in developing anti-corruption and anti-money 

laundering legislation and guidance. 


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PREPARED STATEMENT OF KHADIJA ISMAYILOVA

Dear Mr. Chairman, I am grateful to the U.S. Helsinki Commission for holding 

this very important hearing and for giving me the opportunity to speak about corruption in Azerbaijan. 

I am a contributor to Radio Free Europe/Radio Liberty, which is a leading source 

for independent news for Azerbaijanis, despite being banned on local broadcast frequencies in Azerbaijan. The radio has the leading role in uncovering corruption in 

the country. 

Azerbaijan has joined the Open Government Partnership, initiated by U.S. President Obama and Brazilian President Rousseff in 2012. In a letter of intent in October 2011, Azeri Foreign Minister Mammadyarov informed his American counterpart 

U.S. Secretary of State Hillary Clinton about Azerbaijan’s long history of combatting 

corruption. Azerbaijan has undertaken number of commitments within the context 

of its participation in OGP, including access to information. However, in the very 

same 2012, Azerbaijan has changed its legislation to restrict access to information. 

Since June 2012, when the laws ‘‘On state registration and state registry of legal 

entities’’ and ‘‘On commercial secrets’’ have been amended, information about the 

founders of commercial legal entities and their shares in the charter capital is considered confidential. 

With the same legislative move the law ‘‘On the right to obtain information’’ had 

been changed. The new version of the law states that information deemed contrary 

to the purposes of the protection of political, economic, military, financial and credit 

and monetary interests of the Republic of Azerbaijan, to the protection of public 

order, health and morality, protection of rights and freedoms, commercial and other 

economic interests of other individuals, ensuring the prestige and impartiality of the 

court, shall not be released even following information requests. 

These legislative actions were the government’s response to a series of journalistic 

investigations revealing high level corruption and conflicts of interest, including involving the president’s family. 

The facts cited in those investigations show that the families of the Azerbaijani 

president and several ministers are beneficiaries of monopolies in most of the nonoil sector of the economy. Thus, the president’s daughters control more than 70 percent of mobile communications and one of two backbone internet providers, control 

assets in the three biggest holding companies (AzEnCo, Pasha Holding and Ata 

Holding) and several banks. The holdings and companies controlled or linked to the 

president’s family enjoy biggest public contracts. In most of the cases the ownership 

of the companies has been hidden behind a chain of offshore companies registered 

in Panama and British Virgin Islands. 

Most high-profile visitors to Baku, including members and staffers of the U.S. 

Congress, stay in the Four Seasons Hotel, which is part of the president’s family’s 

company. Over 30 architectural sites, including part of the ancient city wall, were 

destroyed during the construction of the hotel. This and several other business endeavors of the president’s family have cost many ordinary Azerbaijanis their property. The citizens have failed to restore their property rights in the courts of Azerbaijan. Those whom the government has failed to intimidate have sought justice in 

the European Court of Human Rights. 

Even the construction of the National Flag square, which was presented as a symbol of pride for Azerbaijanis, has become an unfortunate example of corrupt practices. The government allocated 30 million AZN ($38,5 millions) to build ‘‘the highest flagpole in the world.’’ The 162 meter-high flagpole kept its supremacy only for 

several months, as Tajikistan, another OSCE member country also leading in corrupt listings, has built one that is higher by two meters. The contract for building 

the flag square was granted to AzEnCo, a company owned by President Aliyev’s 

daughters. 

Azerbaijan is a part of the Extractive Industry Transparency Initiative since 2004. 

As in many other global initiatives, the Azerbaijani government uses the membership as an argument against criticisms of corruption. The country is currently under 

scrutiny by EITI, as one of the main parts of the Initiative—civil society—is paralyzed and cannot serve as a watchdog. In non-oil extractive industries governmentlinked monopolies have a huge stake. In 2007 the government of Azerbaijan signed 

a contract to develop six gold and copper mines with a consortium that is co-owned 

by President Aliyev’s daughters. 

The oil-related extractive industry is partly under oligarchic control as well. Offshore companies, hiding Azerbaijani names and linked to the State Oil Company’s 

management or the president’s family’s businesses, appear as partners in joint ventures, winning oil production and trade contracts. 


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Investigations also reveal that the transportation minister’s son and his business 

partners enjoy exclusive opportunities in the public transportation sector of Azerbaijan. The money, the source of which is highly questionable, is being invested by 

Mr. Anar Mammadov in lobbying activities in the United States through the Azerbaijan-America Alliance. The lobbying events are attended by number of the U.S. 

Congress. 

Unlike U.S. officials and members of Congress, Azerbaijani officials and members 

of parliament do not file asset declarations. The Azerbaijani president signed a decree requiring to do so, but none of the officials, including the president himself, has 

ever filed a declaration, referring to the fact that the Cabinet of Ministers has neglected to create a template for such a document. 

The candidates for the presidency and parliament are required to fill in a form 

declaring their assets, however, this information is not provided. I sued the Central 

Election Commission for refusing to provide this information. 

Investigations reveal that some members of the Azerbaijani parliament own businesses. A constitutional requirement to stop their mandate in case of a conflict of 

interest is neglected. 

Corruption in Azerbaijan undermines not only the well-being of the country’s citizens but also endangers the country’s independence. Corruption in education and 

healthcare puts people’s lives at risk, and as a solution, they seek remedy in neighboring countries. 

You might have heard many times from Azerbaijani interlocutors that the country 

exists in very difficult geography: it is sandwiched between Russia and Iran. These 

are the two main destinations for people who fail to find healthcare and jobs in 

Azerbaijan. Monopolies and corruption in Azerbaijan have created a huge problem 

with the availability of basic services. According to WHO data, Azerbaijanis pay 70 

percent of their healthcare expenses, even though the country claims to provide 

medical care for free. 

The country has failed to establish an insurance system. The Soviet style 

healthcare management is corrupt, and the failure of the education system and drug 

monopolies make it impossible for Azerbaijanis to receive even basic medical services in the country. The solution is right there, next door, in Iran. Azerbaijani citizens enjoy healthcare services there at far more affordable prices than in their own 

country. Iranian government and private clinics attract more Azerbaijanis by providing special promotion packages. According to the Iranian embassy in Baku, every 

year 800,000 citizens out of a population of ten million Azerbaijanis travel to Iran 

for healthcare. 

Millions of Azerbaijanis still depend on remittances coming from guest workers 

in Russia—those Azerbaijanis who could not find opportunities in their own oil-rich 

country and have left to earn their living on the territory of their northern neighbor. 

Azerbaijanis will feel the full impact of corruption and mismanagement when the 

oil money runs out. A devastated economy and environment, in addition to the lack 

of savings for the future, may become a cause of societal unrest in foreseeable future. Seventy percent of Azerbaijan’s budget comes from oil production. Oil is the 

main commodity of Azerbaijan, making up 92 percent of its exports. 

Oil fuels corrupt construction projects, which create temporary employment. The 

so-called ‘‘white elephant’’ projects like the concert halls for Eurovision or stadiums 

for the Euro Olympics will hardly return investments and help Azerbaijanis earn 

a living in the post-oil period. 

The state procurement system has become more transparent in the past two 

years, however it still fails to allow access to information enabling citizens to monitor procurement procedures. Even with minimum access to information, using public sources, journalists have revealed facts of corruption. 

Azerbaijani journalists and NGOs combatting corruption pay a personal price for 

these efforts. The country’s broadcast media is under state control, Azadliq newspaper, the only newspaper that publishes investigative reports about the president’s 

family, is barred from nationwide distribution and faces financial difficulties, and 

RFE/RL, BBC and VOA are banned on local broadcast frequencies. Online penetration is not good enough for the internet to become a substitute for TV. Weekly satellite TV programs from abroad are being jammed. The individual journalists who 

investigate corruption are being punished by intrusion into their privacy and smear 

campaigns in pro-government and the ruling party’s media, and they are labeled enemies of the state. In some cases the journalists are being subject to enormous libel 

fines, even in cases when their story was not libelous. 

The latest wave of pressure on NGOs has targeted the remnants of the research 

centers and media support institutions. The bank accounts of those NGOs are frozen, and leaders have had to leave the country or hide. 


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With the downgrading of the OSCE’s mandate inside the country, most of the 

projects related to media and combatting corruption have stopped. The government 

of Azerbaijan has not approved any of the media-related proposals of the Baku 

project coordinator’s office. 

Investigative journalists in Azerbaijan have done their best to show the government where the problems are. In fact, the system of corruption in Azerbaijan is 

managed from the top, and top government officials are the main beneficiaries of 

corruption. Recent reforms made the corruption even more centralized, leaving less 

room for low-level officials to participate in corruption schemes. 

And here I want to mention a positive part of the story. I want to single out the 

partial reform of the public service, in particular the establishment of so-called 

ASAN (easy) services. ASAN is an agency of the Azerbaijani government which provides a variety of public services to citizens. Services are made available at public 

service halls throughout the country. Currently, ASAN endeavors to provide over 50 

services at the main location in Baku. 

These islands of good governance show that the Byzantine style of business is not 

a destiny for Azerbaijanis, and that public servants can be professional and effective 

when they wish. Although there are some open questions related to ASAN procurements, the agency has decreased petty corruption in many areas of service. However, the service is yet to become a nationwide provider of public services and lacks 

authority in key areas like custom clearances, NGO registration, etc. 

Even these islands of good governance though cannot reduce all the risks. Does 

the Azerbaijani government understand the risks of corruption? It probably does, although the overall system is based on every citizen’s contribution to corruption and 

lies. As Alexander Solzhenitsyn has described in his essay, ‘‘Live Not By Lies,’’ the 

system, designed by the Soviet KGB, depends on everyone’s participation. 

Azerbaijanis are tempted to pay bribes to ease their lives on many occasions every 

day. The country has failed to complete the land and property registry of the capital 

city, leaving up to 500,000 households outside the law. Doctors and teachers, who 

receive $150 monthly salary, are forced to demand bribes. An analysis of cross-border trade statistics of neighboring countries shows that Azerbaijani customs have 

hid imported goods worth billions of dollars. The non-registered goods end up in the 

black market and create illegal businesses. Hundreds of thousands of Azerbaijanis 

have become forced accomplices of the corrupt system, thus becoming vulnerable 

and silent, making it easier for the government to suppress and rule. 

Here I want to speak on how the global powers of the international community 

can help Azerbaijanis to stop living by lies. 

International institutions must pay more attention to the development of investigative journalism. Bad guys know how important investigative journalism is, and 

they invest a lot of money in buying out the broadcasters and silencing journalists. 

Good guys should know its importance as well. 

The Azerbaijani government had been successful in jamming hour-long satellite 

TV programs, but it will be impossible for them to jam 24/7 programming. 

Azerbaijanis should receive 24/7 TV broadcasts of independent content which will 

not only inform the citizens on what is going on inside the country, but also become 

an alternative source of news to what is coming from Russia. 

Azerbaijan needs to be held accountable to the Open Government Partnership and 

fulfill its commitments by granting access to information and by stopping harassment of journalists. 


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41 

18My testimony is presented in a personal capacity. It does not reflect the views of the entities 

to which I am professionally affiliated. 

PREPARED STATEMENT OF SHAAZKA BEYERLE

Thank you Chairman Cardin and Co-Chairman Smith for your leadership in 

drawing attention to the threats and injustice caused by corruption, in particular 

in OSCE participating States. It’s a deep honor to participate in this hearing and 

a pleasure to share with you conclusions and recommendations from new research 

on the positive role of citizens in impacting corruption, including in the OSCE region.18

Today the U.S. Congress will commemorate the 25th anniversary of the nonviolent Velvet Revolution and will honor the late Vaclav Havel by unveiling a bust 

of him in the Freedom Foyer. Since the sound of shaking keys rang through the air 

in Prague, citizens continue to fight and impact impunity. Over the past 17 years, 

around the world and in some OSCE countries, literally millions of people have 

wielded nonviolent power to gain freedom—freedom from corruption. 

During this testimony, I will cover three points: (1) the role of citizens and civil 

society in the anti-corruption equation; (2) recommendations on how the U.S., EU 

and the OSCE can assist participating States to help create an enabling environment for civic anti-corruption initiatives; and (3) what the broader anti-corruption 

struggle in the OSCE region can learn from organized civic initiatives targeting 

graft and impunity. I hope that this brief overview will stimulate your interest and 

prompt questions. 

The following testimony is based on an international, evidence-based, research 

project I conducted to identify, document and distill general lessons from organized, 

sustained civic initiatives wielding people power to fight graft and abuse, gain accountability and win rights and justice. It examined the skills, strategies, objectives 

and demands of such civic initiatives, rather than the phenomenon of corruption 

itself. The focus was on what civic actors and citizens—together exerting their collective power—did or are doing to curb corruption as they themselves define and experience it. Sixteen cases were documented and analyzed in-depth from among the 

following countries: Afghanistan, Bangladesh, Brazil, Egypt, Guatemala, India, Indonesia, Kenya, Mexico, Philippines, South Korea, Uganda, and the OSCE member 

countries, Bosnia and Herzegovina, Italy, Russia, and Turkey. Please refer to the 

Appendix for a summary of the cases and their outcomes. 

The good news is that citizens—organized in nonviolent campaigns, movements 

and community initiatives—are vital protagonists in combatting corruption. As importantly, these are homegrown efforts that do not involve huge financial outlays. 

Most don’t seek financial support from external sources. It’s the ingenuity, courage, 

resources, and voluntary participation of ordinary people that provide the foundation for action. They have achieved notable outcomes, for example in the OSCE region: 

Resignation of Nedz ̆ad Brankovic ́, the Prime Minister of the Federation of Bosnia 

and Herzegovina halfway through his term (2009); 

Over 1000 businesses to date publicly refusing to pay extortion money to the Cosa 

Nostra mafia in Palermo, Italy (ongoing); 

Judicial investigations, trials and verdicts to undermine the links between the 

state, organized crime, elements of the police, gladios (paramilitary groups linked 

to state security institutions), and parts of the private sector in Turkey (1997); 

Targeting corruption and impunity in Russia to prevent the bisection of an oldgrowth, state-protected woodland outside Moscow for a large highway and illegal development involving the French firm, Vinci (ongoing). 

For your information, the latter Movement to Defend Khimki Forest in Russia is 

employing both nonviolent action and legal measures. The European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) 

pulled out of the project. In June 2013, Sherpa, the French human rights lawyers’ 

group, along with other European NGOs, filed a formal complaint of corruption 

against Vinci with the Paris Prosecutor. In October 2013, the Prosecutor announced 

the opening of a preliminary enquiry into financial crimes. While it’s not possible 

at this juncture to know the outcome, as a result of this movement, earlier this year 

most of the forest has not been destroyed (1700 hectares out of 2000 hectares) and 

felling came to a standstill. 

And recently in Hungary—thousands mobilized against a corrupt, increasingly authoritarian government and an internet tax designed to thwart the free flow of information. 

During my research, I asked some civic actors what they needed from external 

actors. Here are a few of their replies. First, the international community (of course 


emcdonald on DSK67QTVN1PROD with HEARING
42 

19Two excellent resources for such engagement are: A Diplomat’s Handbook for Democracy 

Development Support, 2nd ed. (Washington, DC: Council for a Community of Democracies, 2010) 

Veronique Duduouet and Howard Clark, Nonviolent Civic Action in Support of Human Rights 

and Democracy (Brussels: Directorate-General for External Policies, Policy Department, European Parliament, May 2009) 20 A Diplomat’s Handbook for Democracy Development Support, 29. 

including the U.S., EU and OSCE) should look beyond formal NGOs and pay attention to civil society organizations and informal civic groups leading nonviolent campaigns and movements against corruption. They have valuable input about top-down 

efforts to combat corruption as well as insights about what is actually happening 

on the ground. On a positive note, Evgenia Chirikova, the leader of the Movement 

to Defend Khimki Forest, has testified before the U.S. Congress and European Parliament. 

Second, be open to engaging with civil society and homegrown movements and 

campaigns in capital cities and diplomatic missions on the ground (when such contact is sought by them). Grass-roots civil society leaders can be included in government-sponsored international forums and received in capitals, while embassies and 

missions can genuinely interact with them.19 For example, the Czech Ministry of 

Foreign Affairs created the ‘‘Transformation Policy Unit’’ to ‘‘enable embassies to 

support democratization, human rights and transition-related projects in countries 

with repressive regimes.’’ 20

Third, civic anti-corruption actors implore the international community to provide 

protection and solidarity (when they request it). Threats and repression are the norm 

rather than the exception. Moreover, there are wider strategic benefits to international attention and condemnation of crackdowns. Protecting civic actors can potentially empower many more citizens. Solidarity can make repression backfire. It 

thwarts corruptors’ objectives to paralyze civic dissent; create public fear, despair 

and apathy; prevent unity among anti-corruption networks and organizations; and 

obstruct alliances with other nonviolent struggles, for example, for democracy, gender equality, minority rights, and land rights. 

Based on my research, allow me to also offer these additional recommendations. 

Some are not new, but reinforce good practices already under way. In cases where 

civil society initiatives seek external funding, provide donor support for self-organization and capacity-building in the civic realm that supports home-grown approaches 

and taps pre-existing social networks and relationships. The worst thing international actors can do is throw large sums of money at homegrown, grass-roots civic 

initiatives and encourage their institutionalization into formal, conventional NGOs. 

What can be of help in some circumstances are flexible, small grants that enable 

experimentation, pilot efforts, an expansion of outreach and activities, and peer-topeer learning exchanges among civil society actors in-country and across borders. 

When it is wanted, provide solidarity, legal and technical support, and access to 

information that civil society may not be able to acquire in-country. Information is 

often a critical asset for anti-corruption civic initiatives. For example, attention from 

global personalities, as well as legal measures and beneficial ownership investigations carried out by international civil society organizations were invaluable for the 

Movement to Defend Khimki Forest. 

Amplify civil society voices through various outlets. For instance, where in-country 

civic entities investigating corruption are blocked from the media, and provide support for alternative modes of communication, such as online civil society information 

and news outlets, satellite television programming, and multi-lingual international 

outlets such as Radio Free Europe/Radio Liberty and Deutsche Welle. I understand 

there is hope for a bill to revamp RFE/RL that cleared the House of Representatives 

and is now in the Senate. 

Recognize that top-down multilateral instruments (including the United Nations 

Convention Against Corruption) and democratic mechanisms in third-party countries 

can both directly and indirectly support civil society movements and campaigns targeting corruption and impunity. For example, the Paris Prosecutor investigation of 

Vinci, hearings in legislative bodies such as the one today and others in the European Parliament, and decisions taken by multilateral institutions (including the European Investment Bank and European Bank for Reconstruction and Development) 

can disrupt and expose corruption targeted by grass-roots civic initiatives, protect 

civil society, and undermine malfeasance. 

Target global financial corruption. Legislative and institutional measures to curb 

illicit financial transactions, money laundering and the conversion of ill-gotten gains 

into legitimate businesses and luxury properties can disrupt the overall system of 

corruption that civil society is combatting in OSCE participating States. Voices from 

civil society herald the Magnitsky Act. They call for the Act’s application to be rigVerDate Sep 11 2014 01:26 Aug 19, 2015 Jkt 095572 PO 00000 Frm 00046 Fmt 6621 Sfmt 6621 E:\HR\OC\A572.XXX A572

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21My preferred definition of corruption is: a system of abuse of entrusted power for private, 

collective, or political gain—often involving a complex, intertwined set of relationships, some obvious, others hidden, with established vested interests, that can operate vertically within an institution or hortizontally cut across political, economic and social spheres in a society or 

transnationally. This systemic definition was developed by the author, who wishes to credit for 

inspiration, points made by Maria Gonzalez de Asis, World Bank, in an unpublished, working 

paper. 

orous and wish it would be extended both in terms of scope and countries. I’d like 

to thank you, Senator Cardin, and also Senator John McCain, for your efforts to extend the law’s reach through the Global Magnitsky Human Rights Accountability 

Act. I was present in the hall when Sergei Magnitsky’s mother, Natalia, received 

the 2011 Transparency International Integrity Award, given to her son posthumously. I’ll never forget the sorrow etched in her face, in spite of her composure 

and dignity. 

In conclusion, allow me to summarize what we can learn from grass-roots, civil 

society campaigns and movements impacting corruption. First, citizens can add 

extra-institutional pressure to push for change—when powerholders are corrupt and/ 

or unaccountable and institutional channels are blocked or ineffective. Traditional 

top-down approaches were based on a flawed assumption that once anti-corruption 

structures are put in place, illicit practices will change. Those who are benefitting 

from corruption are expected to be the ones to curb it. This helps us to understand 

why, in spite of so many top-down efforts, success is often elusive. Even when political will exists, it can be thwarted, because too many people inside the corrupt system have a stake in the crooked status quo. 

Second, we can learn new strategies from citizen engagement and action that go 

beyond the traditional carrot versus stick approach. Graft and abuse function in systems. They are not simply a collection of random dishonest transactions.21 I found 

that citizen movements and campaigns developed strategies and actions that: (1) 

disrupted systems of corruption (2) empowered and protected reformers and integrity champions inside the state who inevitably faced corrupt, often hostile, vested 

interests; (3) empowered honest individuals caught in venal systems to say no, that 

is, to avoid engaging in corruption. At the same time, these civil society initiatives 

often pursued longer-term goals of changing behaviors, practices and general norms 

regarding corruption. 

Third, top-down and bottom-up approaches are complementary (not mutually exclusive). Both are needed and together, they create synergies. Citizen engagement 

and action can: 

Empower and protect honest powerholders and integrity champions pursuing 

accountability, reform and change from within the system; 

Empower and protect honest state officials caught in a system of corruption 

to refuse to go along with it, i.e., noncooperation with corruption; 

Create political will to enact policies, laws and administrative mechanisms to 

curb illicit financial flows and/or to implement them; 

Contribute to changing behaviors, practices and general norms regarding corruption and, potentially, illicit financial flows. 

Fourth, citizens do not fight corruption in the abstract. Rather, it’s linked to widely shared grievances and venal practices that produce collective outrage or harm 

regular people in their everyday lives. Fifth, citizen action targeting corruption is 

most often found in societies enduring poor governance, poverty, low levels of literacy, 

and severe repression, the latter perpetrated by the state, paramilitary groups, or organized crime. This finding, corroborated by research from the nonviolent resistance, 

democracy and development realms, overturns the misconception that citizen engagement is dependent on various conditions, such as civil liberties, a functioning 

democracy, relatively sound levels of social and economic development, political 

space for dissent, etc. 

In conclusion, I’d like to honor the leaders, organizers and regular citizens who 

are combatting corruption in spite of intimidation and repression. They prove that 

while corruption brings out the worst in people, fighting it can bring out the best. 

Thank you, Chairman Cardin and Co-Chairman Smith. 


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44 

RFE/RL’S COVERAGE OF CORRUPTION IN THE OSCE REGION

November 17, 2014 

Azerbaijan 

RFE/RL’s Azerbaijan Service has a long history of exposing corruption within the 

Azerbaijani government. RFE/RL reporter Nushabe Fatullayeva teamed up with 

contributor and investigative reporter Khadija Ismayilova on a series of investigative reports that linked family members of President Ilham Aliyev to several massive financial corruption schemes. Subsequently, Ismayilova has become a target of 

smear campaigns and spurious legal investigations that, most recently, have prevented her from testifying on corruption issues before the U.S. Congress and in 

other international fora. 

The Azerbaijani Service hosts a web portal, ‘‘Korrupsiometr,’’ that provides information on the latest laws and regulations in the country, lets Azeri lawyers respond 

to audience questions on anti-corruption issues, and serves as a discussion forum 

for people impacted by corruption. 

Ukraine 

The Ukrainian Service has launched a nationally-broadcast television program, 

‘‘Schemes,’’ that examines various deals and allegations of corruption that helped 

spark the Euromaidan movement. The program exposes the lavish lifestyles of 

former senior Ukrainian officials and documents various government employees receiving gifts. 

Widely-seen episodes have exposed financial misappropriations of former minister 

Mykola Zlochevsky and excessively lavish lifestyles of former oil and gas officials 

Serhiy Katsuba and Yevhen Bakulin. 

Armenia 

RFE/RL’s Armenian Service routinely exposes corruption, conflict of interest, 

abuse of power in the country. A Service journalist recently uncovered a story about 

Armenian oligarchs exploiting local resources for big gain while penalizing small 

farmers. Another story shed light on the Yerevan city government’s excessive—and 

ultimately wasted—expenditures that inflamed environmental and anti-corruption 

activists alike. 

In October, an RFE/RL story exposed the potentially illegal income of a top state 

Justice Ministry official, Mihran Poghosian, who has been the source of public criticism for questionable accumulated wealth while in state service. 

Uzbekistan 

The Uzbek Service worked with Sweden’s SVT public television broadcaster in 

2013 to publicize documents that demonstrate alleged links between Gulnara 

Karimova, the daughter of Uzbek President Islam Karimov and Swedish telecoms 

giant TeliaSonera. In the documents, TeliaSonera is asked to pay hefty bribes in exchange for protection from government agencies and an infusion of new clients, and 

Karimova appears to be personally dictating the terms of the negotiations. 

Russia 

RFE/RL’s Russian Service helped uncover the massive corruption, environmental 

damage, and toll on local residents and migrant workers that surrounded Russia’s 

preparations for the 2014 Winter Olympics in Sochi, with its ‘‘Sochi: Outside The 

Arena’’ investigative report. 

Belarus 

RFE/RL’s Belarus Service is the only media working in Belarus to report on corruption cases in detail—in cities such as Homel, where the mayor, two vice mayors 

and several top police officials have been arrested on corruption charges, and in 

state-owned industries such as the oil company ‘‘Belneftekhim,’’ a wood-processing 

factory in Babruisk, and a food plant in Minsk. 

Bosnia 

RFE/RL’s Sarajevo bureau launched a multimedia project that investigated cases 

of failed privatizations of state-owned enterprises in Sarajevo, Mostar, Banja Luka 

and other Bosnian cities. 

A Balkan Service report also looked into the failed privatization of the ‘‘Aluminij’’ 

plant in Mostar, one of Bosnia’s biggest exporters. The company, which once employed several thousand workers, now only has several hundred employees and is 

facing closure. 


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Another report exposed a massive customs and tax fraud case in Bosnia that has 

subsequently led to the arrest of Kemal C ̆ aus ̆evic ́, the former director of the Bosnian 

Indirect Taxation Authority (UIO), along with 39 others, mostly tax officials accused 

of abuse of power, tax evasion and money laundering. 

Kosovo 

The Balkan Service has dedicated a web page, ‘‘Monitor Corruptus’’, to its coverage of the fight against government corruption in Kosovo. The page features a link 

that allows viewers to upload content directly to the site, and provides a direct link 

to the Kosovo Anti-Corruption Agency that enables users to report corruption cases 

directly to the agency. 

The Service is also working with the Center for Investigative Journalism (CIN) 

on a series of reports on issues related to corruption that have been featured on the 

Service’s regional and national programs and re-used by other media outlets 

throughout the region. 

Macedonia 

The Balkan Service’s Macedonia Unit, in cooperation with local NGO’s, created a 

series of reports as well as a special web page on corruption connected with the 

Macedonian government’s ‘‘Skopje 2014’’ project. As a result, other media outlets in 

Macedonia have begun to report on corruption linked to the Skopje 2014 project, 

and the government has been forced to admit that the cost of the project exceeds 

the amount previously reported. 

Æ 

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