II 114th CONGRESS 2d Session S. 3210 IN THE SENATE OF THE UNITED STATES July 14, 2016 Mr. Cardin introduced the following bill; which was read twice and referred to the Committee on Foreign Relations A BILL To identify and combat corruption in countries, to establish a tiered system of countries with respect to levels of corruption by their governments and their efforts to combat such corruption, and to assess United States assistance to designated countries in order to advance anti-corruption efforts in those countries and better serve United States taxpayers.

1. Short title This Act may be cited as the Combating Global Corruption and Ensuring Accountability Act of 2016 . 2. Findings and purposes (a) Findings Congress finds the following: (1) Corruption erodes trust and confidence in democratic institutions, the rule of law, and human rights protections. (2) Highly corrupt governments deliberately weaken state institutions, especially those associated with democratic accountability, in order to improve their chances of remaining in power. (3) A direct correlation exists between highly corrupt governments and human rights abuses within countries ruled by such governments. (4) Corruption— (A) frustrates the ability of the United States to combat terrorism; (B) helps to foster the conditions for violent extremism; and (C) endangers national and international security. (5) Corruption damages United States competitiveness globally and creates barriers to economic growth overseas. (6) Anti-corruption measures are instrumental in protecting human rights and achieving sustainable economic growth, which benefits a country’s citizens and the international community through the creation of open and transparent markets. (7) Eliminating corruption requires greater transparency and accountability and effective civilian oversight. (8) Deterring corruption requires the credible threat of prosecution to deter corrupt public servants from abusing their authority with impunity for political or financial gains, in collusion with private entities. (9) The United States is a signatory to the United Nations Convention Against Corruption, having ratified the treaty on October 30, 2006. (10) United States foreign assistance could be used to encourage actors within highly corrupt countries to support a more inclusive, just, and democratic political and economic system that ultimately contributes to regional stability, credible and legitimate United States partners, and markets for goods produced in the United States. (11) Preventing corruption requires implementing democracy and governance programs within countries receiving United States foreign assistance, including— (A) anti-corruption training; (B) anti-corruption technical assistance to national human rights institutions; (C) support for civilian anti-corruption oversight capabilities; (D) the development of anti-corruption legal mechanisms; and (E) increased asset recovery and auditing capabilities. (12) Poorly directed foreign assistance could inadvertently contribute to exclusive political and economic systems that— (A) contribute to insecurity within the countries receiving such assistance; (B) stymie their citizens’ democratic and economic aspirations; (C) discourage a free press and civil society; and (D) impede United States foreign policy goals. (13) Effective corruption risk assessment and analysis before, during, and after the provision of foreign assistance is a key element for reducing and eliminating corruption. (14) Comprehensive and timely data on foreign assistance programs is the first step to greater accountability and scrutiny by donor institutions, recipient states, and civil society. (15) Foreign assistance provided to the security sector of a foreign country is not effective at strengthening weak defense and security forces unless it is properly provided and closely monitored for corruption, including diversion and misuse. (b) Purposes The purposes of this Act are— (1) to combat corruption in countries by requiring the Secretary of State to establish and report on corruption in such countries and the efforts of the governments of such countries in combating such corruption; (2) to assess United States foreign assistance to designated countries based on the corruption reports; and (3) to improve the transparency and accountability of United States foreign assistance. 3. Definitions In this Act: (1) Appropriate congressional committees The term appropriate congressional committees means— (A) the Committee on Foreign Relations of the Senate ; (B) the Committee on Armed Services of the Senate ; (C) the Committee on Foreign Affairs of the House of Representatives ; and (D) the Committee on Armed Services of the House of Representatives . (2) Corrupt actor The term corrupt actor means— (A) any foreign person or entity that is a government official or government entity responsible for, or complicit in— (i) ordering or otherwise directing acts of significant corruption; or (ii) facilitating or transferring the proceeds of corruption to foreign jurisdictions; or (B) any company, in which a person or entity described in subparagraph (A) has a significant stake, which is complicit in— (i) directing or participating in significant corruption; or (ii) facilitating or transferring the proceeds of corruption to foreign jurisdictions. (3) Corruption The term corruption means the extent to which public power is exercised for private gain, including by bribery, nepotism, fraud, or embezzlement. (4) Foreign assistance The term foreign assistance means— (A) aid given by the United States Government to other countries— (i) to support global peace, security, government capacity-building, democracy, and development efforts; or (ii) to provide humanitarian relief during times of crisis; and (B) programs authorized under title 10, United States Code, or under any Act of Congress that has been placed in title 22, United States Code, that provide funds, military training or education, or military equipment, weaponry, or services to another country for its military forces and security forces, including police and paramilitary forces. (5) Grand corruption The term grand corruption means corruption committed at a high level of government that— (A) distorts policies or the central functioning of the country; and (B) enables leaders to benefit at the expense of the public good. (6) Petty corruption The term petty corruption means the abuse of entrusted power by low- and mid-level public officials in their interactions with ordinary citizens. 4. Annual report and tiered ranking system (a) Annual report To ensure the transparency, accountability, and effectiveness of United States foreign assistance programs, not later than June 1 of each year, the Secretary of State shall submit a report to the appropriate congressional committees that— (1) describes the status of corruption in foreign countries; (2) includes an assessment of the efforts by the government of each country to combat corruption, including identifying which countries are meeting the minimum standards for the elimination of corruption set forth in section 5, using an appropriate index or indices for measuring corruption; and (3) describes the status of each country’s active membership in voluntary multisectoral global governance initiatives as evidence of the country’s government-led efforts to combat corruption. (b) Publication of tiered ranking list (1) In general The Secretary of State shall annually publish, on a publicly accessible website, a tiered ranking that includes all countries whose governments do not fully comply with the minimum standards set forth in section 5. (2) Tier 1 countries A country included in the ranking published under paragraph (1) shall be ranked as a tier 1 country if the government of such country is making serious and sustained efforts to comply with the minimum standards set forth in section 5. (3) Tier 2 countries A country included in the ranking published under paragraph (1) shall be ranked as a tier 2 country if the government of such country is making significant efforts to comply with the minimum standards set forth in section 5. (4) Tier 3 countries A country included in the ranking published under paragraph (1) shall be ranked as a tier 3 country if the government of such country is making minimal efforts to comply with the minimum standards set forth in section 5. (5) Tier 4 countries A country included in the ranking published under paragraph (1) shall be ranked as a tier 4 country if the government of such country is making de minimis or no efforts to comply with the minimum standards set forth in section 5. 5. Minimum standards for the elimination of corruption and assessment of efforts to combat corruption (a) In general The government of a country is complying with the minimum standards for the elimination of corruption if the government— (1) has enacted laws and established government structures, policies, and practices that prohibit corruption, including grand corruption and petty corruption; (2) enforces the laws described in paragraph (1) by punishing any person who is found, through a fair judicial process, to have violated such laws; (3) prescribes punishment for grand corruption that is commensurate with the punishment prescribed for serious crimes; (4) prescribes punishment for petty corruption that— (A) provides a sufficiently stringent deterrent; and (B) adequately reflects the nature of the offense; and (5) is making serious and sustained efforts to eliminate corruption. (b) Factors for assessing government efforts To combat corruption In assessing a government’s efforts To combat corruption, the Secretary of State shall consider— (1) whether the government of the country vigorously investigates and prosecutes acts of corruption and convicts and sentences persons responsible for such acts that take place wholly or partly within such country, including, as appropriate, requiring incarceration of individuals convicted of such acts; (2) whether the government of the country has adopted measures to prevent corruption, such as measures to inform and educate the public, including potential victims, about the causes and consequences of corruption; (3) whether government authorities in the country participate in, facilitate, or condone corruption; (4) what steps the government of the country has taken to prohibit government officials from participating in, facilitating, or condoning corruption, including the investigation, prosecution, and conviction of such officials; (5) which government authorities in the country are involved in activities to combat corruption; (6) the extent to which the country provides access, or, as appropriate, makes adequate resources available, to civil society organizations and other institutions to combat corruption, including reporting, investigating, and monitoring; (7) what steps the government of the country has taken to prohibit nongovernment individuals from participating in corruption, including— (A) the investigation, prosecution, and conviction of individuals involved in corruption; (B) the criminal and civil penalties for corruption; and (C) the efficacy of the penalties referred to in subparagraph (B) in eliminating or reducing corruption; (8) whether there is an independent judiciary or judicial body in the country responsible for, and effectively capable of, deciding corruption cases impartially, on the basis of facts and in accordance with the law, without any restrictions, improper influences, inducements, pressures, threats, or interferences, direct or indirect, from any quarter or for any reason; (9) whether the government of the country vigorously investigates, prosecutes, convicts, and sentences public officials who participate in or facilitate corruption, including nationals of the country who are deployed in foreign military assignments, trade delegations abroad, or other similar missions, who engage in or facilitate severe forms of corruption; (10) whether the government of the country— (A) is cooperating with governments of other countries to extradite corrupt actors when requested; or (B) to the extent that such cooperation would be inconsistent with the laws of such country or with extradition treaties to which such country is a party, is taking all appropriate measures to modify or replace such laws and treaties so as to permit such cooperation; (11) whether the government of the country is assisting in international investigations of transnational corruption networks and in other cooperative efforts to combat grand corruption; (12) whether the government of the country recognizes the rights of victims of corruption and ensures their access to justice; (13) the steps taken by the government of the country to assist victims of corruption, including efforts to prevent victims from being further victimized or persecuted by corrupt actors, government officials, or others; (14) whether the government of the country refrains from prosecuting victims of corruption or whistleblowers due to such persons having assisted in exposing corruption, and refrains from other discriminatory treatment of such persons; (15) whether the government of the country, consistent with the capacity of such government— (A) systematically monitors its efforts to satisfy the criteria described in paragraphs (1) through (12); and (B) makes publicly available a periodic assessment of such efforts; and (16) such other information relating to corruption as the Secretary of State considers appropriate. 6. Transparency and accountability (a) In general Notwithstanding any other provision of law, prior to obligation by any United States agency of foreign assistance, except acute humanitarian and disaster assistance, to a country ranked as a tier 3 or tier 4 country under section 4(b), the Secretary of State, in coordination with the Administrator of the United States Agency for International Development ( USAID ) and the Secretary of Defense, as appropriate, shall— (1) conduct a corruption risk assessment and create a corruption mitigation strategy for all United States foreign assistance programs to that country; (2) require the inclusion of anti-corruption clauses for all foreign assistance contracts, grants, and cooperative agreements, which allow for the termination of the contract, grant, or cooperative agreement without penalty if credible indicators of corruption are discovered; (3) require the inclusion of appropriate clawback clauses for all foreign assistance contracts, grants, and cooperative agreements to recover United States taxpayer funds that have been misappropriated from the prime contractor, grantee, or cooperative agreement participant through corruption; (4) require the disclosure of the beneficial ownership of all contractors, subcontractors, grantees, cooperative agreement participants, and other organizations receiving funding from the United States Government for foreign assistance programs; and (5) establish a mechanism for investigating allegations of misappropriated foreign assistance funds or equipment. (b) Additional requirements In meeting the requirements under subsection (a) and overseeing the implementation of foreign assistance programs in Tier 3 and Tier 4 countries, the Secretary of State, in coordination with the Administrator of USAID and the Secretary of Defense, as appropriate, shall consider— (1) implementing appropriate safeguards to ensure that disclosure of information about award recipients does not create additional security risks for those operating in restrictive environments; (2) the need to respond in a timely manner to programmatic needs and prevent significant delays in the obligation of foreign assistance funding, which could disrupt the implementation of programs and reduce program effectiveness; (3) programming foreign assistance resources, including democracy, rights, and governance assistance, based on need, foreign policy, and development priorities, strategic planning, and where assistance can be most effective; and (4) criteria for making a recommendation regarding the termination of any contracts, grants, or cooperative agreements determined to be associated with corruption and criminality. (c) Strategy for incorporating corruption risk assessments In order to ensure meaningful follow-through on the United States Government’s recent commitment to strengthen attention to anti-corruption in security cooperation and the provision of security assistance at the United Global Anti-Corruption Summit, the Secretary of State and the Secretary of Defense, not later than 180 days after the date of the enactment of this Act, shall submit a strategy to the appropriate congressional committees that details— (1) how the United States Government will incorporate corruption risk assessments during security sector assistance with foreign security forces; and (2) how security sector assistance will improve security sector governance, as appropriate. 7. Resources and reporting requirements (a) Annual report (1) In general The Secretary of State shall submit an annual report to the appropriate congressional committees that outlines the resources needed to meet the objectives and reports under sections 4 through 6, including— (A) intelligence data collection needs; (B) personnel needs; (C) information technology requirements; and (D) a description of the bureaucratic structure of the offices within the Department of State and USAID that are engaged in anti-corruption activities. (2) Form The report submitted under paragraph (1) shall be submitted in unclassified form, but may include a classified annex. (b) Online platform The Secretary of State and the Administrator of USAID shall consolidate existing reports with anti-corruption components into one online, public platform, which shall— (1) include— (A) the Human Rights Report; (B) the Fiscal Transparency Report; (C) the Investment Climate Statement reports; (D) the International Narcotics Control Strategy Report; and (E) any other relevant public reports; (2) link to third-party indicators used by the United States Government to inform policy and programming, such as— (A) the World Bank Control of Corruption indicator; (B) the World Bank’s Actionable Governance Index Data Portal; (C) the International Finance Corporation’s Doing Business surveys; (D) the International Budget Partnership’s Open Budget Index; (E) the Global Integrity Index; and (F) multilateral peer review anti-corruption compliance mechanisms, such as the OECD Working Group on Bribery and United Nations Convention Against Corruption, to further highlight expert international views on country challenges and country efforts. (c) Training To increase the ability of Department of State and USAID personnel to support anti-corruption as a foreign policy and development priority, and strengthen their ability to design, implement, and evaluate more effective anti-corruption programming around the world, including enhanced skills to better evaluate and mitigate corruption risks in assistance programs, the Secretary of State and the Administrator of USAID shall incorporate anti-corruption components into existing Foreign Service and Civil Service training courses. 8. Sense of Congress on corruption and beneficial ownership It is the sense of Congress that identifying the true beneficial owners of companies formed in the United States or abroad, and property that has been removed from a country in connection with corrupt activities by corrupt leaders or other corrupt actors, is an important part of combating corruption, and the President should develop a comprehensive approach to requiring such beneficial ownership information for companies formed in the United States or abroad, and intensify cooperative efforts with U.S. allies toward those ends.