Most Latin American countries are in the process of implementing international anticorruption standards, including standards for combating corporate corruption. Primarily based on the U.S. experience with the Foreign Corrupt Practices Act (FCPA), these international standards for combating corporate corruption are coalescing into a standardized paradigm, which requires states to establish corporate liability regimes that incentivize companies to prevent, self-police, and cooperate with law enforcement authorities in exchange for more lenient sanctions.

While the United States has had almost fifty years of experience with anticorruption law involving transnational enforcement, Brazilian anticorruption enforcement has not yet celebrated its first decade. In the notorious Car Wash case, however, Brazil is wrestling with the largest anticorruption investigation ever. The Car Wash case has resulted in numerous claims brought by a host of domestic agencies and foreign governments, many of which lack experience in anticorruption law. This essay argues that the Car Wash case reveals the weaknesses of the transnational anticorruption legal apparatus in Brazil. At both the national and transnational levels, the lack of coordination and the existence of competition among different levels of authority have undermined the main pillar of the regime: the collaboration agreements and the corresponding protection granted to whistleblowers. The Car Wash case illustrates how the current transnational anticorruption legal regime fails to promote order over disorder.

Until recently, the United Nations and regional systems of human rights protection had shown considerable reluctance to address human rights violations resulting from corruption. Instead, these actors would underline the negative impacts of corruption on human rights without identifying corruption itself as a violation of human rights. Since 2017, however, this has begun to shift. The UN, regional human rights institutions, and civil society have begun to devise concrete ways for human rights institutions and instruments to better contribute to the fight against corruption. The Inter-American Court of Human Rights (“the Court”), in particular, has taken preliminary steps to establish a legal link between corruption and human rights violations.

Anticorruption treaties generally define corruption as the abuse of entrusted power for private gain. As such, global anticorruption efforts primarily target transactions involving the bribery of governmental officials. The definition excludes transactions in which multinational corporations deprive developing states of revenue by failing to pay taxes and other monies due. Yet such transactions are equally injurious to the development agenda of poor states. This essay argues that corruption should be redefined to encompass illicit financial flows, a term used by a growing network of tax and economic justice groups to refer to money that is “illegally earned, transferred or used.” Transactions such as trade misinvoicing, base-erosion, and abusive transfer pricing to illegally earn additional income undermine the ability of poor states to raise revenue for development. Expanding the definition of corruption would create a more realistic picture of the role of corporate actors and their involvement in corrupt and illicit dealings. It would also bring equivalency to the treatment of corporate actors and public officials. By focusing on illicit dealings involving corporate actors, this essay challenges the partial definition of corruption adopted in the heyday of the Washington Consensus, when skepticism about the role of the state, rather than of private actors, prevailed.

With the rise of corruption as a subject of international instruments and the convergence of obligations around its prevention, detection, and remediation in both the public and private sectors, corruption has increasingly figured as an issue in international arbitration. Indeed, its acceptance as a public policy issue at both the international and transnational levels has resulted in the need for tribunals, in both commercial and investor-state disputes, to grapple with questions of jurisdiction, admissibility, and consequences, as well as standards of proof. As this essay demonstrates, the challenges presented by the issue of corruption pose special difficulties for arbitration. Time will tell if tribunals will move from their current largely binary, all-or-nothing approach to a more nuanced one based on proportionality.

Political corruption is a massive barrier to economic development and good governance. International institutions have become leaders in the effort to combat the problem. A growing number of such institutions have crafted official anticorruption rules, procedures and policies designed to deter the abuse of power within their membership and within institutional practice. Despite these regulatory developments, little is known about the role these institutions play in influencing corruption or whether the growing set of governance rules now in place have any effect.