The terrorist attacks in Burkina Faso at the Splendid Hotel and the recent carnage in Mali at the Radisson are about more than terrorism — they are also reminders of the grave consequences of state institutions weakened by the effects of engrained and deep seeded corruption.
While Director of Investigations at the Global Fund and Head of the UN Anti-Corruption Task Force, I spent months in Burkina Faso and in Mali, staying at and visiting the hotels which are the sites of both attacks, investigating government corruption and focusing on vendor fraud, bribery of senior government officials and tainted procurements of goods and services in the health sector. I became familiar with both countries as well as their governments during my many visits — as well as the sites of the recent carnage.
As I reported in a recent post for the FCPA Blog, my three-plus year Global Fund OIG investigation of a $25 million contract for long lasting insecticidal nets (commonly referred to “bednets”) with the Inspector General of USAID gave rise to the recent indictment of Malamine Ouedraogo by the United States Attorneys Office in the Southern District of New York last month.
While not charged in the indictment, our investigation had identified that the bednet contract had been steered by a relative of the former President to a vendor in China that assumed the identify of a co-bidder, Tana Netting, and then manufactured the nets in Tana’s name, copying their packaging and logo, but failing to properly complete the construction by adding the necessary medicine and mosquito repellant on to the netting material – effectively rendering the two million nets distributed throughout the country to its populace of little practical use.
The corruption put the population of the country of Burkina Faso at risk of malaria. Likewise, in Mali, literally dozens of vendors presented fake invoices to trigger millions of dollars in payments for services never rendered, and some senior government officials helped facilitate the scheme and benefited from kickbacks and other “fee” payments charged to the donor programs. While 16 lower level vendors were ultimately arrested in Mali as a result of our investigation, the government refused to continue the investigation and cooperate with us as the evidence trail led deeper and higher into the Ministry. The 16 lower level individuals were quietly let out of prison once we left the country and the press articles and focus subsided.
The recent terrorist attacks in both countries, while certainly much more devastating in terms of the consequences — are not unrelated to the incidents of corruption that were identified in my investigations. State institutions weakened by corruption can lead to a diminished capacity to address and respond to other risks, such as terrorism.
Corruption signals more than a lack of integrity in government — it can mean a focus diverted away from security and stability. When Boards of Directors meet to discuss the acceptable levels of corruption in high risk/low integrity regions and whether to do business there, they might also consider factoring into the equation the consequences of weakened state institutions, and the other potential significant fallout that can be a by product of persistent corruption and a determined lack of accountability.
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By coincidence, I spoke with Richard Bistrong a couple of days before the Burkina Faso terror attack, about corruption there. Here’s an eight-minute clip from that conversation.
Robert M. Appleton is a partner in Day Pitney LLP, based in the firm’s New York office. His practice focuses on FCPA matters, economic and financial sanctions, and compliance issues. In 2005, he served as former U.S. Federal Reserve Chairman Paul Volcker’s Special Counsel in the Independent Iraqi Oil for Food investigation. In 2008, Appleton was selected by the U.N. Secretary General to serve as Chairman of the United Nations Procurement Task Force. He was Director of Investigations and Senior Legal Counsel at the Global Fund from 2010-2014. He also served as a supervisory Assistant U.S. Attorney, in the U.S. Department of Justice, Office of the U.S. Attorney for the District of Connecticut, for more than 13 years. He can be contacted here.