International Transparency Standards and Processes Need Convergence

By Thomas W. Welch, J.D., American International Regulatory Coherence Institute

Given the many difficulties described earlier in this blog, I thought I should mention a current discussion among international law professors revolving around what could be called the “shame theory.”  That is, in the absence of a utopianist, benevolent, “global government” (which, given recent events at the UN, appears to be very far off), it is sometimes possible to nonetheless slowly coax gradual compliance and convergence by leaders of sovereign countries to international laws and/or ‘international legal norms.’  While such norms are not always clear (especially if they are vague, legally unenforceable and in Latin),  the “Law of Nations” is still referred to explicitly in the U.S. Constitution, so it must exist somewhere.  (Interestingly, according to Wikipedia, President George Washington had a number of overdue library books dating back over 221 years. One of them was The Law of Nations.)

Might indirect persuasion work?  Some international treaties and other agreements, over time, while lacking legal enforcement mechanisms, do indirectly act to ultimately “shame” non-complicit country leaders into complying and converging with some needed treaties and standards. Of course to know what should be shamed, one needs to both: 1) Establish a viable international standard; and then, 2) Obtain credible evidence about the actual conduct of the infringing party.  Since officials naturally loathe to divulge embarrassing or compromising information of any kind (as it makes their bosses very unhappy), some systematic public transparency for protection is essential  The problem is, too much transparency and risk will drive illicit activities underground, and become counterproductive.   A careful balance is thus essential.

As to the norms themselves, the sheer rapid proliferation of international laws can itself be a problem.  A recent report from US Government auditors politely suggests that many American government agencies are struggling to keep up with international laws and standards. Although many Government officials have now seen the efficiency of work-sharing with their international counterparts with equivalent missions, they often face resistance to such efforts.  Some help from, and accountability to, “stakeholders” is critical.  Those helpers should include engaged citizens (such as consumer groups), regulated businesses, concerned professional groups, and other domestic and ‘peer’ -foreign government agencies.

One particularly potent supporting group is the Non-Governmental Organization (NGO). There are now thousands of active NGOs purporting to represent a “civil society.”   These groups are now continuously pressing many Governments, and multinational corporations, to recognize, and adopt, international treaties and “norms,” even if they have not been legally ratified according to domestic laws.  See, e.g., Transparency International, and the Open Society Institute.  While their work has been enormously helpful, it sometimes appears that some NGOs are both, advocating for imprecise standards, and disproportionately criticizing those governments and companies that are already, albeit imperfectly, the most open.

Multinational businesses (and their investors and employees), can also help drive convergence in international transparency standards.  In fact, business support is crucial. Although they, too, wish to avoid negative press from NGOs, transnational business enterprises are keen to seek international convergence–particularly in the area of technical standards, because it reduces their costs of business, and makes them more globally competitive.

So what global transparency standards are most essential?   First, one must have some, enforceable, legal mechanism for NGOs, businesses, citizens and the press to viably demand information, commonly referred to as Freedom of Information Laws (FOI). Although the US has openly struggled with vagaries in its FOI Act, there is bi-partisan support for reform, and according to several recent comparative studies (see also here and here), the US is actually one of the model global citizens.   Astoundingly, those comparative studies reveal that most countries still have no functioning FOI Act, or still do not have judicial mechanisms to reliably enforce it.

What else is needed?  A means of revealing when government officials evade their legal duties under FOI and other transparency mandates, such as mandatory, Administrative Procedures, and open meeting laws.   There also must be incentives and resources for independent, and sometimes confidential, judicial review.   Stakeholders can help here too, but only so far.

For consistent enforcement, however, internal ‘whisleblowers’ are most essential.  Several new laws in the US and UK have greatly increased the number and influence of whistleblowers.  Financial incentives are provided by the Federal False Claims Act, which was originally signed by President Abraham Lincoln in 1863, and includes an ancient legal device called a “qui tam” provision (from a Latin phrase meaning “he who brings a case on behalf of the King, as well as for himself”). International enforcement has been expanded by the Foreign Corrupt Practices Act, and new American securities reporting laws.  Some new, lesser known legislative and regulatory proposals and enactments are expanding the whistleblower as a critical transparency tool.

In this global age, whistleblower laws must be clarified and expanded internationally.  Even in the U.S., effective whistleblower incentives and protections are scattered, relatively new, and not universally understood or appreciated. (Even President Barack Obama was not certain if they would have applied to Mr. Snowden.)  Given the enormous risks, all whistleblowers must be adequately incentivized, and protected by clearly established investigatory processes. Adequate financial incentives are critical, or, alternatively, complete anonymity must be respected.   Particularly in areas of high unemployment, the risk of whistleblowing can usually mean a permanent end to a lucrative career (if not worse).  Only complete anonymity, or significant monetary incentives, can adequately counterbalance such threats.  Most US departments now have whistleblower protection policies, but insufficiently established mechanisms and resources to actually counteract the common risk of often hidden, or disguised retaliation.

On the other hand, inducements for internal discovery and correction must also exist, or the enterprise will have little or no incentive to change.  The process must thus protect the target as well. Far too often, the absence of due process for both, the whistleblower and the accused, can result in years of delay, disruption and wasted resources, and fail to achieve the real purpose of change and correction society needs. Uncontrolled transparency and false whistleblowing can be extremely disruptive and damaging to innocent Stakeholders (like unrelated employees and investors), and thus counterproductive.  Disclosures of proprietary, trade secret, private or confidential information can be catastrophic to business interests.  False reports from competitors need some filter as well.    It is thus necessary to also ensure that whistleblowers fulfill prerequisite processes to allow Management and legal systems to work, verify the complaints, and give the enterprise the opportunity (and thus the corollary incentive) to come clean, improve and self-correct.  A mandatory, confidential internal review can help, but then a swift, external appeals process ensuring timely independent review is also necessary. 

In this era of globalization, errant behavior from Governments can actually become quite embarrassing. A recent example of this can be found in the Snowden affair.   As seen recently, his “whistleblowing,” while highly controversial and risky, may actually shame the US into greater transparency.  This is a positive step.  So lets give mandatory internal processes a chance, but also authorize rapid, judicial review to make sure that they work.

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