New study: Corrupt intermediaries in international business transactions

A recent publication in the European Journal of Law and Economics, by Johann Graf Lambsdorff, alerts us to put intermediaries on center stage for the fight against corruption. They are often key drivers of corrupt transactions, but they easily escape prosecution and regulation. Innovative tools are required to make sure that intermediaries contribute to fighting corruption.

Note that section in bold. They aren't just neutral players: they are often facilitators and drivers of these activities too. The abstract runs as follows:

Attempts to deter corruption have little recognized the operation of intermediaries. This study takes a New Institutional Economic-perspective, supported by a variety of case studies, to identify firms´ choices of when to engage corrupt intermediaries (buy) and how to approach reform. It argues that firms should be held unbendingly liable for the operation of their intermediaries. Reform may also focus on certifying "good" intermediaries and holding the certifier liable for the performance of its agents. Prohibiting intermediaries is not advisable, as intermediation can be either arranged in-house (make) or mixed with legal services. Registration and auditing of intermediaries provides a more promising avenue for reform. Legislators should balance the additional regulatory burden by granting a wage premium to registered intermediaries and denying legal recourse to unregistered competitors.

(Hat tip: Jim Henry.) We've long argued for greater attention being paid to the intermediaries in illicit (and other) financial transactions - the banks, law firms, accountancy firms, corporate and trust service providers, and so on. The more attention is paid to them, the better.