US Anticorruption Policy in a Trump Administration: A Cry of Despair from the Heart of Darkness

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Like many people, both here in the US and across the world, I was shocked and dismayed by the outcome of the US Presidential election. To be honest, I’m still in such a state of numb disbelief, I’m not sure I’m in a position to think or write clearly. And I’m not even sure there’s much point to blogging about corruption. As I said in my post this past Tuesday (which now feels like a million years ago), the consequences of a Trump presidency are potentially so dire for such a broad range of issues–from health care to climate change to national security to immigration to the preservation of the fundamental ideals of the United States as an open and tolerant constitutional democracy–that even thinking about the implications of a Trump presidency for something as narrow and specific as anticorruption policy seems almost comically trivial. But blogging about corruption is one of the things I do, and to hold myself together and try to keep sane, I’m going to take a stab at writing a bit about the possible impact that President Trump will have on US anticorruption policy, at home and abroad. I think the impact is likely to be considerable, and uniformly bad:

  • First, the Foreign Corrupt Practices Act (FCPA) is likely to be substantially weakened, perhaps even repealed (though I think the latter possibility is still relatively unlikely). The FCPA “reform” crowd–the Chamber of Commerce, the defense bar, and their various supporters–will now have a Congress that is likely to support “reforms” that substantially weaken the statute, and a President who is already on record as calling the FCPA a “horrible law.” It may not be a top priority of the Republican Congress and the Trump Administration, but I expect that the Chamber and others will seize this legislative opportunity to push through many of the reforms that have been on their wish list for quite some time.
  • Second, even putting aside possible changes to the FCPA itself, I fully expect that the era of vigorous FCPA enforcement, which ran from about 2000 (give or take a couple years) up to the present, is over. It’s hard for me to imagine that the Attorney General of a Trump Administration (Rudy Giuliani, perhaps?) would make prosecuting foreign bribery a significant priority, or would devote substantial resources to this area. It might take a little while for the change to become apparent–there are still some cases in the pipeline, after all–but I’d be shocked if the US maintained anything like its current level of FCPA enforcement.
  • Now, one might point out that substantially weakening the FCPA and/or ratcheting back enforcement might be in tension with US obligations under the OECD antibribery convention. And so it would. But does anyone really think that a Trump Administration would care about this? After all, the only enforcement mechanism that OECD Convention has is public shaming (through bad peer review compliance reports), and I doubt that a Trump Administration would have much shame.
  • Insofar as the US continues to enforce the FCPA, I expect that enforcement will become much more politicized than it has been in the past, with more deliberate targeting of foreign companies (especially those that compete with firms close to Trump and his business associates) and more targeting of perceived political enemies. The complaint that FCPA enforcement is politicized, which I never took seriously before, is about to become much more plausible.
  • The DOJ’s Kleptocracy Initiative, which had been making so much exciting progress in its relatively short lifespan, is also likely to be on the chopping block. It seems to me highly unlikely that going after foreign kleptocrats–or indeed highlighting kleptocracy as a problem–is something that a Trump Administration will have much interest in. This is especially the case for kleptocrats with whom Trump, his family, his businesses, or his close associates do business. We don’t know for sure who these might be, but let’s just say I’m skeptical that the Kleptocracy Initiative, even if it survives, will spend much time looking into unlawfully obtained assets from associates of former Ukrainian President Viktor Yanukovych (a Putin ally) or Putin and his cronies.
  • Domestically, I think that there is a very serious risk that enforcement of US anticorruption laws will become much more heavily politicized. Keep in mind that President George W. Bush apparently fired several US attorneys for either pursuing corruption cases against Republicans, or not pursuing corruption cases against Democrats. And there’s more systematic evidence of some partisan bias in domestic anticorruption prosecutions more generally. But I expect this problem to increase by an order of magnitude under a President Trump, who has already indicated his desire to use the powers of the presidency to go after his political opponents. And I’m not even talking about anything so brazen as Trump’s pledge to appoint a special prosecutor to go after Hillary Clinton–I have in mind more systematic targeting of Democratic politicians and officials, as well as a systematic shielding of Trump allies.
  • I also expect that domestic anticorruption laws will be weakened overall, as Trump’s power to fill several Supreme Court vacancies will accelerate the trend, which we have already seen in the current court, of reading anticorruption statutes narrowly. (A silver lining, if you can call it that, is that the more this happens, the harder it may be for Trump to use those laws to target his political opponents, though that’s not much comfort.)
  • Oh, and the recent big push by civil society advocacy groups and others to push for more corporate transparency, for example beneficial ownership transparency and stronger know-your-customer rules? Dead. If anything, I would expect a Trump Administration to be actively hostile to efforts to establish such measures elsewhere.
  • Trump’s threat to strengthen defamation laws to allow him (or others) to sue media outlets for unfavorable coverage is, I hope, less likely to become a reality, as I hope that even the more conservative Justices of the existing Supreme Court would hold the line on that issue, no matter who else Trump appoints. But a chilling effect on the media is nonetheless a serious concern, as we have seen time and time again that a vigorous press is vital to exposing public corruption.
  • More generally, I expect that Trump himself will likely be, if not a kleptocrat in the most brazen sense, then at least a quasi-kleptocrat–not directly stealing from the US Treasury, but shaping US policies in ways that are designed to enrich Trump and his associates.
  • Turning back to the international realm, it probably goes without saying that grander plans to create a stronger international anticorruption architecture will go nowhere under a Trump presidency. Some of these proposals–like the International Anti-Corruption Court–are not ideas that I particularly liked in the first place. But I take no pleasure in the fact that under a Trump Administration, the US is unlikely even to engage in a serious way with meaningful proposals to help fight grand corruption around the world. Anticorruption advocacy groups are going to have to re-think their overall strategies in a world where the United States not only has abdicated its traditional leadership role, but is likely to be actively obstructionist.

So, is there anything to do about this? How can or should the anticorruption community respond? I have no idea. Right now I’m just too depressed to have anything positive or constructive to say. Hopefully that will be for another post in the not-too-distant future. But for now, I thought that maybe getting all these depressing thoughts down in writing would be somehow therapeutic. Honestly, I’m not sure if it was. Now I think I’m more depressed than ever. Sorry.

34 thoughts on “US Anticorruption Policy in a Trump Administration: A Cry of Despair from the Heart of Darkness”

    • I agree that that perception was likely a contributing factor (though how much is hard to say). But the fact that Clinton and Trump were considered by many to be equally or even similarly corrupt was one of the great tragedies of how this campaign was covered. The Clinton Foundation “scandal” was built mainly on insinuation and innuendo, misleading reporting, and in some cases outright falsehoods. Were there problems with how the Foundation was set up, and with the fact that many Foundation donors also had dealings with Secretary Clinton while she was serving as head of the State Department? Possibly. But the differences in the candidates’ records on these sorts of issues is so great that it beggars belief that the Clinton Foundation “scandal” was considered “corruption” in any serious way.

      I actually think that one of the problems with our political culture is that too many commentators–from both the left and the right–are inclined to bandy about the term “corruption” to describe anything shady or distasteful or that smacks of privileged access. For example, the casual description of the entire US campaign finance system as a form of “legalized corruption” is, I think, both misleading and counterproductive. But that’s a topic for another day.

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  2. Please keep us posted! I agree that this might not be the most pressing issue, but still important to follow up on. Given the current climate, it will be crucial to separate the optics and culture shock of a Trump presidency from the policy results (which might be less terrible than expected if people like you keep engaging in public discourse).

    Best wishes from the other side of the Atlantic…

    Reply ↓

    • Thanks for the words of encouragement! I do hope that the policy results turn out to be less terrible than expected. Perhaps I’m over-reacting in the shock and despair of the moment, and the bureaucratic inertia that is so often decried as a flaw in our system of government will turn out to be a saving grace, at least with respect to maintaining some of the laws and initiatives that are already in place.

      Reply ↓

  3. Prof. Stephenson,

    You will be surprised that many Malaysians wholly support the US DOJ’s Kleptocracy Initiative.

    The US DOJ’s Kleptocracy Initiative is a very fine example of anti-public corruption crusade of the USA. Many Malaysians are wholly supportive of such endeavours :

    http://aliran.com/web-specials/2016-web-specials/fbi-1mdb-malaysian-people-defrauded-enormous-scale/

    1MDB Saga– US Department of Justice does Malaysia a great favour

    Reply ↓

  4. Reading this did not make me feel any better about the recent election results. However, the sooner we come to grips with the scope and details of what we, as people who care about anticorruption, are up against, the more strategic we can be in resisting it.

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  5. I write this mostly in orde to assuage my own nervousness, so take this as my attempt to be as optimistic as possible given the rather bleak situation.

    I do wonder if there may some small chance that the Trump presidency is less destructive with regard to anticorruption measures than you laid out above. His final message was ultimately one that focused on corruption in a sense (“draining the swamp”) and given how impossible it is to really predict Trump’s actions and moods, there may be some chance that he latches on to this final issue as a form of mandate going forward.

    Additionally, the NY Times laid out some reasons why FCPA enforcement may not slow down quite as much in an interesting article – http://www.nytimes.com/2016/11/10/business/dealbook/how-trumps-presidency-will-change-the-justice-dept-and-sec.html?_r=0
    Though you did raise a number of concerns that this article does not really address.

    That all said. It does seem just as likely that your above post accurately captures what will happen. Guess we just have to wait and see.

    Reply ↓

    • I hope you’re right. But I’m not sure Trump believes or cares about any of his rhetoric, or whether his “drain the swamp” slogan will actually translate into any meaningful action against general corruption, as opposed to measures designed to weaken “The Establishment.”

      I took a look at the NYT piece, hoping to be encouraged. I came away still fairly pessimistic. The main points were (1) Trump won’t want to be seen as soft on corruption given his campaign rhetoric; and (2) FCPA investigations aren’t that expensive, because the DOJ relies on self-reports and company internal investigations, so budget cuts there won’t hurt so much.

      On point #1, again, I don’t think he cares about or will feel especially constrained by his anticorruption rhetoric when dealing with the FCPA. First, the average (Trump) voter probably has never heard of the FCPA, much less care about enforcement rates. Second, if pressed he can easily fall back on his earlier claim that the FCPA is a horrible law that burdens US business, which ties in nicely to his claim that countries like China “are eating our lunch” because we have been wusses who fight with one hand tied behind our back. Third, as I said above, I think the anticorruption rhetoric is exclusively about channeling anti-establishment anger, not about actual anticorruption policy.

      As for point #2, I think it kind of misses the point. FCPA enforcement is likely to diminish not because the DOJ will be starved of resources, but because the lobbyists who have the ear of Trump and his attorney general will ensure that the people heading the Fraud Section don’t make FCPA enforcement a priority.

      Again, though, I dearly hope to be proven wrong!

      Reply ↓

  6. Hi Matt,

    Your post is certainly one you (and many others) did not expect to make. From an outsider point of view (in a country with compulsory voting) it is of concern the US lead in anti-corruption measures internationally may well fall off. However, the FCPA marks 40 years next year and many countries have implemented similar statutes. The UK may pick up the lead, and here in Australia enforcement efforts have picked up since a highly critical OECD Phase III review a few years back. In essence, the US is not alone in fighting foreign bribery.

    On a slight silver-lining note, Giuliani as AG may well politicize AC measures, however he also likely to push strongly against organised crime and racketeering, using RICO to pursue domestic corruption. Not much in the current climate, but it is something.

    Reply ↓

    • I’m so glad that my doom-and-gloom post has provoked so many people to write in with suggestions as to why things might not be quite as bad as I fear! I’m not sure I buy any of it, but boy, it makes me feel better–if only about the human spirit’s bottomless capacity for hope!

      More seriously, the point you raise about some other country taking the lead on foreign antibribery enforcement is one that occurred to me as well, though the record to date is not encouraging. The UK is a possibility, given the breadth of the UK Bribery Act. Other countries, including Australia, offer somewhat less promise (unless there’s concerted global action), because of their limited jurisdiction. The nice thing about the FCPA is that it reaches any company listed on a US stock exchange or any transaction that takes place in the US (even if only one small part), which gives the statute very broad coverage. Even if Australia amped up enforcement of its equivalent law by a factor of 20, that still won’t help for all the firms that are not based in Australia and don’t have any other Australia contacts. Still, it would be a help!

      Reply ↓

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  10. Thank you for writing this, even if it depressing to read. You’re right that anticorruption policy is narrow compared to say, the Affordable Care Act, I doubt the media will give as much coverage to this, so it’s important that you raise the issues.

    Thinking back to one of my recent post, it is a cruel irony that a man who threw around the term “corrupt” so causally to attack is opponent is posed to dismantle the anticorruption legal regime. In addition to the myriad policies you list, any hope for meaningful campaign finance reform looks dead, whether through the Congress, or through the Supreme Court which will gain a Trump-appointed justice. Moreover, while Trump had a vague anticorruption platform, I doubt he will actually follow through on it, given that he’s already walked back from some of his campaign promises.

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  12. Interesting piece and certainly thought provoking. I’m not overly convinced, however, that the future is so bleak. In general, even with the majority in the house and senate, he won’t be able to overhaul the entire ‘system’. For that, the GOP is simply too divided. They are by no means a homogeneous group. More specific, 1) Doesn’t the FCPA also generate significant revenue by its fines and/or settlements? I doubt Trump would just want to do away with these instruments. I share your concern for politicized investigations, but as you’ve mentioned that’s not a new discussion. 2) Combating things like terrorism, extremism and illegal immigration can’t be done without solid AML and KYC practices in place. I have little doubt that strict vetting and a push for transparency will gain traction even under a Trump administration. On their recruitment site (greatagain.gov) they also ‘warn’ applicants that all information confidentially submitted may become public one day under the freedom of information act. That’s a sign of awareness and may even attribute some sense of respect for the notion of transparency ? 3)US media is resilient enough to withstand the threat of lawsuits and claims of defamation, have a little faith! 4) Progress is often two steps forward and one back; ideas on anti corruption have been planted and taken root. They won’t be suddenly eradicated now that Trump is about to assume office. It may even help to get the real discussion on domestic cronyism and corruption started, I wouldn’t be surprised if he is eventually impeached because of corruption related legal issues. Hypothetical as this may sound, it would be a huge boost for the anti-corruption movement both domestic and global.
    And if all of the above turns out to be incorrect, the USA will see higher levels of corruption which will have a real impact on the economic and security situation, and will likely trigger a renewed anti-corruption policy response! Patience is a virtue however, but then again anti corruption has always been a longterm process. Stay strong 🙂

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  14. Dear Matthew, A lot has been written in response already to your blog. Just a couple of points to add:
    First, the use of ‘corruption’ accusations for a vast swathe of activities, and as a means to label or disable your opponent, has always been common. I am not sure this election represented anything new in this regard. It has thrown into relief however how definitions of corruption can vary, within in and across societies. For one segment of the public, corruption might be more about abuse of power and influence and insiderdom, for another it may be about secrecy and getting away with it, despite the rules. Of course corruption can be both (undue influence, policy capture, conflict of interest, abusive tax practices, etc.) or even more (a campaign finance system that is broken and unfair), but there is selectivity, by voters and commentators, in applying the corruption label. One can ask if a wide definition of corruption ends up making our efforts to thwart corruption even more difficult. At the same time, it’s helpful and necessary as advocates to call a spade a spade.
    What will matter now is how and to what extent corruption in the US is prevented by existing transparency mechanisms and ultimately how corruption is pursued by law enforcement. Another blog that raises these questions with regard to (similar issues) in open government was put out by the Sunlight Foundation. http://sunlightfoundation.com/2016/11/10/the-trump-questions-what-will-transparency-and-open-government-look-like-in-the-next-white-house/ One piece of legislation I believe you missed in your review of laws-at-risk is Dodd Frank, with all its implications for financial regulation and corporate transparency, especially in the extractive sector. All eyes are now on what happens next — and what it might mean for global anti-corruption norms, processes and initiatives.

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  15. Thanks for the insightful, albeit depressing, article. Future of the statute aside, I can’t help but wonder what kind of FCPA problems Trump himself may already have given the foreign components of his businesses and the way he seems to operate. Not to mention the obvious conflicts-of-interest and complexities he’d create once he’s in office and directing trade policy and other foreign policy that directly impacts his foreign properties, businesses holdings and personal wealth? Are there fact scenarios where those policies could be interpreted as bribes? Frankly, I’m not sure where the FCPA ends and Kleptocracy begins here, but aren’t there additional issues given that his children will be managing the businesses and he will be gaining financially while he serves as president ? What’s the legal mechanism for keeping an eye on this – now, during the transition, and beyond (with a Trump-appointed AG)? Is there any way the FCPA can help flush out the financial information/relationships the American people should have had months ago?

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    • This raises an interesting possibility. Trump himself appears to be a kleptocrat- look to the way he has conducted his business in the past (a great example of this is the Trump ice rink in Central Park). In my eyes, this image has been reinforced through his appointment of lobbyist and family members to his transition team. But promotion of kleptocracy at home does not necessarily translate to weaker anticorruption measures abroad. A common refrain is that the US is too aggressive in its extraterritorial applications of the FCPA. Perhaps under a Trump administration, the DOJ/SEC will push for even more aggressive enforcement against foreign companies under FCPA. This could lead to greater outcry about uneven enforcement. And such hypocrisy would not be unexpected from this man.

      Reply ↓

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