Anticorruption Tools in the Anti-Trump Toolkit: A Primer

[Kaitlin Beach provided helpful research and thoughtful contributions to this post.]

Since Donald Trump’s election, critics have asserted that his presidency presents unprecedented risks of corruption, cronyism, and conflict of interest. Many argue that President Trump and members of his administration are already engaging in conduct that is not only unethical, but also illegal. Because it can be hard for non-specialists to keep track of the myriad rules that have been referenced in the context, this post provides a brief, non-technical overview of the most important federal laws and regulations that are designed to prevent corruption, conflict-of-interest, and self-dealing in the U.S. government, focusing on those that have been most widely or most creatively discussed in relation to fighting a purportedly corrupt Trump administration.

U.S. Constitutional Requirements

  1. The “Foreign Emoluments Clause” (U.S. Constitution, Article I, § 9, cl. 8)
  • What the law regulates: The so-called Foreign Emoluments Clause states that: “[N]o Person holding any Office of Profit or Trust under [the United States], shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” The Emoluments Clause was included in the Constitution due to a worry that American ambassadors might be easily corrupted by European powers, especially when overseas. The Emoluments Clause has not been the subject of national concern since the days of the Founders — for example, when John Jay accepted a horse as a gift from the King of Spain — and, as such, many questions regarding its applicability are still unanswered. For example. there is uncertainty as to what constitutes an “emolument” in the first place: some legal scholars advocate a very broad reading of the Clause that would cover any situation in which a foreign state or its officer gives any item of value to a federal officer. Others argue for a much narrower reading. In particular, some suggest that an emolument has to be something more than a market-value exchange, while others have argued that even transactions at fair market value can count as emoluments for purposes of the Clause. The Clause has not been subject of a major court case, so there is no guidance from the judiciary.
  • How the law might (or might not) apply to the Trump administration: Ever since President Trump’s election, this largely forgotten Constitutional provision has taken center stage due to the presence President Trump’s companies and holdings across the world. The concern is that his businesses will accept payments from foreign countries. The week following the inauguration, Citizens for Responsibility and Ethics in Washington (CREW) filed a lawsuit in the Southern District of New York, asking the court to rule that President Trump’s “vast, complicated, and secret” business dealings with foreign governments violated the Emoluments Clause. Aside from the uncertainties surrounding the Foreign Emoluments Clause already noted, there remains a key question of if the Clause even applies to the President at all. On the one hand, the text of the Clause seems relatively clear: by prohibiting a “person holding Office of Profit or Trust” from accepting emoluments, the Clause covers the President. President Obama’s Office of Legal Counsel noted that “The President surely ‘hold[s] an[] Office of Profit or Trust.’” The text of the Constitution also refers to the President as holding “Office.” However, some argue that the Clause could be inapplicable to the President based on the view that the Clause only reaches the conduct of appointed federal statutory offices, not elected or constitutionally created positions.
  • How it is enforced: The text of the Emoluments Clause itself does not provide any express remedies for its violations. One way that constitutional provisions like this are sometimes enforced is through lawsuits seeking injunctions against the allegedly unlawful conduct; CREW’s lawsuit is an example of such a suit. However, there are important limits to the ability of private parties to enforce the clause through litigation. First, as with any federal claim, a plaintiff needs to have standing to bring a claim under the Emoluments Clause, which in turn requires that the plaintiffs show that they have suffered a personal, concrete injury directly traceable to the allegedly unlawful action. Several commentators have argued that the standing issue may pose a serious challenge to CREW’s suit. Even if CREW does not have standing in this lawsuit, though, one can imagine some other plaintiffs who could stand a better chance at getting their suit heard: one of Trump’s hotel and leisure competitors could argue that it has been hurt because of foreign payments to Trump hotels. For example, DC’s Cork Wine Bar, which has sued the Trump hotel for unfair competition, could argue an injury from business being taken by such alleged Emoluments Clause violations. Some commentators have alternatively suggested that a state government could sue to enforce the Emoluments Clause because of the unique enforcement role of state attorneys general, who could even argue that Emoluments Clause problems violate state law. In addition to the standing hurdle, the Emoluments Clause itself doesn’t seem to confer an individual right or cause of action, meaning even if the Emoluments Clause is violated, it’s not clear anyone is entitled to sue in court to stop or punish the violation. And even if some party manages to get to court and have a court hear the case, a court may decide the issue is too much of an issue for the Executive branch to manage and invoke the “political question doctrine,” under which courts decline to decide issues that seem to belong to other parts of the government.

II. Federal Statutory Requirements

  1. The Federal Official Bribery Statute (18 U.S.C. § 201)
  • What the law regulates: This statute prohibits two distinct offenses, bribery and unlawful gratuities. The bribery prohibition, § 201(b), prohibits any person from giving, offering, or promising anything of value to a public official, and prohibits the public official from seeking, accepting, or agreeing to accept anything of value, if the thing of value is given with the “intent to influence” an official act or in “return for being influenced.” The prohibition on unlawful gratuities, § 201(c), prohibits any person from giving, and prohibits a public official from accepting, anything of value if that payment is made “for or because of” any official act. The distinction between bribery and gratuity centers around the existence of a causal connection between the offer (or receipt) of the thing of value and the performance of an official act. If there is a direct casual connection, i.e., a quid pro quo, then the crime is bribery. A looser connection constitutes a gratuity: the Supreme Court has clarified that the § 201(c) does not require a “quid pro quo,” but rather just a “nexus” to an official act. Money or a gift can be given to an official after that official has acted in a certain way, for example a sign of gratitude for that action. But the Supreme Court recently noted, in McDonnell v. United States, that, in order to be convicted under § 201, an officer must take “official action” in exchange for a gift. The Court read requirement rather narrowly, and listed examples like a lawsuit, another type of court proceeding, or some other obviously official activity. Taking a meeting, “making a call, or arranging an event” does not make the cut for an “official act.” The narrow “official act” definition set forth by McDonnell undoubtedly made it more difficult to pursue bribery or gratuities charges. The penalties for bribery are more severe than for unlawful gratuities.
  • How the law might (or might not) apply to the Trump administration: The federal official bribery statute is applicable to the President and other White House officials. In theory, if, for example, members of a foreign government were patronizing a Trump Hotel or business in exchange for a benefit in trade or a military sale, this could constitute a violation of § 201. However, such allegations might be extraordinarily difficult to prove in practice. .
  • How the law is enforced: The Bribery Statute is a federal criminal law and is enforced by the United States Department of Justice. However, it might not be terribly realistic to imagine that the DOJ would aggressively investigate allegations of bribery against high-level administration officials, unless there was unusually compelling evidence.Congress can also enforce the law against the President by pursuing impeachment proceedings.

2. The Foreign Corrupt Practices Act (15 U.S.C. § 76dd–1, et seq.)

  • What the law regulates: The Foreign Corrupt Practices Act (FCPA) prohibits U.S. citizens and corporations (as well as others, including foreign corporations that list on U.S. exchanges) from giving or offering anything of value to foreign government officials in order to obtain or retain business. In addition to this anti-bribery provision, the FCPA also includes requirements on corporate record-keeping.
  • How the law might (or might not) apply to the Trump administration: In principal, if Trump-affiliated businesses, or members of the Administration, were to offer foreign government officials favorable treatment in exchange for making decsisions that would benefit Trump’s businesses, this could be an FCPA violation. However, as with violations of the domestic federal bribery statute, finding evidence for such violations would likely be extremely difficult, even if the improper conduct took place. There have also been some suggestions that the Trump Organization may have violated the FCPA in connection with business deals that took place before Trump was elected. (For example, some have suggested that Trump organization’s involvement with a hotel in Azerbaijan may have entailed FCPA violations, though it’s not clear its activities could or would be prosecuted.)
  • How the law is enforced: The FCPA is jointly enforced by the Securities and Exchange Commission (SEC) and the DOJ. The SEC has civil enforcement authority against companies that list on U.S. exchanges, while the Department of Justice has civil enforcement authority over other actors covered by the FCPA, as well as sole criminal enforcement authority.

3. The “Anti Nepotism” Statute (5 U.S.C. § 3110)

  • What the law regulates: This statute prohibits federal officials from hiring or helping to get hired any of their “relatives,” where relative is defined as “an individual who is related to the public official as father, mother, son, daughter, brother, sister, uncle, aunt, first cousin, nephew, niece, husband, wife, father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, stepfather, stepmother, stepson, stepdaughter, stepbrother, stepsister, half brother, or half sister.” However, according to a recent decision by the Office of Legal Counsel (OLC), the statute does not apply to White House positions, particularly given that another statute, 3 U.S.C. § 105, allows the president to appoint White House staff members without regard to other laws that restrict employment and compensation of federal employees.
  • How the law might (or might not) apply to the Trump administration: Discussions of the anti-nepotism statute came to the fore when President Trump announced he would be appointing his son-in-law, Jared Kushner, as a senior White House adviser. The OLC, however, cleared the appointment because of the limitations of the reach of the statute, noted above. More recently, the Trump White House announced that Ivanka Trump, the president’s daughter, will have an official White House role. Some transparency experts actually take comfort in Ivanka Trump and Jared Kushner being appointed to official positions rather than advising in an informal capacity, because they will now be subject to financial conflicts of interests laws (discussed further below).
  • How the law is enforced: The DOJ enforces the anti-nepotism statute. However, even in cases where the Department finds a violation of the statute, the penalty for violation is just to withhold salary or other financial remuneration for the appointed employee; the statute does not require removal of the individual from the federal position. So even if the statute applied to White House positions, Ivanka Trump could nevertheless stay put because she, along with her husband, is not accepting a salary for her work at the White House.

4. The Ethics in Government Act of 1978 (5 U.S.C. app. §§ 101 et seq.)

  • What the law regulates: This statute requires high-level elected and appointed officials, across the three branches, to disclose their personal finances. The Act casts a wide net, covering the President, Vice President, Members of Congress, and Cabinet officials. The law also covers other officials — such Undersecretaries of departments and heads of most executive and independent agencies — based on their pay grade. Completed financial disclosure forms are submitted to the United States Office of Government Ethics (OGE). The OGE then releases a public report on the official or nominee, identifying any potential conflicts. Lower level executive officials are also required to disclose their finances, but these disclosures are kept confidential.
  • How the law might (or might not) apply to the Trump administration: President Trump, along with all his Cabinet nominees, are required to comply with this law. During the first wave of Senate confirmation procedures for the president’s Cabinet nominees, Senate Democrats complained that some of the nominees had not even begun the financial disclosure process. (Cabinet nominees are also subject to other requirements, like an FBI background check and nominee questionnaires designed by the relevant Senate committee.) The Senate committees set their own rules about whether the financial disclosure review forms must be filed before a hearing or simply before the full Senate vote. But the director of OGE, Walter Shaub, wrote to Senators in January highlighting serious concerns over proceeding with hearings without first reviewing the disclosure forms: “I am not aware of any occasion in the four decades since OGE was established when the Senate held a confirmation hearing before the nominee had completed the ethics review process.”
  • Who enforces the law: The Attorney General can bring a civil federal suit against any individual who willfully fails to report the information required by the Act, or knowingly and willfully falsifies information in a report. The penalty for such a violation is capped at $50,000. The heads of agencies and the OGE are charged with advising the Attorney General if there is reasonable cause to believe that an individual has falsified his or her disclosure reports or failed to file the required information. The OGE itself is charged with promoting ethics across the federal government, but it has no enforcement powers.

5. Personal Financial Conflict of Interests Statute (18 U.S.C. § 208)

  • What the law regulates: This is the principal financial conflict of interest law that requires “recusal” or disqualification of officials participating in governmental matters affecting their own personal financial interests. The OGE has clarified that this law applies “where any financial interest exists, no matter how small.” A waiver may be granted if the employee fully discloses the financial interest to an ethics official and receives an advance written determination that “the interest is not so substantial as to be deemed likely to affect the integrity of the services which the Government may expect from such officer or employee.” These waivers are rarely granted in practice. However, the statute does not apply to the President or Vice President because the definition of “officer” and “employee” as articulated in 18 U.S.C. § 202(c) explicitly excludes them. It does, however, apply to all other officers in the executive branch.
  • How the law might (or might not) apply to the Trump administration: As noted above, and as emphasized by President Trump’s lawyers, § 208 does not apply to the President himself. However, the law applies to other members of the Trump administration, and concerns have been raised about possible violations. Recently, for example, reports have alleged that Kellyanne Conway still retains a significant financial interest in her polling and consulting firm, the Polling Company, even though she resigned from her position within the company. Among the firm’s clients are lobbying organizations like the National Rifle Association and the Right to Life Committee, and corporations like Boeing. If Ms. Conway is advising the president on any decisions that could affect these companies or her firm’s relationship with them while still retaining financial interest in the firm, she could be running afoul of 208.
  • How the law is enforced: The financial conflicts of interest statute is a federal criminal law and is enforced by the DOJ. The penalties for violating the statute include up to five years imprisonment for willfully engaging in the prohibited conduct. The Attorney General may also bring a civil suit; the civil penalty is capped at $50,000. Rather than seeking criminal penalty or civil monetary liability, the Attorney General may petition a federal district court for an order prohibiting the federal official from continuing the offensive conduct.

6. The Stop Trading on Congressional Knowledge (STOCK) Act ( L. 112­–105)

  • What the law regulates: This statute was designed to curb insider trading within the federal government. The STOCK Act was primarily designed to combat insider trading by members of Congress and their staff, but the Act also applies to executive branch employees, including the President and Vice President. The act does not actually implement stricter insider trading rules. Rather, it makes clear that Members of Congress and other federal officials “are not exempt from the insider trading provisions” of existing law. In addition, it requires government officials to disclose financial transactions like public security trades within 30 days of notice of the transaction. Provisions of the law require the financial disclosure reports of certain officials, including the President, Vice President, and presidential appointees confirmed by the Senate to be posted on the Internet.
  • How the law might (or might not) apply to the Trump administration: If Trump continues to be involved in the running of his businesses — even tangentially — and he uses information he has garnered in his position as President in securities transactions related to his businesses, he could be in violation of insider trading rules and thus the STOCK Act. Moreover, there’s an additional concern that he could pass on information to his children. Insider trading laws also prohibit passing inside info on to others who then use the information to trade. Though Trump insists his children are running the Trump business empire independently, Eric Trump has also indicated that he will provide his father with quarterly business updates.
  • Who enforces the law: The SEC enforces the rules against insider trading, including the important Rule 10b-5 under the Securities and Exchange Act most commonly used to punish much insider trading. Rule 10b-5 can also be enforced by private suits. The Rule deals with fraud, and punishment for insider trading would be damages for the given fraud. It is not clear whether violation of the STOCK Act would lead to something more. The OGE can issue guidance to executive branch officials, and the STOCK Act instructs the Office to issue guidance on how the Act applies specifically to the President and Vice President. However, only Congress can take the step of impeachment. For more on the challenges of effectively enforcing the STOCK Act, see here and here.

III. Federal Ethics Regulations for the Executive Branch (5 CFR 2635)

  • Introductory Note: The principal federal ethics regulations for the executive branch, codified at 5 CFR 2635, apply only to to “any officer or employee of an agency, including a special Government employee” but explicitly do not cover the President or Vice President. 3 CFR 2635 sets out “fourteen basic principles of ethical conduct” for executive branch personnel. The standards cover a wide array of conduct, like rules for accepting gifts from outside sources and mandates of impartiality in performing one’s official duties. The focus here is on those standards that are likely most relevant to corruption concerns in the Trump Administration.
  • Enforcing the Regulations: The OGE uses a network of Designated Agency Ethics Officials at each agency to implement the standards and advise government employees. While the OGE ”enforces” the regulations, it has no investigative authority or disciplinary powers. The only real power that OGE has is to recommend that “the employing agency investigate the matter and consider taking disciplinary action against the employee.” In the case of White House employees, even where there is televised proof of ethical misconduct, there is little that can be done unless the White House itself decides to officially sanction an employee. However, the normative force of an OGE public recommendation can be strong and the Office’s letters often garner widespread media and public attention.
  1. Misuse of Position (5 CFR 2635, Subpart G, §§ 7635.701-705)
  • What the standard regulates: This standard is designed to ensure that employees do not misuse their government positions. The standard covers misuse of position both for private gain (for the employee or people and organization with whom he is associated) and use of the position to intimidate or coerce others into inaction. Employees should not use the color of their position, including writing on their official stationery, unless engaging in officially sanctioned federal government work.
  • How the regulation might (or might not) apply to the Trump administration: This standard garnered widespread attention recently, after Kellyanne Conway explicitly advertised products from the President’s daughter’s fashion line on live television. Indeed, the Director of the Office of Government Ethics wrote to the White House arguing that Ms. Conway’s actions “would establish a clear violation of the prohibition against misuse of position.” The misuse of position standard would cover behavior beyond the scope of Ms. Conway’s public advertisement of Ivanka Trump’s fashion line. Had Ms. Conway encouraged her office staff, in private, to purchase the products or any other product related to Ivanka Trump or members of the Trump administration, that behavior would still be covered by the regulation. Employees with support staff may generally not ask that staff to prepare work or engage in activities unrelated to federal government work if on official time and using government resources.

2. Conflicting Financial Interests (5 CFR, Subpart D, §§ 7635.401-403)

  • What the standard regulates: The OGE vets thousands of federal employees across the various agencies, reviewing their financial disclosures to ensure that they comply with the federal conflict of interest statute but the OGE standard goes further than the statute. According to the standard, executive employees are prohibited from participating in an official government capacity in “a manner in which he has a financial interest or in which his spouse, minor child, employer, or . . . other specified persons has a financial interest.” The federal statute only covers personal financial interests.
  • How the regulation might (or might not) apply to the Trump administration: By casting a wider net than the federal statute, this standard can capture more conflicts between those in the Trump administration with ties — even indirect — to the Trump businesses, and federal officers who may have connections to other businesses. Officials or employees with stocks or financial interests that could present a conflict with their position — Secretary of Health and Human Services Tom price, for example, divested from over 40 companies that could have created conflicts — must divest fully from those companies, rather than handing control of those interests to a family member. Jared Kushner was reportedly got rid of many of his financial assets, but sold much of them to his brother and created a family trust to be controlled by his mother. Some ethics lawyers complained that this would not be sufficient: first, a trust controlled by a family member is not truly blind and, second, many of Kushner’s assets were in property and so he still retains knowledge of their existence and decisions that could affect their value, even if he is not the decision-maker himself. As such, it is possible that Kushner could participate in some government activity in his official capacity as adviser in which he could have knowledge that his family’s financial interests were at stake.

3. Impartiality in Performing Official Duties (5 CFR 263, Subpart E, §§ 2635.501-503)

  • What the standard regulates: This standard is designed to cover circumstances that are not captured by the scope of the Conflicting Financial Interests standard. The standard seeks to avoid any appearance of loss of impartiality. There are two subparts to the standard. The first, § 2635.502, covering personal and business relationships, notes that employees should get specific authorization before engaging in government matters that could have even the appearance of impartiality. This goes beyond the employee or a member of his or her household having a direct or indirect financial interest in a government matter. The standard covers situations where the employee knows someone who “represents a party” involved in the matter. The second part of the standard, § 2635.503, covers “extraordinary payments.” The standard prohibits employees from working on a matter if she received an “extraordinary payment” of $10,000 or more in value from a party related to the matter before she entered government service. The payment must be made after the employee knew of her appointment to her government position. The head of an agency or the president may waive this prohibition.
  • How the regulation might (or might not) apply to the Trump administration: Democrats pointed out that EPA Director Scott Pruitt is expected to be anything but impartial when carrying out his duties. Mr. Pruitt was involved in multiple lawsuits against the EPA in which he received significant financial enumeration, and, as Oklahoma Attorney General, he launched a suit against the EPA seeking to halt its climate change policy. During his confirmation process, Mr. Pruitt agreed that he would seek authorization from the appropriate ethics official to continue work on the Oklahoma – EPA suit. As of the end of March, however, it appears that Mr. Pruitt had not yet released any information about such a grant of authorization and multiple Senators have followed

One thought on “Anticorruption Tools in the Anti-Trump Toolkit: A Primer

  1. Finally! since day 1 of the trump administration, i’ve been imploring elected officials to stop campaigning and to do their job: to put their heads down and figure out the law. thank you for this summary.
    i believe there is value in exploring administrative law. if nothing else, certain officials are entitled to certain information, such as contracts entered into. in my experience, trump skirts, in fact, completely ignores, the part of the process that requires disclosure. this may be a basis for voiding a contract; certainly this should be the basis for disqualification from renewal and from future contracts. i believe that this is important because what trump’s businesses do necessarily requires contracts with federal, state, and municipal agencies (perhaps all over the country). at a glance, the information available to the public about contracts with NYC shows that trump completely ignored Vendex requirements. Laches might apply, but how will we know unless we see the contract? i have been unable to persuade the public advocate, who clearly has the power to get copies of all contracts with the City, that this is worth doing. even if its a small step, if we make many such small steps all over the country, trump will be in litigation, his projects will be tied up, and that’s not nothing. RESIST

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