About Matthew Stephenson

Professor of Law, Harvard Law School

Anticorruption Bibliography–April 2017 Update

An updated version of my anticorruption bibliography is available from my faculty webpage. A direct link to the pdf of the full bibliography is here, and a list of the new sources added in this update is here. As always, I welcome suggestions for other sources that are not yet included, including any papers GAB readers have written

When, If Ever, Does a Favorable Legal or Regulatory Decision Count as an “Emolument”?

Last week, I posted about the amended complaint that the Citizens for Responsibility and Ethics in Washington (CREW) filed in its lawsuit against President Trump for alleged unconstitutional acceptance of “emoluments” from various sources. My post last week, like much of the immediate commentary on the amended complaint, focused on the new plaintiffs who had joined the suit, and the extent to which their addition mitigated concerns about whether the court would have jurisdiction to hear the case. But the amended complaint was notable for other reasons. In particular, it fleshed out more details about President Trump’s alleged violations of the Foreign Emoluments Clause, and also added a new set of allegations focused on separate violations of the Domestic Emoluments Clause.

What was most striking to me about the allegations detailed in the amended complaint is that in several cases, the alleged “emolument” is not a monetary payment or a market transaction, but rather a legal or regulatory decision by a government (U.S. or foreign) that favors businesses owned by President Trump. Consider the following examples:

  • Donald Trump had long sought—and had long been denied—Chinese trademark protection for his “Trump” brand in China. Shortly after his inauguration, President Trump made statements suggesting that he might reconsider the U.S. commitment not to recognize the government of Taiwan (the so-called “One China” policy). On February 9, President Trump met with Chinese President Xi Jinping. Following the meeting, President Trump reaffirmed the U.S. commitment to the One China policy. Five days later, China granted the Trump Organization its trademarks. According to CREW, the decision to grant the trademarks was an emolument, from the government of China to President Trump.
  • The Trump Organization has several ongoing real estate development projects in Indonesia, which require permits from the government. According to the CREW complaint, if and when the government of Indonesia grants these permits, this will constitute an emolument from the government of Indonesia to President Trump.
  • Prior to the election, a company owned by President Trump signed a lease with the U.S. General Services Administration (GSA) to open what is now the Trump International Hotel at a property owned by the U.S. government. The lease agreement stated that “no … elected official of the Government of the United States … shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom.” Prior to President Trump’s inauguration, a GSA official indicated that the GSA thought that Trump would be in violation of the lease unless he fully divests from the hotel. Shortly after the inauguration, President Trump appointed a new GSA Administrator. On March 23, the GSA issued a letter taking the position that President Trump is not in violation of the lease, principally because President Trump would not receive any earnings from the hotel until he leaves office. Many ethics experts derided the GSA’s letter as unpersuasive. The CREW amended complaint goes further, arguing that the GSA’s letter is itself an “emolument” from the U.S. government to President Trump.
  • Prior to the election, the Trump company that owns the D.C. hotel applied for a “Historical Rehabilitation Tax Credit,” which, if approved, could be worth up to $32 million. The application has cleared the first two phases of the three-stage approval process—the first step before the election, the second step after the election (but before inauguration). The National Park Service must provide the third and final approval. If the Service were to grant that approval, according to the CREW complaint, this would be an unconstitutional domestic emolument to the President.

All of these alleged “emoluments” are regulatory or legal decisions by government agencies. Can such decisions count as emoluments? When or under what conditions?

These turn out to be hard legal questions, and to the best of my knowledge there’s very little existing case law or scholarly commentary. I’ll throw out some preliminary thoughts here, but this issue likely deserves more sustained and careful analysis from genuine experts (which I am not). Continue reading

CREW’s New and Improved Legal Complaint Against Trump

Can anything be done about the serious corruption risks posed by Donald Trump’s dual role as President of the United States and patriarch of a vast business empire? Do any of these apparent conflicts of interest break the law? If so, is it reasonable to hope that the courts will step in?

As readers of this blog are likely aware, a group of activists, lawyers, and legal scholars have asserted that the answers to the above questions are Yes, Yes, and Yes. The fact that President Trump’s companies do business with foreign governments, the argument goes, means that the President is in violation of the U.S. Constitution’s Foreign Emoluments Clause, which prohibits any person “holding any office of profit or trust under [the United States]” from accepting, without congressional consent, “any present, emolument, office, or title, of any kind whatever, from any king, prince, or foreign state.” Shortly after the inauguration, Citizens for Responsibility and Ethics in Washington (CREW), a nonprofit advocacy group, filed a lawsuit seeking a declaration that President Trump was in violation of the Foreign Emoluments Clause and a court order enjoining the President from further violations of that clause.

Before CREW filed its suit, I was skeptical about the prospects of a judicial remedy for this alleged Emoluments Clause violation—not because I didn’t think that President Trump was in violation of the clause (quite the opposite), but because I didn’t think it was realistic to expect that a court would be willing to order the sitting President to rearrange his financial affairs (or hold him in contempt if he didn’t). My prediction was that the court would find a way to dismiss the suit on jurisdictional grounds, or deem it a non-justiciable “political question.” And my skepticism only deepened after CREW filed its original complaint. Like many other legal analysts, I thought that CREW’s claimed basis for “standing” (which requires a direct, concrete, non-ideological injury to the plaintiff) was flimsy and would likely be rejected, and I worried that the whole enterprise would prove counterproductive, because a dismissal on jurisdictional grounds would be widely misinterpreted as a judicial rejection of the substantive claim that Donald Trump is violating the Constitution.

Two days ago, CREW filed an amended complaint, which has caused me to rethink (though not entirely abandon) my earlier skepticism. The new complaint includes a number of changes, but by far the two most important are these:

  1. The amended complaint adds two new plaintiffs to the suit—an association of restaurants and a Washington, D.C. event planner—whose claims to have standing are much stronger than CREW’s.
  2. The amended complaint also adds new substantive allegations that President Trump is not only violating the Foreign Emoluments Clause, but is also violating a separate provision of the Constitution, the so-called “Domestic Emoluments Clause,” which states that the President shall receive a fixed salary, which cannot be changed during his term, and that the President “shall not receive within that period any other emolument from the United States, or any [state].”

In a future post I may have something to say about the Domestic Emoluments Clause issue, but for now I want to focus on how much difference the addition of the two new plaintiffs makes to the likelihood that the lawsuit will survive a motion to dismiss on jurisdictional grounds. My initial take is that it makes a big difference—the case for standing, under current doctrine, is now much stronger than it was before—but some problems still remain. Continue reading

The U.S. Combating Global Corruption Act Is a Worthwhile Proposal that Deserves More Attention

I know a lot of what I write on this blog is pessimistic, critiical, or both, but every once in a while it’s nice to call attention to some positive, encouraging developments. In this spirit, I was heartened to read that a bipartisan group of U.S. Senators last week introduced a new bill, the “Combating Global Corruption Act of 2017” (CGCA), that strikes me as quite a good idea overall. Yes, I realize that most bills like this never make it out of committee, let alone get enacted into law. And yes, the bill has a number of problems, some of which might be fixable through the amendment process but others of which are more inherent. But on the whole, it seems to me that this is the sort of bill that the U.S. anticorruption community ought to support.

Here’s a quick summary of what the bill would do, why I think it’s basically a sound idea, and (because I can’t help myself) a few of its problems and difficulties. (The full text of the bill can be found at the link above, and a press release about it from Senator Cardin’s office is here.) Continue reading

Guest Post: The U.S. Retreat from Extractive Industry Transparency–What Next?

Zorka Milin, Senior Legal Advisor at Global Witness, contributes today’s guest post:

The US Department of the Interior recently took steps to halt its work on implementing a global transparency initiative for the resource sector, known as the Extractive Industries Transparency Initiative (EITI). This announcement came on the heels of the Congressional action repealing a related rule, adopted by the SEC pursuant to Section 1504 of the Dodd-Frank Act, that required oil, gas and mining companies to publish their payments to governments. The two issues are related but distinct. First, 1504 rule required US-listed companies to report payments they make to governments around the world. In contrast, the Extractive Industries Transparency Initiative (EITI) applies in those countries whose governments choose to join the initiative (including the US) and requires payments to be disclosed both by the recipient government as well as by all extractives companies that operate in that country. These differences in scope make the two transparency measures necessary complements to each other. EITI produces valuable information from governments about the payments they receive for their natural resources, whereas mandatory legal rules like 1504 are necessary to ensure meaningful and broad reporting from companies, including in those resource-rich countries such as Equatorial Guinea and Angola that are not part of EITI but are in desperate need of more transparency. Indeed, the US EITI experience shows that even in those countries that do commit to implementing EITI, EITI alone might not be enough to compel all companies to report, if it is not backed by domestic legislation.

Officials at Interior appear to be retreating from their ill-advised decision to effectively withdraw from EITI, but these mixed signals, especially when viewed together with the Congressional action, send a troubling message about the US government’s changing stance on anticorruption, and set back a long history of US leadership on these issues. Nonetheless, while these recent US developments are a setback from a US anticorruption perspective, the rest of the world is powering ahead with this much needed transparency. Continue reading

When Should Countries Outsource Key Anticorruption Functions to Foreigners?

Partly because of previous work I’ve done (with Sofie Schütte of the U4 Centre) on specialized anticorruption courts, I recently had the opportunity to participate in some interesting discussions in Kiev about ongoing debates about the possible the creation of such a court for Ukraine. There’s much to say on this topic generally, but what most and surprised me about the discussions I was fortunate enough to attend was how much they focused on a specific proposal—advanced by certain influential members of the Ukrainian civil society community—for the international donor community to participate (indirectly but formally) in the selection of the judges to serve on this court. There are a few different proposals floating around, but I’ll focus on the version embraced by a draft law currently pending in the Ukrainian Parliament. Under this proposal, judges on the special anticorruption court would be chosen by a nine-member Judicial Selection Committee. Of these nine members, three would be appointed by the President, three would be appointed by the Parliament, and three would be selected by the international donor community. (Formally, the last three would be appointed by the Minister of Justice, but that’s a formality: According to the proposal, the Minister of Justice would be obligated to consult with the international donor community and to appoint the three individuals that they recommend.)

For some in the civil society community, this feature of the proposal is absolutely essential, and they fear that without a formal role for the international community in the judicial selection process, the anticorruption court will be a failure. Others feel equally passionately that formalizing a role for international donors in the selection of special court judges is deeply misguided, and will jeopardize (both politically and legally) the special court experiment. I don’t know nearly enough about Ukraine’s specific situation to have an informed view on this one way or the other. But the proposal seemed sufficiently novel and interesting to be worth contemplating more generally. After all, though to the best of my knowledge there’s no precedent for what the draft Ukrainian law proposes, it’s not unheard of for countries to “outsource” (for lack of a better term) aspects of the law enforcement apparatus that most countries most of the time would consider core functions of the state, particularly in the context of anticorruption or closely related matters. (Probably the best known example is CICIG in Guatemala, in which a UN-sponsored body, headed by a non-citizen, has substantial investigative—though not prosecutorial or adjudicative—powers.) Is this an approach that more countries should adopt—for their investigators, prosecutors, or even their courts?

Again, I don’t have a terribly strong or well-informed view on this question, so this isn’t one of those posts where I’m going to take an aggressive, argumentative stand. I’m still thinking this through myself. But I figured that since this question might be of interest to others as well, I’ll offer a few thoughts on the possible advantages and disadvantages of outsourcing some or all of a state’s core law enforcement functions. I’ll think about this mainly in the context of anticorruption, though many of the arguments would apply more generally.

Long story short: I can think of two big potential advantages for this sort of outsourcing, and four countervailing drawbacks. Continue reading

Guest Post: A Critical Evaluation of National Anticorruption Strategies

Mark Pyman, Senior Fellow at the London Institute for Statecraft, contributes the following guest post:

Many countries now have official “national anticorruption strategies” or similar plans; indeed some have had them for ten years. So surely there are insights to be had from reviewing the substantive content of a decent sample of them? Unfortunately, most of the existing analysis of national anticorruption strategies focuses not on substance, but only on process (things like stakeholder engagement, the drafting process, the need for realism, cost-benefit analysis, monitoring and evaluation, reporting, etc.) In fact, everything except substance. This is a shame.

In order to remedy this gap, I recently collaborated with the Norton Rose Fulbright law firm on a study of the substantive provisions of national anticorruption strategies in 41 countries that rank between 21 and 130 on Transparency International’s 2015 Corruption Perception Index (CPI). (We chose that range because we wanted to look at countries that have a significant corruption problem, but not those that are in the grip of deep, systemic corruption issues.) The report, published earlier this week, is available here. Our objective in conducting this review was to extract lessons that can help country leaders make better strategies in the future

So, what did we find? Continue reading