About Matthew Stephenson

Professor of Law, Harvard Law School

If You Don’t Think Trump’s Financial Conflicts of Interest Matter, Consider the Kurds

Yesterday I posted a note regarding the update of this blog’s project on tracking the various ways in which President Trump and his family may be attempting to use the presidency for private financial gain, how the associated conflicts of interest might influence or distort U.S. policy. In light of recent events, I thought that perhaps it might be appropriate to highlight, and elaborate upon, a few items on that list that may be cause of particular concern:

  • President Trump has extensive business interests in Turkey, including a Trump Tower in Istanbul. This is not a new observation; the potential conflict of interest that this might create has been extensively documented (see here, here, and here), though in light of recent events these business connections have received renewed and intensified scrutiny (see, for example, here, here, and here). Indeed, then-candidate Trump acknowledged back in December 2015 that, “I have a little conflict of interest [in Turkey], because I have a major, major building in Istanbul.” Indeed, the Trump Towers Istanbul, which the Turkish conglomerate Dogan Holding developed, pays licensing fees to the Trump Organization. The Erdogan government can, and previously has, imposed substantial costs on Dogan Holding, and there are credible reports that the Erdogan Administration believes that this ability to put “pressure on Trump’s business partner [in Turkey]” gives the Turkish government the ability “to essentially blackmail the president.” Let that sink in for a moment.
  • In addition, entities close to the Turkish government have gotten in the habit of spending heavily at Trump properties in the U.S. Most notably, the American Turkish Council and the Turkey-U.S. Business Council have held multiple events at the Trump Hotel in D.C. (see here and here), attended by senior administration officials, with these events estimated to pay the Trump Organization well over $100,000 per event. (It’s also worth noting here that the Turkey-U.S. Business Council is headed by the founder of the consulting company that paid former national security advisor Michael Flynn $530,000 for lobbying work.)

It’s impossible to prove whether any of this directly affected President Trump’s foreign policy decisions regarding Turkish interests. But as Turkish forces continue to bombard the Kurdish forces in Northern Syria—an assault against loyal U.S. allies that was only possible because President Trump acquiesced in President Erdogan’s request/demand that U.S. forces clear out and make the attack possible—it’s hard not to wonder whether crucial U.S. allies in the fight against ISIS have been betrayed by the American Commander-in-Chief so that he can protect his financial interests.

This makes the stakes of the corruption concerns related to this presidency, including those implicated in the Emoluments Clause lawsuits brought against the administration, seem all the more pressing. The strategic and tactical wisdom of those suits, and their legal viability, is a complicated question on which my own views have evolved over time (see here, here, and here). But to characterize the issues raised by those suits as a minor distraction, as former New York Times reporter Linda Greenhouse did back at the start of the Trump presidency, is a hot take that hasn’t aged well. Here’s what Greenhouse had to say in that January 2017 Council on Foreign Relations roundtable discussion:

I think [the Emoluments Clause] lawsuit is a distraction…. I mean, it seems to me, what we need—we, as concerned citizens—need to focus on are the policy outcomes … emanating from this White House and not, you know, who’s paying the rack rate at the Trump hotel. I mean, that just doesn’t do it for me. (Laughter.) Maybe I’m missing something, but, you know, I think we need to focus on what really matters here.

Note to Ms. Greenhouse: Corruption and conflicts of interest at the highest levels of government “really matters.” Such corruption is often deeply connected to policy outcomes. I’m not sure anyone who follows these issues closely, and who cares about things like our national security policy and our treatment of vital and loyal allies, is laughing much about this now.

Tracking Corruption and Conflicts of Interest in the Trump Administration–October 2019 Update

The recent and still-unfolding scandal involving President Trump’s apparent pressure on Ukraine to investigate and/or provide dirt on his political rivals has to some degree overshadowed many of the other ethical concerns about President Trump’s behavior in office, including a slew of credible allegations that the President, his family members, and close associates have been using the presidency to advance their personal financial interests. (That said, the Ukraine scandal has also drawn greater attention to at least one aspect of this problem, as it did not go unnoticed that in the now-infamous phone July 25 phone conversation between President Trump and President Zelensky, the latter went out of his way to emphasize how much he enjoyed staying in a Trump hotel in New York, which is consistent with longstanding fears that those hoping to influence Trump will give their patronage to his businesses.)

Back in May 2017, GAB began tracking and cataloguing credible allegations of this sort of profiteering by President Trump and his family and cronies. Until May 2019, we’d been updating that report on a monthly basis. The tracker hadn’t been updated for several months since then, partly due to my own lack of organization, and partly because there are now a number of other higher-profile, better-resourced projects with a similar goal. (Among these, I particularly recommend the those from the Sunlight Foundation and from the Citizens for Responsibility and Ethics in Washington.) But I think GAB’s somewhat distinctive approach to organizing and describing these concerns might still have sufficient added value that we’re restarting our regular updates to the Trump conflict-of-interest tracker. The newest update is now available here.

A previously noted while we try to include only those allegations that appear credible, we acknowledge that many of the allegations that we discuss are speculative and/or contested. We also do not attempt a full analysis of the laws and regulations that may or may not have been broken if the allegations are true. For an overview of some of the relevant federal laws and regulations that might apply to some of the alleged problematic conduct, see here.

In Their Push for Investigations, Did Trump’s Associates Break Ukrainian Law?

The U.S. political news for the last month has been dominated by the explosive and fast-developing scandal involving reports that President Trump and his associates—including not only U.S. government officials but also Trump’s personal lawyer Rudy Giuliani and other private citizens—have been engaged in an ongoing behind-the-scenes campaign to pressure the Ukrainian government to pursue criminal investigations that would benefit President Trump politically. In particular, President Trump, Mr. Giuliani, and others pushed Ukraine to investigate supposed wrongdoing by Vice President Joe Biden and his son Hunter, as well as alleged Ukraine-based interference in the 2016 election on behalf of Democrats. (There is no credible evidence to support either allegation, and experts in President Trump’s administration repeatedly warned him against these unfounded conspiracy theories, to no avail.) The pressure brought to bear by President Trump and his associates on Ukrainian officials appears to have included not only general statements of interest in these allegations—allegations that the Ukrainian authorities viewed as baseless—but also included implicit or explicit threats that failure to comply would lead to various forms of retaliation, both symbolic (the refusal to invite newly-elected President Zelensky to the White House) and tangible (the withholding of desperately needed military aid).

While the main ramifications of this scandal are political rather than strictly legal, the U.S. media extensively discussed whether President Trump and his associates may have violated any U.S. laws, and commentators have suggested a number of potential legal violations. For example, asking a foreign entity for dirt on a domestic political rival might violate the provision of U.S. campaign finance law that makes it illegal to “solicit … a contribution or donation [to an election campaign] … from a foreign national,” where “contribution or donation” includes not only money but any other “thing of value.” President Trump and his associates may also have violated domestic anti-corruption law (the federal anti-bribery statute and/or the anti-extortion provision of the Hobbs Act) in conditioning the performance of an official act (such as the transfer of military aid) on the receipt of something of value from Ukrainian government officials (investigations into political rivals). Private citizens like Mr. Giuliani may have violated the Logan Act, which makes it illegal for private citizens, without the authority of the United States, to correspond with any foreign government or foreign official “with the intent to influence the measures or conduct of any foreign government …. in relation to any disputes or controversies with the United States.” And of course, the attempts to conceal all of these interactions may have amounted to obstruction of justice.

The focus in the U.S. media on whether President Trump and his associates may have violated U.S. law is entirely understandable, but seems incomplete. Strangely absent from the conversation is any mention, let alone sustained exploration, of the question whether any of President Trump’s associates may have violated Ukrainian law. At least this seems strange to me. Imagine that the situation were reversed. Suppose, for example, that a Chinese businessman, nominally a private citizen but known to have close ties to President Xi, approached the U.S. Attorney General and said something like, “We know your administration is anxious to cut a trade deal and would also like China’s assistance in addressing the North Korea situation. I’m sure President Xi could be persuaded to help you out. But you should help China out too. There’s a dissident, now an American citizen, who’s been writing a lot of damaging lies about President Xi, and he’s gaining a following in China and stirring unrest. Why don’t you publicly announce that the U.S. government is investigating him for running a ring of child prostitutes? That would really help us out.” If a story like this came out, I’m quite sure the U.S. media would be abuzz with discussions about which U.S. laws this businessman might have broken, and whether he might be prosecuted in U.S. courts if U.S. authorities managed to arrest him. But in the Ukraine case, we may have something similar—a private citizen (Giuliani) with close ties to a foreign political leader (Trump) apparently told senior political and law enforcement officials (the Ukrainian President and Prosecutor General) to pursue a bogus criminal investigation in exchange for that foreign government’s cooperation on important issues—and nobody seems to be even raising the possibility that this might violate Ukrainian law.

By the way, when I say nobody is talking about this, that apparently includes Ukrainian media and civil society. I don’t read Ukrainian and I’m by no means a Ukraine expert, but I have some friends and other contacts there, and they tell me that while the story is big news in their country, there hasn’t been any discussion about whether Trump’s associates may have violated Ukrainian law. That gives me pause, and makes me think that perhaps I’m totally off base in thinking there’s even an interesting question here. Nonetheless, at the risk of looking foolish (something that’s happened plenty of times before, I admit), I want to use this post to float this topic and see what others think. Continue reading

Guest Post: Indonesian Anticorruption Institutions at Risk, Part 2: Legislative Amendments Spell Disaster for the KPK

GAB is pleased to welcome Simon Butt, Professor of Indonesian Law and Director of the Centre for Asian and Pacific Law, the University of Sydney, to contribute a two-part series on recent developments in Indonesia. Today’s post, the second of the two, is a revised and expanded version of an article that Professor Butt originally published on Indonesia at Melbourne.

As I discussed in yesterday’s post, Indonesia’s anticorruption commission (the Komisi Pemberantasan Korupsi, or KPK) has found itself under serious attack since it began to pursue powerful political figures. Members of the national parliament, many of whom have found themselves in the KPK’s sights, have long threatened to use their legislative power to weaken the KPK and undermine its independence. For many years the KPK has managed to stave off such threats, thanks mainly to strong leadership and public support. But the KPK has found itself in a weakened state in recent months. It lost its first case in its 17-year history, and more significantly, the KPK’s leadership team has been replaced with a new group of problematic commissioners, whose terms commence next year. And last month, on September 17th, the parliament took advantage of this vulnerability and finally made good on its threat to amend the 2002 statute that established the KPK. These amendments, which attack the very institutional features and powers the KPK has used to build its impressive track record, are disastrous for the KPK and Indonesia’s fight against corruption. Continue reading

Guest Post: Indonesian Anticorruption Institutions at Risk, Part 1: The Significance of the KPK’s First Acquittal

GAB is pleased to welcome Simon Butt, Professor of Indonesian Law and Director of the Centre for Asian and Pacific Law, the University of Sydney, to contribute a two-part series on recent developments in Indonesia. Today’s post, the first of the two, is a revised and expanded version of an article that Professor Butt originally published on the East Asia Forum.)

Over the past decade or so, Indonesia’s anticorruption commission (the Komisi Pemberantasan Korupsi, or KPK) had managed to deflect numerous efforts of powerful politicians and senior law enforcement figures to reduce its independence and effectiveness. However, last month Indonesia’s national parliament appears to have successfully hobbled the Commission, with the support of President Joko Widodo. The effort to weaken the Commission began with the appointment of a new batch of commissioners, widely condemned as being sympathetic to the regime or likely to be ineffective. This was followed by amendments to the Commission’s founding statute that are clearly designed to render the Commission ineffective in investigating and prosecuting corruption.

An important precursor to these events was the KPK’s first loss in court. Until this past July, the KPK had not, since its establishment in 2003, lost any of the hundreds of cases it had brought to full trial. This was a remarkable achievement in a country renowned for deeply entrenched and widespread corruption at the highest levels, particularly in government institutions and the courts.

But on July 11, 2019, the KPK’s perfect record was broken when a divided three-judge Supreme Court panel voted to acquit Syafruddin Arsyad Temenggung, the former chair of the Indonesian Bank Restructuring Agency. Temenggung had been convicted at trial (in one of Indonesia’s specialized anticorruption courts) for a scheme in which a businessman, Sjamsul Nursalim, overstated the value of assets used to repay government assistance funds he had received after the 1997 Asian Economic Crisis. According to the prosecution, by improperly approving the discharge of Nursalim’s debt, Temenggung caused the Indonesian state to lose 4.5 trillion rupiah (well over USD 300 million). Temenggung’s lawyers argued, among other things, that there was no proof that their client had obtained any benefit from Nursalim in exchange for discharging the debt, and that their client was simply doing his job and had not committed any crime. The trial court rejected these defences, convicted Temenggung, and sentenced him to 12 years’ imprisonment. On the first appeal, the Jakarta High Provincial Court affirmed the conviction and increased the prison sentence to 15 years. But Temenggung then appealed to the Supreme Court, and there he prevailed. At time of writing, the Supreme Court judgment acquitting Temenggung has not yet been made publicly available. Nevertheless, according to media reports, two of the three judges on the panel voted to acquit Temenggung, though for somewhat different reasons, while the third judge would have affirmed the conviction.

Given that the KPK probably lacks a legal basis for asking the Supreme Court to reconsider its decision, the KPK appears to have now suffered its first defeat in its 15-year history. The loss of this case is a major blow on its own terms, because it was the KPK’s largest-ever case in monetary terms, involving over twice the alleged state loss than its previous largest case. But the significance of this acquittal may be much broader, and raises a number of questions about the future of corruption eradication efforts in Indonesia. Continue reading

New Podcast Episode, Featuring Sergei Guriev

A new episode of KickBack: The Global Anticorruption Podcast is now available. In this episode, I interview Professor Sergei Guriev, who until last month served as the Chief Economist for the European Bank for Reconstruction and Development (EBRD). In the conversation (which took place a couple of months ago, when Professor Guriev was still in his EBRD post), we discuss a range of topics, including his academic work (both his research on the role of oligarchs in the Russian economy and his more recent work on how expanded high-speed internet access affects both perceptions of and political responses to widespread corruption); the question why some post-socialist countries were more successful than others in making a transition to a market economy and reasonably well-functioning democratic government, while others remain mired in corruption; and some of the major challenges and opportunities confronted by international organizations, like the EBRD, that want to help advance the fight against corruption in challenging political environments.

You can find this episode, along with links to previous podcast episodes, at the following locations:

KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.

Guest Post: Toward a Meaningful “Common African Position on Asset Recovery”

GAB is delighted to welcome back Mat Tromme, Director of the Sustainable Development & Rule of Law Programme at the Bingham Centre for the Rule of Law, who contributes the following guest post:

It’s no secret that kleptocratic rulers in Africa have robbed their countries of substantial assets that could have  otherwise been used to promote development and social welfare. Indeed, the amounts are often staggering: $16 billion reportedly stolen by former Libyan President Gaddafi; $1 billion by Gambia’s ex-President Jammeh; billions by former Congolese President Kabila; and the list goes on. Recently, Nigeria’s Economic and Financial Crime Commission suggested that up to $50 billion has been looted from Africa, and whether or not particular estimate is accurate, there’s little doubt the problem is serious. More troubling is the fact that only a small proportion of these stolen assets have been recovered and repatriated to the country of origin.

As part of the effort to address the challenges of asset recovery—and to give African states more clout in negotiating the terms and conditions of asset return with the states that initially seize the stolen loot—African countries are currently undertaking an effort to develop a “Common African Position on Asset Recovery” (CAPAR). Incidentally, a common african position was the chosen theme of this year’s African Union Anti-corruption day. At this early stage, it seems likely that this effort will result only in a political proclamation (perhaps within the framework of this month’s UN General Assembly), one that will re-emphasize the importance of the speedy and unconditional return of assets, and call for better collaboration across countries. That’s a good start, but not enough! Developing a pan-African position on asset recovery—perhaps similar to the multilateral framework adopted by the Mercosur countries and by the EU—is a worthwhile endeavor, one that will likely produce tangible benefits only if it goes beyond mere statements of intent or general principles, and lays out some concrete steps to translate the vision into reality.

Ideally, CAPAR should seek to streamline policies and resources devoted to recovering assets and developing better investigative and prosecutorial capacity across African states, for example by implementing cross-border investigations and fostering collaboration, experience and information-sharing between countries. There are various ways to achieve this broad objective: Continue reading