Category Archives: Commentary

CREW’s Long-Shot Emoluments Clause Lawsuit Against Trump: Calculated Risk or Reckless Gamble?

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After the events of the last ten days, worrying about the potential conflicts of interest created by the Trump organization’s business dealings with foreign governments seems almost quaint. It appears that under the Trump Administration, constitutional crises don’t get resolved, they just get overshadowed by bigger constitutional crises; such are the strange times in which we live. But I did want to return to the topic I wrote about a couple of weeks ago, concerning the pending lawsuit brought by the Citizens for Responsibility & Ethics in Washington (CREW) alleging that the Trump Organization’s business relationships with foreign governments violate the Constitution’s Foreign Emoluments Clause. In my post a couple of weeks ago, I predicted that U.S. courts are likely to toss the suit out on jurisdictional grounds, without reaching the merits of the claim. That assessment appears to be shared by the overwhelming majority of legal experts who have weighed in (see here, here, here, here, here, and here), though the consensus is not quite universal.

Several people have suggested to me that even if the suit has little chance of success, it was good that CREW filed it. They’ve offered two arguments for this assessment: First, even if there’s only a very small chance of success, the costs of bringing the suit are relatively low, and the benefits if the suit does end up succeeding are enormous—so what’s the harm in trying? Second, the mere act of filing the suit, even if it’s ultimately dismissed on jurisdictional grounds, will generate attention to the underlying constitutional and ethical issues, and help both educate and mobilize the citizenry. My colleague Larry Tribe, who is one of the parties who filed the CREW brief, laid out this position clearly and succinctly in an interview shortly after the brief was filed:

Litigation can help bring important principles to light… It helps me teach my students, and it performs an educational function vis-à-vis the public. Of course, I don’t take on causes that I feel confident I will lose purely for educational purposes. But win or lose, we’re going to help educate the public on something that’s very important.

Much as I wish those arguments were true, and much as I wish the CREW lawsuit had some chance of succeeding, I respectfully and reluctantly disagree. I hope that events will prove me wrong, but at the moment I fear that CREW’s decision to file this lawsuit was not only a long shot, but was a serious tactical blunder that will probably hurt the cause overall. Continue reading →

The Role of Corruption in the Syrian Civil War

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Many forces spurred on the development of the Syrian Civil War, a conflict that has likely led to the deaths of over half a million people, as well as the displacement of ten million more. While fighting was sparked by protests within Syria, a reflection of the larger wave of discontent in the Middle East and North Africa that spurred the so-called Arab Spring, the uniquely destructive path of Syria’s internal instability is tied to more specifically Syrian problems, including rule by a minority religious group – the Alawites – over a mostly Sunni country, early and continued support by Russia to maintain the Assad regime, a partially autonomous Kurdish minority in the north, and the rise of Sunni rebel groups including ISIS. While these larger points are important, another, more mundane factor is often overlooked: the pervasive corruption of the Assad regime, which contributed to the outbreak of the civil war in at least three ways:

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Appearances Can Be Revealing: The Trump Administration’s Corruption Perceptions Problem

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In the wake of President Trump’s Executive Order “Protecting the Nation from Foreign Terrorist Entry into the United States” (also known as the “Muslim Ban”), numerous media outlets published articles highlighting the fact that Trump’s order excluded several predominantly Muslim countries where the Trump organization conducts business (see here, here and here). The implication was that this exclusion was intentional, and demonstrates the extent to which Trump’s business ventures create conflicts of interest that influence his policy decisions. Although this explanation is plausible, another likely explanation is that the list of countries targeted by the ban tracked the visa waiver program restrictions Congress passed in 2015 and the Obama administration expanded in 2016 (see here).

Were the limitations on the ban driven by corruption or policy priorities? We don’t know—and that’s the problem. Even if Trump’s executive order had no connection with his business, Trump’s extensive conflicts of interest and unwillingness to divest from foreign holdings casts a shadow of corruption over any decision made by the administration. The fact that every decision Trump makes could be tainted with the appearance of self-interest, regardless of whether his administration actually is doing what it believes is in the public’s interest, is incredibly damaging, delegitimizing, and destabilizing. This is why we have ethics rules for government officials that seek to prevent not only corruption, but also the appearance of corruption. Trump’s failure to clear his presidency of any potential conflicts of interest has a few particularly pernicious effects:

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How Should the U.S. Anticorruption Community Respond to Trump? Engagement vs. Confrontation

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So Donald Trump is now the President of the United States, and has been for almost two weeks. Yes, this is really happening. And yes, this is really frightening. As has been pointed out countless times, Donald Trump poses a unique and unprecedented threat to American political institutions. It’s not mainly the hard-right policies that President Trump and the Republican Congress will push. People can strongly disagree with much of that policy agenda (as I do), but those policy positions are, alas, within the American political mainstream. And it’s not just Trump’s obvious narcissism, racism, and ignorance, bad as those are. On top of all that, Trump seems to view the presidency mainly as an opportunity for personal enrichment, and many of his top-level advisors and appointees seem to have a similar attitude. Notwithstanding his (obviously disingenuous) “drain the swamp” rhetoric, Trump—and many congressional Republicans—seem to have little regard for basic ethical norms and principles. And there are reasonable fears, based on what we’ve seen so far, that much of the Trump Administration’s policy agenda, though couched in familiar conservative market-oriented rhetoric, will in fact be oriented toward enriching the friends and families of senior administration officials, including but not limited to Trump’s own organization.

A democratically elected head of government who ran on a populist platform, but whose agenda seems to be oriented primarily toward using political power to enrich himself and his cronies? This might be a new experience for Americans, but as Professor Palifka pointed out in her post last week, this is a familiar story in many other countries (including Mexico, Ms. Palifka’s lead example). Think Silvio Berlusconi in Italy, Nestor and Cristina Kirchner in Argentina, Thaksin Shinawatra in Thailand, Jacob Zuma in South Africa, and countless others. Now that the U.S. seems to be facing a similar situation, the U.S. anticorruption community—which I’ll define loosely as the diverse set of activists, advocacy groups, commentators, researchers, scholars, and others who focus on anticorruption in their professional work—needs to be actively involved in responding.

Unfortunately, the U.S. anticorruption community is not especially well-prepared to deal with this situation. Put aside for the moment that the most prominent international anticorruption advocacy group—Transparency International (TI)—recently voted to strip its U.S. chapter (TI-USA) of its accreditation, triggering an ongoing internal fight that has, I gather, left the chapter in limbo. (That’s a whole other story.) Much more important than any internal organizational drama is the fact that most U.S. anticorruption advocacy groups have typically focused on questions of U.S. anticorruption policy—such as FCPA enforcement, asset recovery, corporate transparency, and the like—not on systemic corruption in the U.S. government itself. True, some groups have in the past positioned themselves as fighting systemic corruption in the U.S. government, but those groups generally use a broad (in my view, overly broad) definition of “corruption” that emphasizes primarily campaign finance and lobbying reform—noble causes, to be sure, but not really the main worry right now. The U.S. anticorruption community faces a challenge that’s more akin to the challenge anticorruption communities have faced (or are still facing) in places like Mexico, Italy, Argentina, Thailand, and South Africa, though perhaps with even higher stakes.

My sense is that many leading figures in the U.S. anticorruption community are already thinking hard, and having many constructive conversations, about how to respond to the unique challenges posed by the Trump Administration. In the remainder of this post, I want to focus on a basic strategic question that I’ve seen come up many times in these conversations: Engage or confront? Continue reading →

Why Does the SEC Enforce the FCPA?

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Donald Trump’s nomination of Jay Clayton to chair the Securities and Exchange Commission (SEC) has attracted some attention and concern from the anticorruption community. That concern is due mainly to a report issued by a New York Bar Foundation committee, chaired by Mr. Clayton, which criticized the Foreign Corrupt Practices Act (FCPA) for its alleged adverse and asymmetric impact on U.S. corporations. Though it remains to be seen how strongly committed Mr. Clayton is to the views expressed in the report, the concern is understandable given that the SEC is one of the two agencies—along with the Department of Justice (DOJ)—that is responsible for enforcing the FCPA. This controversy also highlights another, broader question that some FCPA critics have raised: Why is the SEC even involved in FCPA enforcement in the first place?

Congress created the SEC in 1934 through the aptly named Securities Exchange Act to enforce federal regulations regarding the trade of securities after they have been issued. The main impetus for the SEC’s creation was the belief that an under-regulated securities market helped drive the 1929 stock market crash. However, over the past 80 years, the SEC has expanded into other areas of enforcement—such as FCPA enforcement—that seem tentatively tied to the SEC’s original mandate. Some have argued that due to resource limitations, it does not make sense for the SEC to pursue vigorous FCPA enforcement at the expense of diverting resources from protecting investors. In pushing this point, some critics also point out that the SEC’s major regulatory fumbles of the past decade coincide with the escalation of FCPA enforcement activity—which perhaps suggests that expanding the SEC’s responsibilities beyond its original mandate has indeed weakened the agency.

The reasons for the SEC’s involvement in FCPA enforcement are partly historical, as explained further below. But beyond that, despite the critics’ complaints, in fact FCPA enforcement remains a valuable use of the SEC’s resources in the 21st century.

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Why CREW’s Foreign Emoluments Lawsuit Probably Won’t Succeed

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A couple months back, before Donald Trump was formally inaugurated as President of the United States, I dismissed as a “pipe dream” the idea of successfully suing President Trump for violations of the U.S. Constitution’s Foreign Emoluments Clause—which prohibits any United States officeholder from accepting any “emolument” from a foreign state without the consent of Congress—due to the Trump Organization’s business dealings with foreign governments. Was my dismissive take premature? We may find out soon: Earlier this week, the Citizens for Responsibility and Ethics in Washington (CREW) filed a lawsuit in the Southern District of New York raising this very claim, and asking the New York court to issue an order enjoining President Trump from continuing to violate the Clause.

I have a great deal of respect for CREW, and on the merits, I tend to think that Trump may well be in violation of the clause (though I don’t think it’s quite as obvious as the CREW brief and some other commentators have suggested, for reasons I might get into in a future post). But I continue to be skeptical that this suit has much chance of success, because I don’t think that the court will ever reach the merits of the claim. Rather, the case is likely to be dismissed before reaching the merits, for three reasons. Continue reading →

Building a Cadre of Procurement Professionals

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Government purchases of goods, services, and public works constitute anywhere from 15 percent to as much as 40 percent of total public spending, and thus any government committed to fighting corruption should make procurement a priority. Corruption sneaks into public procurement in many ways in the long and often complex chain of events in the process: from identifying a need to designing the specifications for meeting the need to the award of a contract and the delivery of the final product.  While stepping up procurement audits and investigations can weed procurement out of corruption, far better is to keep it from infecting the process in the first place.

For that a government needs a cadre of well-trained public procurement professionals dedicated to ensuring their country receives the best value for every dollar it spends building roads or acquiring high tech communications equipment or simply buying pencils and papers for schools. Procurement professionals must be knowledgeable about law, finance, engineering, project management, economics, and of course corruption, and while some of that learning can be picked up through intensive on-the-job training programs, building a first-rate, technically sophisticated cadre of procurement specialists takes more than putting those with a generalist degree through a few o-j-t courses.  It requires, as Francis Fukuyama explains in discussing how the public services of Japan, Germany, and the United Kingdom’s public services were built, university courses that teach prospective public servants basic analytic skills and tools, knowledge that simply cannot be mastered in a week or even several week intensive training course.

For the United Nations Office on Drugs and Crime I have been asked to suggest what a curriculum leading to an undergraduate degree in public procurement might look like.  In “Building Sustainable Capacity in Public Procurement,” Peter Trepte of Nottingham University’s Public Procurement Research Group explains that teaching public servants what the procurement law is and how to comply with it is not enough.  To conduct fair, effective, and efficient procurements requires an interdisciplinary course of study that trains students in how to identify procurement needs, plan procurement activities, assess market conditions, manage relations with bidders and contractors, and administer contracts.

Below is my effort to follow Professor Trepte’s advice.   Comments are most welcome. Continue reading →

How Corrupt Are Your Courts? Too Corrupt To Be Fair?

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In complex transnational litigation, ensuring the rights of all parties is especially challenging. Consider the following situation: A plaintiff brings a lawsuit against a US multinational in US court, alleging wrongful conduct in some foreign country; the defendant corporation moves to dismiss the case on the ground that the courts of the country where the alleged conduct took place are a more appropriate forum for adjudicating the suit, and the plaintiff should therefore be required to pursue the suit there; but the plaintiff opposes the motion to dismiss on the grounds that the foreign country’s courts are so corrupt that it would be impossible to get a fair trial. What should the US court do when confronted with that sort of situation?

The technical legal term for a motion to dismiss a case because the plaintiff ought to file the suit in a different (and more convenient) judicial forum is the forum non conveniens motion. To successfully win on such a motion in a US federal court, the defendant must convince the court that an alternative forum would provide “basic fairness.” When the alternative forum is the judiciary of a foreign country, plaintiffs sometimes try to oppose these motions by pointing to judicial corruption in the foreign forum. But as one court highlighted, “the argument that the alternative forum is too corrupt to be adequate does not enjoy a particularly good track record.” Indeed, as I noted in my previous post on the Chevron-Ecuador litigation, the district judge in that case rejected the plaintiff’s claim that Ecuadorian judicial corruption made it impossible to get a fair trial in Ecuador, remarking that “the courts of the United States are properly reluctant to assume that the courts of a sister democracy are unable to dispense justice.” Even when confronted with clear and undisputed evidence of corruption in a foreign court, US courts have generally been unwilling to accept this as a sufficient reason to keep the case in US court. (In one case a US court reaffirmed a forum non conveniens decision even after the plaintiff successfully bribed a Mexican judge to have the case sent back to the US court.) Consistent with this deferential approach, there are very few cases where a US court has found a foreign forum inadequate due to credible allegations of widespread judicial corruption. (There are admittedly a handful of such cases, including Bhatnagar v. Surrendra Overseas, Ltd., in which the court found that the extensive delay, unreliability, and general corruption of the Indian judiciary made it an inadequate forum for the plaintiff.)

By contrast, other jurisdictions take allegations of foreign judicial corruption more seriously as a reason not to dismiss a lawsuit and insist that it remain in the forum of the plaintiff’s choice. Notably, although the forum non conveniens analysis is very similar in US and Canadian courts, Canadian courts have been more willing to find foreign forums inadequate because of pervasive corruption. For example, in Norex Petroleum Limited v. Chubb Insurance Company of Canada, a US court dismissed the case on forum non conveniens grounds, while the Canadian court took jurisdiction, denying the defendant’s forum non conveniens motion in light of the Canadian court’s finding that—even though every other factor weighed heavily in favor of Russia as the better forum—extensive judicial corruption in Russia would prevent the plaintiff from accessing a fair and impartial court. It’s certainly not the case that Canadian courts have been consistently receptive to these sorts of arguments—for example, a recent Canadian ruling found Guatemala an appropriate forum despite significant corruption concerns—but the contrast between Canada and the US demonstrates that the US courts’ “see no evil” approach is far from inevitable.

Although it may be helpful for the purposes of international comity for courts to presume that foreign judiciaries are fair, and there are legitimate reasons to dismiss a case in favor a foreign forum (such as easier access to evidence and witnesses), the reluctance of US courts to accept credible allegations of judicial corruption as a reason to deny a forum non conveniens motion likely goes too far. Respect for foreign courts is a good thing in principle, but in practice it can undermine the ability of plaintiffs to get a fair hearing. US courts should hesitate before dismissing cases to foreign forums when there are plausible claims of corruption for two reasons:  Continue reading →

Large-Scale Land Acquisitions: Opportunities for Corruption

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Recent years have seen a significant rise in large-scale land acquisitions by foreign investors, generally for agricultural or extractive purposes. Many of these land deals, termed “land grabs,” have had injurious effects on local populations who are often pushed off of their land without their informed consent. (For a description of contemporary land grabs and a land grab bibliography, see here.) Foreign companies and governments secure the majority of these land deals in poorer countries, where large tracts of land can be purchased cheaply, and where many of the local inhabitants do not have the means to contest the deals through the legal system. The land is frequently used for agriculture or production of “flex crops” (such as soy or palm oil), which are then sold abroad, rather than to the host country. Therefore, land grabs can result in not only the displacement of local communities, but also the reallocation of these vital resources to external actors, rather than to the inhabitants of the host country.

Large-scale land deals are often facilitated by corrupt practices perpetrated by the foreign purchaser and/or the host government, through the transactions themselves or through weak institutions. Last November, the International Corporate Accountability Roundtable (ICAR) and Global Witness released a report that details the opportunities for corruption at each stage of large-scale land acquisitions, as well as the current legal frameworks for addressing this corruption. As noted in the report, corruption can occur in each of the six phases of a land deal: Continue reading →

The Aid-Corruption Paradox: How Should the U.S. Allocate Foreign Aid?

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The United States spends about $34 billion annually on foreign aid, frequently to countries that have abysmal corruption track records (see the exact allocations here). Although a portion of that money, almost $6 billion, goes to humanitarian aid, the remainder is intended for development purposes. There has been a great deal of discussion about whether the United States should continue giving this aid, exemplified by the debate between Jeffrey Sachs and William Easterly: Professor Sachs argues that the West can eliminate African poverty if it increases the amount of aid, while Professor Easterly insists that foreign aid thus far has not only been ineffective, but has actually caused greater harm to aid-receiving countries, in part due to corruption. Easterly-like skepticism of foreign aid due to corruption (a topic that has been discussed previously on this blog) seems to have permeated public opinion, resulting in what has been labeled “aid fatigue.” Such fatigue endangers the foreign aid system, as taxpayer support is necessary if the U.S. hopes to continue or increase its aid programs.

Unfortunately, choosing to withhold aid from corrupt countries altogether would be to deny aid from the majority of the world’s poorest countries. Corruption and poverty are correlated, resulting in an “aid-corruption paradox”: often the countries that are in the greatest need of foreign aid also have extremely corrupt governments. Thus there will inevitably be a trade-off when giving development aid: either we will be ignoring the countries in greatest need, or we will give to those countries but accept that a portion of the funds may not serve their intended purposes. How then should countries such as the United States determine where to allocate their development aid? Continue reading →