Trump’s Attempted Violation of the Emoluments Clause, and the Inadequacy of the “Services at Cost” Rationale

In a press briefing on October 17, 2019, acting White House Chief of Staff Mick Mulvaney announced that the United States would host the 46th G-7 summit at the Trump National Doral Miami, a golf resort in Doral Florida owned by the Trump Organization. The announcement provoked widespread concern (see here and here) that this choice would violate the U.S. Constitution’s Foreign Emoluments Clause, which bars any person “holding any Office of Profit or Trust under [the United States]” from “accepting any present, emolument, office, or title, of any kind whatever, from any King, Prince, or foreign state,” as well as the Domestic Emoluments Clause, which bars the President from receiving any emolument, other than his salary, from the United States or any of the individual states. Following two days of complaints—not only from the ethics watchdogs and the President’s Democratic opponents, but also from some of his Republican allies—the White House abandoned the plan. So, the situation appears to have resolved itself. Nonetheless, the particular argument that Mulvaney advanced to defend against the anticipated Emoluments Clause complaints is worth considering—and debunking—lest this argument arise again in another context.

To be clear, the White House’s attempt to host the G-7 at a Trump Organization venue appears to be part of the same pattern of self-dealing that has already prompted multiple lawsuits against Trump for alleged violations of the Emoluments Clauses. As Mulvaney said on Fox News this past Sunday, “[President Trump] still considers himself to be in the hospitality business, and he saw an opportunity to take the biggest leaders from around the world and he wanted to put on the absolute best show.” Although the proposal to host the G-7 summit at the Doral resort was dropped, Mulvaney’s admission is worrying because there are reasons to suspect Trump chose the Doral property to benefit himself financially. (Consider the fact that in 2004, when the United States hosted the summit on Sea Island the organizers served 45,000 meals and paid the resort owners $3 million to reserve the entire property for 10 days.)

When Mulvaney detailed the White House’s decision-making process for the G-7 venue on October 17, he claimed the administration used neutral criteria when it made this choice (which is a bit hard to swallow given that Mulvaney stated the President suggested Doral), and that Doral was actually the best location (an assertion that is hard to assess without knowing the other venues the White House was considering). Furthermore, Mulvaney also argued that there was no Emoluments Clause violation because Doral would host the event “at cost”—that is, that Doral would only charge the government for the cost of the goods and services provided, and would not make a profit. On its face, this sounds plausible. After all, if Doral—and hence the Trump Organization—does not earn any profits on the G-7 meeting, but merely breaks even, then how can Trump have received an “emolument” from the U.S. government? If anything, the Trump Organization would have provided the U.S. government with a venue and associated amenities at a discounted rate.

Despite its superficial plausibility, there are three flaws with the argument that running the event “at cost” would eliminate any Emoluments Clause problem:

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New Podcast Episode, Featuring Daria Kaleniuk

A new episode of KickBack: The Global Anticorruption Podcast is now available. This week’s episode features an interview with Daria Kaleniuk, a leading Ukrainian anticorruption activist and the executive director of the Anti-Corruption Action Center (ACAC) in Kyiv. In the interview, she and I discuss a range of issues connected to the fight against corruption in Ukraine in the post-Maidan period, including institutional reforms and the creation of new anticorruption bodies (some of which seem to have been more successful than others), the importance of the media and civil society, and the role of the international community.

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.

Why Won’t Indian PM Modi Extradite KVP to Answer Corruption Charges?

Four plus years ago the U.S. Department of Justice unsealed an indictment alleging a plot stretching from India to Chicago to pay senior Indian officials some $18.5 million for mining licenses in the state of Andhra Pradesh.  Central to the scheme was K.V.P. Ramachandra Rao, then senior advisor to the state’s Chief Minister.  He allegedly solicited and agreed to accept bribes for himself and other Indian officials in return for approving the licenses.

As soon as the sealed indictment issued, the U.S. requested KVP’s extradition from India.  In accordance with the U.S.-Indian extradition treaty, the Indian government is required to surrender anyone located in India accused of the crimes in the United States of the kind KVP allegedly committed.  Article nine provides that all the U.S. need do is provide Indian authorities with “information describing the facts of the offense and the procedural history of the case, a statement of the provisions of the law describing the essential elements of the offense. . . [and] a statement of the provisions of the law describing the punishment for the offense.”

The 43-page indictment (described here) easily meets these requirements.  It details the plot KVP, Ukrainian magnate and alleged Russian mobster Dmytro Firtash, and a U.S. resident, and others concocted to rob the citizens of Andhra Pradesh of hundreds of millions of dollars through a web of bribes and kickbacks. The charges against defendants — racketeering, money laundering, and related crimes arising from the scheme – are precisely and carefully specified.

So why is KVP still not in U.S. hands? Continue reading

Tracking Corruption and Conflicts of Interest in the Trump Administration–May 2018 Update

For the last year (beginning in May 2017), GAB has been tracking credible allegations that President Trump, as well as his family members and close associates, are seeking to use the presidency to advance their personal financial interests, and providing monthly updates on media reports of such issues. Our May 2018 update is now available here. Despite the flurry of news reports over the past month concerning ethical issues and allegedly unlawful conduct in the Trump Administration, there have been relatively few new reports of activity specifically related to the profiteering-type activities our tracker emphasizes, and hence relatively few changes since the April 2018 update.

As always, we note that 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.

The Backstory on Brazil’s Extraordinary War on Corruption

 

Hardly a day passes without news from Brazil that a senior politician or business person has been charged with corruption or has admitted guilt or found guilty of a corruption offense or is cooperating with authorities in their ever-expanding investigation into the rot that has infected Brazilian politics.  Brazil is not only the envy of corruption hunters everywhere, but for those living in countries where big time, grand corruption is the norm, it provides enormous inspiration and hope.  “If the Brazilians can do it, we [fill in the blank] can do it too,” is a refrain I have heard in more than one country.

But just how Brazil has “done it” has remained a mystery.  Or at least it has until the recent release of The Sum Of Its Parts: Coordinating Brazil’s Fight Against Corruption, 2003 – 2016, the latest in a series by Princeton University’s Innovations for Successful Society on how countries are combating corruption. Through revealing interviews with key participants and observers, author Gordon LaForge chronicles how a handful of reformers built the law enforcement institutions now bringing corrupt Brazilian politicians and their private sector co-conspirators to heel. Investigating and prosecuting complex corruption cases takes coordinated action across numerous agencies, and the emphasis throughout is on the painstaking, time-consuming efforts required to build the needed inter-agency cooperation.

The Sum of its Parts is essential reading for those trying to make their country “the next Brazil.”  It should also be valuable for those trying to understand the process of political change in developing nations.  One of its strengths is that it never loses sight of the fact that human agency is critical element.

The Purity Potlatch and Conflict of Interest Revisited

A potlatch is a competition once found among tribes in the American Northwest.  Contestants took turns destroying things of value to them to demonstrate their wealth and status in the community, and overtime the combat escalated until eventually the only way to win was to reduce oneself to material ruin.  In a 1964 essay Stanford Law School Dean Bayless Manning, a member of the President’s Advisory Panel on Ethics and Conflicts of Interest in Government, compared the then current race in Washington, D.C., to condemn conflicts of interest to a potlatch – with similar unfortunate consequences.  Given the conflict of interest mania now gripping Washington, D.C., the time seems right to resurrect Dean Manning’s largely forgotten classic on the perils of ethics overstretch.  “The Purity Potlatch: An Essay on Conflicts of Interest, American Government, and Moral Escalation” appeared in volume 24 of the Federal Bar Journal. Available nowhere online, excerpts follow. The emphasis are as in the original:

“Something dramatic has happened of late to the subject of conflicts of interest.  This formerly obscure topic has become front page news and Big Politics. . . .

“The significant feature of these nation-rocking exposes is that, so far as is known from the record, none of the men involved actually did anything demonstrably injurious to the public treasury or the public interest.  None figured in an alleged Teapot Dome or anything resembling it.  The charge was only that the combination of their economics circumstances and their offices did not look just right.  The worst allegation that could be made against them was that they held an economic interest or received gifts that might, upon a certain set of assumptions about the conduct of their office and about human nature generally, tempt them in the future to act contrarily to the public interest in certain limited situations. Continue reading

3 Things To Do About Corruption Rather Than Gripe

Most of what passes for commentary or learned analysis about corruption in the press, on social media, or elsewhere does little more than say (again and again and again) that corruption is a pressing problem and that it should be addressed.  However valuable such calls to action might have been in the early years of the anticorruption movement, as Matthew suggested some time ago (almost two years ago to be exact), the principle of diminishing returns has long since set in.  I have serious doubts that another newspaper op-ed, “thought piece,” or (even) blog post will prompt one more policymaker or citizen to take up the anticorruption cause. If they have not by now, they simply aren’t going to.

Rather than wasting energy and time and sending more innocent trees to their death in the hopes of enlisting the remaining holdouts to the cause, here are three projects activists can tackle that will make a difference in the fight to curb corruption. Continue reading