Tag Archives: Adam Davidson

The FCPA Is Not an All-Purpose Anti-Foreign-Illegality Law

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A few months back, Adam Davidson did a terrific New Yorker piece on the Trump Organization’s shady business dealings in Azerbaijan, focusing on evidence of corruption, money laundering, and sanctions evasion in connection with the Trump Organization’s licensing deal for a Trump Tower in Baku, the country’s capital. While I greatly admired the piece, I nonetheless criticized one aspect of it: the argument that the Trump Organization’s licensing deal ran afoul of the Foreign Corrupt Practices Act (FCPA), an allegation which, it seemed to me, wasn’t adequately supported by the otherwise impressive body of evidence assembled in the piece. While I recognize that a piece written for a general audience can’t get too lost in the technical legal weeds, I do think that it’s important to convey an accurate sense of what the FCPA does, and what it doesn’t do.

I was reminded of this a couple weeks back when I read an otherwise incisive essay by the political commentator Heather Digby Parton (whose work I very much admire) on Ivanka Trump’s shady business dealings and possible legal violations. Though Ms. Parton’s piece focused mainly on the Trump Ocean Club in Panama (dubbed “Narco-a-Lago” in an excellent Global Witness report), she also brought up Mr. Davidson’s reporting on the Azerbaijan project, and repeated the suggestion that the Trump Organization’s involvement in this project likely violated the FCPA. In making this case, Ms. Parton states:

The Foreign Corrupt Practices Act requires that American companies not make profits from illegal activities overseas, and simply saying you didn’t know where the money was coming from isn’t good enough…. Courts have held that a company needn’t be aware of specific criminal behavior but only that corruption was pervasive.

I hate to be nitpicky, especially when it involves criticizing a piece I generally agree with by an author I admire, but this is simply not a correct statement of the law. Continue reading →

Did the Trump Organization’s Azerbaijan Deal Violate the FCPA?

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Adam Davidson’s New Yorker piece from earlier this month, “Donald Trump’s Worst Deal,” has been getting a lot of attention, and deservedly so. The article, which focuses on the Trump Organization’s involvement in a hotel deal in Baku, Azerbaijan, does a very nice job highlighting the troubling background of the Trump Organization’s Azeri business partners and the Trump Organization’s casual approach (to put it charitably) to due diligence. However, the piece also suggests that the Trump Organization’s involvement with the Baku hotel deal may have violated the Foreign Corrupt Practices Act (FCPA), and many of the follow-up discussions of Mr. Davidson’s piece have repeated this claim (see, for example, here and here). On this point, not everyone agrees. Professor Mike Koehler, for example, wrote a lengthy critique of Mr. Davidson’s discussion of the FCPA issues, concluding that nothing in the facts as reported in the article suggests that the Trump Organization violated the FCPA – and that many of the article’s assertions to the contrary are based on incomplete and misleading representations of the statute and prior case law.

After having finally had a chance to read Mr. Davidson’s article carefully, it seems to me that Professor Koehler has the better of the argument—mostly. Much of the discussion of potential FCPA violations in Mr. Davidson’s article is confused and potentially misleading. That said, I do think there’s at least one plausible basis for the claim that the Trump Organization may have violated the FCPA in this case.

Here’s my take: Continue reading →