Tag Archives: CARES Act

New Podcast, Featuring Danielle Brian

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In this week’s episode, I interview Danielle Brian, the Executive Director of the Project on Government Oversight (POGO), a U.S. civil society watchdog organization that focuses on investigating, exposing, and preventing government corruption, fraud, and waste, and more broadly lobbies for systemic reforms to improve accountability and integrity in the U.S. government.

The interview begins with a conversation about POGO’s history and current work, and discusses POGO’s somewhat “hybrid model,” which combines investigation work on specific cases with a broader policy reform agenda. Ms. Brian provides, as an encouraging example of how groups like POGO can have a positive impact, POGO’s work in promoting significant reform in the regulations governing payments to oil and gas companies. She describes the case study as a useful illustration of a successful advocacy campaign, but also emphasizes that one of the lessons from this and other cases is that genuine reform takes time and requires patience. We then turn to several other challenges that anticorruption advocacy groups like POGO face, including how to maintain a reputation for nonpartisanship and how to balance the interest in engaging with the government and publicly criticizing the government. Ms. Brian and I also touch on a number of more specific issues, including concerns about corruption in the allocation of coronavirus relief funds, questions about whether or how to frame lobbying or other influence activities as “corrupt,” and the so-called “revolving door” problem.

You can also find both this episode and an archive of prior 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.

One other note: KickBack will be going on holiday in August, but we’ll be back with a new episode on September 7.

Guest Post: The Coalition for Integrity’s New Report on How To Ensure Oversight of U.S. Coronavirus Response Funds

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Today’s guest post is by Shruti Shah, the President and CEO of the Coalition for Integrity, a civil society advocacy organization focused on corruption in the United States.

The U.S. Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), enacted in late March to address the economic fallout from the coronavirus pandemic, provides over $2 trillion in various forms of relief, including over $600 billion for the Paycheck Protection Program (PPP), which provides loans to small businesses, and approximately $500 billion in additional discretionary Treasury Department loans. To ensure appropriate allocation of these funds, and to reduce the risks of corruption, fraud, and other forms of misappropriation, transparency and oversight are essential. Indeed, we have already seen the perils of a lack of transparency in awarding the PPP loans. Instead of prioritizing businesses who were in danger of failing without an injection of cash, many large chains and other well-funded companies received loans. Further, there are reports that businesses owned by members of Congress received money under the program, which raises conflict of interest concerns.

Unfortunately, the Trump Administration has resisted even relatively modest measures to assure transparency and accountability in the allocation of CARES Act funds. Treasury Secretary Steven Mnuchin previously announced that the names of PPP recipients would not be made public, making the misguided claim that the identity of PPP loan recipients is the companies’ confidential and proprietary information. But taxpayer have a right to know where their money is going (a principle the U.S. vigorously applies when sending foreign aid dollars overseas). Eventually Secretary Mnuchin relented to pressure to change course, and agreed to provide information regarding PPP loans in excess of $150,000. Yet the administration’s resistance to transparency and oversight has continued, as demonstrated by alarming reports that the Treasury Department’s Office of General Counsel has issued a legal opinion claiming that the Department has no obligation to provide key information to oversight officials, including the Pandemic Response Accountability Committee (PRAC), about the CARES Act’s PPP and discretionary business loan programs.

These reports underscore the importance of keeping up the pressure on Congress and the Administration to take appropriate steps to ensure genuine transparency and accountability in the allocation of pandemic response funds. Congress in particular may need to add new legal provisions to address the flaws in the oversight system. The Coalition for Integrity recently released a new report, entitled Oversight is Better than Hindsight: Anti-Corruption Recommendations for the CARES Act, which documents the current oversight gaps in the CARES Act and presents a set of recommendations on how best to close those gaps. These recommendations include, among others: increasing appropriations for oversight bodies, enacting for-cause removal protections for Inspectors General, enhancing whistleblower protections, requiring the Federal Reserve to comply with Sunshine’s Act meeting transcript or recording requirements, and appointing a chairperson to the Congressional Oversight Commission. The report also highlights a number of measures that the Administration can and should take, including better and more effective cooperation with the oversight bodies, creating a public-facing website with detailed information on contracts awarded under the stimulus program (as was done by the Recovery Accountability and Transparency Board, which oversaw the stimulus funding enacted in response to the 2007-2008 financial crisis), and ensuring more generally that agencies are responsive rather than resistant to requests and recommendations from oversight bodies.

Effective oversight is not a partisan political issue. Misuse of stimulus money will compound the country’s collective misery at a time when millions are already suffering from the grave health and economic effects of the pandemic. In this context, insufficient public transparency and a lack of full cooperation with oversight bodies should worry us all.

 

Tracking Corruption and Conflicts of Interest in the Trump Administration–May 2020 Update

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Over three years ago, in May 2017, this blog started the project of tracking and cataloguing credible allegations that President Trump, and his family members and close associates, have been corruptly, and possibly illegally, leveraging the power of the presidency to enrich themselves. The newest update is now available here.

Perhaps unsurprisingly, the most significant updates this month (as was also the case last month) concern the ways in which the financial interests of the Trump Organization may intersect with the Trump Administration’s response to the coronavirus/COVID-19 pandemic. Although the main criticisms of the Trump Administration’s response to the coronavirus/COVID-19 pandemic have focused on the administration’s delays, misinformation, and general incompetence, some critics have highlighted suggestive evidence that the personal business interests of President Trump, his family, and their close associates may be influencing the administration’s approach to the pandemic. Critics have pointed to the following concerns:

    • Resistance to stay-at-home orders: There is some suspicion that the Trump administration’s slow and equivocal response to the pandemic may have been influenced by President Trump’s desire to avoid hurting the hospitality industry, one of the Trump Organization’s major lines of business. Media reports suggest that President Trump pushed for an end to social distancing by mid-April in part because of the adverse effect social distancing has had on his own hotels and resorts, and although President Trump ultimately relented and extended the social distancing guidelines through at least the end of April, he renewed his push for states to lift their stay-at-home orders in mid-May, despite the fact that states had not hit any of the targets laid out in the federal government’s own guidance on when it would be safe to reopen the economy. The potential conflict of interest was highlighted by the fact that on May 10, President Trump retweeted an announcement from the Trump Organization’s golf club in LA that it would be re-opening, accompanied by President Trump’s declaration that it’s “great to see our Country starting to open up again.” Former hear of the Office of Government Ethics Walter Shaub characterized this tweet as “shameless, corrupt, and repugnant.”
    • Scope of travel ban: Critics highlighted the fact that the 30-day ban on travel from Europe that President Trump announced on March 11 initially excluded the United Kingdom and Ireland, where Trump owns hotels and golf courses, though a few days later the Administration extended the travel restrictions to cover both countries.
    • Access to economic relief funds: President Trump’s financial interests may have influenced the administration’s response to the pandemic’s economic costs. In early March 2020, President Trump mentioned the possibility of a bailout for the hotel industry, and later that month, as Congress and the administration were negotiating an economic relief package, President Trump refused to rule out the possibility that his personal properties would accept relief funds under this package. However, the bill that ultimately passed, known as the CARES Act, however, banned President Trump’s properties from receiving government support. Nevertheless, when signing the legislation, President Trump issued a statement that suggested his administration would not treat the portion of the legislation that requires the newly-created Inspector General to report to Congress without presidential approval as legally binding, a move that raises concerns about both transparency and compliance. Furthermore, despite the fact that the CARES Act bars businesses owned by President Trump or other government officials from receiving stimulus funding, the Trump administration has funneled COVID-19 small business loans to companies connected to Trump and his allies. Separately from CARES Act relief, the Trump Organization, which leases the Old Post Office Building in Washington D.C. from the General Services Administration (GSA) for the Trump International Hotel, has reportedly asked the GSA for relief from its rent payments, a request that highlights the inherent conflict of interest in the President’s family company renting a building from the federal government.
    • Promotion of particular COVID-19 tests and treatments. For several weeks, President Trump aggressively promoted hydroxychloroquine as a potential treatment for COVID-19. Hydroxychloroquine is produced by Sanofi, a French pharmaceutical company. Three Trump family trusts have small investments in Sanofi, major Republican donor Ken Fisher owns a majority stake, and Commerce Secretary Wilbur Ross used to run a fund that invested in Sanofi. Rick Bright, the former head of the U.S. Government’s Biomedical Advanced Research and Development Agency, filed a whistleblower complaint alleging that he was pressured to give government contracts to political cronies, including to Aeolus Pharmaceuticals, a pharmaceutical company that produced hydroxychloroquine, because the company’s CEO was friends with President Trump’s son-in-law Jared Kushner. Another troubling example is the Trump Administration’s selection of a firm called OSCAR Health—a company founded by Jared Kushner’s brother and formerly partially owned by Jared Kushner—to develop a website to facilitate coronavirus testing. (The website was developed but quickly scrapped, and in the end OSCAR Health was not paid for its efforts.)

 

A previously noted, while we try to include only those allegations that appear credible, 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.)

Guest Post: What the U.S. Congress Must Do To Ensure Adequate Oversight of COVID-19 Relief Spending

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Today’s guest post is by Shruti Shah, the President and CEO of the Coalition for Integrity, a civil society advocacy organization focused on corruption in the United States.

We are facing an unprecedented crisis, and governments around the world have responded with unprecedented actions. In the United States, Congress has responded to the economic disruption caused by the COVID-19 crisis with the $2 trillion CARES Act and the subsequent $484 billion replenishment; still more legislation, allocating even more money for crisis response, is under discussion. When this much money is in play, oversight and fraud prevention are essential. There are already reports of PPP loans meant for small businesses going to larger companies, scammers targeting small business owners, stimulus checks being sent to deceased people, and several other COVID 19 scams. But the current safeguards for preventing fraud, corruption, and abuse in COVID-19 relief spending are woefully insufficient. As negotiations over further relief packages continue, those in Congress who care about government integrity—and the effectiveness of these trillion-dollar programs in achieving their objectives—should insist on correcting these deficiencies. In particular, here are five crucial steps that Congress can and should take to ensure that COVID-19 relief spending helps its intended beneficiaries rather than lining the pockets of grifters and grafters: Continue reading →