How Corrupt Institutions Corrupt Decent People

One of the great challenges in combating corruption—particularly systemic corruption that permeates an entire organization or institution—is figuring out how and why ordinary, well-meaning people would get caught up in activities that are blatantly unethical and usually unlawful. Yes, there are some greedy sociopaths out there, but most people at least like to think of themselves as good people. And yes, sometimes the sociopaths wield so much power that they can coerce collaboration or obedience—but in most cases, systemic corruption occurs only because a large number of people who think of themselves as basically decent end up doing (or at least tolerating and implicitly enabling) grotesquely unethical conduct.

We’ve had a few posts on this topic before (see, for example, here and here), and there’s a substantial and ever-growing body of academic literature, in fields like psychology and organizational sociology, which investigates this question. I’m still working through that literature and perhaps in a future post I’ll have something to say about the research findings. But today, I just wanted to share some insights on the question that originated in commentaries on a different topic: posts by Professor David Luban and by my colleague Professor Jack Goldsmith on the question of whether people of decency and integrity should be willing to serve in the Trump Administration. (Professor Luban’s published immediately after the election, Professor Goldsmith’s published in the wake of Trump’s abrupt firing of FBI Director James Comey last May.) Professors Luban’s and Goldsmith’s pieces are not about corruption, but rather about broader issues related to the challenges of serving a President who might push a policy agenda that many prospective appointees, though politically conservative, find abhorrent. Nonetheless, in reading these two pieces, I was struck by how much their analysis could apply, with only slight modifications, to how well-meaning individuals who join a corrupt organization (whether in the public or private sector) can end up compromising their integrity.

Below I’ll simply quote the relevant passages, with only minor edits to make their observations applicable to corruption (in a public or private organization), rather than creeping authoritarianism or a radical policy agenda: Continue reading

Tracking Corruption and Conflicts of Interest in the Trump Administration–August 2017 Update

This past May, we launched our project to track 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.Just as President Trump’s son Eric will be providing President Trump with “quarterly” updates on the Trump Organization’s business affairs, we will do our best to provide readers with regular updates on credible allegations of presidential profiteering. Our August update is now available here.

Despite all the drama and turbulence surrounding the Administration over the past month, there is relatively little new material in this month’s update. Perhaps the most notable new reports concern the President’s son-in-law, Jared Kushner. Over the past month, new reports surfaced concerning companies connected with Kushner’s family business attempting to leverage his name and position to secure Chinese investment in real estate development projects, despite previous apologies by Kushner Companies to cease such conduct; Kushner enterprises claimed no knowledge that associated promotion companies were doing this. Additionally, reports surfaced that Kushner tried and failed to secure an investment from a Qatari billionaire (and former Prime Minister) for Kushner Companies’ financially troubled property at 666 Park Avenue, and the Trump Administration’s subsequent support for the boycott of Qatar by several of its neighbors appears to have been driven by Kushner, fueling admittedly unproven speculation that the Administration’s foreign policy is being influenced by hostility born out of a failed business deal, and perhaps an interest in signaling to other foreign governments, or individuals closely associated with foreign governments, that failure to do business with Trump or Kushner companies on favorable terms will adversely affect relations with the U.S. government.

(Note: While we try to sift through the media reports to include only those allegations that appear credible, we acknowledge that many of the allegations discussed 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.)

Tracking Corruption and Conflicts of Interest in the Trump Administration–July 2017 Update

This past May, we launched our project to track 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.Just as President Trump’s son Eric will be providing President Trump with “quarterly” updates on the Trump Organization’s business affairs, we will do our best to provide readers with regular updates on credible allegations of presidential profiteering. Our July update is now available here. The most notable new highlight in the new material concerns two developments related to housing subsidies: First, while President Trump’s proposed budget proposed slashing funding for most housing assistance programs, it conspicuously exempts a program that provides payments directly to private landlords–a program from which Trump directly profits due to his ownership stake in a New York housing development that receives subsidies under the program. Second, President Trump appointed an event planner with close ties to his family (but no prior experience in housing policy) to a senior government position responsible for disbursing federal housing funds in New York and New Jersey, where the Trump Organization has substantial real estate holdings.

(Note: While we try to sift through the media reports to include only those allegations that appear credible, we acknowledge that many of the allegations discussed 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.)

Tracking Corruption and Conflicts of Interest in the Trump Administration–June 2017 Update

Last month, we announced the launch of our project to track 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.Just as President Trump’s son Eric will be providing President Trump with “quarterly” updates on the Trump Organization’s business affairs, we will do our best to provide readers with regular updates on credible allegations of presidential profiteering. Our June update is now available here.

Highlights from the new material include:

  • Federal government agencies promoting Ivanka Trump’s book
  • Trump advisors and confidants Carl Icahn and Rupert Murdoch allegedly influencing administration decisions in ways that benefit their financial interests
  • Efforts by Jared Kushner’s sister to attract Chinese investors to a family company project by touting her son’s role as senior advisor to the President
  • Allegations that Jared Kushner and the chairman of a Russian state-owned development bank may have discussed the possibility of a loan to the Kushner family business in exchange for relaxation of U.S. government sanctions on Ukraine
  • Substantial payments by state government pension funds to entities affiliated with Trump Organization businesses.

(Note: While we try to sift through the media reports to include only those allegations that appear credible, we acknowledge that many of the allegations discussed 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.

 

Jared Kushner May Have Violated the Foreign Corrupt Practices Act

Recent media reports – which would be even more sensational if we weren’t getting so desensitized to Trump-related scandals – indicate that prior to Trump’s inauguration, his son-in-law and senior advisor Jared Kushner had private meetings with Russian government officials, including both Ambassador Sergey Kislyak and Sergey Gorkov, the head of a Russian state-owned bank (and a close associate of Vladamir Putin). We still don’t know (and may never know) the precise contents of the meeting, but based on circumstantial evidence, several of the media reports discuss speculations Kushner and his Russian government contacts discussed the possibility of extending financing to business ventures owned by Kushner or his family (including, most notably, a financially struggling office building at 666 Fifth Avenue in Manhattan), if Kushner would help to persuade his father-in-law, the President-Elect of the United States, to lift the sanctions that the U.S. had imposed on Russia for its military intervention in Ukraine.

Again, we don’t yet know whether this is true. But let’s suppose for a moment that some version of that story is approximately correct: that during conversations with Russian government officials, Jared Kushner proposed or endorsed the idea that he would try to persuade his father-in-law to lift the Russia sanctions, and that Kushner did so because he believed (or was told) that if he did, a Russian state-owned development bank would provide valuable financing for his family’s business.

If that’s what occurred, then even nothing further came of these discussions, then there’s a very good argument that Jared Kushner committed a criminal violation of the Foreign Corrupt Practices Act (FCPA). Though there’s been quite a bit of discussion in the reports so far about various federal laws that Kushner may or may not have been broken in connection with these meetings (such as the little-used Logan Act, which prohibits private citizens from interfering with U.S. diplomacy). But I haven’t seem much discussion of the FCPA angle. So even though it might still seem unrealistic to imagine that FCPA charges will be brought, let me elaborate a bit on why I think there’s a plausible case for an FCPA violation here, if the evidence supports the characterization of the meetings sketched above: Continue reading

Guest Post: Trump’s Pledge To Enforce the Global Magnitsky Act–A Skeptical View

Ilya Zaslavskiy, a research expert with the Free Russia Foundation, contributes today’s guest post:

Earlier this month the White House sent a letter to Congress pledging a commitment to the “robust and thorough enforcement” of the 2016 Global Magnitsky Act (GMA). The GMA, which grew out of a similar 2012 law that focused only on Russia, allows the executive branch to impose certain sanctions—including visa bans and freezing of U.S. assets—on any foreign citizen who commits gross human rights violations or who retaliates against whistleblowers who expose corruption. After Trump won the election, many feared that his administration would shelve meaningful enforcement of the GMA. (After all, the Obama Administration had also been reluctant to implement the original Magnitsky Act aggressively, and did so only under pressure from Congress.) In light of those low expectations, the White House’s statement was taken by many as an encouraging sign.

But many activists and NGOs fighting corruption, in Putin’s Russia and elsewhere, remain rightly skeptical. After all, Trump’s praise and upbeat rhetoric about corrupt authoritarian leaders—not only Putin, but President Erdogan or Turkey and President Duterte of the Philippines—naturally call into question the Administration’s seriousness about aggressive GMA enforcement. Consider further the fact that, despite the overwhelming evidence coming out of Chechnya that its president Ramzan Kadyrov has authorized massive abuses against the LGBT community and opened what is amounting to prisons for gays, there are no signs that the Trump Administration is considering adding Kadyrov to any open sanctions lists, despite not only recent events, but his long track record of corruption and human rights abuses.

Moreover, the White House’s statement in support of the GMA might be an attempt to create the appearance of taking a firm stand against corruption and human rights abuses, to diminish political momentum for more consequential actions. Specifically in regard to Russia, the latest statement about the GMA should also be understood in the context of the broader scandal regarding the Trump team’s ties to Russia. This scandal has, if anything, intensified anti-Russian sentiment in Congress. Not only have leading Senators and Representatives come out in strong support of sustaining existing sanctions against Russia, but there are now a half-dozen initiatives under consideration in Congress that would both codify and expand these sanctions. In such context, it might actually be useful to Trump (and arguably his Russian friends) to appear to be taking firm measures against Russia and other kleptocrats, while resisting adoption or implementation of more meaningful responses. The recent White House statement pledging robust enforcement of the GMA fits that narrative. After all, rhetoric aside, neither the original Magnitsky Act nor the GMA create more than a small headache for Trump and Russians. Only few really high level names have been sanctioned under those initiatives. Financial sanctions (particularly restrictions on long-term loans) are what matters for the Kremlin most. Indeed, Russian leadership might even be happy to have the Magnitsky laws in place if those restrictions are relaxed.

 

The Trump Legacy: A Gladstonian Finale?

For a man whose biographer describes him as obsessed “with protecting his image,” President Donald Trump seems oblivious to how flouting conflict of interest norms is blackening that image.  Perhaps he thinks that the criticisms leveled (examples from GAB: here and here, major media: here, here, and here) are just the carpings of Clinton supporters that will fade over time. And that his presidential accomplishments will overshadow whatever he may do to grow the Trump patrimony while holding the office.

He might want to consider how conflict of interest charges have sullied the image of one of Britain’s finest leaders since he left office 123 years ago.  So great has the fuss been that that no biographer, no matter how sympathetic, and no history of 19th century Britain can ignore the charges. Continue reading