For the sixth year running the Organization for Economic and Cooperation is hosting a two-day conference on ethics and corruption. This year’s theme is how corruption has eroded trust in government and is helping advance what Secretary General Gurria termed in his opening remarks the three destructive “isms” haunting the world today: populism, nationalism, and protectionism.
The organization’s members are 35 of the world’ s richest nations (all save Russia and the PRC), and despite extraordinary levels of wealth by any historical measure, and recent upbeat economic news, citizens across the 35 have soured on their governments. Trust in government across the 35 is at a record low while cynicism and distrust in elected leaders is at an all-time high, and though the Secretary General put much of the blame for the current funk on the 2008 economic crisis and the still uneven and unbalanced recovery, corruption, he stressed, has done its part. Revelations of wrong-doing at the highest levels of government coupled with the petty corruption that frustrates the delivery of basic government services has only deepened citizens’ suspicions in their government. If OECD member states are to win back citizens’ confidence, and avoid those destructive “isms,” they cannot, he argued, ignore the corruption question.
For those unable to fund a trip to Paris or with a sponsor or client willing to foot the bill, the conference home page with the agenda is here. Four things I found useful on day one: Continue reading →
[Kaitlin Beachprovided helpful research and thoughtful contributions to this post.]
Since Donald Trump’s election, critics have asserted that his presidency presents unprecedented risks of corruption, cronyism, and conflict of interest. Many argue that President Trump and members of his administration are already engaging in conduct that is not only unethical, but also illegal. Because it can be hard for non-specialists to keep track of the myriad rules that have been referenced in the context, this post provides a brief, non-technical overview of the most important federal laws and regulations that are designed to prevent corruption, conflict-of-interest, and self-dealing in the U.S. government, focusing on those that have been most widely or most creatively discussed in relation to fighting a purportedly corrupt Trump administration.
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 →
Seeing the President-elect as a champion of ethics would be one way to interpret the comedic events of the past 36 hours in the upside-down world of what was once termed the capital of the free world. The comedy opened Monday evening, January 2, with Republican members of the incoming House of Representatives voting (in secret and without prior notice) to curb the Office of Congressional Ethics, the independent body which hears allegations of ethical transgressions by House members and staff. The vote met with immediate and sustained outrage by citizens, media commentators, and government reform groups. Criticism was also voiced from a source many found unlikely. In a pair of messages (here and here) Tuesday morning President-elect Trump tweeted that:
“With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog, as unfair as it may be, their number one act and priority. Focus on tax reform, healthcare and so many other things of far greater importance! #DTS”
Within hours of the Trump tweets, the comedy ended. Chastened, on-the-defensive, with even their allies questioning their political competence, House Republicans reversed course and left the congressional ethics office’s powers intact. Continue reading →
Volkswagen’s diesel emissions cheat has cost the company dearly. Last October, Volkswagen reached a US$16.5 billion dollar settlement with the US government, and the value of Volkswagen’s stock today is worth about 50% of what it was before the scandal – a US$60 billion drop in the company’s valuation. Criminal charges against several senior managers, including chairman Hans Dieter Poetsch, are still pending. Countless customers are furious, while many employees fear for their jobs as Volkswagen scrambles to cut its costs. (Some background on the scandal, as well as a regularly updated timeline, can be found here.)
What started as a “simple cheat” became a slippery slope for the whole company. Volkswagen failed to create a culture of corporate integrity; the institutional checks and balances that are supposed to prevent something like this from happening were purposefully or ignorantly subverted, and the company created all the wrong incentives. As Alison Taylor has argued on this blog, these are the perfect ingredients for a corrupt corporate culture.
Who to blame for this mess (and, similarly, many other corporate messes)? Just as “a fish rots from the head down,” a company’s board of directors must take responsibility for creating or allowing a toxic corporate culture that permits cheating and other unethical and illegal behavior. Continue reading →
President-elect Trump tweeted early November 30 “that legal documents are being crafted which take me completely out of business operations.” Will this suffice to resolve concerns about the potential conflicts of interest that could arise during his presidency? While the answers of the anti- and pro-Trump camps are predictable (a heated, vitriolic “no” and an equally heated, vitriolic “yes” respectively) for others the answer will turn on two issues:
1) What conduct they understand the conflict of interest rules prohibit, and
2) Whether they think Trump’s removing himself “completely” from his businesses is enough to prevent it.
Media coverage about conflict of interest since Trump’s election has been so colored by opposition to Trump generally that those trying to fairly evaluate Trump’s plan are likely confused about both issues. Herewith a guide to both to help fair-minded citizens evaluate the Trump plan. Continue reading →
Attacking President-elect Trump on the basis of his expected violations of the conflict of interest laws provides the anti-Trump crowd a convenient outlet to vent their anger and frustration over his election. But as the attacks continue to pop up in op-eds and on cable and be smuggled into straight news reporting, those launching them might bear two things in mind: the attacks will surely further divide the nation and, even worse for the anti-Trumpers, make it more likely Trump will pursue the policies he espouses that they so adamantly reject.
As explained here last week, the conflict of interest laws do not apply to presidents; suggestions that Trump should follow them even though he is exempt make no sense. Continue reading →