Rethinking Presidential Obstruction of Justice

One of the greatest powers that can be granted to a national chief executive is jurisdiction over law enforcement. From the French President’s authority over the Ministry of Justice to the American President’s authority over the Department of Justice (DOJ), a number of states entrust their chief executive with significant control over the nation’s top law enforcement bodies. While these oversight powers are often exercised to achieve legitimate aims, problems arise when an executive uses his authority to shield himself or his associates from legal accountability. Such misuse of the chief executive’s authority over law enforcement is itself corrupt—an abuse of the president or prime minister’s public power to protect his private interests—and can foster the culture of impunity that allows other forms of corruption to thrive. But policing this sort of improper interference is challenging.

One possible limit on corrupt presidential interference with law enforcement is the fact that such interference may itself be a crime. In the United States, for example, it is a felony—known as “obstruction of justice”—for a government official to “corruptly” use the power of his or her office to “obstruct” a “pending or contemplated official proceeding” (such as a trial or investigation). But as Special Counsel Robert Mueller’s investigation into former President Donald Trump made clear, the current version of the obstruction of justice statute may be inadequate to check this form of presidential corruption.

For starters, it’s not clear whether the obstruction of justice statute, as currently written, even applies to a sitting president. (Scholars have disagreed on this point, with some arguing that the current statute does not apply to the president—see here and here—and others arguing to the contrary that it does.) That problem, though, has an easy fix: As Bob Bauer and Jack Goldsmith’s recent book has argued, Congress can and should amend the statute to state explicitly that a sitting president can commit obstruction of justice. Another difficulty is that, as Robert Mueller’s report stressed, under current DOJ policy, a sitting president cannot be criminally indicted. This too could be changed. The deeper and harder problem is that because in the U.S. system the president may legitimately seek to influence the conduct of criminal investigations, and because the president’s motives may be ambiguous or mixed, it is very hard, perhaps impossible, to prove that the president’s actions with respect to a pending or contemplated official proceedings were “corrupt.” Take President Trump’s decision to fire FBI Director James Comey. The Mueller Report concludes that President Trump fired Director Comey to save his presidency (which seems like a corrupt motive). Yet some claim that President Trump also had other, more legitimate reasons for firing Director Comey, including concerns about partisan bias in Comey’s investigations. And even if one contests that claim in this particular case, it’s not hard to imagine a situation in which a President moved to impede an investigation that both threatened the president’s personal interests and that the President thought was unwise or improper.

How should the law treat such cases, if the goal is to ensure that a U.S. President is not above the law, while simultaneously giving the President appropriate latitude oversee federal law enforcement?

The “Big Government Causes Corruption” Zombie Shambles On

I don’t make a practice of responding to opinion columns in mainstream newspapers, especially when they’re not specifically or primarily about corruption. But the opening of Bret Stephens’ piece in yesterday’s New York Times caught my eye, mainly because the column used corruption in the Greek health care system as the “hook” for an argument that President Biden’s ambitious plans for an expanded social safety net will lead to American decline. Here’s how Stephens opens his column:

Years ago, Alexis Tsipras, the party leader of Greece’s Coalition of the Radical Left, surprised me with a question. “Here in the United States,” the soon-to-be prime minister asked me over breakfast in New York, “why do you not have this phenomenon of passing money under the table?”

The subject was health care. Greece has a public health care system that, in theory, guarantees its citizens access to necessary medical care.

Practice, however, is another matter. Patients in Greek public hospitals, Tsipras explained, would first have to slip a doctor “an envelope with a certain amount of money” before they could expect to get treatment. The government, he added, underpaid its doctors and then looked the other way as they topped up their income with bribes.

Take a close look at any country or locality in which the government offers allegedly free or highly subsidized goods and you’ll usually discover that there’s a catch.

What is the point of opening with this anecdote (other than not-so-subtly alerting the reader that the author is the sort of important person who has chit-chats with world leaders)? The implication, so far as I can tell, seems to be that countries that provide free or heavily subsidized social welfare benefits tend to be more corrupt.

There is, however, an important problem with this argument: It’s not true.

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Recovering Damages for Corruption — Bribery Victims

There is no longer any doubt that corruption does enormous harm – to individuals, businesses, governments, and whole societies.  Nor is there any dispute that those harmed should have a right to recover damages for their injuries.  In drafting the UN Convention Against Corruption, governments agreed quickly and without dissent upon what is now article 35. It requires parties to ensure their domestic law permit any person or entity harmed by corruption to “initiate legal proceedings against those responsible for the damage to obtain compensation.”

Yet what evidence there is shows article 35’s promise remains largely unfulfilled.

For the UN Office on Drugs and Crime and the StAR Initiative, I am examining just how far there is to go for that promise to be met. With their resources and the help of the International Bar Association, I have reviewed the case law in close to one-third of the 187 UNCAC states parties.  The most common victim recovery cases I find are those where a government agency or state-owned corporation has recovered damages when an employee took a bribe. In a few, courts have also awarded damages to third-parties harmed by the bribery. There are in addition a miscellany of actions I am still digesting covering actions by the competitors of a bribe-payer, consumers, and NGOs.

Below are the bribery victim cases I have located to date. A second post will review the other cases. Reader contributions and comments warmly solicited.

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The ComEd Corruption Scandal is a Wake Up Call for Illinois

In 2020, one of the largest energy companies in America, Commonwealth Edison (ComEd), admitted to bribing “Public Official A” for legislation that allowed the company to increase the utility rates ComEd charged to Illinois citizens. Public Official A is almost certainly former Illinois House Speaker Michael Madigan, the longest-serving House Speaker in a state legislature in American history. Though Madigan denies wrongdoing and has not yet been charged, the evidence indicates that for close to a decade, ComEd bribed Madigan—for example, by giving Madigan’s allies political patronage jobs and “do-nothing consulting” contracts—in exchange for favorable legislation.

Madigan’s tenure as Speaker exemplifies Lord Acton’s adage that absolute power corrupts absolutely. During his time as Speaker, Madigan consolidated power over the legislative process, as well as substantial leverage over how other House members voted. This concentration of influence made him the ideal corruption broker for companies like ComEd. Preventing this sort of corruption from arising in the future will require various reforms, including the empowerment of external watchdogs, such as the currently dysfunctional and ineffective Office of the Legislative Inspector General. But while proposals to reform this office (see here and here) are welcome, genuine structural reform will require addressing the excessive concentration of power in the House Speaker. If Illinois, and similar jurisdictions, hope to tackle the sort of corruption we see in the ComEd scandal, it is essential to ensure greater dispersion of power within the legislature.

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One American Rule for Compensating Corruption Victims Not to Follow

American law offers victims of corruption several advantages: a range of legal theories on which to bring suit for damages; a low cost procedure for recovering damages in a criminal prosecution; the ability to aggregate many small claims into a class action; rules permitting lawyers to represent claimants in return for a share of any recovery. Each has contributed to a decent corpus of corruption victim compensation law (reviewed here), and each merits consideration by judges and policymakers elsewhere searching for ways to reduce obstacles to the recovery damages for corruption.

One feature of American law should, however, be avoided at all costs. Too often courts demand victims show exactly how much harm they suffered to recover damages. The exercise is inherently imprecise.  Advanced econometric techniques fed the best data imaginable yield nothing but a rough approximation. U.S. courts are beginning to opt for common sense rules of thumbs in some settings, but the demand for precision where precision is not possible still frequently stands in the way of the victim compensation.

The most egregious cases are where an employer seeks damages caused when a supplier bribes an employee.

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Rethinking the Hatch Act in a Post-Trump World

In the United States, the Hatch Act has long served as bulwark against the corrosive intersection of partisan politics and government power. Signed into law in 1939, the Hatch Act was designed to combat the corruption associated with the so-called “spoils system,” in which politicians dole out valuable government jobs to their supporters, and those supporters are in return expected to use their government positions to benefit their political patrons. Civil service laws that create a “merit system” attack the spoils system from one direction, by making politically-motivated hiring and firing more difficult. Laws like the Hatch Act complement these efforts by prohibiting government employees from engaging in partisan political activities. More specifically, the Hatch Act prohibits any federal officer or employee (other than the President or Vice President) from engaging in political activity while acting under his or her “official authority or influence.” (This prohibition, as interpreted, covers any sort of partisan political activity while on the job, including displaying political paraphernalia, distributing campaign materials, and soliciting campaign contributions.) Penalties for violating the Hatch Act can include fines, demotion, suspension, removal from office, and temporary debarment from future federal service.

Since its enactment, compliance with the Hatch Act has generally been quite good. But that changed in January 2017, when President Trump took office. Throughout the Trump years, rampant violations of the Hatch Act plagued the federal government. High-level Trump Administration officials like Ivanka TrumpJared KushnerMike PompeoKellyanne Conway, and Stephen Miller, among many others, engaged in likely Hatch Act violations, with no significant consequences. This exposed an uncomfortable truth: At least for high-level political appointees, the Hatch Act’s enforcement mechanisms are too week, and the penalties too negligible, to deter officials uninterested in complying with the law. Indeed, past compliance with the Act was likely more the product of government norms than fear of punishment.

Just to be clear, the situation is likely quite different for career civil servants who serve in government regardless of which political party holds the White House. With respect to these individuals, who comprise the overwhelming majority of the government, the Hatch Act’s prohibitions are strictly enforced, and the penalties are stiff. But for senior political appointees, the Trump Administration exposed glaring weaknesses in the Hatch Act’s efficacy, when the Administration has little interest in adhering to conventional norms of ethics and integrity. Two types of reform are needed:

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The Perils of Over-Criminalizing Sports Corruption

Although the fight against corruption has traditionally focused on corruption in government, the anticorruption community has started to pay more attention to corruption in other spheres. One particularly prominent concern is corruption in sports (see herehere, and here). The topic of sports-related corruption includes not only corruption in the major sports associations (think FIFA and the International Olympic Committee), but also the corrupt manipulation of individual sporting events in order to win bets (whether legal or illegal). Such corrupt manipulation includes match-fixing (where corrupt actors fraudulently influence the outcome of a game); spot-fixing (where wrongdoers seek to influence events within the game that do not necessarily have a significant effect on the final outcome, such as the number of minutes an athlete plays or timing the first throw-in or corner in a soccer game); and point-shaving (where perpetrators seek to hold down the margin of victory in order to avoid covering a published point spread).

Different jurisdictions approach this sort of sports corruption differently. Many countries in Europe have enacted blanket laws criminalizing match-fixing in order to uphold the integrity of sports. The United States, by contrast, takes a narrower approach: The relevant criminal laws targeting sports corruption in the U.S.—both the Federal Sports Bribery Act (the “Act”) and comparable laws at the state level—focus solely on bribery. Furthermore, the Act has historically been used to prosecute individuals involved in paying bribes or inducing others to collect bribes, but not the people (usually athletes, coaches, or officials) who receive the bribes. Although a great deal of corruption in sports involves the payment of bribes, and would therefore be covered by these laws, some types of sports corruption are unilateral: An athlete or sports official may place bets on sporting events and subsequently undertake behavior to win those bets. For this reason, some scholars have argued that the U.S. should close this loophole by criminalizing such unilateral conduct as well.

I disagree. To be sure, unilateral sports corruption is unethical, and criminalizing it would help to prevent athletes, referees, and coaches from engaging in corrupt acts that jeopardize the integrity of sports. But the benefits of criminalizing this form of misconduct are minimal and are greatly outweighed by the corresponding costs.

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Actions for Damages Caused by Corruption: American Law

American law allows corruption victims to recover damages under a variety of legal theories, and its class action procedures are well suited for recovery in certain cases.  This post discusses who the law deems a victim and what damages they are entitled to recover.  A second post will suggest where countries developing their own corruption victim law might follow American practice, and where American practice should be avoided at all costs.

In the United States, the party that most often recovers damages for corruption is a company whose employee accepted a bribe. The bribe will have been paid in return for awarding the bribe-payer a contract or for approving poor performance or overpayment on a contract the payer already holds with the employer. Most cases have arisen from one firm bribing an employee of another, but the same law applies when the victim is a government agency whose employee was bribed. U.S. agencies (here), cities (here and here) and counties (here), local police forces (here) and the United Nations (here) have all collected damages in these circumstances. So have foreign governments when the bribe was paid in violation of the Foreign Corrupt Practices Act (chapter 10 here). 

The basis of the employer’s damages is in taking a bribe the employee breached the duty of loyalty owed the employer. The duty of loyalty is also grounds for recovery in conflict of interest cases.  The most well-known public conflict of interest case is from the early 20th century. In United States v. Carter, Army Captain Oberlin Carter had awarded dredging contracts to a company in which he had a secret interest. The court ruled that not only was the Army entitled to Carter’s share of the company’s profits but to any money he had earned from investing those profits.

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Guest Post: The U.S. Just Created a Public Beneficial Ownership Registry for a Subset of Companies

Today’s guest post is from Neil Gordon, a Senior Researcher at the Project On Government Oversight (POGO).

Companies with anonymous ownership structures are a serious global problem. Anonymous companies, as readers of this blog are likely well aware, play a significant role in facilitating grand corruption. Anonymous companies are associated with a wide range of other criminal misconduct as well. Unfortunately, the United States bears much of the blame for the proliferation of anonymous shell companies and the harm they cause. Most states make it relatively easy to set up a business without revealing the real owners—even easier than getting a library card, according to the anticorruption think tank Global Financial Integrity. That’s why it was so important that Congress finally enacted two key corporate transparency provisions as part of the fiscal year 2021 National Defense Authorization Act (NDAA).

The first provision, the Corporate Transparency Act (CTA), requires most companies to register their beneficial owners—the people who really own, control, and financially benefit from the company—with the Treasury Department’s Financial Crimes Enforcement Network. This provision received a great deal of media coverage, and rightly so. But the second key beneficial ownership transparency provision in the NDAA has received almost no attention, even though it could be a real game-changer. That second provision can be found in Section 885 of the NDAA. Section 885 requires all companies receiving federal contracts or grants over $500,000 to report their beneficial owners in the Federal Awardee Performance and Integrity Information System (FAPIIS), a database containing the misconduct and performance histories of federal contractors and grantees. Continue reading

Guest Post: An Anticorruption Agenda for the Biden Administration

Today’s guest post is from Lucinda A. Low and Shruti Shah, respectively Acting Chair and President of the Coalition for Integrity, a U.S. based non-governmental organization focused on fighting corruption. The opinions expressed here are those of the authors, and should not be attributed to the organization..  

The United States has a long history, across administrations of both parties, of showing leadership internationally in the fight against corruption. The passage and enforcement of the Foreign Corrupt Practices Act (FCPA) has served as an example for other countries to adopt their own transnational anti-bribery laws. Additionally, the United States has championed international anti-bribery efforts in multilateral organizations and worked to build coalitions to root out all types of corruption. For the last several years, however, U.S. has faltered. In order to reestablish the U.S. as a global leader against corruption, and to get its own house in order, the Biden Administration and the new Congress should embrace an ambitious agenda that includes the following elements: Continue reading