Tag: corruption

Could President-elect Trump’s Business Dealings Violate the Constitution?

At the New York Times, Adam Liptak has a story on whether President-elect Trump’s business dealings–in particular the possibility that he may use his presidential power to secure business advantages–would violate the obscure Emoluments Clause of Article I, Section 9 of the Constitution. Since the clause has never been directly addressed by the Supreme Court, we’ll have to do some guesswork.

The short answer: very possibly, but it will depend upon the facts of the situation.

The longer answer: whether or not Trump’s dealings violate the text and original public meaning of the Emoluments Clause, it should be highly concerning to everyone that the President-elect seems committed to still being closely involved in his businesses. Unless he wants a pall of suspicion hanging over his every move and every phone call to a foreign official, the President-elect should immediately place his businesses in a blind trust in order to maintain at least the semblance of propriety.

In the text, the Emoluments Clause prohibits any Person holding “any Office of Profit or Trust” under the Constitution from accepting “any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” Immediately, it is clear that the text limits the clause to gifts from foreign governments and the officials.

The original public meaning of the clause also confirms this interpretation. Foreign kings and princes once gave lavish presents to American officials, for example, a diamond-studded snuff box given to Benjamin Franklin (then ambassador to France) by Louis XVI. The Framers were concerned that these gifts would corrupt our officials, and so they prohibited them.

The next relevant consideration is whether, if Trump’s businesses receive a “gift” from a foreign government, Trump himself may be violating the Emoluments Clause. There is certainly an argument for this, since he benefits from the gift, even if only by increasing the value of his brand and stock holdings.

It Couldn’t Happen Here?

Dilma Rousseff was never as popular as the president who anointed her as his successor. Despite her intelligence and diligence in numerous official posts, she lacked his warm personality and flair for campaigning. But she ran a very professional presidential campaign, with lots of celebrity supporters, and the vigorous support of her predecessor, and she won the election and became Brazil’s first female president. In office she pursued policies of easy money, subsidized energy, and infrastructure construction, which initially boosted her popularity. As is so often the case, though, those populist programs eventually brought inflation and a slide into economic contraction. Simultaneously, allegations of corruption and cronyism hurt her reputation. Impeachment proceedings were brought against her, focused on her mismanagement of the federal budget, particularly employing budgetary tricks to conceal yawning deficits. “Experts say Ms. Rousseff’s administration effectively borrowed some $11 billion from state banks, an amount equal to almost 1 percent of the economy, to fund popular social programs that have been a hallmark of the Workers Party’s 13 years in power.” Some said that such fiscal mismanagement and dishonesty were common in presidential administrations and should not result in impeachment. But the Senate convicted her and removed her from office, making her bland vice president the new president.

Thank goodness nothing like that could happen in our own country.

Our Corrupt Navy

The Glenn Defense Marine scandal has exposed “a staggering degree of corruption within the Navy,” concludes a Washington Post investigation.

A more accurate title for this blog might have been “Our Corrupt 7th Fleet,” but the ease with which one foreign contractor infiltrated and ripped off the Navy in the Pacific makes one wonder about the integrity and strength of the broader institution. It is surprising that Navy officers with so much training and experience fell prey to the simple flattery, bribes, and other low-tech tools of a Singapore-based huckster.

For more than a decade, the head of Glenn Defense, Leonard Glenn Francis, cozied up to Navy leaders to win lucrative contracts to refuel and resupply ships. At the same time, he was gathering internal Navy procurement information and other intelligence. To do so, he wined and dined Navy officers, and provided them with gifts, prostitutes, and other favors to get them to do his bidding.

If this nobody, who had no military background, could wrap so many Navy leaders around his finger with little more than charisma, there is a huge institutional problem here. What about our other military and intelligence services and agencies—are they just as easy for hucksters, let alone expert foreign spy services, to penetrate?

You should read the full Post story. The revelations are disgusting and pathetic. I assume the Navy puts a huge effort into training, protocols, security, and technology to ensure that we have the most effective fighting force possible. Yet all of that was so easily undermined in such old-fashioned ways. I don’t get it.

To the Navy’s credit, it was their internal investigation that eventually exposed the corruption. And the Post story indicates that there were some officers who wouldn’t go along with the sleaze.

Francis was captured and pled guilty to various crimes. Four Navy officers, an enlisted sailor, and a Navy investigator have pled guilty to crimes. Last Friday three more officers were charged with corruption-related offenses. Investigations are ongoing, and dozens of other Navy officials are under scrutiny.

Here are some of the highlights from the Post story about one of the worst national security breaches in years:

Leonard Glenn Francis was legendary on the high seas for his charm and his appetite for excess. For years, the Singapore-based businessman had showered Navy officers with gifts, epicurean dinners, prostitutes and, if necessary, cash bribes so they would look the other way while he swindled the Navy to refuel and resupply its ships.

Much more than a contracting scandal, the investigation has revealed how Francis seduced the Navy’s storied 7th Fleet, long a proving ground for admirals given its strategic role in patrolling the Pacific and Indian oceans.

In perhaps the worst national-security breach of its kind to hit the Navy since the end of the Cold War, Francis doled out sex and money to a shocking number of people in uniform who fed him classified material about U.S. warship and submarine movements. Some also leaked him confidential contracting information and even files about active law enforcement investigations into his company.

He exploited the intelligence for illicit profit, brazenly ordering his moles to redirect aircraft carriers to ports he controlled in Southeast Asia so he could more easily bilk the Navy for fuel, tugboats, barges, food, water and sewage removal.

Over at least a decade, according to documents filed by prosecutors, Glenn Defense ripped off the Navy with little fear of getting caught because Francis had so thoroughly infiltrated the ranks.

The company forged invoices, falsified quotes and ran kickback schemes. It created ghost subcontractors and fake port authorities to fool the Navy into paying for services it never received.

The investigation has mushroomed partly because Glenn Defense was a pillar of U.S. maritime operations for a quarter-century. The 7th Fleet depended on the firm more than any other to refuel and resupply its vessels.

Over time, Francis became so skilled at cultivating Navy informants that it was a challenge to juggle them all. On a near-daily basis, they pelted him with demands for money, prostitutes, hotel rooms and plane tickets.

“The Soviets couldn’t have penetrated us better than Leonard Francis,” said a retired Navy officer who worked closely with Francis and spoke on the condition of anonymity to avoid reprisal. “He’s got people skills that are off the scale. He can hook you so fast that you don’t see it coming. . . . At one time he had infiltrated the entire leadership line. The KGB could not have done what he did.”

After the Sheldon Silver Conviction

The federal corruption trial of former New York Assembly Speaker Sheldon Silver (D-Manhattan) has concluded with a conviction on all counts, despite his lawyers’ interesting argument that trading favors — in this case, funneling state grant money to a doctor’s clinic in exchange for highly lucrative asbestos-claim referrals to Silver’s law firm — is just the way everyone does politics in New York. It’s a huge win for Preet Bharara, who holds Rudy Giuliani’s old job as chief federal prosecutor in Manhattan — often seen as the only jobholder capable of cleaning up New York politics, because all the relevant actors within the state government itself are too compromised one way or another.

Ward heelers and frank rogues are common enough in Northeastern politics, but Silver always presented himself as something else, the voice of conscience speaking for every kind of progressive movement in New York. He had won the National Conference of State Legislatures’ “William M. Bulger Excellence in State Leadership Award,” delightfully named after the notorious boss of Massachusetts politics. Silver had the power, but he also had the pretensions.

Everything You Need to Know about Deductions, Loopholes, and Special-Interest Tax Provisions

Why does the tax code require more than 10,000,000 words and more than 75,000 pages?

There are several reasons and none of them are good. But if you had to pick one cause for all the mess, it would be the fact that politicians have worked with interest groups and lobbyists to create myriad deductions, credits, exclusions, preferences, exemptions, and other loopholes.

This is a great deal for the lobbyists, who get big fees. It’s a great scam for politicians, who get lots of contributions. And it’s a great outcome for interest groups, who benefit from back-door industrial policy that distorts the economy.

But it’s not great for the American people or the American economy.

Remembering Georgia’s Freedom Fighter

Sometimes a person’s genuine significance can be assessed only after their passing. That seems to be the case of Kakha Bendukidze, Georgian entrepreneur, reformer, and philanthropist, who died unexpectedly early last month. While he was very well-known among libertarians in Eastern Europe and the former USSR, the reactions of some of the world’s leading media outlets suggest that his influence extended far beyond narrow ideological lines, making him one of the most important voices on public policy in the region.

Kakha was a close intellectual ally of Cato and did more than his fair share to promote free-market ideas in countries of the former USSR. In the early 2000s, he pressed for the adoption of a flat tax in Russia. Earlier than others, he understood Vladimir Putin’s true motives, sold his Russian businesses and moved to his native Georgia. It was there that he spearheaded, as Minister for Economy, the ambitious program of fighting corruption and liberalizing the economy, which led to extraordinarily high growth rates for Georgia’s economy. In 2007 alone, the economy expanded by 12.3 percent. After leaving public office, Kakha helped establish the Free University of Tbilisi, a private university offering Western-style undergraduate and graduate education, and the Knowledge Fund, a charity providing funding for teaching and research, including scholarships for Georgian students from poorer backgrounds.

Impressive as this account is, few would have guessed that his passing would prompt a wave of tributes and appreciations coming from sometimes unexpected places. On Foreign Policy’s Democracy Lab, Anna Nemtsova called Kakha one of Georgia’s “most progressive reformers and corruption fighters.” The New York Times published a lengthy obituary, which highlighted Kakha’s involvement with the new leadership of Ukraine. The Independent, in turn, called Kakha a “businessman and statesman who fell foul of Vladimir Putin but rescued Georgia’s post-Soviet economy.”

Finally, the New Yorker magazine offers a carefully written appreciation, offering a lot of details on Kakha’s life and activities in Ukraine prior to his untimely death, as well as the directness with which he communicated his ideas:

Even though he was unsure whether Ukrainians would accept the changes that he wanted to carry out, he agreed to work with [Ukrainian President] Poroshenko, friends say, because he saw Ukraine as the frontline of the battle for liberal reforms in the former Soviet states. With the same tough love that he had inflicted on Georgians, Bendukidze urged Ukrainians to stop blaming others for their problems. “You have broken every world record in idiocy,” he told an audience at the Kyiv School of Economics, in July. “You keep electing populists, people who promise you more. This means you are electing the worst.” He advocated cutting government spending, reducing retirement benefits for public servants, and radically deregulating the economy. Ukraine, he said, in one of his last interviews, had too many ministries and agencies. “Who needs them when the government’s sole function these days is to take money from the International Monetary Fund and pass it on in payment for Russian gas?” he asked.

Pennsylvania Lawmaker Portraits Now Come With Conviction Footnotes

Truth in legislative portraiture from the Pennsylvania State Capitol, as reported by Kris Maher in the Wall Street Journal: “On Tuesday, officials in the capital, Harrisburg, placed plaques beneath the portraits of three former state House speakers and a former Senate president pro tempore listing when the lawmakers left office—and when they were sentenced to prison.” The idea was a compromise between those who felt the portraits should be taken down entirely and those who favored keeping them on display with no mentions of criminality. The plaques cost $63.75 each, and if their shaming presence even slightly improves lawmakers’ incentives to avoid corruption, they could prove a good investment: 

Pennsylvania was ranked the fifth most corrupt state in a recent study that analyzed federal data from 1997 to 2008. During that time, malfeasance among state officials appeared to boost per capita spending by about 5% in the 10 states with the highest levels of corruption, the study published in Public Administration Review found.

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