Rethinking America

Corruption in Trump’s America

The election of Donald Trump could spell disaster for anti-corruption efforts in the U.S. and abroad.

Credit: Andrea Izzotti Shutterstock.com

Takeaways


  • Trump’s election could spell disaster for the cause of anti-corruption in the US and abroad.
  • Trump will likely cut funds to enforcement of the Federal Corrupt Practices Act he called “horrible.”
  • Property tycoon Trump is not going to make rules tougher for real estate developers and brokers.

The election of Donald Trump could spell disaster for the cause of anti-corruption in the United States as well as internationally.

This is likely to be the unintentional consequence of policies that will be promoted by the new Administration, which takes office on January 21, 2017.

Rules and regulations guarding domestic and foreign business activities pursued by U.S. corporations, money laundering and foreign affairs in general may be relaxed far too much.

Business and finance

There are increasing indications that the Trump Administration will include people who have been outspoken in their opposition to business regulation.

Leading the Trump “government transition” team on business regulation is lawyer Paul Atkins, 58, who served for six years from 2002 to 2008 in the Bush Administration as a member of the Securities and Exchange Commission (SEC).

He opposed SEC enforcement actions against corporations, arguing that they only hurt the shareholders who end up paying the fines.

Atkins has been a vocal opponent of the Dodd-Frank Act, which introduced a host of financial industry regulations following the 2008/09 financial crisis.

Atkins and Trump have both advocated a major overhaul of the law to ensure that banks have greater flexibility and scope.

One small part of the Dodd-Frank Act called on the SEC to develop rules that force U.S. oil, gas and mining companies to disclose all of their foreign payments to governments. The industry opposed this.

The new rules are due to go into operation next year, but will probably be scuttled. They were designed to add transparency to the incomes of foreign kleptocratic government leaders in many parts of the world.

Corporate foreign bribes

Last year, Donald Trump called the Foreign Corrupt Practices Act “a horrible law.” The new Administration, staunchly backed by the U.S. Chamber of Commerce, may seek to water-down the FCPA.

But the FCPA could be rendered useless sooner than it takes to change the law: All that the new Administration has to do is end enforcement by sharply cutting funds for investigations and prosecutions.

I believe this is likely and that it will inevitably result in far lower levels of compliance by U.S. multinational corporations – and more bribe-paying.

Money laundering

The new Administration can in theory be expected to ramp up all possible anti-terrorism actions, including the investigations of terrorist financing. This would be the exception in the field of anti-money laundering, which will also be dialed back.

The Obama Administration repeatedly pledged to enforce measures to curb money laundering and to secure public disclosure of the beneficial ownership of holding companies that represent “suspicious characters.”

Now, the financial deregulation and reduced corporate enforcement by the major U.S. government agencies is likely to reverse the modest progress that has been seen.

Many of these “suspicious characters” use holding companies to mask their identity as they purchase yachts and fine art and expensive apartments in New York, Miami, and Los Angeles.

One thing is for sure – property tycoon Donald is not going to make life tougher for real estate developers and brokers, let alone the banks, lawyers and consultants that make big fees in assisting the holding companies to invest in the United States.

Foreign affairs

An unintentional consequence of U.S. foreign policy over many decades has been that often the U.S. government has contributed to increasing corruption overseas.

A great deal of the more than $116 billion in U.S. reconstruction aid to Afghanistan over the last 14 years has disappeared. U.S. officials agree that these vast flows of funds have added to that country’s corruption problems. The same was true on a somewhat lesser scale as the U.S. deployed and maintained its forces in Iraq.

In recent times the U.S. State Department, Department of Defense and the National Security Council, have become more aware and concerned about this problem.

They know all too well that traditional U.S. economic and military aid to highly corrupt regimes, for example in Pakistan and Egypt, has been misused. But they have accepted this as an unfortunate cost of attaining strategic relationships.

Now, I expect that the new Administration as it aggressively moves to promote its foreign policies will seek to use economic and military aid to an even greater degree to influence foreign governments.

The strategic security goals will be even more dominant and the unintended corruption consequences could be grave.

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About Frank Vogl

Frank Vogl is co-founder of Transparency International and author of Waging War on Corruption: Inside the Movement Fighting the Abuse of Power.

  • Julia May Felt

    this is propaganda, plain and simple. Trump’s administration will fight corruption.