HOTLINE KLEPTOCRACY

Donald Trump’s Quiet Christmas Gift to the Kleptocrats

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Despite being under the intense scruti­ny of impeach­ment, the White House remains devot­ed to enabling for­eign graft and cor­rup­tion.

Nearly two decades ago, Nursultan Nazarbayev, the then doughy dic­ta­tor of Kazakhstan, came hat in hand to the George W. Bush White House, des­per­ate to make a deal. The post-Soviet strong­man had a prob­lem: The Department of Justice had accused Nazarbayev of gob-smack­ing bribery. Per the DOJ, the Kazakh leader had put the squeeze on a range of hydro­car­bon com­pa­nies, hop­ing to tap the country’s vast oil wealth. Those com­pa­nies rec­i­p­ro­cat­ed by fun­nel­ing tens of mil­lion of dol­lars to Kazakhstan’s klep­to­crat in chief. All run through Swiss bank accounts, the ill-got­ten gains pro­vid­ed Nazarbayev with luxe crea­ture com­forts such as snow­mo­biles, fur coats, and speed­boats. Caught red-hand­ed, Nazarbayev need­ed President Bush and his staff to help make his judi­cial issues go away.

Those alle­ga­tions result­ed, at the time, in the largest case ever brought under the aus­pices of the Foreign Corrupt Practices Act, the key­stone in the United States’ anti-cor­rup­tion regime. The charges were also a thump­ing embar­rass­ment for Nazarbayev, who had sought to spin his image as a democ­ra­tiz­ing, West-lean­ing fig­ure. (Among those Nazarbayev roped into his white­wash­ing efforts: Tony Blair.) Nazarbayev leaned on the Republicans in the White House to try to make the alle­ga­tions dis­ap­pear. As one ana­lyst wrote, Nazarbayev “so dread­ed being tar­nished” by a con­vic­tion “that both he and his envoys plead­ed repeat­ed­ly for the George W. Bush Administration to order the case be dropped.” He sicced his under­lings on Dick Cheney, who dodged Nazarbayev’s efforts. (According to the Financial Times, Cheney “rebuffed” the Kazakhs, “rec­om­mend­ing in essence that they hire a good lawyer.”) Nazarbayev then turned direct­ly to Bush himself—but, as The New York Times report­ed, the dictator’s hench­men were “told there was noth­ing the admin­is­tra­tion could do about the inves­ti­ga­tion.”

And that was that. A Republican admin­is­tra­tion had sent a post-Soviet klep­to­crat pack­ing, allow­ing a DOJ inves­ti­ga­tion to con­tin­ue hum­ming along unper­turbed. Nazarbayev con­tin­ued to sweat as fur­ther details of his finan­cial malfea­sance came to light. The case itself even­tu­al­ly fell apart, for a range of dis­parate rea­sons. Nevertheless, the rev­e­la­tions helped inspire law­mak­ers to even­tu­al­ly draft pio­neer­ing reg­u­la­tions requir­ing hydro­car­bon com­pa­nies to dis­close their pay­ments to for­eign gov­ern­ments. The entire episode also high­light­ed how an exec­u­tive branch could, and should, push back against for­eign crooks try­ing to quash American inves­ti­ga­tions.

But those days are gone. The past few months, which have cul­mi­nat­ed in the third impeach­ment of a U.S. pres­i­dent, have demon­strat­ed that President Donald Trump and his ide­o­log­i­cal allies have no inten­tion of fol­low­ing in Bush’s foot­steps by reject­ing for­eign cor­rup­tion. While Trump insists that his unprece­dent­ed pres­sure cam­paign in Ukraine was an effort to fight for­eign graft, he and his allies have tak­en a sledge­ham­mer to the very anti-cor­rup­tion reg­u­la­tions assem­bled to ensure that a repeat of the “Kazakhgate” affair nev­er hap­pens. And if you think that being under the white-hot spot­light of impeach­ment has chas­tened the pres­i­dent, think again: The Trump administration’s lat­est effort to under­mine the glob­al effort against klep­toc­ra­cy hap­pened right before the hol­i­day sea­son kicked off, in the height of impeach­ment fer­vor.


Amid the dai­ly del­uge of news about Trump’s var­i­ous scan­dals, it can be dif­fi­cult to appre­ci­ate the lengths to which this admin­is­tra­tion and its con­gres­sion­al allies have gone in their attempts to dec­i­mate America’s pre­em­i­nence in glob­al anti-cor­rup­tion mea­sures. (For a com­pre­hen­sive run­down, see here.) Trump’s bids to implode the U.S. anti-cor­rup­tion efforts go back to the ear­li­est days of his pres­i­den­cy, when, in one of his first offi­cial acts, he and his House GOP allies employed a “rarely used” mech­a­nism to pre­vent the imple­men­ta­tion of a reg­u­la­tion man­dat­ing that major oil and gas com­pa­nies dis­close their pay­ments to for­eign gov­ern­ments.

Known as Section 1504, and col­lo­qui­al­ly as the “Cardin-Lugar pro­vi­sion,” the reg­u­la­tion was, as anti-cor­rup­tion watch­dog Global Witness wrote, “a bea­con of U.S. lead­er­ship in the glob­al fight against oil and min­ing cor­rup­tion.” It struck at the heart of what is con­sid­ered to be the most cor­rupt indus­try extant. (If imi­ta­tion is the sin­cer­est form of flat­tery, then Section 1504 was one of the most suc­cess­ful anti-cor­rup­tion mech­a­nisms the U.S. has ever intro­duced: Governments from Canada to Norway to the European Union quick­ly imple­ment­ed their own ver­sions of the pro­vi­sion.)

After Trump tar­get­ed Section 1504 for dec­i­ma­tion in the ear­ly days of his tenure, his Securities and Exchange Commission used the cov­er of impeach­ment to try to fin­ish the job. Because of the leg­isla­tive mech­a­nism Trump and his allies used to ini­tial­ly gut Section 1504, they couldn’t repeal the statute entire­ly; rather, the SEC is still required to imple­ment a ver­sion of the pro­vi­sion. But the SEC’s new draft pro­pos­al, announced just as every­one was leav­ing for the hol­i­days, makes an absolute mock­ery of the orig­i­nal anti-cor­rup­tion intent of Section 1504—and high­lights just how cozy the Trump admin­is­tra­tion is with the pro-cor­rup­tion, anti-trans­paren­cy forces swirling America’s oil and gas sec­tor.

The SEC’s draft pro­pos­al, for instance, comes rid­dled with exemp­tions, allow­ing com­pa­nies to file cer­tain pay­ment infor­ma­tion confidentially—or in some cas­es, leave out the infor­ma­tion entirely—and all but elim­i­nat­ing the trans­paren­cy the pro­vi­sion was orig­i­nal­ly meant to pro­vide. It also rais­es the thresh­old for min­i­mum fil­ing require­ments, lim­its which projects would require dis­clo­sure, and effec­tive­ly elim­i­nates the abil­i­ty for cit­i­zens to track infor­ma­tion about contracts.The SEC’s pro­pos­al con­firms the worst fears of lead­ing anti-graft voic­es: that one of America’s fore­most anti-cor­rup­tion tools has, under Trump, been trans­formed from a force into a farce.

The SEC’s pro­pos­al con­firms the worst fears of lead­ing anti-graft voic­es: that one of America’s fore­most anti-cor­rup­tion tools has, under Trump, been trans­formed from a force into a farce. “It was a big let­down, I have to say,” Zorka Milin, a senior legal advis­er with Global Witness, told The New Republic. “It just seems like they sort of looked at every sin­gle aspect of [Section 1504] and reversed them­selves from what they did a few years ago … and I cer­tain­ly did not expect that.”

The draft pro­pos­al is not yet imple­ment­ed, and there’s still a chance the lan­guage could change—especially if dis­cus­sions drag into next year or into a new admin­is­tra­tion. But for the moment, the dam­age is obvi­ous. Global Witness said in a state­ment that the cur­rent draft pro­pos­al would “utter­ly fail to safe­guard against cor­rup­tion in the extrac­tives sec­tor and appears instead to be a mas­sive hand­out to the oil and gas indus­try.” Per Oxfam, the draft pro­pos­al would “facil­i­tate cor­rup­tion,” act­ing as “a hand­out for klep­to­crats and indus­try insid­ers” and some­thing that “plays into the hands of cor­rupt politi­cians, com­pro­mised bureau­crats, and insid­er lob­by­ists who thrive on secre­cy.” And Publish What You Pay, a group of civ­il soci­ety orga­ni­za­tions that push­es for finan­cial trans­paren­cy in the extrac­tives sec­tor, was blunt: Following Trump’s and his allies’ efforts to roll back pro-trans­paren­cy lan­guage, the SEC’s new pro­pos­al would “enable bribery and cor­rup­tion.”

If there’s good news amid the Trump administration’s ongo­ing efforts to kneecap the role of the U.S. as a glob­al leader in the fight against cor­rup­tion, espe­cial­ly in the oil and gas sec­tor, it’s that oth­er nations haven’t yet fol­lowed suit. Norway, Canada, the European Union—all those who trod in the pre­vi­ous foot­steps of the U.S., demand­ing that major hydro­car­bon com­pa­nies dis­close infor­ma­tion on pay­ments to for­eign governments—have main­tained their reg­u­la­tions thus far, fill­ing the vac­u­um left by Trump’s America. Even the White House’s 2017 move to pull the U.S. back from the Extractive Industries Transparency Initiative, the fore­most con­sor­tium advo­cat­ing for dis­clo­sure about oil, gas, and min­ing assets, hasn’t led to a cas­cade of oth­ers with­draw­ing, as some feared.

But those real­i­ties are lit­tle more than sil­ver linings—and only serve to high­light the yawn­ing reg­u­la­to­ry gap Trump has opened. Where Washington once stood as a leader in the fight against spi­ral­ing cor­rup­tion, there is now an admin­is­tra­tion bent on glad-hand­ing klep­to­crats and crooks across the world, dec­i­mat­ing America’s anti-cor­rup­tion lega­cy along the way. And with so many mobbed-up crooks lined up to enlist Rudy Giuliani’s ser­vices to bend Trump’s ear, there has arguably nev­er been a bet­ter time to be a mem­ber of the klep­to­crat­ic elite try­ing to milk hydro­car­bon com­pa­nies, bilk cit­i­zens and inves­ti­ga­tors alike, and sop up every drop of dirty mon­ey they can. These bad actors can cer­tain­ly look at the SEC’s most recent actions as a cause for cel­e­bra­tion.

For those com­mit­ted to good gov­ern­ment, how­ev­er, it’s a sign of woes to come. “I think that the optics of this are not good for the broad­er his­to­ry of U.S. lead­er­ship on anti-cor­rup­tion issues,” Milin said:

[The U.S. has] a very long and proud his­to­ry of lead­ing on these issues, and these U.S. poli­cies have cat­alyzed change all over the world—and I think the real ques­tion is, can we expect that going for­ward? Unfortunately, based on the [SEC pro­pos­al], that’s not a hope­ful answer.

All that is to say, if Nazarbayev had only wait­ed for Trump to take office, all of his efforts to cajole the White House would have paid dividends—and he could have enjoyed all of his ill-got­ten snow­mo­biles and speed­boats in peace. As they say, tim­ing is every­thing.

By CASEY MICHEL

Casey Michel is an inves­tiga­tive reporter based in New York. @cjcmichel

Original source: The New Republic

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