September 24, 2019 / 8:29 PM / a month ago

Breakingviews - White House tests corporate corruption firewall

U.S. President Donald Trump looks on during a bilateral meeting with India's Prime Minister Narendra Modi on the sidelines of the annual United Nations General Assembly in New York City, New York, U.S., September 24, 2019. REUTERS/Jonathan Ernst

SAN FRANCISCO (Reuters Breakingviews) - Companies are ahead of the White House when it comes to anti-corruption efforts. From withholding Ukrainian aid to making money out of lodging visiting dignitaries, the U.S. administration has muddied the waters on acceptable behavior. While there’s a risk that companies exploit the murk, it’s more likely they’ll end up defenders of the higher ground.

Donald Trump has pushed the boundaries of ethical norms as president. He refused to divest his business and has visited his hotels more than 360 times as commander-in-chief, according to an August report by an ethics watchdog. The Washington Post reported that Democratic House Speaker Nancy Pelosi on Tuesday will call for an impeachment inquiry over allegations Trump withheld $391 million in aid to Ukraine, in his attempt to nudge that country into investigating his potential 2020 presidential rival and former Vice President Joe Biden. 

Trump says he has done nothing wrong. It’s clear though that the lines between public and private interest have become blurred under the current administration. More than 100 overseas officials from 65 governments have visited Trump’s properties nearly 140 times, the watchdog said. For example, Kuwait has held its National Day celebration at the Trump hotel in Washington for three years in a row. Profit from foreign governments is supposed to go to the U.S. Treasury but there’s no way to verify whether that has happened.

By contrast, companies are facing tougher accountability for their dealings with other countries’ nationals. Goldman Sachs is under a U.S. Justice Department investigation over its work for Malaysia’s sovereign wealth fund, from which billions were looted. A former executive pleaded guilty in 2018 and forfeited $43 million. Wall Street banks were also hit with fines for hiring the children of Chinese government officials. Last year, U.S. authorities slapped a record $3 billion in fines on companies accused of foreign corruption.

Whatever the tone from the top, companies have reason to keep up the good behavior. Penalties and criminal indictments for corruption often take years to resolve, and could easily outlast the current administration. America’s tough extraterritorial rules on foreign corrupt practices remain firmly in place when it comes to corporate executives. But the gap between the behavior of the business world and the U.S. government is widening – which suggests it will fall increasingly to companies to defend America’s global reputation.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below