Taking Corruption International

AP Photo/J. Scott Applewhite

House Speaker Paul Ryan, House Majority Leader Kevin McCarthy, and House Majority Whip Steve Scalise meet with reporters on Capitol Hill. 

U.S. foreign policy has long sought to advance democracy around the world, but Republicans on Capitol Hill this week placed the nation on the opposite course with a measure that will advance international corruption instead.

In a little-noticed move that echoed the House GOP’s very first attempted vote in the 115th Congress—to gut the Office of Congressional Ethics—Republicans approved a resolution that throws out a regulation, enacted with bipartisan backing, that targets graft and extortion in countries where publicly traded fossil fuels and mining companies do business.

When they first tried to weaken ethics oversight in early January, House Republicans backed down following a massive public outcry, and a couple of condemning tweets from then-president-elect Donald Trump. But this time, with public attention focused on Trump’s Supreme Court nominee and his legally contested refugee ban, House Republicans managed to quietly weaken anti-corruption laws with little notice.

The rule overturned in the House on Wednesday was first inserted into the 2010 Dodd-Frank Act, with the aim of shedding light on oil, gas, and mining deals in resource-rich but corruption-riddled countries like Angola, Equatorial Guinea, and Iraq. Known as Section 1504, the rule requires companies to publicly report the taxes, royalties, bonuses, and other payments they make to foreign governments in exchange for extracting their natural resources.

The rule is also known as the Cardin-Lugar bill after its chief sponsors, then-Senator and Indiana Republican Richard Lugar, and Democratic Senator Ben Cardin of Maryland. The rule survived a court challenge from the American Petroleum Institute, and took effect last June following a multi-year legislative and regulatory process. But the House reversed it summarily Wednesday with a resolution of disapproval under a little-used law known as the Congressional Review Act. The Senate was scheduled to follow suit on Thursday.

“It is all about corruption, and it is all about giving big oil what they want,” chided House Democrat Jim McGovern, of Massachusetts, during debate on the House floor Wednesday. Lugar and Cardin had also pleaded with lawmakers to preserve the rule, which established the United States as a leader in the international anti-corruption sphere, and prompted all 28 members of the European Union, plus Norway and Canada, to adopt identical disclosure laws.

Trump said in his inaugural that “the interests of citizens should prevail over the powerful special interests in Washington,” Lugar and Cardin noted in an op-ed. “Yet some politicians now want to do just the opposite, and cancel a pioneering anti-corruption law that bolsters American national security, advances our humanitarian goals, and demonstrates U.S. moral leadership.”

A long list of fossil fuels and mining companies support the Cardin-Lugar rule, including BHP Billiton, BP, Kosmos Energy, and Shell, whose executives say it promotes good governance, creates a level playing field, and is in the best interests of American companies. But the American Petroleum Institute, Chevron, and ExxonMobil have all strongly opposed the rule and spent heavily to lobby against it. And, as McGovern noted Wednesday, former ExxonMobil CEO Rex Tillerson, whose nomination as secretary of state the Senate narrowly confirmed on Wednesday, was among those who lobbied against the rule.

“This is a new front in the Republican leadership war on ethics,” says Norman Eisen, the former ethics czar under President Obama, and a fellow in governance studies at the Brookings Institution.

The House’s move this week is part of a pattern that began with the GOP bid to weaken ethics oversight, Eisen says, and includes Trump’s refusal to divest from his business holdings. Eisen has helped mount a lawsuit alleging that Trump is violating the Emoluments Clause by taking illegal foreign payments due to his business activities. Eisen also pointed to GOP attempts to intimidate Walter Shaub, Jr., director of the federal Office of Government Ethics. Shaub has criticized Trump’s failure to divest and Senate Republicans’ move to rush through cabinet nominees before their ethics screenings are complete. Now, Eisen argues, the GOP attack on ethics is “going international.”

Republican arguments against the Cardin-Lugar rule—that it’s costly and unfair to American businesses, that it hurts them competitively vis-à-vis other nations—make no sense now that the EU, Canada, and Norway have all put the same rule in place. Now, the U.S. has the dubious distinction of leading the world in the opposite direction. The rule’s reversal is particularly ironic, given the Trump administration’s vaunted interest in combating terror. Foreign policy experts broadly agree that corruption creates a fertile breeding ground for bad actors.

When Lugar first called for the anti-corruption legislation in 2008, he referred to the “resource curse” that often diverts oil, gas and minerals profits away from the people of a nation and into the hands of kleptocrats. This curse “affects us as well as producing countries,” Lugar noted then. “It exacerbates global poverty which can be a seedbed for terrorism, it dulls the effect of our foreign assistance, it empowers autocrats and dictators, and it can crimp world petroleum supplies by breeding instability.”

It’s a compelling conservative message that today’s congressional Republicans ignore at their peril—and at the nation’s.

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