Corruption in the United States

The staggering corruption of government in the United States prompted me to look again at what Sir Lewis Namier, the great English historian said about corruption in England in the eighteenth century.  It was Namier who rewrote the history of that time by looking at how the whole machinery of government was run on what they called patronage and we call corruption.

Here are some citations from his writing.  What strikes me about the Trump family is how brazen they all are and how tamely acquiescent their victims are – and the people are the victims.  Namier was talking about bribery while Trump specialises in enrichment – but the same moral or ethical considerations apply.  And at least in Australia, I think the same legal consequences follow.

The proper attitude for right-minded Members was one of considered support to the Government in the due performance of its task…But if it was proper for the well-affected Member to co-operate with the Government, so long as his conscience permitted, attendance on the business of the nation was work worthy of its hire, and the unavoidable expenditure in securing a seat deserved sympathetic consideration.  …. Bribery, to be really effective, has to be widespread and open…

Trade was not despised in eighteenth-century England – it was acknowledged to be the great concern of the nation; and money was honoured, the mystic common denominator of all values, the universal repository of as yet undetermined possibilities…. A man’s status in English society has always depended primarily on his own consciousness; for the English are not a methodical or logical nation – they perceive and accept facts without anxiously inquiring into their reasons or meaning.  (England in the Age, etc., 2nd Ed, 1961); ‘…. Fox would probably have found it easier to account for his fears than for the money…

On Charles Townshend: He did not change or mellow; nor did he learn by experience; there was something ageless about him; never young, he remained immature to the end…Conscious superiority over other men freely flaunted, a capacity for seeing things from every angle displayed with vanity, and the absence of any deeper feelings of attachment left Townshend, as Chase Price put it, ‘entirely unhinged’.

I have put emphasis on the extent of the moral collapse.

The work of Namier generally led me to say.

The English aristocracy survived, almost alone in Europe.  They had been able to reach an accommodation with the Commons in shaping the English constitution, and they reached an accommodation with business and money in shaping British trade.  This triumph of the English aristocracy is unique in all Europe, and the failure of English historians to notice it, let alone celebrate it, is a sad reflection upon the provincialism and specialization of too much of English historical writing. 

Namier saw it plainly, but he was from out of town.  Maitland frequently stressed the need for a comparative outlook, and was deeply interested in German history.  French historians such as Marc Bloch and Georges Lefebvre laced their analyses of the history of France and Europe with comparisons with what was happening across the Channel, and their work was so much more illuminating as a result. 

But English historians do not often return that serve.  How often do you read in English history how the French law of derogation precluded the French lords from engaging in trade?  For example, under the heading La Noblesse et L’Argent, (The Nobility and Money), Georges Lefebvre remarked that ‘the French lords envied the English lords who became rich on mixing with the bourgeoisie and who, thanks to their Parliament, formed the ministry and government of the nation.’

The English lack of interest in Europe has borne fruit, and is currently celebrating a kind of mordant vindication, but the mind-set may also be at risk of being described as insular – definitively insular – with all the darkening and proud exclusion that that state of mind entails.

Sadly, the United States as it stands is a very different beast.

Good news about U S

Most Australians look on sadly at the horror currently on show in the US – in large part because most of us are fond of it.  Here are two items to cheer us up.

First, the World Cup has been terrific – in spite of the glitch put on by two corrupt men who found and deserve each other.  As has been the case in my six visits there, visitors are charmed by the hospitality and the willingness to do business of the hosts in some of the world’s great cities.

Secondly, the U S press, the Fourth Estate, has excelled itself – in showing up the failures of all other estates.  I have followed Maggie Haberman for years.  She is joined by the Australian Jonathan Swan as consummate professionals in the book Regime Change.  It is a very disturbing work – that is now saluted in an editorial in The New Yorker.  (OK – they have tickets on themselves, but they have courtesy – they sent me a knockback so charming that I framed it.)  The book reminded me of the dark days of Vietnam and Nixon.  The U S has faults, but we learn about them from Americans – like Woodward and Bernstein, and Haberman and Swan.

All, then, is not lost.

Consorting

In 1992, I had to conduct a public inquiry into whether an American gaming machine operator should be given a licence to operate in Victoria.  The issue was red hot politically, and forensically it was the trickiest I have had to deal with.  Both sides wanted the hearing closed – the applicant for fear of damage to reputation, and the police because they had a number of confidential sources.  Counsel said it would take months.  We narrowed the grounds alleged against the applicant down to two potentially fatal objections, and told the trolley – bearing lawyers that they could have four days. 

One ground was that the applicant could not be trusted because he associated with known criminals.  Another was that he had lied to a gaming authority in the U S on an issue that could not be dismissed as trivial. 

We decided against the applicant on that second ground, and I did not feel the need to express a view on the other.  For some reason that I still cannot articulate, I felt reticent about the issue of associating with undesirables.  It savored of the old days and the Consorting Squad. 

I would not feel that reticence now.

Senior Counsel for the Police opened his case by saying that the applicant was asking the people of Victoria to take him on trust.  That sounded spot on to me, and it was in substance conceded.  It is I think part of our law that any person holding significant public office – certainly any minister of government – holds an office of public trust.  The slippery forensic term is ‘fiduciary’.  The applicant for the licence was putting himself in that position under the terms of the relevant legislation.  A bent person in that position could cause real harm in the community.

A person holding such an office faces problems, to put it softly, if it is shown that he or she regularly associated with – the dictionary definition of ‘consort’ – with criminals.  Let us take the President of the United States. A number of people he associated with regularly have been convicted and imprisoned.  The President was merely convicted.

Having someone you dealt with closely found guilty of serious crime must cast doubt on your judgment.  We can all be let down by friends or family, but after just one or two, the defence of accident wears thin.

Among other things, it might raise questions about not just the conduct, but the sense and the integrity of the office holder.

If the relationship touches on criminality, or unfaithfulness, there is the risk of pressure or blackmail.  (President Kennedy was an obvious example because of his licentiousness.  Trump has a worse problem with Epstein; and, possibly, Putin.) 

So it is with accepting large donations – which brings the risk, or at least the suspicion, of corruption.  How many people in business donate money to an actual or potential member of government just out of the goodness of their hearts?  If they are dealing with corporate funds, at least in a public company, is it lawful to dispose of capital with no expectation of any corporate return?  (How sensible was it for Nigel Farage to say that a gift of millions of pounds was made for private purposes, when it was expressed to be made so that he could continue safely in public life?)

It is here that we understand why military law referred to conduct unbecoming an officer (or prejudicial to good order and military discipline).  Conduct unbecoming refers to standards expected of officers, or that may dishonour their position or character or compromise their standing among others.  These are big issues that you may not expect to see dealt with under the general law – but they are vital in bodies set up for general public welfare.  In other words, they are vital to the regulation of at least some bodies of public trust. 

The old notion of conduct prejudicial to the regiment still finds expression in our law.  Our Defence Force Discipline Act, 1982, s 60 makes it a criminal offence, punishable by imprisonment, for a member to commit any ‘act likely to bring discredit on the Defence Force.’  (The primary offence is ‘prejudicing discipline.’)  You may be surprised by that wording, and I have never heard of its being invoked, much less leading to a jail sentence. 

But it addresses the kind of problem that may arise in a business or political context.  A fractious MP engages in faction fighting by taking the brawl to court – so causing immense harm to the standing of the party: in other words, he or she has committed an act ‘likely to bring discredit on’ the party.  It is called hanging out your dirty linen.  A very well-known footballer publicly expresses contempt for gay people – and the major sponsor of the footballer has a gay CEO.  The owners of a halal butcher’s shop in Footscray put a One Nation poster on their front window.  A director of a well-known trustee company gets on Sky News at night to celebrate the billions the Trump family is making out of Bitcoin and says that profiting from holding a position of public trust is the logical conclusion – nay, the ultimate triumph – of capitalism.  Gordon Gecko was right.  Greed is good.

(If you wish to see what our law says about disqualification of directors, and you have a taste for the macabre, you might look at s 206F of the Corporations Act, 2001 and compare that with the English act. This is in legislation said to be longer than War and Peace.)

In short, rank carries responsibilities, and appearances count.  You may recall the very old saying that justice must not only be done – it must manifestly be seen to be done.  Fiduciaries should recall the story of Caesar’s wife.  People whose conduct or history cause the public to lose faith in a public body may well be unfit to be members of that body.

That is why I would approach the case of the American gaming regulator differently now. 

It is also why I think that Donald Trump is unfit for any kind of public office.

That brings me to another ground for that conclusion.  Consorting with bad people may cast doubt on the judgment of a person, and it may also adversely affect the reputation of the relevant organisation.  The case of the footballer’s offending gay people is commonly the subject of the law constituted by the contract under which he is be is engaged.  (As I recall it, the Code Napoléon recognizes that in forming a contract, the parties make a law for themselves.)  This issue is not the subject of any statutory law I know of.

The common law, unlike Roman Law, was not in favour of importing notions of good faith under the general law of contract.  But as between principal and agent, and employer and employee – relations that fall under the umbrella of ‘fiduciary’ – the law imposes obligations of good faith, and loyalty.  (You can trace the obligation of loyalty back to feudal times.) 

It is a gross breach of the obligation of loyalty for an officer or agent of a public organisation publicly to disparage that organisation.  If the Chairman of BHP or the Australian Opera said his organisation had been hopeless for many years before he was appointed, he would be removed from office at the first opportunity. 

Yet the President of the United States does just that so often when he refers to its role in the world.  He looks to care only for himself, and to see all the world solely through his own perverted prism, as he enforces his own vulgarity on the presence of the Union in the capital, while obliterating – a favourite term among the goons – every part of what we call the rule of law that underlies our claim to civilization.

Seldom he smiles, and smiles in such a sort
As if he mocked himself and scorned his spirit
That could be moved to smile at anything.
Such men as he be never at heart’s ease
Whiles they behold a greater than themselves,
And therefore are they very dangerous.

The dark side of Uncle Sam

In broad terms, most people I know here and in England and Europe think well of the United States.  Here are some aspects of life and governance in the U S that give us pause.

  • Guns.  The first aim of government is to preserve the peace.  The U S Constitution refers to ‘Tranquillity’ and the ‘General Welfare’.  The U S has not achieved this first and most vital objective, and it sickens the world with its likeness to the Wild West and the days of the gangsters – and its ‘thoughts and prayers’ for the dead.
  • The Welfare State.  The U S refuses to provide the basic level of welfare adopted by the rest of the civilised world.  Both of these failings come from an inclination to ideology that is rejected in most of the English-speaking world, and show why people like us would never want to live in the U S. 
  • Ideology.  And this leaning to ideology – theory over practice – is the opposite to what we have been brought up to here under the Anglo-Saxon common law.  They have a reverence for the Declaration of Independence and the Constitution that looks as alien to us as it is naïve.  Their addiction to this moonshine is a fundamental difference that we might be forgiven for describing as immature.
  • World leadership.  The U S reached its apex in helping Germany and Japan recover after the Second World War.  Then came Cuba, Vietnam, Cambodia, Iraq, Afghanistan, and, now, Iran.  All faith destroying failures.
  • Failed presidents.  Too many since Eisenhower have been flawed intellectually or morally.  They have also shown a worrying tendency to keep it in the family – nepotism.
  • Acquiescence.  By and large the electorate lets the system get away with all this – although its voting systems are badly bent.  Their addiction to ideology has led them to refuse to make voting compulsory – something that would have delivered a very different political machine.
  • God.  Religion has influence in the U S that would be unthinkable outside Asia or Europe.  And it appears to us to be incandescently hypocritical and bad, for both God and the nation.  From the Puritans on, they have followed a crude Darwinism that equates success with the dollar with favour in the eyes of God.  They could never have adopted laws for dealing with poverty that were made by the English parliament under Elizabeth I – before white people arrived in America.  They now have beggars on the street in the richest country in the world.  That appalls us.
  • Exceptionalism.  From the Pilgrims through the Founding Fathers and beyond, they have seen themselves as exceptional – God’s chosen people.  The Puritan stain persists.  Their tourists used to be notorious braggarts, so that we were relieved when we went to America to deal with sensible people who wanted to get on with us – and who did not have a chip on their shoulder.
  • Patriotism.  Except when it comes to sport, we, and the English, do not embrace ‘patriotism’.  The Americans do, big time – as part of their exceptional proximity to God.  This is not new.  In 1838, de Tocqueville wrote: ‘Nothing is more embarrassing in the ordinary intercourse of life than this irritable patriotism of the Americans.’
  • Race.  Their problems of race are such that their treatment of the Black American puts in the shade their treatment of their First Nations.  And it, too, is linked with their exceptionalism.  The Declaration of Independence was premised on a lie.
  • Inequality.  People who know more about business and money than I do say that the American economy is unstoppable.  The U S has the most resilient business model in the world, but does it depend on its workers’ having no effective group strength or political expression?  And the inequality of wealth and income is morally appalling and has a life-threatening aspect that blew up a whole nation in 1789.
  • Intemperance.  Partly because of matters referred to above – like ideology and God – U S politics have lost the tolerance and restraint that are essential to democracy.  If its business model looks frayed, its political model looks busted.
  • Corruption.  Again because of its attitude to the State, God, and the Dollar, the U S is susceptible to corruption that is now a cancer on the political process and the nation as a whole to an extent not seen outside of Asia or Africa.
  • Blindness.  In spite of all these intimations of failure, they carry on blithely – insolently, even.  They do not know or accept how Europe and the English-speaking world now think so differently of them.

When you list those differences, you see immediately that the current president, Donald Trump, perfectly exemplifies each such failing of the U S – to the letter.  Trump has no friends and he will leave the U S in the same condition. 

A perfect example is his intervention in the World Cup.  He defiles everything he touches.  (Including the Fourth – when out came the hammer and sickle!)  He has now lowered the sporting reputation of the United States to that of Russia – and his great mate.  But his ego leaves no room for shame.

We are not talking of a failed state, but a fallen republic, that we look on with the despair described by Shelley.  But Trump lives fiercely in his own Wonderland.  He has barely ever read a book.  He therefore would not know of Shelley, or that a fairy tale by Hans Christian Andersen gave us the phrase ‘the emperor has no clothes.’

Trump and the Bible – and the Law

For to everyone who has, more will be given, and he will have abundance; but from him who does not have, even what he has will be taken away.  Matthew 25:29

That looks to me to be just right for Trump and family.

If someone put a gun to your head and extracted money from you by force, you would not be impressed if the criminal said this was not robbery because he was being frank and open about it.  Yet that seems to be the response of Trump to complaints about his deriving undreamed-of millions as a consequence of his being elected President – when he correctly believed that the alternative would have been imprisonment.

That of course is in the US.  Let me put three propositions about what I understand about our law here.

  • People in public office hold positions of trust.  (The legal epithet is ‘fiduciary’.)
  • As such, they are liable to account, in a forensic sense, for any profit they derive as a result of holding that office of trust.
  • This liability does not depend on fraud or bad faith (want of bona fides) – it arises from the mere fact that a profit was made.

The leading case was English.  A trading company incorporated a subsidiary in order to expand the business.  For this purpose, the directors had to put in extra capital.  When the shares in the subsidiary were sold, the directors stood to gain – they made a profit.  When they were replaced, the company said that they had to account to it for that profit.  Although there had been no dishonesty at all, the action succeeded.  The courts held that it did not matter whether the company had been damaged or had benefited from the transaction.  However honest or well meaning, the profiteer could not escape the risk of being called to account.  As a leading text comments (Law for Directors, Gibson, Federation Press, 2003, 48), ‘Directors who stand to gain directly and personally from contracts with companies of which they are directors can expect to meet this stern response.’

Now, something like this would be unlikely to happen in Australia for many reasons.  I suspect that in the U S, there would be an issue of ‘standing’ – about which they get very worked up over there.  But if it arose here, I know what side I would want to be on – the side of the angels – before a judge with teeth gleaming in eager anticipation. 

And I wonder how a neutral court might respond if, after a change of government, the United States sued Trump to account for the billion or so dollars he derived from his holding of public office.  At least his accountants have relieved such a court of an inquiry into quantum.  There would be plenty to go around, in this wonderful new Golden Age, so splendidly revealed in an acrid swamp in the beating heart of the Capitol.

And it would not take much ingenuity to deploy the law about aiding breach of trust to join the sons.  I knew people who tapped a bank for millions for allowing a crooked partner to rip out cash from a law firm’s trust account.  And then the attorneys at the other end would know that they might forfeit their professional indemnity insurance if they let one client get within fifty miles of the witness box.

Happy Fourth!