Supreme Court sides with the big dogs against everyone else
Hold on to your wallet.
In a galling decision Thursday, the Supreme Court has made it abundantly clear: American government exists to protect unprincipled corporations and corrupt public officials from citizens, not the other way around. In their evisceration of the federal honest-services law, which states that American citizens have an “intangible right” to expect “honest services” from corporate executives and public servants, the nine justices have essentially deemed it more important to save the top dogs of business and government from prosecution than to protect Americans from getting fleeced.
Justice Scalia has been eager to attack the honest-services law for some time. The law, he wrote last year, is
invoked to impose criminal penalties upon a staggeringly broad swath of behavior, including misconduct not only by public officials and employees but also by private employees and corporate fiduciaries… Without some coherent limiting principle to define what ‘the intangible right of honest services’ is, whence it derives, and how it is violated, this expansive phrase invites abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators, and corporate CEOs who engage in any manner of unappealing or ethically questionable conduct.
But if you have any doubt as to whether the court’s ruling is a good idea or not, just look at the first two beneficiaries of the decision: Enron’s Jeffrey Skilling and Hollinger’s Conrad Black.
Because their convictions were based on violations of a law now determined to be too vague to count, Skilling and Black -- two of the twenty-first century’s most rapacious CEOs, and, respectively, federal inmates 29296-179 and 18330-424 -- get a mulligan in their legal efforts to spring themselves from jail.
Now, the court did include some nuance in its decision: bribes and kickbacks will continue to be illegal under the law. But unless the law is rewritten (which Justice Ginsburg, a New York Times editorial states, “practically invited” Congress to do), other dishonest behavior will be tolerated because it isn’t explicitly outlawed. “If you can argue in ongoing cases that there is no evidence of a fraud or kickback,” attorney Robert Plotkin, head of McGuireWood’s SEC enforcement group, told The Wall Street Journal, “the opinion could be a basis to dismiss that aspect of the case.”
Though the majority opinion states that the “solid core” of the honest-services law remains intact, Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, disagrees. Bribery, she says, which must entail a specific quid-pro-quo, is extremely hard to prove in both corporate and governmental realms. And in the Enron and Hollinger scandals, kickbacks weren’t even part of the prosecutors’ cases. In the public sector, lobbyist Jack Abramoff (inmate 27593-112) created a climate of corruption that included free dinners, tickets to sporting events and overseas trips, but he did not specifically engage in tit-for-tat bribery with government officials. Still, Sloan says, after being showered with such largesse (but not bribed, per se), “Public servants were willing to do things that were not in the public interest.”
But if a CEO can come up with a new, creative way to loot his company, says Sloan, there is little the law can do to stop him from robbing shareholders blind. Because the honest-services law is the single most-used statute in the prosecution of corrupt public officials, the court’s decision robs prosecutors of a vital weapon in the pursuit of private and public integrity.
Katrina vanden Heuvel
| June 25, 2010; 5:08 PM ET
Categories: vanden Heuvel | Tags: Katrina vanden Heuvel
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