At ICS, University of Lisbon
Thank you for your kind introduction, Professor Costa Pinto. I would also like to thank Professor Costa Lobo and everyone at the Institute of Social Sciences here at the University of Lisbon for organizing this event. Let me also thank Professor Luis de Sousa of Transparency International and the University of Aveiro. In addition, I want to thank all the students, scholars, and other faculty members for taking the time to be here today. Muito obrigado a todos. It really is a great honor to be part of this conference and to speak to you today about topics so important to all of us – governance and transparency.
Lobbying is a word in the American political lexicon that reflects a legal and traditional way of intersecting with governments but also carries with it a great deal of contempt. Rarely does anyone ever claim to be a “lobbyist,” for example. Rather, they describe their work as “strategic communications,” representing the interests of individuals, businesses, or even an entire sector or industry before government entities. In essence, lobbyists are paid to influence public officials toward or away from policy or procurement decisions.
While there is much debate over the origins of the term lobbying – ranging from British parliamentarians “lobbying” about the hallways of the House of Commons or U.S. Congressional members seeking to gain an audience with President Grant in the 1800’s waiting in the smoke-filled lobby of the Willard Hotel in Washington, DC, one thing is true: lobbying is as old as government itself and is an entrenched part of the American political process.
In the United States, lobbying is formally recognized and regulated – even, protected as part of our constitutional right to petition the government for redress of grievances. Some other countries do not formally regulate lobbying, but lobbying exists in all healthy democracies (and some not so healthy ones).
Since many governmental decisions can have major financial consequences, the nexus between money and power can create conditions ripe for abuse. Recognizing that there is often a very fine line between legal lobbying and illegal influence-peddling and corruption, we in the U.S. have adopted laws to govern how special interests groups and their representatives can petition public officials to support their agendas.
This tension between our cherished constitutional rights to freedom of speech and to petition government (and to spend money to do so); and the ability of the government to restrict the influence of money in politics will continue to be a persistent challenge for the United States, one that is inherent in our democratic, capitalist political system. This battle underlies the still controversial case Citizens United, decided by our Supreme Court in 2010, which prohibited the government from restricting independent political expenditures of non-profit organizations.
“There is no such thing as too much free speech,” a majority of the Court ruled. Critics of the Court’s decision term the decision one of the worst in the history of the court because it legalizes unlimited political spending, potentially anonymous, by individuals and corporations thereby undermining our prior system of transparency for political donations. These organizations are known as Super Pacs.
Rules on transparency, coupled with a limit on campaign contributions, were designed to address the potential of subtle and unverifiable corruption or influence when large campaign donations are made even in the absence of strict quid-pro-quo arrangements.
As we Americans commence the 2016 Presidential campaign, you can already see the effects of Citizens United in play. For instance, the political action committee, known as a Super Pac, for Governor Jeb Bush is on track to raise $100 million dollars by May from wealthy benefactors. I should note that originally there was a “cap” on single contributions of $1 million but that has since been lifted.
This debate about the intersection of money and politics will always be a work in progress.
All forms of reform, whether lobbying reform, campaign finance reform, and disclosure and registration requirements, make up a set of rules, regulations and enforceable standards of ethical conduct that, in the words of former White House Counsel, Bob Bauer, “are meant to (a) keep decision making focused on the merits of the competing public policy choices, and (b) reassure the public that this is the case and that confidence in the integrity of the government is warranted.”
With that caveat, I would like to take this opportunity to outline some of actions taken by my government to improve accountability and transparency.
By law, people who are paid to influence government decision makers must register as lobbyists and meet public disclosure requirements about their clients and compensation.
Lobbyists must also disclose their meetings with public officials. These transparency requirements protect the rights of interest groups to petition government officials on policy decisions, but also serve as an effective safe-guard against back-room deals based on private, rather than public, interests.
Lobbyists are also restricted in the amount of direct political contributions they can make to a campaign, but as I just spoke about, the Citizens United case has now opened up a new avenue for their influence to be extended.
As a candidate, Senator Obama campaigned against “the role corporate lobbyists play in setting the agenda in Washington. As a result he imposed what was viewed at the time as draconian limitations on lobbyist participation in his campaign. They were unprecedented because he prohibited lobbyists from being part of the campaign structure, refused to accept contributions from them, and from organized special interest groups, although both were legal.
On his first full day in office, January 21, 2009, President Obama reaffirmed his commitment to clean government by signing an Executive Order – the Ethics Commitment – seeking to further limit the influence lobbyists could have in his Administration.
The order imposed unprecedented restrictions on the hiring of individuals for senior positions if they had been registered under federal law as lobbyists any time during the preceding two years and also on the lobbying contacts they could have after returning to the private sector.
The President also specifically addressed the practice where people would serve in government, and then upon leaving be hired at lucrative salaries to represent private entities before their former departments or agencies.
The President required Senate-confirmed appointees accepting positions in his Administration – like me – to commit – in a legally binding signed document – not to receive gifts from lobbyists, and not to become a lobbyist or lobby other Executive Branch employees for at least two years following their government service. And those that do become lobbyists are prohibited from contacting executive branch officials for the remainder of the administration. This is to ensure there is not, as President Obama said, “a revolving door that lets lobbyists come into government freely and lets them use their time in public service as a way to promote their own interests…when they leave.” His actions were directed at the heart of the integrity behind governmental decision making.
As I mentioned earlier, no one rule is going to eliminate abuse of position or corruption. Recent cases in the United States have shown a Governor in a major state and a powerful member of Congress charged with accepting inappropriate gifts from people who were allegedly trying to influence their decisions. Both cases are instructive:
Bob McDonnell, former Governor of Virginia, campaigned on transparency. He was recently convicted of accepting $135,000 in gifts, loans, luxury items like Rolex watches and trips and even a contribution to his daughter’s wedding from company CEO who wanted them to help him promote his dietary supplement company. His wife was also convicted since she received expensive jewelry. He was sentenced to 2 years in prison because he failed to report these items on ethics statements. But the issue is just because you accept such largess, is it criminal if you neither promise nor perform official acts in return? The question to be decided is where there is a “quid” and a “pro” definitely present, what constitutes enough “quo”? In this case it was setting up meetings and sending staff studies about the diet supplements the CEO was selling.
Case of the former Chairman of the senate Foreign Relations Committee, Robert Menendez, who resigned his leadership position but remains a senator, is even more interesting.
He was recently indicted on corruption charges for receiving $1 million in gifts, including rides on private jets, multiple trips to an exclusive villa in the Dominican Republic, golf trips, and stays at Paris hotels from a friend of 20 years, who also made a $600,000 contribution to a PAC supporting him. That friendship included family vacations together and attending the weddings of each other’s children.
Unlike Governor McDonnell, there is no question that Senator Menendez intervened with the government to help his friend, including assisting his girlfriends (note the plural), in obtaining visas, protect a cargo screening contract he had in the Dominican republic, and intervened on a Medicare billing dispute worth millions of dollars.
Again, Menendez didn’t report the gifts and has since sent reimbursement for $58,000 for the private jet flights. But his defense to the federal charges is that “I was just helping a friend.” In fact he says, the prosecutors don’t “understand the difference between friendship and corruption and have chosen to twist my duties as a senator and my friendship into something that is improper.”
On the one hand, these cases show that corruption and abuse of power are a problem in the United States. On the other hand, they also show that our judicial institutions are trying to hold allegedly corrupt public officials accountable. We will see how that case comes out but both cases demonstrate that it still remains a challenge to enforce a separation between money and politics through the use of the criminal law.
As you may know, before becoming Ambassador to Portugal, I worked as a lawyer in Boston, specializing in government and internal corporate investigations, with special emphasis on U.S. Foreign Corrupt Practices Act compliance. I traveled to 11 countries on five continents carrying out corruption investigations and designing compliance plans for some of the largest corporations in the world. It was during that time I came to admire very much the important contribution being made by Transparency International.
What I learned from my travels was that corruption and influence peddling is not an American problem, or a European problem; it is a worldwide problem. And in many of the countries I worked in, bribery of public officials was not only expected and accepted, but it was viewed as part of the normal cost of doing business.
Through my work, even in countries where bribery is not a normal way of life, I saw firsthand how existing conditions served to tempt some powerful people to abuse their authority in search of personal gain, and I witnessed how these actions undermine the well-being of society as a whole.
As we know from recent news, Portugal is wrestling with many of these very issues today. While admittedly not based on scientific research, but on conversations with average Portuguese in many different parts of the country and from all walks of life, I believe that the following perceptions exist:
1. That too many Portuguese public officials leave office having accumulated inexplicable wealth during their service;
2. That public officials are not interested in giving jobs to people best suited to advancing the interests of the public, but instead those jobs go to people from families with the “right connections.” This is known in Portugal as “jobs for the boys.” It was a phrase I first heard two weeks after arriving here. The complaint is that Portugal is not a meritocracy and that the ability to get ahead in government or in business is not based on merit but based on knowing someone who is in a position of influence. Those who are not connected, no matter how smart or talented, are simply out of luck.
3. That there is a group of elite, wealthy, politically powerful individuals and families in this country that, because of their connections and status, receive special treatment. On a judicial level, they also receive special treatment from prosecutors and the courts, and are in essence immune from prosecution. Or at least, they are immune from having to serve jail time. The recent significant arrests that have been reported in the newspapers and anticipated prosecutions will be a test of whether that perception will change.
I want to emphasize that these are the perceptions of reality here. I am sure everyone in this audience has his or own view as to the reality. But my point is not to get into a debate about whether they are accurate but to underscore that accurate or not, perceptions are important.
These perceptions are conveyed to others, including foreign investors. I know this for a fact because when I meet with American companies interested in doing business in Portugal who have started their due diligence, they raise these issues with me.
Transparency International’s April report Europe: A Playground for Special Interests Amid Lax Lobbying Rules provides sobering statistics – for Portugal but also for 18 other countries in Western Europe. According to this report, which confirms my unscientific study of perceptions, 53 percent of Portuguese citizens “believe their government is to a large extent or entirely controlled by a few big interests.” The same report indicates 76 percent of Portuguese say that political connections are the only way to succeed in business. The confidence the Portuguese people have in the honesty of the government needs to improve. It also needs to improve in the United States.
Neither of our countries ranks in the top 10 on Transparency International’s Corruption Perception Index (Note: the U.S. ranks 17 of 175 and Portugal ranks 31 of 175.) We can and should do better.
Transparency International calls for the Portuguese parliament to “regulate lobbying activities through a dedicated law.” Even without it, I want to note that Portugal is not blind to the problem of corruption as the recent arrests demonstrate. It is also strengthening institutions like the Tribunal de Contas and the Council for the Prevention of Corruption. The Council advises Parliament directly, and obligates organizations that receive public funding to create risk management plans to counter corruption.
Media, both traditional and social, can also play a role in fighting corruption in Portugal. In their front-pages, newscasts and website postings, they can shine a light on graft and on efforts by government, NGOs and individuals to fight it.
In closing, I have appreciated the opportunity to address this wonderful institution about a topic – the interaction between lobbying and the rule of law – that is vitally important. The law has been my passion and the common thread throughout my professional life – especially now as Ambassador.
The United States – like Portugal – is a country of laws. Despite this, we fall short from time to time. Although my country has laws regulating lobbying and prohibiting political patronage – our effort started with the Pendleton Civil Service Reform Act of 1883 – we still fall short from time to time. We are still a work in progress. I therefore don’t doubt I will see more cases of illegal influence peddling and corruption during my remaining time here, both in the United States and in Portugal.
Yet I remain confident that, working together toward objectives I believe we share, we can attack this scourge head-on and make significant progress. Our peoples – Portuguese and American – deserve it.
Thank you very much.