Business Crimes Bulletin ® Volume 26, Number 9 • May 2019

Should Trump’s Foreign Policy Affect Criminal Prosecutions?

By Robert J. Anello and eign relations may be implicated be- Meng and those of state-created cor- Kostya Lantsman cause of the nationality or location of porate entities like and ZTE. the defendants. Because enforcement Comparing the impact of the Execu- Business has gone global. So too of the federal criminal code abroad tive’s intervention in each of these has business-related crime. In the in- or against foreign individuals and en- prosecutions, helps illustrate why in- terconnected business environment, tities has an effect on foreign states, dividual and corporate prosecutions white-collar criminal investigations such cases have an impact on the re- should be treated distinctly. and prosecutions frequently present lationship between the United States cross-border issues and affect U.S. for- Individual v. Corporate Rights and other countries. For example, the eign relations. Indeed, in some recent Individual criminal prosecutions im- recent arrest of , the high-profile cases, the Trump admin- plicate life and liberty interests that CFO of ’s Huawei and daugh- istration has implied that it sees law are strictly protected by due process. ter of Huawei’s influential founder, enforcement — or the lack of it — as Some due process rights protect hu- made international headlines. Charges one of the tools in its foreign policy man dignity — such as double jeopar- against Meng, Huawei, and ZTE, an- arsenal. Allowing these foreign rela- dy protections which allow individu- other Chinese telecommunications tions implications to influence the als to avoid the “continuing state of prosecutions of individuals would equipment maker, have significantly anxiety and insecurity” if they had to seem to violate our notions of fairness affected America’s vital and delicate fear a second trial for the same con- and due process. Because corporate relationship with China. duct. Green v. United States, 355 U.S. criminal enforcement, however, is far President Trump has linked these 184, 187 (1957). Similarly, due process more regulatory or policy-oriented in cases directly to the ongoing trade protections enhance society’s trust of nature, foreign relations perhaps can negotiation with China, asserting that the criminal justice system. Society’s be seen as a legitimate consideration Huawei and ZTE may be included in knowledge that criminal defendants in such criminal prosecution deci- the trade deal and that he would con- are treated evenhandedly strength- sions. sult with Attorney General William P. ens their belief in and support for the Foreign Corrupt Practices Act (FCPA) Barr before acting. This suggestion rule of law. The opposite — provid- investigations, sanctions enforcement, — that criminal prosecutions may be ing disparate treatment to the wealthy, and prosecution of economic espio- influenced by U.S. foreign policy in- powerful, or well-connected within nage by design deal with interna- terests — was immediately criticized the criminal justice system — under- tional issues. Even for cases brought by some legal experts. See, e.g., Phil- mines the rule of law and societal under laws that do not necessarily im- lip Bantz, “What Happens If Trump confidence in criminal justice. In the plicate cross-border issues, complex Intervenes in the DOJ’s Case Against same vein, utilizing the criminal jus- fraud (LIBOR and FX manipulation Huawei?,” Corporate Counsel (Dec. 12, tice system to punish individuals — or conspiracies), banking crimes, and 2018) (http://bit.ly/2UNjGMO) (argu- to forgive them — because of political money laundering enforcement, for- ing that President Trump intervening considerations strikes most Americans in the Huawei and Meng prosecutions as fundamentally unfair. This rejection would send a bad message to global Robert J. Anello, a member of the Board of political prosecutions is reflected of Editors of Business Crimes Bulletin, is businesses). Unfortunately, President in extradition treaties that allow the a partner in Morvillo Abramowitz Grand Trump and critics have failed to tease United States and its treaty partners to Iason and Anello PC. Kostya Lantsman out the difference between foreign deny extradition requests for “politi- is an Associate in the New York office of policy influencing the prosecution of cal offenses.” President Trump’s sug- the firm. a living, breathing human being like gestion that Meng’s prosecution may LJN’s Business Crimes May 2019 be a part of the political negotiations tions that the law affords them. President Trump’s Willingness could lead to Canada rejecting the Corporations are artificial entities to Mix Criminal Prosecutions U.S.’s extradition request. As Harvard given life and regulated by the law. and Foreign Policy Law Professor Mark Wu stated: “Any The purposes of corporate criminal Meng’s arrest during a layover perception that her arrest is meant to prosecutions are different from the at International Airport offer political leverage in upcoming purposes of individual prosecutions. by Canadian authorities acting on trade negotiations could jeopardise Although the United States has made a U.S. warrant pursuant to charges the success of the ongoing extradition the decision to subject corporations filed in the Eastern District of New hearings in Canadian court.” to the criminal laws, other countries York (EDNY) made front-page head- Although corporations in the U.S. such as , Sweden, and Argen- lines in the U.S. and China. Huawei enjoy some of the same due process tina do not subject legal entities to the was charged alongside with Meng in protections as individuals, these state- general criminal laws. Instead, corpo- EDNY and, more recently, was also created business entities do not share rate misconduct is regulated through separately charged in the Western Dis- all of them. For example, human dig- civil administrative enforcement. Yet, trict of Washington with attempting to nity rights like the right against self- whether the applicable laws and pro- steal trade secrets from T-Mobile, to incrimination, which preserves auton- cesses are criminal (as in the U.S. which it was supplying phones. omy, does not extend to corporations. and other common law countries) or In 2017, ZTE plead guilty to conspir- See, e.g., Bellis v. United States, 417 administrative (as in many civil law U. S. 85, 89–90 (1974) (“The privilege acy to unlawfully export electronics to countries in Europe and Latin Amer- and in violation of against compulsory self-incrimination ica), the enforcement is simply a way should be ‘limited to its historic func- U.S. sanctions, to obstruction of jus- to regulate corporate conduct and, tice, and to making false statements tion of protecting only the natural indi- through that, commerce. vidual from compulsory incrimination to federal investigators. ZTE was fined For corporations, a criminal investi- through his own testimony or per- $287 million for its criminal conduct. gation and prosecution can be devas- sonal records.’” (quoting United States Its criminal fine, forfeiture, and civil tating, but — other than perhaps the v. White, 322 U.S. 694, 701 (1944)). fines, including a fine for violating the splashy headlines and the amounts Whereas constitutional rights are in- settlement terms, totaled over $2 bil- of Congressionally-created fines — a alienable for the individual, scholars lion. criminal prosecution does not differ have argued that whether such rights When President Trump suggested significantly from a regulatory pro- should apply to corporations needs he might intervene in Meng’s case, ceeding. No meaningful distinctions to be part of a balancing determina- competing headlines blared on CNN can be drawn between the way a com- tion. See, e.g., Peter J. Henning, “The (“Trump sets ‘terrible precedent’ by Conundrum of Corporate Criminal Li- pany may be punished as part of being crossing red line on Huawei case”) ability: Seeking a Consistent Approach held criminally liable for its conduct and FOXBusiness (“Trump has author- to the Constitutional Rights of Corpo- and the sanctions that may be applied ity to pardon Huawei CFO to close rations in Criminal Prosecutions,” 63 by a regulatory authority if Congress China trade deal: Judge Napolitano”). TENN. L. REV. 793, 801 (1996) (“The so decides. A company cannot go to John Demers, Assistant Attorney Gen- initial determination of whether a jail. Thus, the criminal prosecution of eral for National Security, was forced constitutional right should apply to a a company is simply another manifes- to weigh in at a Senate hearing, stat- corporate criminal defendant should tation of our regulatory structure. The ing that the Justice Department does be based on the fundamental prem- laws being enforced against corpora- “law enforcement. We don’t do trade.” ise that the corporation’s sole inter- tions are ultimately solely economic in He added: “We follow the facts and we est is protection from abuse of the nature and result predominantly in a vindicate violations of US law. That’s government’s power to investigate, financial penalty. The crimes are more what we’re doing when we bring those prosecute, and sanction illegal con- typically malum prohibitum, bad be- cases, and I think it’s very important duct.”). Henning argued that courts cause they are prohibited, rather than for other countries to understand that must “acknowledge[] that a corpora- malum in se, bad in themselves. Crim- we are not a tool of trade when we tion has no a priori claim to a specific inal antitrust, securities, and tax laws bring the cases.” Demers’ statements constitutional right, and its interests define malum prohibitum offenses revealed that the Justice Department can be outweighed by [other govern- that control the way commerce is con- found it important to be perceived as mental necessities] when the potential ducted. These factors make it more evenhanded. He asserted that Meng’s for abuse is not significant.” Id. In es- reasonable to consider concerns, such prosecution was the Justice Depart- sence, corporations are a product of as foreign policy implications, when ment’s independent decision, not the the law and deserve only the protec- deciding on corporate prosecutions. result of an order from the President. LJN’s Business Crimes May 2019

President Trump, however, has been prosecutions can have a significant rest of two Canadians in response to willing to combine foreign policy effect on U.S. foreign relations. See, Canada detaining Meng. Not dissimi- and U.S. criminal prosecutions as evi- e.g., Robert Williams & Preston Lim, larly, after Su Bin, a Chinese national denced by the fact that other countries “Huawei Arrest Raises Thorny Ques- living in Canada was arrested pursu- have discussed U.S. prosecutions and tions of Law Enforcement and Foreign ant to U.S. charges of cyberespionage, investigations with President Trump. Policy,” LAWFARE (Dec. 7, 2018 11:06 China arrested and held for over two According to Turkish President Tayy- AM) (http://bit.ly/2Gv42vu) (consid- years Julia and Kevin Garratt, Canadi- ip Erdogan, he and President Trump ering “the extent to which federal an Christian aid workers. The United discussed a Turkish state-owned insti- law enforcement decisions may or States should avoid encouraging such tution under U.S. criminal investiga- may not be walled off from broader actions by not stooping to this tit-for- tion. This discussion occurred within foreign policy considerations,” and tat behavior. weeks of Turkey’s release of an Ameri- concluding that “[t]he arrest of Meng The arrest and prosecution of for- can pastor who had been held on ter- undoubtedly complicates the admin- eign nationals is a repeat-play game. rorism charges. istration’s efforts to achieve its objec- Oftentimes, this game is played with tives in bilateral trade negotiations”). countries that have poor human rights Foreign Policy Should Not The rule of law requires steadfast- records and where we do not place Influence Prosecutions ness in the administration of jus- much faith in their domestic crimi- Of Individuals tice as any deviation, no matter how nal justice systems. Invariably, coun- The public has an interest in ensur- pressing the circumstances, under- tries like China, Russia, and Turkey ing — and typically insists — that all mines confidence in the system. As may be seen as employing arrests and defendants are treated fairly — that William Reinsch, the Scholl chair for prosecutions to influence the United they neither receive a benefit nor suf- international business at the Center States rather than to seek justice. Such fer a detriment due to influences out- for Strategic and International Stud- reprisals would turn human beings side of the case and their individual ies, has observed, because the United into bargaining chips. Both the due characteristics. The State Department States is committed to the rule of law, process considerations of our judicial stepping in to dictate or even influ- “[o]ur history is that things like [the system and the foreign policy implica- ence the result of an individual’s crim- Meng prosecution] proceed through tions counsel against allowing extraju- inal prosecution would distort our the criminal justice system and jus- dicial interference in the prosecution criminal justice system. Such interfer- tice is blind. Trump is basically saying of individual criminal defendants. ence would not only infringe upon he might interfere with this process, Whereas the State Department the individual’s due process rights, but which is a terrible precedent.” should not interfere with apolitical also would undermine our confidence Not only would politicizing Meng’s criminal prosecutions within the Unit- in the impartial administration of jus- arrest set a terrible precedent that ed States, human rights concerns de- tice. The disfavor of such improper in- would undermine the rule of law, it mand the opposite when an individu- terference is reflected in the constitu- also encourages bad behavior by less- al is treated as a political pawn. When tional prohibition on bills of attainder, responsible global actors. On the in- a regime imprisons and prosecutes an laws that declare individuals guilty of ternational stage, such interference individual for political purposes, the a crime. The structure of the Consti- could be seen by foreign states as United States and other countries that tution makes clear that although the confirming their beliefs that the U.S. value the rule of law must use their executive branch enforces the law, it criminal justice system is susceptible geopolitical muscle to halt such be- must do so impartially, and guilt or in- to foreign policy interests and that havior. Consequently, when North nocence must be assigned only by an hostage-taking disguised as a crimi- Korea imprisoned Otto Warmbier, it independent factfinder applying the nal prosecution is an appropriate and was incumbent on the United States, law evenhandedly. effective way to influence U.S. policy. as well as other nations, to apply po- Interference by the Executive in Linking prosecutions like Meng’s to litical pressure to demand his release. individual criminal prosecutions not the accomplishment of foreign policy Unfortunately, for Mr. Warmbier and only raises significant due process goals, rather than simply the admin- his family, it was too little, too late. concerns, but also could (rightly) un- istration of justice, encourages other The Impact of Criminal dermine the public’s faith in the inde- countries to do the same. Prosecution of Multinational pendence and fairness of the criminal The perception that Meng’s arrest justice system. Thus, the State Depart- is geopolitically motivated or that her Corporations on Foreign ment should not step in on decisions prosecution can be influenced by geo- Relations whether a foreign national is prose- politics leads to the type of behavior Although criminal prosecutions of cuted or pardoned even though such we see regularly from China — the ar- individuals — or declinations — can LJN’s Business Crimes May 2019 have an impact on America’s relation- two governments claim to represent the issues that led to the sanctions vio- ships with other states, criminal pros- a foreign state, the State Department’s lation. The ban threatened to cripple ecutions of multinational corporations “recognition of one is conclusive”). ZTE’s global telecommunications busi- are vastly more likely to have such Furthermore, in determining wheth- ness and put Chinese employees out of an impact and the impact is typically er to prosecute and how to resolve work, a huge embarrassment for Presi- significantly greater. The Volkswagen charges against corporations, pros- dent of China.” Ana Swan- diesel emission prosecution had a ma- ecutors should consider the impact son & Kenneth P. Vogel, “Faced with jor effect on U.S.-German relations by on innocent third parties. In fact, col- Crippling Sanctions, ZTE Loaded Up touching various German constituents lateral consequences are one of the on Lobbyists,” N.Y. Times, Aug. 2, 2018, — shareholders, employees, pension- Filip factors prosecutors consider at A9. Second, even though there may ers, suppliers, customers, and German when deciding whether and how to be a tit-for-tat response, as many have voters. In August 2017, the German proceed in a criminal prosecution of predicted, with Chinese regulators pe- Finance Ministry called the emissions a corporation. The Justice Depart- nalizing American companies as retri- scandal a risk to Germany’s economy ment’s United States Attorneys’ Man- bution for the prosecution of Huawei, and said that it was impossible to ual advises that “[p]rosecutors may such regulatory harm in China is part quantify its impact. German politicians consider the collateral consequences of the risk American companies run by became tougher on their own auto in- of a corporate criminal conviction or doing business in China. dustry and supported tougher interna- indictment in determining whether to Although the prosecution of Meng tional regulations because most Ger- charge the corporation with a crimi- and Huawei are related, they should man voters concluded that the German nal offense and how to resolve corpo- be handled differently when it comes government had been too lenient with rate criminal cases.” to allowing foreign policy to influence the auto industry. Allowing foreign policy to influence prosecutorial decisions. The President Whether or not the United States corporate criminal prosecutions is and State Department should not in- allows foreign policy to influence simply a combination of these two ac- terfere with individual prosecutions criminal prosecutions, it likely will be cepted influences — state department as doing so fundamentally intrudes perceived to be doing so even by its expertise and consideration of collat- on constitutional rights, infringes due closest allies. For example, in 2012 eral consequences. The State Depart- process, and leads to the treatment of when he was mayor of London, Bo- ment is in a good position to judge individuals as mere bargaining chips. ris Johnson questioned the motivation both the collateral consequences of a On the other hand, because the due for the investigation of Standard Char- criminal prosecution on other coun- process rights of corporations do not tered’s violation of sanctions against tries and their citizens as well as the have the same underpinnings and be- Iran. He said, “[y]ou can’t help won- collateral consequences of such pros- cause corporate criminal prosecutions dering whether all this beating up of ecutions on U.S. foreign relations and are more akin to regulatory enforce- British banks and bankers is starting to advise the Department of Justice ment, foreign policy considerations to shade into protectionism; and you accordingly. can and should be considered in pros- can’t help thinking it might actually be Foreign policy, like all politically- ecutorial decisions. at least partly motivated by jealousy of made policy, is acceptable as the im- London’s financial sector — a simple petus for regulatory action. Because desire to knock a rival.” Prosecutions the invocation of criminal law against of large, multinational corporations corporations is such regulatory action, implicate foreign policy suggesting foreign policy is a valid consideration that the State Department’s concerns in whether and how to proceed with should be considered when pursuing a criminal prosecution of a company. such investigations. The prosecutions of Huawei and ZTE —❖— do not present the same concerns as Foreign Policy Can Impact the prosecution of Meng. First, in the Corporate Criminal Prosecutions case of ZTE, the biggest threat was The judicial system, perhaps right- not from criminal sanctions but from a fully, can take its lead from the State regulatory action. “ZTE’s future began Department on matters relevant to looking dubious in mid-April, when U.S. foreign policy. See, e.g., Republic the Commerce Department banned the of Panama v. Republic Nat. 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