Last month, the U.S. House of Representatives passed a bill that gives the president and his cabinet appointee broad discretion to stifle political dissent.
A provision in the Stop Terror-Financing and Tax Penalties on American Hostages Act allows the secretary of the Treasury to unilaterally strip a nonprofit organization of its tax-exempt status under certain conditions, or through an executive order from the president.
Those conditions are met if the secretary decides that a nonprofit gave a terrorist organization any form of “material support,” which can include money, advice, or even the brief use of a mobile phone. Proponents of the bill have made it clear that speech and political protests are also in their sights.
And while there are only a few dozen organizations currently designated as terrorist (one such list is here), the bill includes a clause that the president can lean on to draw up a new list just for the purpose of this bill, with no parameters or restrictions on how that decision can be made (beyond a broad definition of terrorism and terrorist activity).
As a result, if a student group occupies an administrative building during a political protest, and damages some property in the process, it could be classified as a terrorist group. Perversely, by feeding, housing, and educating that group’s members, the university itself could be deemed “terrorist supporting,” and lose its tax exemption. Because the bill is silent on whether it excludes indirect support, it could even cover the foundations, corporate charities, and philanthropic trusts that donate to the university.
Losing tax exemption would not just scare away donors, but shut the nonprofit out of the financial system – banks, fearful of running afoul of counter-finance of terrorism laws, will refuse to hold accounts or process transactions for the group. As there is no judicial review, the only avenue of appeal is through the very secretary who made the designation in the first place.
It is no exaggeration, then, when Oxfam America said the bill “would allow the Treasury Secretary to effectively shut down any non-profit organization, including news outlets, universities, and civil society groups.” They are joined by a broad spectrum of opponents, including not just the American Civil Liberties Union, but Amnesty International, the Sierra Club, the NAACP, Cartoonists Rights, the Montana Nonprofit Association, and the Greater Pittsburgh Arts Council.
It is already a crime under existing laws to knowingly provide material support to terrorist groups. (That’s how we know that “material support” is broadly interpreted – because prosecutions and court cases under these laws have shown us.) But this bill lowers the bar for action further, by removing the “knowing” qualifier and taking the courts out of the process.
Didn’t know that the freelance journalist you bought a few articles from might have moonlighted for Hamas? Too bad, your organization could effectively be shut down.
TRACE International has long recognized the important role that free speech and a free press have in increasing commercial transparency and good governance. Organizations that expose evidence of malfeasance – including corruption – have often been labelled as terrorists by those in power. For instance, when allegations surfaced about the “gas for gold” plot, a multi-million dollar bribery scheme meant to skirt US sanctions on Iran, Turkish Prime Minister Recep Tayyip Erdogan dismissed them as the workings of political rivals that he later designated as a terrorist group. Al Jazeera, which has repeatedly been accused by the U.S. and its allies of supporting terrorists, is the same network that uncovered the laundering of more than $1.5 billion by high-ranking officials in the Maldives.
The bill is now in the hands of the Senate. Though Majority Leader Chuck Schumer might not bring it up for a vote in this session, it could resurface in January when Republicans control both houses of Congress, as well as the presidency.
Note: This is the first of a three-part series discussing the potential impact of the bill. In subsequent posts, we will explore its broader impact on civil society, and how similar laws in the financial crime sphere have been weaponized by autocratic regimes to clamp down on dissent. |
President and Founder, TRACE
Compliance has expanded greatly, and encompasses so many important facets of ethical business practices that it should not become a dreaded, “check the box” training that is pushed until the very last day of the year.
But, seeing the same content or reading the same documents over and over again, it is likely that the audience will start to gloss over the true, underlying and important message.
How can you be sure that you retain your audience’s attention?
First, let’s turn to the UK Bribery Act guidance that speaks directly to training and communication, as well as that of the DOJ’s Evaluation of Corporate Compliance Programs. The DOJ’s guidance notes that “some companies…give employees practical advice or case studies to address real-life scenarios, and/or guidance on how to obtain ethics advice on a case-by-case basis as needs arise.”
The biggest takeaway is that you must communicate to your organization about compliance as it affects them. Give them scenarios that relate to their day-to-day practices and help them take practical steps to avoid unethical business and corrupt dealings that will land the whole organization in trouble.
You can create simple slogans that help your audience to remember where to go to raise concerns, such as a simple acrostic that you can post on your company intranet, or around your office space. Such as:
C - Caring
O - Open
M - Mindful
P - Pleasant
L - Listen
I - Interested
A - Available
N - Nearby! Room 200!
C - Call our helpline! +123 456 7890
E - Email us! compliance@abc.com
Take the time to be a little creative and think outside of the typical training sphere. Look at other ways to communicate. Virtual “face-to-face” training that you conduct via your conference calling system is a great way to “see” and “meet” more people.
An evite to a conference call discussing compliance with a theme like “Cookies and Compliance” could be a way to show that compliance is important, and can allow people to bring a treat to the event, making it feel special.
Short but interesting and exciting elements keep your audience engaged. Send colleagues short videos from your phone with “compliance quick tips” getting your message across quickly and easily!
There are many ways to upgrade your compliance communication, and so many technologies at your fingertips to do so. Use your other departments, like marketing and sales, they might know of creative ways to develop a short and effective message, too.
The same can be said of other regions. Tap into colleagues at local offices who can take your message and share it with their teams, to ensure that your compliance theme is being seen and heard. Use them as “ambassadors” of your compliance efforts.
A small team can still do a lot to ensure that compliance reaches everyone. Communicate through any means you have available: email, newsletters, conference calls, webinars, your team does not have to travel to make sure compliance has a far reach!
Associate Director, Compliance Training, TRACE
This post is part of our “Ask an Expert” series where we take questions submitted by readers and ask an expert in the compliance field to provide insight. If you have a question you would like answered, please submit here. |
For decades, John O’Halloran was the man to see if you wanted something done in Trinidad and Tobago. He had many nicknames—“Johnny O”, “Cockfighting Johnny” and, most notoriously, “Mr. Ten Percent”—and a comfortable home on Flamboyant Avenue in the hills outside Port of Spain. Whatever his official role—from minister of petroleum to chairman of the country’s racing authority—O’Halloran had the ear of Dr. Eric Williams, founder of the People’s National Movement party and Prime Minister from independence in 1962 until his death in 1981.
Among O’Halloran’s many schemes, perhaps the most baleful was the sweetheart deal he arranged for Tesoro Petroleum, a then-small Texas oil company that in 1968 acquired a 49.9% share in the country’s petroleum production with an initial investment of $50,000, the full $10 million to be paid from future profits. When the price of oil soared in the 1970s, the company’s revenues ballooned. O’Halloran got his $2 million—ten percent of the deal’s initial value—and payments continued to be made over the years to a range of “finders” and “consultants” with a hand in the concession’s administration.
The country lived well during the boom years, but the party ended with the oil glut of the 1980s. Recession led to significant cutbacks in salaries and cost-of-living adjustments, and in 1986 the PNM lost its previously unchallenged grip on parliament to the newly formed National Alliance for Reconstruction. Tesoro had left the market by then, selling its share of the operation back to the government in exchange for 3.23 million barrels worth about $200 million. O’Halloran was also out of the picture, having fled to Canada in 1982 after the death of his protector, where he himself passed away in 1985.
The new government, through the efforts of Attorney General Selwyn Richardson, started digging around. They were able to recover a few million from O’Halloran’s son in Canada, and began piecing together the full story behind the Tesoro arrangement. (The SEC’s 1980 consent agreement with Tesoro had addressed the matter only in passing, as one of a number of “finder/consultant” infractions in various countries.) The company eventually agreed to settle the matter for about $3.3 million. The merits of the settlement were under discussion in parliament on July 27, 1990 when the chamber was suddenly overtaken by armed insurgents mounting an attempted coup. The trauma lingers to this day.
This post is part of "The FCPA Files" series, examining key enforcement cases under the Foreign Corrupt Practices Act and the lessons they offer for modern compliance. |