FIFA’s crimes are none of our business: definitive analyses

This article originally appeared at Politico Magazine

I hate to say it, but Vladimir Putin might be right. America says it no longer wants to be the world’s policeman. So why, as Putin complained, is the U.S. now acting like the world’s prosecutor?

The U.S. Justice Department charging multiple members of FIFA with corruption extends America’s legal jurisdiction well beyond its national boundaries. Yes, FIFA may be one of the most corrupt multinational institutions in the world, but the question is a real one: Why is the United States taking it upon itself to go after a soccer organization domiciled and largely functioning outside of U.S. borders?

The case against FIFA uses racketeering laws to prosecute the rogue officials who allegedly demanded and accepted bribes that may have exceeded $150 million. That activity, venal and corrupt though it may be, isn’t America’s business in any obvious way. Even if this is within the theoretical purview of U.S. law, dropping the hammer on FIFA seems like an unwise use of American power. We shouldn’t confuse specific support for action against FIFA with general support for Americans acting as a global judge and prosecutor. Such actions are likely to generate backlash abroad and needlessly risk damaging America’s standing in the world.

This is hardly the first time that the U.S. has tried to use its laws to extend its influence. In fact, as Noah Feldman of Harvard has pointed out, there is a long and controversial legal history of American prosecutors and regulators attempting to apply American laws abroad.

Indictments against 14 current and former FIFA officials were made for political reasons, not criminality. America’s media scoundrels reacted as expected – ignoring huge wrongdoing at home, piling on the political offensive against FIFA.——S. Lendman

Loretta Lynch, the U.S. Attorney General, explained that because U.S. banks were used to distribute the cash; because at least one of the arrested FIFA officials, Chuck Blazer, is American; and because U.S. national soccer leagues are governed by a division of FIFA, Americans indeed have jurisdiction to bring charges. The problem, however, is that the activity did not really take place on U.S. soil.

U.S. courts have routinely reigned in prosecutors who have attempted to apply domestic U.S. laws to foreign jurisdictions. The principle is the “presumption against extraterritoriality,” which is judicial speak for “our laws are our laws, not everyone’s laws.” This principle was reinforced by the Supreme Court most recently in the 2010 case Morrison v. National Australia Bank, which held, that no, U.S. laws (in this case concerning the sale of securities) do not apply willy-nilly throughout the world.

Lynch: another shill of the system, and again with the requisite “black face.”

In the FIFA case, the United States has considerable international support. Many have railed helplessly against the soccer federation for years, and the U.S. action is a welcome relief in that respect. But what about when such stretching of U.S. laws is less welcome, and what of the precedent this extension sets?

Take the recent case of how authorities pursue action against companies suspected of violating the Foreign Corrupt Practices Act. Enacted in 1977 for the entirely reasonable goal of preventing American companies from engaging in bribery abroad, the act has recently been put to some rather unusual uses. In recent months, for instance, the SEC has issued subpoenas to JP Morgan Chase asking for information about correspondence with senior Chinese government officials whose sons and relatives may have been hired by the bank in China as a quid pro quo for influence. Included in the list of 35 Chinese officials was none other than Wang Qishan, who is the head of the Chinese government’s own anti-corruption initiatives.

Subpoenaing JP Morgan is clearly within the legal rights of the SEC, but publically listing the names of senior Chinese officials and demanding all private communications with them is hardly a tactful or adept way of conducting international relations. Are the lattice of U.S. interests with China best served by actions that both stretch the meaning of an American statute on bribery and risk embarrassing senior officials of a major world power who broke no laws of their own and likely no laws at all?

Just because something can be done and can be justified does not mean that it should be done or that doing it is wise. Is jeopardizing already tenuous U.S.-China relations over something so grey and potentially insignificant worth the price?

There is an emerging pattern of regulators and prosecutors filling multiple voids left by inert legislatures and moribund international institutions. It is a cliché that nature abhors a vacuum, but it is a powerful truth nonetheless. Within the United States regulatory bodies take action on climate change and structural financial system weaknesses where Congress cannot or will not act forcefully or deliberately. Outside the United States, most international institutions have been frozen in form from the time of their mid-20th century founding and have only partially evolved to a changing world order. Joint action on anything is a challenge, even where interests are shared.

Into those voids, U.S. regulators find themselves drawn. But they are drawn because of an American tendency to view the world through a 20th century lens as a global policeman and superpower. Powerful the United States is, but using that power judiciously is vital. Overreach is as tempting here as it is with the deployment of troops, and as self-defeating.

Such self-defeat can be obscured when many cheer the actions taken. Having FIFA and Putin against you can seem like a validation that what you are doing is spot on. But using the fact that much of the world’s commerce flows through American banks as a peg to hang nearly limitless possible enforcement actions guarantees that other enforcement actions of this sort will smack not of justice but of naked attempts to grab power and influence using domestic American laws and American regulators as judicial Marines establishing beach-heads.

The investigation into China is one such attempt, but there are others and likely will be ever more. Balancing overall interests against such overreach is imperative, else the United States may find itself not just only lonely crusades but on questionable and losing ones as well.

ABOUT THE AUTHOR Zachary Karabell is head of global strategy at Envestnet and author of The Leading Indicators: A Short History of the Numbers That Rule Our World. He is a contributing editor at  Politico Magazine.