It is unlikely that President Donald J. Trump directly used his one-time catchphrase to dismiss Acting Attorney General Sally Yates. What he did say—showing her the door after she refused to defend the administration’s controversial, temporary ban on migrating Syrian refugees and travel to the United States from seven Muslim majority countries—was just as blunt.
“The acting Attorney General, Sally Yates, has betrayed the Department of Justice by refusing to enforce a legal order designed to protect the citizens of the United States,” the White House wrote in a statement announcing the firing. “This order was approved as to form and legality by the Department of Justice Office of Legal Counsel. Ms. Yates is an Obama Administration appointee who is weak on borders and very weak on illegal immigration.”
In a vacuum, the ensuing controversy might be just another example of Machiavellian maneuvering inside the beltway. With just 11 days catalogued in the future Trump Presidential Library, however, the move may add to questions and concerns already facing the business community. For example, and importantly, what will the Yates termination mean for the future of the Justice Department’s enforcement of the Foreign Corrupt Practices Act?
The element of (no) surprise
Despite the punditry of handwringing cable news talking heads—with Trump’s critics fretting a “Constitutional crisis” and drawing comparisons to the Nixon Administration’s “Saturday Night Massacre”—the firing really should come as no surprise.
Yates had served at the Justice Department under both Republican and Democratic administrations throughout her 27-year career as a prosecutor. She was personally asked to head the agency until a successor—specifically Trump’s controversial pick Jefferson Beauregard “Jeff” Sessions III, a Republican senator representing Alabama—could be confirmed.
A selection of what Yates said that led to her abrupt dismissal:
My role is different from that of the Office of Legal Counsel, which through administrations of both parties has reviewed Executive Orders for form and legality before they are issued.
OLC’s review is limited to the narrow question of whether, in OLC’s view, a proposed Executive Order is lawful on its face and properly drafted. Its review does not take account of statements made by an administration or it surrogates close in time to the issuance of an Executive Order that may bear on the order’s purpose. And importantly, it does not address whether any policy choice embodied in an Executive Order is wise or just.
Similarly, in litigation, DOJ Civil Division lawyers are charged with advancing reasonable legal arguments that can be made supporting an Executive Order. But my role as leader of this institution is different and broader. My responsibility is to ensure that the position of the Department of Justice is not only legally defensible, but is informed by our best view of what the law is after consideration of all the facts. In addition, I am responsible for ensuring that the positions we take in court remain consistent with this institution’s solemn obligation to always seek justice and stand for what is right.
At present, I am not convinced that the defense of the Executive Order is consistent with these responsibilities nor am I convinced that the Executive Order is lawful. Consequently, for as long as I am the Acting Attorney General, the Department of Justice will not present arguments in defense of the Executive Order, unless and until I become convinced that it is appropriate to do so.
Yate’s replacement is acting attorney general Dana Boente, U.S. attorney for the Eastern District of Virginia. He was sworn in at approximately 9 p.m. on Monday night. Senate confirmation hearings for Sessions were scheduled to resume the next day.
The big picture for business
As is often the case, political drama can have seismic effects that ripple past Washington D.C. Monday’s headlines further complicate an initial understanding of President Trump’s pro-business bona fides.
Captains of industry and wolves of Wall Street alike have cheered Trump’s promise to reform the corporate tax code. A more mixed reaction comes from threats to invalidate the North American Free Trade Agreement, part of a systemic shunning of multi-lateral trade agreements in favor of new, Trump-negotiated bi-lateral deals. Depending on what your company makes or sells, import/export uncertainties are either a cause for optimism or impetus for fear.
Additional confusion comes from Trump’s predilection for deregulation versus the regulatory uncertainties inevitably created.
The President has stated his intent to slice away much of the Dodd-Frank Act, not least of which the Volcker rule’s ban on proprietary trading by financial institutions. And yet, he and his nomination for Treasury Secretary, Steve Mnuchin, have stated support for a “21st Century Glass-Steagall Act,” the contours of which might, in fact, be even more restrictive and burdensome on banks (especially when paired with enhanced capital and liquidity demands many of their fellow Republicans support).
Hours before Yates was dispatched with the same gusty bravado that once banished Gary Bussey from the “Celebrity Apprentice” boardroom, Trump made news by signing an executive order demanding that for every new regulation issued at least two prior ones must be identified for elimination. Good news for companies burdened by what many refer to as the “regulatory tsunami” of recent years? Perhaps. There could be trouble ahead, however, as companies suffer the whiplash of tearing down compliance systems and related technologies only recently implemented.
As for the travel bans: what if they prevail? The enterprise-level reaction won’t necessarily be favorable. Already, leading companies like Apple, Facebook, and Lyft are protesting. Tech companies will likely suffer from the lack of overseas work visas; oil and gas companies may be hampered in efforts to strike deals in oil-rich, Muslim-prominent countries.
Even the Koch brothers, the billionaires behind the conservative curtain, have voiced great displeasure with both the immigration/travel ban and Trump’s plan for a border wall with Mexico, a project that could be funded with tariffs. A tax on imports would raise the price of both raw and manufactured materials, creating no small measure of supply chain headaches.
If you were aware of Sally Yates prior to Monday night’s firing, it was likely due to the Justice Department memo that bears her name. It codified cooperation credit in FCPA settlements
The “Yates Memo,” announced in September 2015, put forth that: “If a company wants any consideration for its cooperation, it must give up the individuals, no matter where they sit within the company.” To qualify for any cooperation credit, corporations must provide “all relevant facts” relating to the individuals responsible for the misconduct.
President Trump has, on occasion, expressed concern with the anti-corruption legislation and accompanying enforcement activity. His choice to head the Securities and Exchange Commission, Jay Clayton, a partner with Sullivan & Cromwell, is also a critic. In a paper, he suggested that the FCPA has led to an overly aggressive, unchecked enforcement posture by the SEC and Justice Department that may, ultimately, be counterproductive to the goal of decreasing global corruption.
The Yates Memo, ultimately, is mere guidance. A few minutes on Microsoft Word are all it would take for the new Justice Department regime to devise its own rules of the road. That, of course, leaves companies without a clear roadmap for cooperation credit.
Also, for those that shun uncertainty, could prosecutions under the Trump Administration be less formulaic? Does Yates’ firing for objecting to the Administration’s demands show that the wall once separating the Executive Branch from intervening in whether to pursue charges, or drop them, no longer exists?
Any combination of scenarios may not necessarily be good news for multinationals—and despite Trump’s tendencies towards nationalism, nearly all business in this day and age is both global and threatened by corruption risk.
The final word on all this, at least for now, comes from Yates herself, in a post-election speech at the Annual International Conference on Foreign Corrupt Practices Act in Washington, D.C. “To deter wrongdoing, we need to change the risk-reward calculus for corporate decision makers, and we do that by punishing decision makers when they decide to break the law,” she said. “But it’s about more than just deterrence. It’s also about making clear to everyone that there’s a single system of justice in our country and that no one gets a pass just because of their power or wealth.”