As befits a superpower, America’s reach is global. Less clear is the extent of the grasp of US law. In the words of the US Supreme Court, “In general, United States law governs domestically but does not rule the world.” That proposition is now being put to the test in a federal court in Brooklyn, New York.
There, Jean Boustani, a Lebanese business executive, is challenging a federal indictment that accuses him of fraud and money-laundering in connection with a series of loans made to Mozambican entities by two European-based investment banks. In a recent filing, Boustani sought the dismissal of the government’s case, pointing to the attenuated connections linking himself, the site of the alleged wrongdoing, and the US.
“Even if every allegation in the indictment is taken as true, there is simply no nexus between Mr Boustani’s alleged actions and this country,” Boustani’s lawyers write. In other words, at this juncture the case is not about whether their client has clean hands. Rather, they assert, the question is whether the case should be brought by the US government at all.
Boustani contends that the indictment cannot stand because it fails to identify a single domestically issued or traded security that was tainted by fraud. Likewise, the foreign securities in question have not been shown to have any tie to the US. Due process generally demands that prosecutions take place in countries and forums that have readily apparent ties to the crime about to be tried.
Understandably, the US has thrown its weight around – and extended its jurisdiction – when confronted by terrorists and drug lords. Likewise, America’s anti-corruption rubric sends a strong message when applied to Americans, at home and abroad, as well as to those whose actions impact the US. Less clear are those instances where the Foreign Corrupt Practices Act has been used to target foreign companies acting overseas.
As a candidate, Donald Trump ridiculed laws that made the US the “policeman for the world.” From the looks of things, not any more.
Allies and others are expected to fall into line simply because America demands it. But a strategy predicated solely on sticks without carrots cannot be expected to be readily embraced.
One example is the case of Meng Wanzhou, the finance chief of Huawei who also is the daughter of the company’s founder. Meng is being held in Canada at the request of the US government in connection with allegations of violating sanctions against Iran. At the same time, the US has signaled that her fate is tied to the outcome of the US-China trade war.
When instances like this begin to pop up routinely, the American mainland is no longer immune to foreign efforts to snatch dissidents and fugitives. According to The New York Times, Chinese nationals within the US have received warnings from Beijing.
In any case, the specter of foreign governments throwing their weight around is not a welcome development. A US government paying less heed to notions of sovereignty and extraterritorial application of law will likely invite new challenges. Indeed, a flare-up with Iran looms as another flashpoint destined to strain US ties with its traditional allies, particularly given the current administration’s preference for taking unilateral measures.
Against this backdrop, the outcome of the criminal case against Boustani will likely signal just how long is the long arm of America’s laws. Grabbing a foreign dictator like Panama’s Manuel Noriega for conspiring to traffic drugs in the US is one thing. Pursuing a foreign business executive lacking an obvious link to the US is something else.
In the months ahead, we stand to learn just how far the reach of extraterritoriality goes.