Lawless in Saipan, and Trump pardons crypto bros
I visited the Commonwealth of the Northern Mariana Islands a couple of years ago, intrigued by its curious bad luck in repeatedly being struck by massive gaming and money laundering scandals, like this one and this one. In case you’re not au fait with the CNMI, it’s a US territory north of Guam, which is best known as the place the Enola Gay and the Bockscar departed from on their way to drop atomic bombs on Hiroshima and Nagasaki.
It’s also the current home of Jim Kingman, a Texan lawyer who was invited to the commonwealth in 2023 to act as special prosecutor in a baroque corruption scandal featuring former ex-Governor Ralph Torres, who had been acquitted along party lines in impeachment proceedings in the islands’ senate the year before.
A LESSON FROM SAIPAN
And for Kingman, it’s been basically downhill from there. His attempts to investigate, subpoena or prosecute have been frustrated at every turn by a local elite that’s decided it doesn’t really want him to make any progress. “Where are the feds? Where is the oversight? Where are the ethics committees? Where is the bar? What are we even doing out here?” he asked in a fed-up Facebook post, a year into the corruption trial, with almost no progress made.
With the change in government in Washington, DC, Kingman is clearly concerned about the future of his mission on the islands, and has given an interview to a local journalist who also described the sheer extent of obstruction that Kingman has faced. It’s a bitter read, but it has a defiant tone, a commitment to fighting corruption, that leaves an optimistic aftertaste.
“One promise that I can make is that I won’t quit,” Kingman said. “I can’t promise the desired results in a process I don’t have control over. There is a fundamental change that needs to happen to set up a more sustainable government and that will have to come from the people here. The forces that I have been facing have made it clear that these changes will not be received from an outsider.”
Kingman is just doing his job as a lawyer, but the reason I single him out is that he’s looking pretty unusual among American lawyers at the moment. Faced with hostile politicians, Kingman is choosing to fight. Far better paid, better networked and more powerful lawyers than him are choosing to take a different route and roll over when threatened.
I’m glad Kingman is sticking to his principles, and wish him luck. If anyone hasn’t read about what Pakistani lawyers did over a decade ago to preserve judicial independence in the face of an interfering autocrat, I highly recommend this piece. Faced with far tougher circumstances than those confronting New York’s white-shoe firms, Pakistan’s lawyers and judges took their struggle to the streets and found that most people are sympathetic to the idea of an independent judiciary that can act as a constraint on a dictatorial, power-hungry executive.
SLOW PROGRESS
Of course, lawyers can take to the streets. But the authorities’ chronic neglect of offices that investigate and prosecute corruption and financial crime has critically hampered their effectiveness.
The U.K. non-profit “Spotlight on Corruption” has produced a really useful dashboard to track how the British authorities have fared in their efforts against financial crime. Long story short – it’s been pretty bad. If anyone needed proof that underfunding investigative agencies for years and years was an ineffective way to tackle complex criminality, then here it is.
And more evidence has been provided by Transparency International UK’s Ben Cowdock who has produced a fascinating summary of the progress the British authorities are making in reforming its corporate registry. Long story short – it’s not going very quickly.
With an assessment by the Financial Action Task Force (FATF) on the horizon, the “pressure is on to get Companies House reform right,” Cowdock notes. The FATF sets international standards for tackling money laundering and runs mutual assessments of its members on a regular timetable, and the UK is due to be assessed in December 2027. Before that, however, in February 2026, will be the assessment of the United States and there could be fireworks.
MADE EVEN SLOWER
Donald Trump has just pardoned a corporation for the first time. He decided to cancel the judgement against the founders of a crypto trading company that was fined $100 million last year. Authorities said the fine reflected the expectation that the digital assets industry “takes seriously its responsibilities in the regulated financial industry and its duties to develop and adhere to a culture of compliance.” But Trump appears to have given up on enforcing corporate transparency, which is a central pillar of the FATF’s approach to tackling illicit finance.
“What the getaway car is to a bank heist, the anonymous company often is to a fraud scheme,” said Transparency International U.S. in this useful factsheet of cases in which American shell companies have enabled fraud and financial crime. The Trump administration’s response to this has been to not only do nothing, but to stop what was already being done. There has not yet been a time when the American government has so egregiously flouted the FATF’s core principles. And the U.S. was central to crafting FATF back in the late 1980s, so we are drifting into uncharted and rocky waters. It’s hard to imagine the FATF approving of what’s happening, and harder to imagine this White House reacting well to being criticised, so you’d hope the FATF is preparing for the fallout.
If it is, however, it’s not showing any sign of being ready for battle. Its most recent publication is almost aggressively dull. And the latest public pronouncement from its president suggests that, while she might have some thoughts about the arrangement of the deckchairs, she’s not got much to say about the iceberg up ahead.
I am personally not a huge fan of the FATF, which has been very good at producing documents and very bad at stopping money laundering. In fact, I sometimes wonder if money laundering experts aren’t the modern day equivalent of the self-perpetuating lawyers lampooned by Charles Dickens in “Bleak House”. “The one great principle of the English law is,” Dickens wrote, “to make business for itself.” Still, we might find we’ll miss the FATF if it’s gone.
AND FINALLY, WHAT IS A KLEPTOCRACY?
I was in Oxford last Thursday to chair an event for Professor John Heathershaw and Tom Mayne, two of the authors of Indulging Kleptocracy, a book about how British professionals have helped foreign thieves and crooks to steal, keep, protect and spend their fortunes. The week before I was in Washington and had lunch with Jodi Vittori, professor at Georgetown University, and author of this recent piece in Foreign Policy headlined “Is America a kleptocracy?”.
These are noted experts on kleptocracy, with lots of very interesting things to say, but they have different definitions of what the word means. In the U.K., Heathershaw and Mayne use it to describe the multinational networks that allow corrupt officials to steal money from places like Nigeria or Kazakhstan, launder it offshore, and spend it in London, the French Riviera or Miami. In the United States, however, Vittori and Casey Michel use it to describe a system of government (like a corrupt version of autocracy, democracy or any other -cracy).
I think these two definitions are the sign of something quite interesting. The United States has so much diversity in terms of how wealth is treated between individual states that crooks and thieves are able to build a kleptocracy within just one country. And the task just became easier, with a specialized team at the Justice Department investigating kleptocrats’ deals and assets now deemed unnecessary by the Trump administration. Not entirely surprisingly, the team’s investigations had irritated some of Trump’s closest advisors and allies.
A version of this story was published in this week’s Oligarchy newsletter. Sign up here.