Russian businessman Alexei Navalny and his brother Oleg are learning a lesson about economic crimes that American businessmen learned a long time ago. When Alexei decided to take on Russian President Vladimir Putin in the political arena, he and his brother soon became the target of a federal criminal prosecution relating to economic and financial crimes. Two weeks ago, the Navalny brothers were convicted, with Alexei receiving a suspended sentence and Oleg receiving a two-year jail sentence.
They’re not the only ones. Every time a wealthy Russian businessman has risen up in opposition to Putin, he has immediately been met with a criminal prosecution for some type of economic or financial crime.
American businessmen could have told their counterparts in Russia to expect this sort of thing. After several decades of operating under a system of economic and tax regulations and crimes, American businessmen have learned the hard way to keep their mouths shut about whatever the U.S. government does, especially in foreign affairs.
How many CEOs of big U.S. corporations have you seen taking a public stance against such things as the Patriot Act, the NSA, the CIA, the national-security state, the war on terrorism, the invasions of Iraq and Afghanistan, Guantanamo Bay, torture, rendition, secret surveillance, and all the other aspects of the warfare state?
Not very many. In fact, I can’t think of one. They know better. They know what would happen to them if they were to do that. They learned a long time ago what Russian businessmen are learning under Putin. The CEO of every major American corporation knows full well that if he were to take a public stand against the national-security state, U.S. officials would go after him as fiercely as Putin has gone after the Navalny brothers.
That’s the real value of the regulated society. Economic regulations have never been about keeping people safe and secure, as statists claim. The value of the regulated society, from the standpoint of public officials, is that it provides them with the means to cow and intimidate people in the business world into keeping their mouths shut or, even better, becoming loyal and patriotic defenders of what the national-security state is doing to people and countries overseas.
In his latest biographical volume about Lyndon Johnson, Robert Caro detailed two examples of how this phenomenon works.
Just before Johnson became president, the mainstream press was investigating his purported participation in criminal activity regarding influence peddling. By the time November 22, 1963, rolled around, it was clear that the noose was already very tight around Johnson’s neck. In fact, at the very moment that President Kennedy was assassinated, a congressional hearing was taking place that was documenting Johnson’s criminal involvement in official corruption, which would have almost certainly led to his ouster from the ticket in the 1964 campaign and also to a criminal indictment.
As soon as Johnson became president, he used his presidential powers to squelch the investigations, both in Congress and in the press.
There were two newspapers in Texas in particular that were investigating and reporting on the allegations.
Johnson telephoned one editor and made it clear to him that if he didn’t shut down the reporter who was doing the investigating, LBJ would make sure that the IRS came down on him with an extensive audit.
He telephoned another editor and made it clear to him that approval for a corporate merger that the editor was seeking would remain stalled in the federal bureaucracy so long as the newspaper continued to investigate and report on LBJ’s alleged criminal conduct.
Both editors buckled. They knew that Johnson was vicious enough to carry through with his threats—and that he now wielded the political power to carry through with such threats.
Needless to say, it became unnecessary for future presidents to be so brazen with their threats. American businessmen quickly came to understand how the regulation game works. If a businessman bucks a president, the government goes after him on “unrelated” charges — tax evasion, insider-trading violations, and the like or ensures that he doesn’t receive favorable regulatory or tax treatment.
A modern-day example of this phenomenon involves Joseph Nacchio, the former CEO of Qwest Communications. When he was approached after 9/11 by national-security officials to secretly divulge his customers’ personal records to the feds, he said no, not only because it would be illegal to do so but also contractually and ethically improper to violate the confidentiality of his customers.
In retaliation, the first thing the feds did was cancel federal contracts for Qwest. Then they got nastier. They went after Nacchio on an insider-trading violation, all the while claiming that his criminal prosecution had nothing to do with his refusal to play ball with the feds by illegally and unethically selling his customers down the river.
Does anyone think that other businessmen didn’t get these types of messages? That’s why we don’t see American CEOs taking open stands against the U.S. national-security state the way that the Navalny brothers and other Russian businessmen are doing against Putin.
It will be interesting to see how long Russian businessmen hold out and continue to openly oppose the wrongdoing of the Putin regime. Unfortunately, they can’t look to the United States for many role models to emulate.