Table of Contents
Influence Peddling Definition
DEFINITION
Influence peddling or trading in influence involves a third party providing an undue advantage (usually money) to a middleman who has ties to a decision-maker. The middleman, then, persuades the decision-maker to pass or block bills (for example)–whichever benefits the third party most.
Undue influence peddling is illegal.
In contrast with other forms of bribery, influence peddling benefits the middleman as opposed to the decision-maker. The latter may not even know that such a deal has been struck, relieving them of any criminal responsibility.
To illustrate, we’ll give you a hypothetical example:
Let’s say a high school student has no chance of passing their math final. They take all their savings and go to the principal with an envelope full of cash. The student says, perhaps in veiled terms: “In exchange for this money, you [the principal] will guarantee I get an A+ on my math final.” The principal pockets the money and orders the math teacher to give the student an A+.
That’s the basic process of influence peddling.
The middleman (the principal) receives a bribe from the third party (high school student). Consequently, the middleman uses their position to influence the decision-maker (the math teacher). The third party, if all works out, benefits (gets an A+).
Have you ever heard of the LIBOR scandal? Investors from major financial institutions allegedly committed a corporate crime by rigging LIBOR, a global benchmark interest rate, in order to artificially boost their employers’ profits. Find out if you or someone you know was ripped off…
Lobbying vs Bribery?
Without a doubt, you’re probably thinking the definition of influence peddling does not sound all that different from lobbying.
The Organization for Economic Cooperation and Development (OECD) uses the term ‘undue influence peddling’ to differentiate it from lobbying. The former referring to a criminal offence that occurs when “‘vocal vested interests’ are favored over the public interest […]”
Of course, disentangling the two proves difficult in practice. Both involve contributions to a middleman (lobbyist) and an attempt to influence decision-makers. What does distinguish lobbying from influence peddling is the transparency of compensation. Lobbyists have a salaried position and are paid a designated amount by contract. Influence peddling happens with clandestine deals, compensation that is not reported.
Still, compensation can take so many forms that lobbying can often verge into bribery when businesses provide a candidate free transport, accommodations, meals, etc.
That is to say, we should not think that lobbying and influence peddling have to happen at separate times. Influence-peddling schemes can include a combination of above and under-the-board tactics.
Why Influence Peddling can enable Theft
In truth, influence peddling obviously can’t be viewed as direct theft.
You aren’t being cheated out of money that should have been yours. The bribes involve the middleman and the third party.
You wouldn’t be wrong to think that. However, influence peddling can lead to theft.
For example, let’s say a massive pharmaceutical company wants to make as much money on their blockbuster drug as possible. The moment generics (the cheaper option) hits the market, the blockbuster drug will plummet in sales. The pharmaceutical company, in light of this, decides to bribe an executive who works for the manufacturer of generics. They tell the executive to use his influence to persuade the rest of the board to accept their pay-for-delay deal.
In effect, the free market breaks. The pharmaceutical company unethically maintains its monopoly and rakes in the profits while the generic manufacturer also enjoys a nice sum from the agreement. The corrupt generics executive treats his family to an expensive vacation with the extra cash from his bribe.
So, what does this all mean for you?
Maybe you’re a freelancer, and you need that blockbuster drug to help with your ailments. With no health insurance, you have to pay exorbitant drug prices. Moreover, you don’t have any cheaper options available to you even after the patent on the drug has expired. Your savings effectively become profits for the pharmaceutical company.
Three U.S. Cases Allegedly Involving Influence Peddling
Former Virginia Governor Robert F. McDonnell
Former Va. Governor Robert F. McDonnell
Gage Skidmore, CC BY-SA 3.0, via Wikimedia Commons
On September 4, 2014, CNN reported that former Virginia governor Robert F. McDonell had been found “guilty in [an] influence-peddling case.”
In January 2015, the Department of Justice published a press release detailing the legal proceedings: “The former Virginia Governor Robert F. McDonnel…was sentenced today to two years in prison for soliciting and obtaining payments, loans, gifts, and other items from Star Scientific, a Virginia-based corporation, and Jonnie R. Williams Sr., Star Scientific’s then chief executive officer, in violation of federal public corruption laws.”
The evidence is discussed further on in the press release: “[F]rom April 2011 through March 2013, the McDonnells [the governor and his wife] participated in a scheme to use the former governor’s official position to enrich themselves and their family members by soliciting and obtaining payments, loans, gifts and other things of value from Star Scientific and Jonnie R. Williams Sr. The McDonnells obtained these items in exchange for the former governor performing official actions to legitimize, promote and obtain research studies for Star’s products, including the dietary supplement Anatabloc.”
In July 2016, however, the Supreme Court overruled the initial verdict. In the official report linked in the sentence prior, the court held that the governor’s actions did not count as ‘official acts,’ as established in federal bribery law. Noah Feldman, professor of law at Harvard University, reacted to the reversal: “…McDonnell’s lawyers urged that if his conduct could be considered criminal, then much of what elected officials do for their big donors might count as criminal as well. After all, politicians receive donations, and their donors expect them to make calls and set up meetings on their behalf…Embarrassingly enough, the Supreme Court has blessed what it calls; ingratiation and access.’ Not only don’t those count as corruption, according to a 2014 opinion, they actually ‘embody a central feature of democracy.’ Ingratiation and access are formally protected by the First Amendment.”
Megacorporations and their lobbyists could be heavily influencing legislation and regulation. Do your part and protect the U.S. economy by joining the Zero Theft Movement
Trump’s former lawyer Michael Cohen
The Circus, CC BY 3.0, via Wikimedia Commons
Cohen came under media and public security when his dealings with Novartis, AT&T, and Columbus Nova became public. Major news networks discussed how Cohen, after Trump’s election in 2016, started to field offers for his access to the incumbent president.
According to a CNN report, “[Cohen] aggressively pitched himself to potential clients, reminding them of his proximity to the most powerful man in the world.”
Pharmaceutical giant Novartis, in an article for The New York Times, eventually confirmed it paid Cohen $1.2 million for ‘advice.’ As we stated previously, influence peddling can be hard to prove because proof of compensation alone is not sufficient evidence to charge or imprison an individual.
Furthermore, Cohen’s alleged influence peddling also brought the debate of Pay to Play back to the fore. Pay to Play, in short, refers to the idea that massive companies have the funds to pay for better access to lawmakers. Thus, corporate lobbyists can get in the ears of politicians, providing overwhelming evidence for their client’s side.
Cohen did not face any charges for his reported violations of the law.
Thirty brokerage firms paid about $900 million to settle the civil suit contending they “schemed with one another for years to fix prices on the NASDAQ stock market,” the New York Times reported. They allegedly did so by not using odd-eighth NASDAQ quotes. See what the ZT community has uncovered about the matter.
Tony Rezko, the former Obama fundraiser
Found guilty of 16 criminal counts, including influence peddling, fast-food mogul Tony Rezko surrendered to his officials. Much was made of his connections to Obama, but the president was found to have no ties to Rezko’s illegal activities.
As it relates specifically to influence peddling, the Seattle Times reported, “Rezko […] was accused of using his influence to corrupt two state boards in a scheme to profit from millions of dollars in kickbacks from businesses that wanted state contracts.” He also convinced a health board to sign off on a new hospital in order for him to get a cut of a contractor’s bribe, according to the aforementioned news story.
Does Influence Peddling Cause Theft?
Evidently, influence peddling can be hard to disentangle from lobbying. Nevertheless, we must stay vigilant and at least question dubious government and corporate dealings as they arise.
We at the Zero Theft Movement, along with our growing community, are working together to come up with the best estimate for the monetary costs of corruption in the U.S. Corporate, political, and everything in between. This way, with hard evidence, we can hold the bad actors responsible, and government officials accountable.
We have built a safe and independent platform where you and your fellow citizens work together to investigate and debate potentially rigged areas across the economy. Through blockchain voting, the way to make all your work permanent, public, and unchangeable, you decide whether (1) theft is or isn’t occurring in a specific area of the economy, and (2) how much is being stolen or possibly saved. Through direct democracy, we can collectively decide where the problem areas are and start working on addressing them systematically.
The ZTM community knows that many wealthy individuals and corporations act ethically. We are just trying to catch the bad guys. That way, good people and businesses can properly thrive and enjoy the piece of the pie we’re all due.
Standard Disclaimer
The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. Zero Theft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.