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Slammed by the WTO, slammed at home

Is Gonzo moralism at the DOJ on the way out at last?

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Analysis As Alberto Gonzalez, loyal Bushie par excellence, stares up at his own sword of Damocles, his record of mediocrity has sharpened into focus. Memos advocating what the civilized peoples of the world consider torture, a misplaced priority on public morals prosecutions at home, suspension of habeas corpus rights, FBI investigations run amok, politicization of the US Attorney’s Office – his failings as Attorney General are as numerous as they are dispiriting.

Gonzalez is wriggling like a fish on a line trying to explain to Congress his apparent ignorance of what went on behind the scenes at the DOJ when 8 US Attorneys got canned for not towing the administration’s political line enough, and his office is at a crossroads.

The official release of the latest WTO ruling on the trade dispute between Antigua and the United States over online gambling services last week only sets the hook harder. Although the US Attorney’s Office (USAO) leaked the gist of the decision to the press over a month ago, and those familiar with the case knew all along that the US would lose, the US could not have been body-slammed any harder. The US lost, and lost big.

The moralistic zeal that has characterized the Gonzalez DOJ has expressed itself most clearly in the international sphere in its relentless, overbearing prosecutions of the internet gambling industry. Although the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) last year devastated the online gambling industry around the world (though it has yet even to take effect) tiny Antigua has felt the wrath of the DOJ more than any other country. Online gambling is more important to the Antiguan economy than it is to the UK, for example, where most of the publicly traded companies are listed, and after Antigua took the US to the WTO over its online gambling policies the DOJ took a special interest in Antiguan providers.

The WTO compliance panel report focused on a narrow, Kafkaesque question appropriate to this Kafkaesque DOJ – namely, could the US bring itself into compliance with a prior WTO ruling to open its market to Antiguan gambling services without doing anything at all to bring itself into compliance? The answer was as resounding as it was self-evident: no. Although the answer was obvious, the question was important enough for the Europeans, Japanese and Chinese to weigh in against the US at the WTO panel. After all, what good is the WTO as an organization if a member country can simply refuse to comply with its decisions? In fact, the WTO panel was insulted enough by the American approach to expand its inquiry to issues that it had initially refused to consider due to inadequate information.

The initial ruling limited its scope to the most obvious American violation of WTO rules, which involved remote interstate gambling on horse racing. The essence of WTO jurisprudence is that a member country cannot treat domestic suppliers more favorably than foreign ones, and since the US allows online gambling on horseracing by domestic suppliers, while prohibiting it by foreign suppliers, the WTO ruled against the US on the issue.

The WTO initially refused to consider whether individual state laws covering remote wagering also violated America’s WTO commitments due to a paucity of information on the issue supplied by the Antiguans. The stalling by the US on bringing its laws into compliance that forced the panel to convene in the first place allowed the WTO the opportunity to revisit this issue.

Once again, the US got hammered.

6.121 It is not disputed that the Wire Act prohibits remote wagering from jurisdictions outside the United States, such as Antigua. It is also undisputed that the Wire Act does not prohibit remote wagering within the United States to the extent that it is not in interstate or foreign commerce. Antigua's submissions in this compliance proceeding show that there are at least 18 State laws (laws outside the Panel's terms of reference) that expressly authorize wagering by wire within the United States, including on a wholly intrastate basis. Most of these State laws authorize remote wagering on horse racing, some of them expressly in accordance with the IHA.182 The simultaneous prohibition of cross-border supply of remote wagering services, on the one hand, and the lack of a prohibition of some domestic supply of remote wagering services, on the other hand, afford different treatment.183

As the US comes into compliance with WTO rules on internet gambling services, as it eventually must, the prosecutorial emphasis on internet gambling will fade.

Of course, the moralistic streak that typifies the Gonzalez DOJ will not go away so easily, and is one that will continue to inspire questionable compliance at best. It’s a characteristic that has provoked debate both within and without the DOJ. One notable parallel occurred in South Florida back in 2005, when the Gonzalez DOJ, prodded by the same social conservatives that pushed the UIGEA through Congress, decided to put public morals at the top of the prosecutorial agenda.

When FBI supervisors in Miami met with new interim U.S. Attorney Alex Acosta last month, they wondered what the top enforcement priority for Acosta and Attorney General Alberto Gonzales would be. Would it be terrorism? Organized crime? Narcotics trafficking? Immigration? Or maybe public corruption? The agents were stunned to learn that a top prosecutorial priority of Acosta and the Department of Justice was none of the above. Instead, Acosta told them, it's obscenity. Not pornography involving children, but pornographic material featuring consenting adults. Acosta's stated goal of prosecuting distributors of adult porn has angered federal and local law enforcement officials, as well as prosecutors in his own office. They say there are far more important issues in a high-crime area like South Florida, which is an international hub at risk for terrorism, money laundering and other dangerous activities.

Although the DOJ will have to reorder its priorities somewhat, the moralistic streak that permeates the current DOJ leads many to suspect that the Bush administration will continually reinterpret the law to suit its Christian conservative constiuency, as it has done so often with other laws it dislikes.

Of course, as far as questionable legal judgment by the Bush administration goes, internet gambling is not a weighty moral issue like the suspension of the right of habeas corpus (possibly the most fundamental principle in all of Western jurisprudence, habeas corpus prevents the Kafkaesque situation of unchallenged and indeterminate detention), the debate about internet gambling touches on issues that really are important, such as the projection of American power and jurisdiction over the internet.

Gonzalez, who once dismissed the Geneva conventions as quaint, may soon be obsolete himself. The one silver lining of his tenure is that he bungled his job so badly that he will never be on the Supreme Court, as had been speculated.

The combination of pressure from our international trading partners and regime change at home may be the only way the DOJ gets its priorities in order. ®

Burke Hansen, attorney at large, heads a San Francisco law office

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