The most practical way would probably be to make the IPO jump through all manner of hurdles to the point where they couldn't do their job effectively. Especially with EA-Psi Corp and IPO pretty much have two separate areas where they can enforce laws. He could "encourage" Federation member states to enact laws that would limit or end the requirement that they share information or work with the IPO.

Or he could simply force the IPO to file a SNO (Statement of No Objection) if they want to cross into or conduct law inforcement in Federation space -OR- on vessels with Federation registry.

A hot pursuit condition allows you to only go so far. Chasing Batarian Pirates As they cross from say, Zetan controlled space to {insert non affiliated governing body here} controlled space all is well, at least for a few parsecs. Chasing Batarian Pirates from Zetan to Sol and crossing into Earth Orbit or actually chasing them onto Earth... well good luck trying to prosecute that.

Of course this is all meta interpretation of real life law/jurisdictional issues superimposed on UF. But hey, fuel for the discussion right? :)