Donald Trump promises that he and his adults sons won’t talk business or policy while he runs the country and they run his company, but the country will have to take his word on it.
Trump says his company is hiring an ethics officer to review any new deals for conflicts of interest, but the ethics officer will report to business executives, not the public.
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Trump says he’ll forfeit profits from foreign government officials who stay in his hotels, but he didn’t say how he’ll calculate profit or keep track of all such payments.
There is a common thread in the ethics plan Trump outlined Wednesday: His pledge to separate his private interests from public policy depends almost entirely on him and his team following their own rules, with almost a total absence of public disclosure, outside oversight or independent verification.
Trump’s self-verification system drew criticism from both parties after it was announced, including an extraordinary response from the government’s top ethics official.
“I need to talk about ethics today because the plan the president has announced doesn’t meet the standards that the best of his nominees are meeting and that every president in the past four decades has met,” Office of Government Ethics chief Walter Shaub said during an afternoon press conference hosted by the Brookings Institution.
Trump developed his plan – to put his holdings into a trust run by his adult sons and another executive – without input from the executive branch’s ethics regulator, the Office of Government Ethics, Shaub said. The office’s chief responded Wednesday by shredding Trump’s plan as wholly inadequate.
Trump is putting his assets into a trust, but not a blind one. Under the trust agreement, Trump is turning over management of the company to his adult sons, Don Jr. and Eric, and a longtime Trump executive, Allen Weisselberg.
Trump’s lawyer who worked on the plan, Sheri Dillon with the firm Morgan Lewis, did not specify who the trust’s beneficiary is, or whether Trump still technically owns the assets in the trust, or whether he can retake the holdings when he leaves office. But it’s clear that Trump is maintaining a financial interest in the Trump Organization, which means he could still enrich himself through official actions that benefit the company.
“This is not a blind trust – it’s not even close,” Shaub said. “The only thing it has in common with a blind trust is the label ‘trust.'”
Trump’s plan does nothing to prevent him from profiting off the presidency, ethics experts said Wednesday.
“Having Trump’s adult children lead the operational control of his business, while he still retains full ownership, is not an acceptable solution,” Trevor Potter, president of the Campaign Legal Center and a former campaign lawyer to John McCain, said in a statement. He added: “His decision has created a direct path by which U.S. and foreign interests, including foreign governments, can exert influence over him through his companies or holdings.”
Trump promised to restrict the information he received about his company to overall profit and loss, Dillon said. But critics doubted Trump could reasonably avoid talking shop with his own sons, and the public will have no way of knowing.
“Firewalls work in businesses, not in families,” Danielle Brian, executive director of the Project on Government Oversight, said in a statement. “Trump claims he’ll only learn about his businesses from the newspapers, but it’s hard to believe that family dinner conversations will be restricted to the weather.”
The ethics adviser
Trump promised to appoint an ethics adviser to vet new transactions that could create conflicts of interest. A lawyer involved in the negotiations said the company is still interviewing candidates.
But in addition to the credibility of the person who’s chosen, it will be important to establish who appoints and oversees the ethics adviser, according to Matthew Sanderson, an attorney at Caplin & Drysdale who handles political law and ethics. An ethics adviser who can be directed or removed by business executives wouldn’t be a truly independent check.
The ethics adviser won’t be accountable to the public, like the corporate monitor proposed by
New York Times Dealbook columnist Andrew Ross Sorkin, who would have full access to the company and make regular disclosures.
Trump also backtracked on his previous promise of “no new deals,” revising it on Wednesday to no new foreign deals. Domestic transactions to go ahead if the ethics adviser approves them.
The plan also failed to address existing overseas investments, which could still be magnets for tax or regulatory favors from foreign governments. In order to avoid a constitutional prohibition on receiving payments from foreign governments, Trump promised to donate the profits from such payments to the U.S. Treasury.
But that doesn’t satisfy most legal experts’ interpretation of the provision, known as the Emoluments Clause. They say Trump needs to forfeit the entire payment, not just profits.
The clause has never been tested in court. But former Obama ethics czar Norm Eisen, former George W. Bush ethics lawyer Richard Painter and Harvard law professor Laurence Tribe argue it does apply to fair-market transactions in exchange for goods and services, like staying in a Trump hotel. Emoluments are defined to include “salary” and “offices,” they argue.
Trump’s lawyer disagreed.
“The so-called emoluments clause has never been interpreted, however, to apply to fair value exchanges that have absolutely nothing to do with an office holder,” Dillon said Wednesday. “Paying for a hotel room is not a gift or a present, and has nothing to do with an office. It is not an emolument.”
Trump also needs to clarify how the Trump Organization would account for identifying profits from foreign governments, Sanderson said.
“The idea of giving up only profits, not all revenue, from foreign business, and only from hotels, is not an acceptable answer to the emoluments clause problem,” Lisa Gilbert, director of Public Citizen’s Congress Watch division, said in a statement.
The Washington property
Trump also faces emoluments concerns at his D.C. hotel, which has already become a favored haunt for foreign diplomats. In addition, Trump leases the property from the federal government presenting a clear and immediate conflict of interest from being both landlord and tenant. Furthermore, a line in the contract says it can’t benefit an elected official.
But a Trump attorney involved in the negotiations argued that it prevents a government official from entering the deal, but not someone already on the lease from subsequently taking office.”
“It’s intended so someone who’s in the government couldn’t enter in a sweetheart deal,” the attorney said on an earlier phone call with reporters. “To suggest that the contract language applies to this lease is just a complete distortion of the clause. … He acquired the lease as a private citizen before he was an officeholder.”
However, several contracting experts insist Trump’s becoming president breaks the lease. And the agency that leases the building, the General Services Administration, told House Democrats that it agrees with that interpretation.
Why this approach?
Trump’s lawyer Dillon argued that selling Trump’s holdings wasn’t realistic because he would still have a financial interest in the form of royalties he received from the Trump brand (and selling the company without the brand would destroy its value). But Trump could
have committed to receive only a fixed income from his holdings for the rest of his life, Sanderson said.
“That would have left his business empire intact while still assuring the American people that he will not personally profit from his administration,” said Sanderson, who previously advised Rand Paul and Rick Perry. “There is no doubt that Mr. Trump could have done much more here to address his conflicts of interest.”
Dillon further argued that Trump couldn’t divest because his children couldn’t buy the company without massive borrowing from someone else, selling stock to the public would be too “cumbersome and complicated,” and selling the company to an unrelated person would invite accusations of currying favor.
And she rejected calls for a true blind trust, saying, “President Trump can’t unknow he owns Trump Tower.”
But that’s exactly why the non-blind trust she designed doesn’t work either, Shaub countered.
“She’s right about that,” he said. “That’s why the decision to set up this strange new kind of trust is so perplexing.”
Josh Dawsey, Darren Samuelsohn and Josh Gerstein contributed reporting.