Rudy Giuliani complained on Sunday that it would be unfair — to Trump’s children — to separate them from Trump’s businesses. He proclaimed that the conflict-of-interest laws don’t apply to the president.
This attitude doesn’t sound like Trump wants to “drain the swamp.” It sounds like he will be flooding it. “His kids cannot, by definition, administer a blind trust,” former ambassador to the Czech Republic Norman Eisen of the Brookings Institution tells me. “A true blind trust is supposed to be run by an independent trustee with no familial relationship. In a real blind trust, Trump would sell his assets and the proceeds would be converted into stocks, bonds or other holdings that he does not know the identity of.” Eisen, who in 1991 co-founded Citizens for Responsibility and Ethics in Washington (CREW), adds, “The problem is exacerbated by the kids having a role in a transition — it’s not consistent with the arm’s length nature of what a blind trust is supposed to be.” (When the shoe was on the other foot, Republicans scoffed at the notion that Chelsea Clinton could have been left to run her parents’ foundation if her mother became president.)
Fred Wertheimer of Democracy 21 argued in a written statement that Trump’s arrangement is the worst of all worlds: “The arrangement will not only fail to protect against conflicts of interest, it will facilitate conflicts. The trust will shield all information from the American people, while the Trump family will control what is taking place and have full knowledge of the transactions.” He added, “To the extent the Trump trust is doing business with foreign interests, the Trump family, not the American people, will know about those transactions and every one of them will involve a potential conflict of interest for President Trump. And under the proposed arrangement, there will no way to know if such conflicts of interest are occurring since the assets will be in a Trump-controlled blind trust.”
Trump’s conflicts are compounded by three extraordinary circumstances.
First, media have focused almost exclusively on management of the Trump businesses, but the financial conflict comes from Trump’s ownership, which he is not about to give up. Central to that is the role lenders play in the Trump empire. To the extent the Trump administration pushes banks to make available more credit, the lifeblood of the real estate business, there will be questions as to whether the Trump administration is acting in his own interests. Richard Painter, President George W. Bush’s ethics counsel and now an expert on government ethics at University of Minnesota Law School, tells me that if Trump business people suggest in any way that favors or leniency can be obtained for lenders and other business partners, they would put themselves at peril for prosecution under bribery statutes. Government appointees in the Trump administration meanwhile will be accused of “dereliction” if they fail to enforce laws and regulations from every imaginable executive branch agency against Trump facilities. What about those IRS audits and investigations into labor-law violations?
Second, Trump has never revealed his income, his specific investments, his liabilities (Does he owe money to foreign banks?) or the sources of his income. We do not know for certain what litigation he is involved in and what settlement agreements he is party to that might include ongoing financial obligations. Without that, the public will have no idea what Trump’s “interests” are, let alone whether his administration is acting in ways that put Trump’s financial interests above the country’s.
Painter thinks it would be unconstitutional for Congress (even if it had the political gumption) to require Trump to divest himself of holdings but it could beef up the disclosure forms Trump must file so that we would see specifically what he owns and to whom he owes money. That’s critical since the Constitution bars presidents from accepting titles, gifts and other things of value from foreign governments under the so-called “emoluments” clause (Article I, Section 9). That, Painter says, would affect Trump’s business dealings with foreign-owned banks (e.g. Bank of China). “The emoluments clause has been interpreted by the Justice Department to include any payment from a foreign government, except with the consent of Congress,” Painter recently wrote. “Every time there was a financial transaction between a foreign government — or a company controlled by a foreign government — and any Trump entity, there would be a potential for favorable treatment that could violate this limitation, as well as the anti-bribery laws. That, too, gives us pause.”
Third, even if his kids were not running his businesses, they cannot be blind. He owns and derives income from ongoing, public operations. “It’s somewhat hard to believe that he would be completely blind to his businesses when there’s a giant one with his name on it five blocks from the White House,” Jordan Libowitz of CREW explains. “Even if he doesn’t talk to his children about the businesses, he’d still know what properties they’re overseeing, what would be good for them and what tax changes would benefit them.”
Common Cause president Karen Hobert Flynn agrees. “Mr. Trump needs to come up with a serious plan to address the myriad conflicts inherent in his holdings. His current proposal does not even begin to address the very serious conflicts of interest he would face in office.” Ironically, the candidate who made hay out of the Clinton Foundation is poised to embark on something far worse than Bill and Hillary ever tried.
“It is a lot worse than the situation involving the Clinton Foundation because there were a set of conflict of interest and other rules that applied there (including voluntary restrictions agreed to by the Clintons),” Eisen likewise argues. “None of that applies here, and moreover, here (unlike with the Clinton Foundation) we are also talking about a huge financial enterprise, one run for profit and in which the elected official has a giant personal economic stake.”
Many Americans may be wondering: Isn’t there a law or something that says he cannot do this? Not really. “There is a long-standing tradition of presidents either putting their fortunes into blind trusts or similarly managed funds so that there is no conflict of interest between how they manage their money and how they manage the country,” says Libowitz. However, there is no specific statute compelling the president to do so, although there may be nasty consequences if he insists on operating this way. “While there is no law requiring Trump to set up a true blind trust, people are going to try to use the connection to his businesses, and his kids, to influence him, so that implicates laws that do apply such as bribery,” Eisen says. He argues that “Congress could and should pass legislation applying conflict of interest rules to the president, and if there is a big Trump conflicts scandal, which is a major risk given this state of affairs, they will.”
Trump’s conflicts minefield can best be defused through political pressure. The press can ask about his financial conflicts at every press conference and interview; his children can be peppered with questions whenever they appear. Reporters can track the effect of new legislation (e.g. tax and regulatory reforms) on Trump properties and inundate the administration with Freedom of Information requests to determine if anyone in federal departments, agencies and bureaus is considering offering preferential treatment to Trump businesses, conversing with the Trump kids or evaluating the potential effect of statutory and regulatory changes on his holdings.
If Democrats stick together and can peel off some conscientious Republicans such as Sens. Lindsey Graham (R-S.C.), John McCain (R-Ariz.), Susan Collins (R-Maine), Mike Lee (R-Utah) or others, they can hold up confirmations, delay legislation and conduct oversight unless and until Trump really does separate himself and his family from his businesses. Democrats should certainly try to test whether Republicans are intent on “draining the swap” — or at least preventing it from overflowing. Democrats can make this a serious issue in the 2018 midterm elections. At the very least, the hypocrisy of the talk-show crowd and the other professional Hillary Clinton haters who deplored her corruption should be revealed. (In the worst-case scenario if Trump does violate the emoluments clause, we could head for a standoff with Congress. The only remedy if it gets that far would be impeachment.)
Trump voters demanded he “lock up Hillary.” They were scandalized that “Crooked Hillary” evaded rules on handling of classified material and had meetings with foundation donors. Shouldn’t they be incensed if their chosen “outsider” becomes an even worse ethics offender? Their reaction will tell us much whether their concern about “change” was sincere or whether they simply wanted their own “crooked” president.