In response to the president’s unprecedented attack on a company declining to do business with a family member, Nordstrom answered President Trump’s accusation that it was treating Ivanka Trump unfairly. “To reiterate what we’ve already shared when asked, we made this decision based on performance,” the company said in a statement. “Over the past year, and particularly in the last half of 2016, sales of the brand have steadily declined to the point where it didn’t make good business sense for us to continue with the line for now.” In other words, customers are just not into Ivanka.
National Retail Federation President and CEO Matthew Shay, in a conference call with reporters on Wednesday, gave a measured response. “What we are all seeing is that we’re living in a world with a different kind of chief executive in the White House,” he said. “It’s someone who communicates directly and forcefully and has a strong opinion on issues. We are learning, all of us, I think, how to work in that environment.” That’s one way of putting it. Another is that the president and his aides are inviting corruption.
Had any federal employee, including a Cabinet official, done what Trump did, he or she would have run afoul of federal ethics regulations, specifically, Title 5, Section 2635.702:
An employee shall not use his public office for his own private gain, for the endorsement of any product, service or enterprise, or for the private gain of friends, relatives, or persons with whom the employee is affiliated in a nongovernmental capacity, including nonprofit organizations of which the employee is an officer or member, and persons with whom the employee has or seeks employment or business relations. . . . An employee shall not use or permit the use of his Government position or title or any authority associated with his public office in a manner that is intended to coerce or induce another person, including a subordinate, to provide any benefit, financial or otherwise, to himself or to friends, relatives, or persons with whom the employee is affiliated in a nongovernmental capacity.
This is garden-variety corruption, of the type we deplore in kleptocratic regimes around the world.
Likewise, if an American company consented to hire or do business with a foreign leader’s children in order to grease the skids for business dealings or avoid government retribution it would be a violation of the Foreign Corrupt Practices Act. As the Financial Times reported recently:
JPMorgan has agreed to pay $264m to settle a US probe into its practice of hiring well-connected Chinese “princelings” to win business. . . .
“JPMorgan engaged in a systematic bribery scheme by hiring children of government officials and other favored referrals who were typically unqualified for the positions,” said Andrew Ceresney, director of the SEC’s enforcement division. “JPMorgan employees knew the firm was potentially violating the FCPA yet persisted with the improper hiring program because the business rewards and new deals were deemed too lucrative.”
The White House (falsely) keeps insisting the president cannot have conflicts of interest, neglecting the Constitutional prohibition on receipt of monies from foreign governments. Nevertheless, Congress can and should close the gap in ethics laws given that this president refuses to divest himself of businesses and insists on using the power of his office (during the transition and currently) to benefit his family finances. Perhaps we need a presidential anti-corruption act that would make Title 5, Section 2635.702 applicable to the president and vice president. In any event, both Spicer’s derogatory comments (an attempt to “coerce”) and Kellyanne Conway, who directly hawked Ivanka’s line (“I fully — I’m going to give a free commercial here. Go buy it today, everybody. You can find it online.”), seem to run afoul of existing ethics laws and should be held accountable.
There may be other legal avenues as well. Ethics guru Norman Eisen of the Brookings Institution yesterday tweeted that there is a cause of action under California’s Unfair Competition law forbidding “any unfair business act.” Eisen told me this morning, “The law has long recognized that when someone makes untrue statements about a business, and those statements cause harm, a cause of action lies. As it happens, California, which has a lot of Nordstrom’s stores, has one of the most generous laws in the nation in allowing a business to respond when it is the victim of unfair treatment.” He adds, “Interestingly, that law also allows the California attorney general or other public officials to bring an action as well. Nordstrom’s says the president and Mr. Spicer’s statements were not correct. . . . [T]his was a business decision that was made because Ivanka’s line was not selling, that there was nothing unfair or political about it.” Conveniently, former Democratic congressman Xavier Becerra is now California’s state attorney general. Over to you, Mr. Becerra.