President-elect Donald Trump's team on Wednesday detailed its long-awaited plan for Trump's business empire during his presidency. And ethics watchdogs were decidedly not impressed.
Trump declined to put his assets into a blind trust, as they had long been urging (and he'd originally said he would — though it's not clear his definition and theirs ever dovetailed to begin with.) Nor will he divest from his foreign interests. He's having his children run his business, which experts say won't completely wall it off. And his team changed course on a previous promise to have the Trump Organization avoid entering into any new deals, saying instead that it won't do new foreign deals but can do domestic ones, subject to thorough review for conflicts of interest.
But in making the presentation, Trump's lawyer, Sheri Dillon, made a number of questionable or misleading claims about what the law states and what the arrangement would mean, according to watchdogs.
Below, we recap them.
1) “He directed me and my colleagues at the law firm Morgan Lewis and Bockius to design a structure for his business empire that will completely isolate him from the management of the company.”
. . . and . ..
1a) “In sum, all of these actions — complete relinquishment of management, no foreign deals, ethics adviser approval of deals, sharply limited information rights — will sever President-elect Trump's presidency from the Trump Organization.”
“Completely isolate” and “sever” are very strong terms suggesting a complete separation. The fact remains that Trump's business will be run by his two oldest sons, whom he'll ostensibly have contact with. They've already been involved in his transition effort.
They may avoid discussing business, but if Trump is not completely isolated from the managers of his company, will he really be completely isolated from the management of it? This is why ethics watchdogs wanted a blind trust. It would eliminate many more possibilities of conflicts of interest.
“President-elect Trump is maintaining, not eliminating, the only relationship with the Trump Organization that matters for the purposes of conflicts and Emoluments Clause violations — ownership,” said Paul S. Ryan of Common Cause. “Through ownership of the Trump Organization, President-elect Trump’s presidency will be tied to the Trump Organization.”
(There's also the question of precisely when this will happen, given that the president-elect said Wednesday that he entertained and ultimately rejected — though he didn't believe he was obligated to — a major deal just last weekend.)
2) “The so-called Emoluments Clause has never been interpreted, however, to apply to fair value exchanges that have absolutely nothing to do with an officeholder. No one would have thought when the Constitution was written that paying your hotel bill was an emolument. Instead, it would have been thought of as a value-for-value exchange — not a gift, not a title, and not an emolument. But since President-elect Trump has been elected, some people want to define emoluments to cover routine business transactions like paying for hotel rooms. They suggest that the Constitution prohibits the businesses from even arm's-length transactions that the president-elect has absolutely nothing to do with and isn't even aware of. These people are wrong. This is not what the Constitution says. Paying for a hotel room is not a gift or a present and it has nothing to do with an office. It's not an emolument. The Constitution does not require President-elect Trump to do anything here.”
The Emoluments Clause states that “no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State.” The Post's David Fahrenthold will be watching it like a hawk in his new role.
But it has not been tested much in court. Dillon notes that it hasn't been interpreted to apply to fair-market exchanges, but that doesn't mean it has been interpreted to not apply to them (double-negative alert). We just don't know yet; it's unsettled law.
Norm Eisen, a top ethics adviser to President Obama, explained it last month: “Some scholars say it’s any payment,” he said. “Some scholars say it has to be a payment that is not an exchange for consideration ― more than a fair arms-length exchange.”
Eisen and two other top ethics lawyers — former George W. Bush counsel Richard Painter and Harvard University Laurence Tribe — argue that “the best reading of the Clause covers even ordinary, fair market value transactions that result in any economic profit or benefit to the federal officeholder.”
We'll find out, it seems.
3) “The conflicts of interest laws simply do not apply to the president or the vice president and they are not required to separate themselves from their financial assets.”
As The Post Fact Checker has noted when Trump himself made this claim, this is strictly true. What's not quite as clearly true is Trump's repeated claim that a president can't have a conflict of interest just by virtue of holding the office, which he repeated Tuesday:
The president-elect did rightly point to an exemption for the president and vice president in conflict-of-interest laws. And while such an exemption exists, the theory was that the presidency has so much power that any policy decision could pose a potential conflict. The law assumed that the president could be trusted to do the right thing and take actions to avoid appearance or presence of impropriety. . . .
Trump, nevertheless, should be more careful about his wording on this point. It’s quite possible he will face a number of conflicts of interest during his presidency. The law may offer an exemption for the president, but political reality — and perception — often does not.
4) “As you know, the business empire built by President-elect Trump over the years is massive — not dissimilar to the fortunes of Nelson Rockefeller when he became vice president. But at that time, no one was so concerned.”
It's hard to compare levels of concern 43 years later, but Rockefeller's fortune was clearly a big issue — enough for Congress to hold hearings devoted to looking into his business interests, “in which strangers scoured his family's business dealings and finances,” according to Bloomberg.
Furthermore, the same conflict-of-interest exemption that Dillon described was first outlined in response to Rockefeller:
This principle was outlined in a 1974 letter from the Justice Department, issued at a time when Nelson Rockefeller was under consideration to be confirmed as vice president after Richard Nixon resigned and Gerald Ford became president.
5) “The Constitution does not require President-elect Trump to do anything here. But, just like with conflicts of interests, he wants to do more than what the Constitution requires. So, President-elect Trump has decided, and we are announcing today, that he is going to voluntarily donate all profits from foreign government payments made to his hotel to the United States Treasury. This way, it is the American people who will profit.”
This doesn't completely erase the possibility that the hotel will be used to curry favor with Trump, according to watchdogs. After all, they say, Trump still has an interest in the long-term viability of the hotel, and patronizing it helps him. According to Meredith McGehee of Issue One, someone could “buy out a whole floor to help keep the hotel profitable and open.”
It's also unclear where the line will be drawn when it comes to “profits from foreign government payments.” What determines which and how much of these payments are technically profitable? (For instance, will any payments on a money-losing property be considered “profit"?) Since there is currently no in-depth public documentation of the finances of Trump businesses, how would people know what the Trump standard on that question is — let alone whether he's actually abiding by it?
6) “Selling, first and foremost, would not eliminate possibilities of conflicts of interest. In fact, it would exacerbate them. The Trump brand is key to the value of the Trump Organization's assets. If President-elect Trump sold his brand, he would be entitled to royalties for the use of it, and this would result in the trust retaining an interest in the brand without the ability to assure that it does not exploit the office of the presidency.”
This sets up a contrast between Trump putting his kids in charge and him just selling his business. But it's something of a false choice. He could just as easily put his assets in a blind trust — as ethics groups have long urged him to do — which would exclude him from receiving royalties.
"Selling would create temporary conflicts problems that would then end," said ethics expert Kathleen Clark of Washington University. "Retaining his ownership of the Trump organization will create a never-ending scandal machine."
7) “Further, it would be impossible to find an institutional trustee that would be competent to run the Trump Organization.”
This basically means nobody is capable of running the Trump Organization besides Trump's kids, which is a bold claim.
In an email, Ryan of Common Cause responded simply: “Lol.”