President-elect Donald Trump will retain ownership of his company while shifting assets into a trust managed by his sons, a step that Trump and his advisers said will eliminate potential conflicts of interest between his public duties and private business.
The move, announced Wednesday in Trump’s first news conference since July, followed weeks of criticism from ethics experts and congressional Democrats who have said his financial entanglements could improperly steer his presidential decision-making.
The announcement included a pledge from a Trump lawyer that the company would make “no new foreign deals whatsoever” during Trump’s presidency, and that any new domestic deals would undergo vigorous review, including approval by an independent ethics adviser.
In addition, Trump is giving up his position as an officer at the company, the Trump Organization, ceding all management responsibilities and agreeing to what his lawyers described as strict limits on communications with company executives beyond receiving regular profit-and-loss statements.
Sheri Dillon, a tax adviser at global law firm Morgan Lewis, said Trump has sought to isolate himself from the business that will be managed by Trump’s sons Donald Jr. and Eric and company executive Allen Weisselberg.
Trump, she said, “will only know of a deal if he sees it in the paper or on TV.” She added that Trump also terminated all pending international deals.
But Trump’s continued financial stake in a global real estate and branding company is likely to remain a point of contention between the president-elect and federal ethics officials, who have said that full divestiture remains the only way to prevent conflicts.
Dillon, who also wrote a widely shared letter last year that asserted Trump’s tax returns were under audit, argued that taking steps recommended by some vocal ethics experts would trigger additional problems. A sell-off would have created additional conflicts, she said, while a blind trust would have been unrealistic for a real estate company with high-profile assets.
“President Trump can’t unknow he owns Trump Tower,” Dillon said, and he “should not be expected to destroy the company he built.”
The announcement inspired an unusual, and highly critical, response from the top federal official at the agency that works closely with presidential transition teams to ensure they abide by ethics requirements.
Walter Shaub, director of the Office of Government Ethics, took the stage at a Wednesday event for the Brookings Institution think tank to say that Trump’s decision “doesn’t meet the standards . . . that every president of the past four decades has met.”
Shaub, appointed by President Obama in 2013, said the trust “adds nothing to the equation” because it’s “not even close” to a blind trust, and called other Trump provisions “wholly inadequate.”
Shaub, whose agency administers financial disclosure filings and advises executive branch officials on avoiding conflicts of interest, does not have the power to force Trump’s hand. The director said he spoke out in hopes the president-elect would fully divest.
Some ethics experts also expressed alarm Wednesday that the changes leave plenty of room for foreign interests and others to enrich the president and affect U.S. policy.
Richard Painter, who was ethics counsel in the George W. Bush White House, said the setup will not prevent Trump from knowing his business’ sources of revenue or block him from receiving income from the trust. Trump Tower projects still stand, for instance, in the Philippines, Turkey, Uruguay and other hot spots where foreign buyers or governments could still lavish money on the Trump brand.
“He still has businesses all over the world, and we still do not know who is financing those businesses and who he’s indebted to,” Painter said.
Referring to the yet-unnamed expert who would be hired to sign off on new deals, Painter added: “That ethics adviser is going to have a lot of work to do. Sounds like he’ll need air support.”
Trump also retained his ownership share of the luxury hotel he opened last year in the Old Post Office Pavilion down the street from the White House, despite criticism that foreign leaders might try to curry favor with the administration by doing business there and at his other hotels, possibly violating the Constitution’s “emoluments clause.”
The clause has never been tested in the courts, but it is upheld by threat of impeachment, and some scholars say Trump risks violating it the day he’s sworn into office. The Washington hotel, of which Trump owns 76 percent, has been frequented by foreign diplomats since the election. Trump himself has signed for hundreds of millions of dollars in corporate loans from foreign banks and is currently involved in deals with foreign investors across several continents.
Dillon, Trump’s attorney, dismissed the suggestion of a problem, saying the clause would not apply to “arms’-length transactions the president-elect has nothing to do with,” such as hotel stays for foreign diplomats.
Nevertheless, Dillon said, the hotel would donate “all profits from foreign government payments” from the Trump International Hotel to the U.S. Treasury.
In his news conference Wednesday at Trump Tower in Manhattan, Trump showcased his signature theatrics. He stood by several stacks of what he said were legal papers related to the Trump Organization changes. He noted repeatedly that the president is not covered by any conflict-of-interest laws, and that he was sure he could do a good job leading both the company and the country if he so chose.
“I could actually run my business and run government at the same time,” he said. But, he added later, “I don’t want to take advantage of something. I have something that others don’t have.”
And if his sons “do a bad job,” Trump added, he will tell them his catchphrase from “The Apprentice”: “You’re fired.”
Trump said his commitment to focus on the presidency has already cost him business, adding he had in recent days turned down $2 billion to do “a number of deals” in Dubai with Hussain Sajwani, the billionaire chairman of the Damac Properties development firm and a man Trump has called a friend.
A Damac executive said the company “confirms that the discussions took place as stated in the media briefing but the proposals were declined by the Trump Organization,” and that the proposals “were for a variety of different property deals.”
Trump’s plan will also include tapping a “chief compliance counsel” at the Trump Organization who will monitor the Trump businesses for “any actions that could be perceived as exploiting the office of the presidency,” Dillon said.
Neither Trump nor Dillon said who would fill the position, and requests to speak with company representatives were not immediately returned.
The Trump Organization is a vast, worldwide collection of golf courses, hotels, condo towers and other commercial holdings spread across more than 500 business interests, financial filings show.
Much of the company’s revenue stems from deals with real estate developers and merchandisers, who pay the company millions of dollars to use Trump’s name and image.
Presidents are exempt from conflict-of-interest laws that force virtually all other executive-branch officials to sell off their business interests, as well as recuse themselves from public decision-making that could benefit their private finances. The president must still abide by bribery, fraud and corruption laws that could arise from potential financial conflicts.
Modern presidents have followed a tradition of selling potentially problematic assets or sequestering them into a blind trust, overseen by an independent manager with unassailable control.
The trust agreement outlined Wednesday will not be truly blind, critics said, due to Trump’s family relationship to its leaders, his sons.
Trump’s daughter Ivanka will also step down from management of the Trump Organization and her name-brand fashion, jewelry and licensing companies, lawyers said. She will also restructure her involvement in potentially profitable Trump Organization deals and, instead, receive fixed payments from the revenue of what lawyers called a “diversified pool” of unidentified projects.
Fixed-income agreements are common approaches to addressing conflicts for spouses of those stepping into government. But, like her father, Ivanka Trump has not committed to selling off her ownership stake, leaving one of her largest conflicts unresolved.
Ivanka Trump’s husband, Jared Kushner, who Trump will name as a White House adviser, will sell off much of his New York real estate and media fortune and resign from the family business to avoid conflicts, his lawyers said this week.
Many questions remain. Trump has not released his income tax returns, which would give the most precise look yet at Trump’s holdings, business interests and foreign accounts. Trump has blamed several years of Internal Revenue Service audits, among other factors, for his reluctance to release the returns. Presidents, by law, are audited every year and not required to release their returns.
Trump’s sons, too, have already run into the minefield of potential conflicts awaiting the president’s family. Eric Trump said recently that he will leave his foundation, following worries that donors could receive special access or favors from the Trump administration.
Congressional Democrats on Monday introduced a law that would force Trump and future presidents to divest their business interests and other potential conflicts. But their Republican counterparts have largely stayed silent on Trump’s entanglements, or said they trust his judgment, drawing the law’s success into question.
Jonathan O’Connell contributed to this report.