Trump’s Toothless Plan to Avoid Conflicts of Interest

Last week I talked about how Trump’s followers don’t care about process issues. To them, process issues are about getting the appearances right and filling out the correct forms. Only lawyers and fussbudgets care about technicalities like that.

Avoiding conflicts of interest is a process issue. Trump has been appealing to his supporters indifference to such concerns when he sloppily says “I have a no-conflict situation because I’m president.” or “The president can’t have a conflict of interest.” The grain of truth in those statements is that the president is exempt from the primary conflict-of-interest law (for reasons that will be explained below). So he’s free from some (but not all) legal technicalities, which he expresses by saying that he’s free from conflicts of interest.

This refusal to acknowledge the problem, other than as a set of meaningless hoops people expect him to jump through, explains a lot about the conflict-of-interest plan he revealed Wednesday. The Atlantic ‘s Jeremy Venook comments:

Trump and his lawyer Sheri Dillon laid out the plans that they claimed would resolve the questions about conflicts of interest that have dogged the president-elect since he was elected. Instead, what they announced were piecemeal steps that, though designed and packaged to mitigate the appearance of conflicts of interest, do almost nothing to substantively address concerns that his business entanglements will undermine his ability to faithfully execute the office of the presidency.

The plan. Trump’s plan has a few basic points:

  • He resigns as an officer of the Trump Organization.
  • His assets go into a trust that he continues to own, but which will be managed by his sons Donald Jr. and Eric, together with a Trump executive, Allen Weisselberg.
  • He pledges not to discuss business with his sons or Weisselberg. (Venook calls this a “pinky-swear assurance”. Obviously Trump will continue to meet with his sons, and we’ll have no idea what they talk about.)
  • The Trump Organization does not make any new deals in foreign countries, or any deals at all with any “foreign country, agency, or instrumentality thereof.”
  • New domestic deals will need the approval of “independent” ethics officers, one in the government and one in the Trump Organization.
  • Profits earned from foreign governments — say by diplomats staying at or holding events at Trump hotels — will be donated to the U.S. Treasury.

His lawyers claim that in giving up foreign-government-related profits, he goes over and above what the Constitution’s Emoluments Clause requires, because it does not apply to “fair-value exchanges” like renting a hotel room. (That’s a controversial view, to put it mildly. And who’s to decide the “fair value” of a room in a hotel whose main selling point is the prestige of its image? What if he later claims that a stay in a Trump hotel is — as the MasterCard commercials say — “priceless”.)

The problems. The foremost obstacle to a credible conflict-avoidance plan is that Trump has a long history of welching on his deals and not carrying out his promises. For Trump, no deal is ever done; he’s constantly pushing its boundaries and trying to re-negotiate its terms. At a minimum, we should expect Trump to interpret any constraints on his actions as loosely as possible. So his conflict-of-interest plan needs to have ironclad enforcement provisions.

This one has none. The public knows nothing and will continue to know nothing about the internal workings of the Trump Organization. The ethics officers are appointed by Trump or his sons, and if they rubber-stamp deals that clearly violate the stated terms — say, an interest-free loan from a sovereign wealth fund — we’ll never know. And what is “profit”, anyway? In the real estate business, profit is as much or as little as an accountant is willing to sign off on. Unless Trump volunteers to tell us, we won’t know how much he is remitting to the Treasury or what that number is based on. (Or he might tell us he’s giving so many millions to the Treasury and then not bother to write the check unless or until somebody notices; he’s done that kind of thing before.) 538‘s Ben Casselman sums up:

It’s hard to evaluate Trump’s promises because as a private company, the Trump Organization doesn’t have to disclose many details about its finances or operations and because Trump himself — in a break from the practice of past presidents — has refused to release his tax returns. Trump on Wednesday displayed huge stacks of documents that he said were part of the process of turning his business over to his sons, but he didn’t make those documents available for public inspection. So although Trump did, as promised, provide new details about how he will handle his finances as president, the news conference didn’t do much to change the bottom line: When it comes to conflicts of interest, Trump’s message to Americans remains, “Trust me.”

And then there’s the stuff that’s not covered at all. Even without any new deals, foreign governments will have plenty of opportunities to favor or threaten existing Trump properties. The Trump Organization can hire people that the Trump administration wants to pay off or keep quiet, and we’ll never know. Banks that loan money to Trump businesses — we recently found out there’s a whole lot more debt than Trump previously admitted to — will be regulated by the Trump administration. Quid-pro-quo deals can be arranged to begin after Trump leaves office. And the lease on the Old Post Office, which houses the new Trump International Hotel in Washington, explicitly forbids any “elected official of the Government of the United States” from participating. Presumably Trump thinks he’s solved the problem by having a trust that he owns be party to the lease, but he hasn’t.

Perhaps the most serious potential conflict of interest isn’t financial: Imagine that terrorists in some country, say Turkey, start targeting Trump properties, and Trump concludes that the Turkish government isn’t doing enough to protect them. Is that an issue between the Turkey and a foreign corporation? Or is it an issue between Turkey and President of the United States?

The Schaub speech. Also on Wednesday, the Director of the Office of Government Ethics, Walter Schaub, gave an unprecedented speech at the Brookings Institution in Washington.

I wish circumstances were different and I didn’t feel the need to make public remarks today. You don’t hear about ethics when things are going well. You’ve been hearing a lot about ethics lately.

I need to talk about ethics today because the plan the President-elect 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.

We learn a bunch of things from Schaub’s speech. First, that Trump constructed his plan with no input from OGE, the organization that his cabinet nominees have been working with. (Schaub spoke glowingly of Rex Tillerson’s cooperation, and the plan they came up with to insulate him from Exxon-Mobil.) Trump’s attorney had explained the decision not to sell his interest in the Trump Organization because its assets are too illiquid to dispose of quickly or easily. Schaub brushed that off:

[Trump’s] attorney [Sheri Dillon] also said she feared the public might question the legitimacy of the sale price if he divested his assets. I wish she had spoken with those of us in the government who do this for a living. We would have reassured her that Presidential nominees in every administration agree to sell illiquid assets all the time.

He might not get top dollar if he sold now, but people make sacrifices to serve at the top levels of government.

I appreciate that divestiture can be costly. But the President-elect would not be alone in making that sacrifice. I’ve been involved in just about every Presidential nomination in the past 10 years. I also have been involved in the ethics review of Presidents, Vice Presidents, and most top White House officials. I’ve seen the sacrifices that these individuals have had to make.

It’s important to understand that the President is now entering the world of public service. He’s going to be asking his own appointees to make sacrifices. He’s going to be asking our men and women in uniform to risk their lives in conflicts around the world. So, no, I don’t think divestiture is too high a price to pay to be the President of the United States of America.

Tillerson, for example agreed to forego “millions of dollars” in bonuses from Exxon-Mobil. Everybody who joined the Obama administration, including Obama himself, had to sell their stocks at the worst possible time. (The exact bottom of the market was in early March, 2009, but November, 2008 was close.)

Finally, we get an explanation of why Congress exempted the president from certain conflict-of-interest laws.

Now, some have said that the President can’t have a conflict of interest, but that is quite obviously not true. I think the most charitable way to understand such statements is that they are referring to a particular conflict of interest law that doesn’t apply to the President. That law, 18 U.S.C. § 208, bars federal employees from participating in particular matters affecting their financial interests. Employees comply with that law by “recusing”, which is a lawyerly way of saying they have stay out of things affecting their financial interests. If they can’t stay out of these things, they have to sell off their assets or get a waiver. That’s what Presidential appointees do. But Congress understood that a President can’t recuse without depriving the American people of the services of their leader. That’s the reason why the law doesn’t apply to the President.

Makes sense, doesn’t it? If a president who owned oil wells had to recuse himself from any energy-policy discussion, he couldn’t really do his job.

[In response to this speech, House Oversight Chair Jason Chaffetz sent a letter to Schaub warning him against “blurring the line between public relations and official ethics guidance” and implying that his office’s funding might be cut.]

Other expert opinion. The Atlantic interviewed Norman Eisen, who used to oversee ethics for the Obama administration. Eisen echoes Schaub’s explanation:

You don’t want to have the president in the middle of a crisis where he’s about to make an urgent decision, and his White House Counsel says to him, “Oh, Mr. President, you have a conflict of interest. You have to leave the room. You can’t decide whether to rescue those hostages.” We don’t want to have that.

And points out another way in which “The president can’t have a conflict of interest” is at best “a half truth”.

It is the case that there are certain portions of the federal conflict-of-interest laws that apply to all other federal officials, but do not apply to the president and vice president. But those occur in a large body of constitutional, criminal, and civil law that is intended to regulate conflict. There’s no dispute that the president is covered by the federal criminal law, including 18 U.S.C. § 201, for example, which is bribery of public officials.

Eisen answers questions about enforcement. Impeachment is the ultimate enforcement mechanism, but he outlines other steps that could play out in Congress or the courts, like competitors suing because they feel they’ve been damaged by favors given to Trump businesses.

But why are we even talking about this? He could sign his stuff over to a true, independent trustee, not a family member, let the independent trustee liquidate, put the liquidated assets behind a big, beautiful, blind-trust wall, and set up another ethics firewall for your kids and other managers of the organization. That simple, four-step process would spare us all of this.

The argument against this solution is one I suspect we’ll hear a lot these next four years: Trump is very rich, and it’s unreasonable to expect the very rich to follow the same rules or live by the same standards the rest of us do.

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Comments

  • Richard Sevigny  On January 16, 2017 at 10:51 am

    “Trump is very rich, and it’s unreasonable to expect the very rich to follow the same rules or live by the same standards the rest of us do.”… Funny that’s the same argument the rich have been trying to make since Ronald Reagan was in office…..

  • gordonc  On January 16, 2017 at 10:57 am

    As a former Government employee who had to fill out financial statements annually, I can tell you it’s very easy to invest in the stock market without conflicts of interest. Just put your money into one of those broadly diversified, automatically rebalanced investment portfolios sold by companies like Vanguard and Schwab, Incidentally, that’s pretty good investment advice for almost anyone.

  • nwbaxter  On January 16, 2017 at 11:03 am

    If anyone is waiting for the Republican Congress to act ethically, or to require trump to do the same, they will be waiting a long, long, time.

  • Mary Scriver  On January 16, 2017 at 11:41 am

    It looks to me as though Trump is fighting so hard to keep the curtain from being swept aside so we can see what Oz is doing is two-fold: his wealth is an illusion already in that strange way that bookkeeping can perform tricks, esp. if it has no reliable data. Once that illusion is revealed, plus what we have discovered about him personally, his name will be worthless. But his name is a major part of his wealth. He will leave this adventure discredited and with his major asset destroyed. He knows that and if he had had any real confidence that he would get this far, he would have bowed out at the candidate stage. He is the monkey with his hand in the narrow-necked cookie jar who starves because he is too stubborn to let go.

  • Jerry Ross  On January 16, 2017 at 3:59 pm

    Perhaps the most alarming take away is how this illustrates the difficulty the American people are going to have holding the new president accountable to anyone and anything going forward. As a separate branch of government, the president is at the outset immune to certain aspects of law. The impeachment process would be the ultimate arbiter of propriety, but Rep. Chaffetz’s response to Mr. Schaub suggests the degree of confidence we can place in this Republican controlled congress to exercise any kind of “presidential restraint.” The most powerful bounds are those established by the political traditions and long-established norms of public behavior in our nation. And these have been the first casualties of “the Trump era.” Finally, Mr. Trump has demonstrated an extraordinary capacity to “tell the big lie” about anything he finds contrary to his interests, which a large proportion of the population then chooses to believe. “Inconvenient truths” seem not a problem given Mr. Trump’s skill at redefining fact. So how will we know there’s even been a conflict, or the facts surrounding it, much less hold Mr. Trump accountable to the people he theoretically serves?

  • Jene Smith  On January 16, 2017 at 11:47 pm

    Very Very nice post. its a very useful and outstanding article. Thanks for that.

  • Kathleen Snider  On January 18, 2017 at 7:27 pm

    Please keep this up. Like some of the previous commenters I do not trust the Republicans in Congress to provide any kind of ethical oversight or demand any accountability and transparency of the president-elect. But to remain silent would be even worse. We need more voices like yours, and hopefully some day there will be such a loud outcry that the public will finally see Trump for the corrupt con artist he is.

    • 1mime  On January 18, 2017 at 7:31 pm

      Start with your own voice. Contact your members of Congress. Let them know what you think about issues important to you, nominees for cabinet, etc. This isn’t a fight we can ask others to wage in our behalf; this is a fight we all own.

Trackbacks

  • By Believing in Change | The Weekly Sift on January 16, 2017 at 11:25 am

    […] week’s featured posts are “Farewell, Mr. President” and “Trump’s Toothless Plan to Avoid Conflicts of Interest“. In honor of Martin Luther King’s birthday, I want to point to an older Sift post […]

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