The massive conflicts of interest in Trump's business empire
Donald Trump will arrive at the White House on Jan. 20, 2017. When he does, a tidal wave of potential conflicts of interest will arrive with him.
The American president wields vast authority over trade policy, economic regulation, and the enforcement of laws governing criminal activity in the business world. Any president with assets or dealings in those realms could potentially make decisions on a daily basis that would affect the value of his businesses, shifting profits and leverage or removing barriers and punishing rivals. While this has certainly been an issue with past presidents — Reagan, Clinton, and both Bushes entered office with investments that could've caused awkward problems — the sheer amount of partnerships, foreign deals, and pending lawsuits attached to Trump presents a problem unprecedented in American history.
Now, were Trump to use his control over the American government to boost his personal businesses and portfolio, it wouldn't be technically illegal. There are laws governing how federal officials, members of Congress, and federal employees should handle conflicts of interest, including requirements that they recuse themselves in certain cases. But those rules do not extend to the presidency. Trump could certainly be charged and investigated for engaging in outright bribery while serving as president. But even then the Justice Department would have to appoint a special prosecutor to investigate the charges — a move which, amusingly, Trump himself would have to agree to.
There is a long history of presidents voluntarily releasing their tax returns and financial information, but no binding rules actually force them to. And Trump has infamously thumbed his nose at that tradition for candidates. So we still have no idea what the full extent of Trump's potential conflicts of interest are.
But it's possible to at least provide a sketch.
Here's but one example: Trump owns eight hotels here in America, including Chicago, Las Vegas, New York City, Honolulu, and most recently in Washington, D.C., itself, after Trump leased the historic Old Post Office Building and turned it into a Trump hotel. Since the property owner is still the government, and the deal was made with Trump pledging future amounts of revenue, it entangled Trump's company in potential future legal and financial wrangling with the Government Services Administration (GSA) — an agency which President Trump would ultimately be in charge of. So how President Trump staffs and influences the GSA could help decide the fate of his D.C. hotel venture.
Or consider this: Germany's Deutsche Bank has been one of Trump's long-time suppliers of credit. The bank provided him with hundreds of millions in loans to finance the D.C. hotel and other projects. Deutsche Bank, which does plenty of business in America, has already been hit with massive fines by U.S. regulators for various shenanigans. So what happens when a foreign bank that federal regulators oversee is a creditor to the president those regulators answer to? The same problem could play out with banks in China and other foreign countries that Trump has had dealings with.
Trump has also made extensive use of the partnership business model in his domestic and foreign dealings, which sets up yet more perverse possibilities around the world. As an example, Trump has suggested he would end U.S. military support for South Korea, which would force that government to turn to domestic firms for a lot of military supplies and infrastructure. One South Korean construction company likely to reap a windfall in that scenario is, you guessed it, in a corporate partnership with Trump himself. So his foreign policy choices could redound to his financial benefit. Versions of this same conflict abound in India, the Middle East, and elsewhere.
Then there are the lawsuits.
Legal entanglements are not a new problem for presidents entering office. And had she been elected, Hillary Clinton would have entered office facing a lawsuit from media companies looking for access to her emails. But again, the volume for Trump is staggering. USA Today determined that something in the vicinity of 75 lawsuits will be pending against Trump when he takes the oath of office, of which around 30 are probably significant. Nor can they be dismissed on public immunity grounds, as most of his lawsuits name him in his role as a private businessman. (Clinton's lawsuits, on the other hand, name her in her role as secretary of state, so public immunity probably would have applied.)
Trump could easily be forced to give depositions or testify in court, which would chew up his time as commander-in-chief — and threaten to expose other secrets to public scrutiny, which might prompt the infamously prickly tycoon to retaliate. But the lawsuits also raise other questions: Who would Trump install as education secretary, and how do they feel about for-profit colleges like Trump University? What if the IRS audit of Trump's finances ends with a recommendation of civil or even criminal penalties? The agency would be targeting its own boss.
If Trump is found personally liable for fraud — a real possibility in the Trump University case — that would be grounds for impeachment (though the GOP Congress won't impeach him for anything, you can be sure).
So what can be done?
Historically, presidents have voluntarily divested themselves from their businesses to wipe the slate clean and avoid this sort of problem. For his part, Trump has said his company would go into a "blind trust" with this three eldest children at the helm.
Except this isn't what a blind trust is. The technical purpose of the arrangement is to make sure the person holding office literally has no idea what assets he owns. Thus he can't manipulate the value of those assets with policy even if he wants to.
Trump's particular business arrangements make this almost a conceptual impossibility. His holdings aren't financial assets that can be traded and reshuffled without his knowledge; they're hotels and resorts and brand lines that have his bloody name on them. Trump would know full well how his decisions as president were effecting his businesses — and especially with his kids running them.
He could instead hand over all his real estate and other assets to a holding company, then take that company public to turn it over to shareholders. The proceeds from the sale of shares could be placed in an actual blind trust, to be managed for Trump's benefit until he leaves office.
Of course, whether Trump's pride would ever allow for such an arrangement is another matter entirely.
"Trump appears to be genuinely unaware, even at the conceptual level, that his business interests might complicate his ability to govern in the public interest," Jonathan Chait observed at New York.
But the president-elect is about to learn. As are we all.