“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,” Sheri Dillon, Trump’s longtime lawyer at Morgan, Lewis & Bockius, said during the President-elect’s first press conference on Wednesday. “But at that time, no one was so concerned.”
No one pointed out right then that there actually was a lot of controversy over Rockefeller’s wealth, and the Vice-President-to-be at least offered, back in 1974, that he would be “delighted” to place his financial holdings in a blind trust, or divest of them altogether. Dillon, however, wasn’t interested in those details. Her presence was meant to reassure the public that Donald Trump would indeed resolve his business conflicts, which are so knotty that they threaten to undermine the legitimacy of his Presidency. The presence of a big-firm lawyer, along with art-directed piles of manila folders on a table beside the lectern, seemed to suggest the President-elect was taking all this complicated legal stuff very seriously.
The first point Dillon made was not very reassuring. She said that Trump didn’t need to do anything at all to resolve his conflicts: the globe-spanning hotels and golf courses, the licensing and co-development deals in places like Istanbul, the dozens of limited-liability corporations listed on Trump’s financial disclosure forms, and the opportunities for self-enrichment presented by each of them would all be totally fine in the eyes of the law, in her legal opinion. “He’s voluntarily taking this on,” Dillon said, as Trump stood to the side, magnanimously. “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.”
In technical terms this is true. The letter of current ethics laws does not spell out a prohibition on a being President while also running a large, complex company. But the fact that it’s not specifically prohibited does not mean that such an arrangement is allowed. As Walter Shaub, Jr., the director of the U.S. Office of Government Ethics, put it in remarks he gave on Wednesday, at the Brookings Institution, “Common sense dictates that a President can, of course, have very real conflicts of interest. A conflict of interest is anything that creates an incentive to put your own interests before the interests of the people you serve.”
The President and Vice-President had been left out of the Ethics in Government Reform Act, which was passed in 1989, because it was impossible, under the Constitution, to require those offices to be subservient to the department of ethics. Rather, it was understood that Presidents and Vice-Presidents would abide by the law anyway, not that they could ignore it, according to Trevor Potter, a former legal counsel to the Republican Presidential campaigns of George H. W. Bush and John McCain. In other words, suggesting that Trump was beneficent was a distraction, at best.
Next, Dillon conveyed that Trump’s primary assets, known as the Trump Organization, “comprising hundreds of entities which, again, if you all go and take a look at his financial disclosure statement, the pages and pages and pages of entities” would be placed in a trust prior to his Inauguration, on January 20th. (The piles of folders on the set were meant to represent the various trust agreements.) The trust would be managed by Trump’s sons, Eric and Don, Jr., as well as by Allen Weisselberg, a longtime Trump Organization executive. The trust would contain cash from the sales of Trump’s most liquid assets, as well as the businesses of the company. The promise that no new foreign deals would be made during the time Trump is in office was made, as was a promise that an ethics adviser would be appointed to help insure that future business decisions didn’t raise any ethical concerns. Trump would have no say in what went on in the business.
Such a structure doesn’t resolve conflicts, Potter said. “If Trump had followed precedent, he would have divested his assets and put the cash in a blind trust,” he said. “To the extent he couldn’t do that, in some cases, then he would have to designate, voluntarily, for someone else to make decisions” when governmental actions affected those assets. To take one small example, the Army Corps of Engineers, the Environmental Protection Agency, the Labor Department, and the state of Florida could all have authority over and potential conflicts with Trump’s golf-course holdings in Florida. Issues could arise over pesticides, water usage, or labor-law violations. Trump would have to delegate someone, such as the Vice-President, to make any decisions that might touch on those issues on his behalf. Neither Trump nor Dillon made any mention of doing any such thing.
Instead, Trump said he plans to transfer day-to-day operating control of the company to his sons and said nothing about how he would handle government decisions that might affect the company. “He also decided to not divest, and not put his assets in a blind trust, and instead to continue to own them,” Potter said. “That to me is the flaw in his announcement. He still owns all of that, he still personally benefits from all of that, and he is still in a position to make decisions that affect his own personal assets.”
Shaub said that he was taking the startling step of going public about his criticisms in the hopes that “constructive feedback” from the government ethics office might help Trump to adjust his plans. He praised the efforts made by Rex Tillerson, the former C.E.O. of ExxonMobil, in his efforts to comply with ethics rules, and went on to say that what Trump planned to do didn’t even meet the standards of his own Cabinet nominees. “The signals a President sends set the tone for ethics across the executive branch. Tone from the top matters,” he said.
Potter, for his part, saw some sign of encouragement, in the form of someone who wasn’t onstage: Trump’s son-in-law, Jared Kushner. Like Trump, Kushner is a New York real-estate developer with a large net worth and interests in multiple buildings. He is moving to Washington to take an advisory role inside the White House. On Monday, Kushner announced that he would sell most of his holdings to his brother and a trust controlled by his mother (a divestment strategy my colleague John Cassidy is not a fan of). Still, Kushner appears to be going much further than Trump himself, who seems determined to maintain ownership of the Trump Organization and its branded golf clubs, commercial rental property, hotels, royalties, and rights as he starts his big new job. The mystery is why.
“His son-in-law is doing exactly what he is not doing,” Potter said. “Every billionaire entering the Administration, and there are a number—all of them are taking steps.”
One possible explanation for the obstinacy is the fact that selling the company to his sons would require an appraisal of the company. It’s unclear, according to Potter, whether the appraisal would be public by default, but perhaps Trump fears that the number that would emerge from such an appraisal might not be as high as he would like.
In any case, like so much else, the resolution of the conflicts rests with the Republicans in Congress. “The issue is, there aren’t really mechanisms to deal with this on a governmental level,” Potter went on. “At the end of the day, this is a fight between Trump and Congress, and at the moment Congress is not fighting Trump.”
