Perspectives on Geopolitics, History, and Political Economy

Trump’s Dangerous, Unprecedented, and Unconstitutional Conflicts of Interest

Originally published by the Center for American Progress

HERSHEY, PA – DECEMBER 15, 2016: President-Elect Donald Trump gestures by pointing as he delivers a speech to a large crowd at a Thank You rally held at the Giant Center. – Editorial Credit: Evan El-Amin / Shutterstock.com

By Liz Kennedy

President-elect Donald J. Trump’s private business holdings present foreign and domestic conflicts of interest that are severe and unprecedented for an American president. Today, instead of getting clarity about the president-elect’s plans to address these conflicts of interest in a long-promised press conference, Americans are left with little more that another vague pledge about transferring operations and nothing about transferring ownership. As the office in charge of overseeing executive branch ethics noted, this is wholly inadequate. To protect the interests of the American people and the integrity of the presidency, Trump must resolve his conflicts of interest or resign from office.

As it stands, Trump will be in violation of the Constitution the day he takes office because a key anti-foreign corruption provision, the Emoluments Clause, bars the president from receiving payments or things of value from foreign states or their agents. As America’s founders understood, if foreign governments can give payments to federal officials, then those federal officials can be bought.

This is not a political or partisan issue—anti-corruption rules for ethics and conflicts of interest are necessary to protect against divided loyalties and self-dealing. No one can serve two masters, and Americans must know that the president is serving their interests and their interests alone and not profiting off the presidency. Trump, if he assumes the presidency without relinquishing his business interests, will cast doubts about the legitimacy of his administration’s actions and decisions and create ongoing credibility problems. Americans must know that when the president makes a decision, he isn’t making it to enrich himself or his family.

Currently, there is no way to know the full extent of Trump’s conflicts because he refuses to release his tax returns and obscures his business debts and assets behind a web of privately held companies, according to a Wall Street Journal analysis. How can he justify withholding this critical information from the American people? What is he hiding? Until a full accounting is made, Americans are justified in fearing that these known conflicts, while severe, are just the tip of the iceberg.

Furthermore, removing himself from “business operations,” as Trump has indicated he would do, does nothing to resolve the president-elect’s conflicts of interest. It does not matter if Trump stops picking out tiles for his hotels’ bathrooms because he would still be well aware of how his administration’s actions would benefit those hotels and the rest of his global business interests. Those private financial gains go to him and his family, and any actions Trump takes as president that accrue to his personal financial gain are immediately suspect.

Selling his businesses and establishing a real blind trust would resolve conflicts of interests because Trump would not know how his money is invested. A blind trust would ensure that Trump would have no idea if his decisions as president will benefit his investments. For decades, American presidents have protected the integrity of their office, the government, and the interests of the American people by using blind trusts or similarly conflict-free tools for their assets while in office. President Barack Obama invested his assets conflict-free government bonds and index funds. President Jimmy Carter sold his peanut farm in Georgia through a blind trust, and President George W. Bush gave up his stake in the Texas Rangers.

President-elect Trump recognizes he has conflicts of interest that he must address. In a November 30 tweet, he wrote:

While I am not mandated to do this under the law, I feel it is visually important, as President, to in no way have a conflict of interest with my various businesses. Hence, legal documents are being crafted which take me completely out of business operations. The Presidency is a far more important task!

Trump specifically noted that his foreign holdings present conflicts, admitting he has “a little conflict of interest” in Turkey because of his “major, major building in Istanbul. Even earlier, in January, then-candidate Trump seemed to indicate a recognition of the need to divest from his businesses during a Republican presidential debate on Fox Business Network, when he stated: “If I become President I couldn’t care less about my company. It’s peanuts.” But more recently, President-elect Trump told the New York Times: “The law’s totally on my side. … The president can’t have a conflict of interest.”

Calls for President-elect Trump to fully disclose and divest from his financial assets and liabilities are coming from across the political spectrum, including Republicans, and from more and more Americans every day. In a short period, hundreds of thousands of people have signed petitions calling for Trump to disclose and divest his conflicts of interest; those petitions are being delivered to Trump properties throughout the country. Newspapers across the country have also called on the president-elect to protect his constitutional office by resolving the obvious conflicts of interest with his widespread global business interests. For example, the Wall Street Journal’s editorial board said, “Mr. Trump’s best option is to liquidate his stake in the company.”

Noting that Americans are “jamming our phone lines with more calls than we have ever received in response to any other issue,” every Democratic member on the House Committee on Oversight and Government Reform joined a letter calling for an immediate congressional investigation into Trump’s financial arrangements. Nearly one-quarter of the Senate—23 senators—sent a letter to the president-elect urging him to divest from his businesses in accordance with the precedent set by every president since the passage of the 1978 Ethics in Government Act and consistent with the advice of the Office of Government Ethics. Senators have also introduced Senate Concurrent Resolution 56, which calls on the president-elect to divest his conflicts of interest or, in the absence of congressional authorization, be considered in violation of the Constitution’s anti-foreign corruption Emoluments Clause.

Moreover, candidate Trump ran against corrupt pay-to-play politics, but if he does not liquidate his assets and have them managed independently, he will introduce the danger of pay-to-play politics on a scale heretofore unseen. Simply, shifting full ownership of his businesses to his children does nothing to close this pathway for pay-to-play corruption. In countries ruled by kleptocratic strongmen, a familiar route for graft and bribery involves making payments through close relatives. There is no way for the public to track all the interests, foreign and domestic, that will seek favorable treatment from a Trump administration by providing financial benefits to the president’s family through his businesses.

Just this week, Trump said he was turning down “billions of dollars of deals.” Even if true, the announcement is nonetheless troubling. After all, who is offering the president-elect of the United States billions of dollars in deals, and what do they want in return? Furthermore, what is Trump negotiating away to foreign and domestic business partners to serve his own—but not necessarily America’s—interests? These are shocking questions to have to ask when considering the behavior of an American president.

The dangers for American interests abroad are severe. At least 111 Trump companies have engaged in business dealings in at least 18 countries and territories, including projects in Saudi Arabia, Indonesia, India, and Panama. Many of these foreign development projects involve business partners that are closely tied to foreign governments.

After Trump spoke with Argentina’s president, a previously stalled Trump building project in that South American country was revived due to renewed willingness to issue the necessary building permits. Additionally, Trump’s daughter Ivanka sat in on a meeting with Japan’s prime minister; meanwhile, she was finalizing a business deal in the country. Moreover, the largest office tenant in the Trump Tower office and apartment complex in Manhattan is the state-controlled Industrial & Commercial Bank of China Ltd., which is due to renegotiate its lease in 2019.

Foreign powers are already funneling money and favors through the Trump Organization, with hotel bookings and the issuing of timely building permits, in what appear to be efforts to curry favor with the incoming administration. For example, since the election, the governments of Bahrain and Azerbaijan have held national celebrations at the Trump International Hotel just blocks from the White House. Moreover, foreign diplomats have been openly speculating that doing business with the Trump hotel is one way to win favorable treatment from the incoming Trump administration. The hotel itself has been actively soliciting business from foreign states.

Trump’s assets are rife with corrupt conflicts of interest, and his debts present avenues for abuse of power. As of May, Trump owed at least $713 million spread across 16 different loans. Without being able to examine Trump’s tax returns, it is impossible to determine the foreign entities that may hold a substantial amount of his personal and business debt. Trump does owe $300 million to Deutsche Bank—which the U.S. Department of Justice has acted against as a result of bad loans and is in the midst of negotiating a huge fine. How will that action proceed, and whose interests will take precedence—Trump’s or America’s? This is all in addition to the $2 billion in debt Trump accrued through his real estate partnerships, $950 million of which is owed, at least in part, to the state-owned Bank of China.

Trump’s international business conflicts are especially worrying given the recent confirmation that Russia interfered with the U.S. presidential election in an effort to harm Secretary Hillary Clinton and advantage Trump. This is a shocking incursion on American sovereignty. Trump and his businesses have extensive ties in Russia and to President Vladimir Putin. These particular conflicts of interest pose a grave danger to U.S. security and the integrity of the nation’s democracy. Senators from both sides of the aisle have joined together to call for an investigation into Russia’s hacking of the election. Congress should waste no time in questioning Trump and his circle about what they knew and when they knew it about Russia’s election cyberattacks.

Domestically, once he takes federal office, it appears that President Trump will be violating the lease between the General Services Administration, or GSA, and Washington, D.C.’s Trump International Hotel. That is because the lease bars the participation of any federally elected official. Interestingly, President-elect Trump is reportedly suing the District of Columbia to get out of paying local taxes on the property. Yet he will be in charge of appointing the head of the GSA, who is charged with administering the lease. Procurement experts agree this is a problem:

It’s a casebook example of both the appearance of a significant conflict of interest and an intolerable intermingling of Trump’s official governmental duties and his and his family’s personal financial interests. … Any reasonable person would worry about the undue pressures and the inherent risk of favoritism that the government might show to such a well-connected contractor.

Even more bizarre is the fact that Trump has announced he will stay on as executive producer of the NBC reality television show “Celebrity Apprentice,” which the president-elect wants write off as a “hobby.” When he tweets his displeasure with NBC News, what impact will that have on his partnership with the channel that carries his show? How will the U.S. Department of Justice and other parts of the administration be instructed to handle matters concerning Comcast or MGM, the corporations behind the television show?

As it stands, a Trump administration that fails to properly resolve its conflicts of interest will be in constant danger of running afoul of the public corruption laws that prohibit illegal gratuities and bribery, as well as the Foreign Corrupt Practices Act. Moreover, the Stop Trading on Congressional Knowledge Act, or STOCK Act, bars the president from using nonpublic information for private profit and a host of other investment, business, and employment-related activities, which President-elect Trump could easily trigger through his sprawling business interests. The president is also subject to regulations banning gifts from outside sources.

The genius of the U.S. Constitution is that each of the branches of the federal government are designed to provide a check and balance on each other. Congress must act to protect the interests of Americans and the integrity of the presidency. Indeed, the House Committee on Oversight and Government Reform Chair Jason Chaffetz (R-UT) said:

If you’re going to run and try to become the president of the Unites States, you’re going to have to open up your kimono and show everything, your tax returns, your medical records. You are just going to have to do that. It’s too important. … I can promise you I don’t care who is in the White House. My job is not to be a cheerleader for the president. My job is to hold them accountable and to provide that oversight. That’s what we do.

Nearly two-thirds of Americans are very or somewhat concerned that Trump’s business ties conflict with the country’s best interests. However, Trump’s conflicts of interest are not going away by themselves. That is why Americans must demand real action from him. Congress must respond with an investigation into Trump’s financial holdings and require him to divest from his conflicts of interest. As for Donald Trump, he must pick a lane and either be president of the United States of America or maintain ownership of the Trump Organization. He cannot do both. The only responsible choice is to resolve the conflicts of interest or resign the presidency.

Liz Kennedy is the Director of Democracy and Government Reform at the Center for American Progress.

© 2017 Center for American Progress