Trump’s Business Entanglements Create Ethics Concerns

President-elect Donald Trump’s business empire is reported to include interests in some 144 companies in 25 countries. The full extent of his business entanglements is hard to know because he has still not released his tax returns. 

The New York Times reports that the Trump Organization has debts of at least $650 million, including owing money to the Bank of China, which is owned by the Chinese government.

Critics and constitutional law experts say this creates an ethical minefield for the incoming president.

Harold Krent, dean of the Chicago-Kent College of Law at the Illinois Institute of Technology and the author of the book “Presidential Powers” gives us his thoughts on how President-elect Trump’s business entanglements could bring him into conflict with the Constitution.

The Emoluments Clause. What is it and how might it impact President-elect Trump?

Krent: The Emoluments Clause is aimed at preventing undue foreign influence in U.S. politics. It forbids, absent Congress’s consent, executive officers from receiving pay or getting bonuses or gifts from foreign powers. The goal is to remove undue foreign influence or corruption from American politics. Obviously the connection to President-elect Trump is that many of his business interests are tied in with either joint-ventures or some kind of potential mercantile relationship with entities owned by foreign governments and therein lies the problem.

What would President-elect Trump have to do in order to comply with the Emoluments Clause?

Krent: There is such a wide disagreement about what the Emoluments Clause means so an answer is difficult … we don’t even know if the Emoluments Clause is enforceable – it’s never been enforced. It may just be a question of something that Congress could respond to with a resolution. Perhaps it could be a subject of ultimate impeachment but it has never been enforced in court. Its meaning is unclear and there are even some scholars who don’t even think the Emoluments Clause applies to the president, most I think do. So there’s a great deal of uncertainty. I think in terms of good government though, as opposed to Constitutional law, having some kind of blind trust over President Trump’s business interests is the way to go. It’s been done by President Carter and others in the past but so far he has not evinced any interest to have a blind trust which would mean that his potential for some kind of triggering of the Emoluments Clause would still exist.

Are there any other conflict of interest laws or precedents that would apply to the President-Elect?

Krent: Most of the conflict of interest statutes don’t apply to the president -- the president has been exempted from them by Congress. That could change of course, Congress could add more conflict of interest provisions to temper the president’s conduct. The president may have a separation of powers challenge to those, but we are in uncharted territory with respect to general conflict of interest as well. I’ll give you an example of one of potentially many. Trump is a large shareholder in Deutsche Bank which is currently negotiating with the Department of Justice about how to resolve the allegations of negligence with respect to mortgage-backed securities fraud. So he has a personal interest in the outcome of those negotiations with the Department of Justice, and there are many more potential conflict areas to go. We haven’t seen many of these in the past and it is unclear to what extent President Trump will try to institute measures such as a blind trust in order to insulate himself from those kinds of conflict of interest.

He has said he is planning on handing over control of the day-to-day running of the Trump Organization to his children. Does that solve anything?

Krent: It probably solves a little. It solves a little bit in terms of appearance, but certainly there is a community of interest between his kids and himself.

What about the President-Elect’s argument that the electorate knew he was a business man when they voted for him and it’s only the “crooked media” that is making a big deal of this? Is this a big deal?

Krent: I think it’s a big deal. I think the Emoluments Clause is probably not as important as the broader conflict of interest issues that can arise. In terms of environmental issues, in terms of Trump employees with respect to the National Labor Relations Board, all of these kinds of issues will be arising and if there is a blind trust it’s going to put all of this at least in the background. But so far his refusal to do so is going to raise the issue to the public and to the Congress about whether or not he is governing the U.S. in the interests of U.S. policy or whether he is governing in the interests of the Trump empire.

The Trump International Hotel in D.C. is in the Old Post Office and is leased from the federal government. What kind of potential conflict of interest might arise from that?

Krent: The first is about whether or not the GSA (General Services Administration) should be at all renting or subsidizing use of any of the Trump properties. That’s just a classic potential self-dealing issue. The issue of foreign dignitaries staying at the hotels does raise an Emoluments Clause issue, because if they are just staying because of the novelty of staying at a Trump hotel my guess is that the Emoluments Clause would not be triggered. But if they are doing so or paying even a higher rate in order to impress the president-elector in order to influence policy because of their support for Trump properties that is a classic case of where the Emoluments Clause provision might be triggered.

Who can hold the president to account on this matter? Congress? The Courts?

Krent: We don’t know the answer. If the courts are going to be involved there would have to be someone with a classic injuring fact that could sue to bring the Emoluments Clause to the courts. The most plausible candidate for that would be an injured competitor who might say that “but for this undue influence we would get more business. We lost business because of favoritism shown to Trump properties.” And the courts in other contexts have entertained similar claims of competitive injury. But because the courts have never even construed the Emoluments Clause it’s possible that ultimately they might say it is up for Congress to decide. Congress has the power to bless these conflicts of interest. And if Congress wants to take retributive action – whether it would be censure or even possibly an impeachment resolution – that would be up to Congress.

Has any other president come close to pushing the boundaries of potential conflicts of interest as much as the president-elect appears to be doing?

Krent: No other president has had such widespread holdings as President-elect Trump has and no other president has had such holdings with foreign entities and foreign companies. We certainly have had issues of gifts being given to presidents before but we haven’t had the same kind of pervasive conflict of interest arise before. This is uncharted territory and we are going to have to work it out and I’m sure that over time President Trump will be more and more sensitive to it.

How do you think this is likely to play out? Will he have to have this addressed and taken care of by the inauguration?

Krent: I think this is almost entirely an issue of politics that will have to be adjusted in the political sphere so there are no deadlines. I think he may change his mind several times before he decides what to do about it. There may well be court challenges that are filed and we may get a peak as to whether the courts are willing to say that this (the Emoluments Clause) is an enforceable part of the Constitution because there have been no court decisions on this previously. Nothing’s going to be decided quickly. The only way to have a quick resolution would be through a blind trust option, but again, that is a difficult thing for a family-owned empire to do – to give up the reins of power of possibly a multi-billion dollar enterprise in 25 countries.

I think there’s going to be a give and take. He’s probably going to try and see how much pressure he gets from Republicans in Congress and how much Republicans are being pressured to pressure him. And he himself might feel the awkwardness at some point which may prompt him to take some steps to distance himself (from his businesses) and I do predict that there will be a couple of court challenges during his term and we are going to have to see if the courts are in any kind of mood to entertain the claims.


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