Kleptocracy? Nepotism? Trump says the president can’t have a conflict of interest

Read few comments.

Questions:

1. How much and why is it important (or maybe unimportant?) for President-elect Donald Trump to address the conflicts of interest and how he should address it?

2. Trump is rich, his enterprise is run also by his children and we do not know much about his taxes. Is Trump’s situation somehow unique comparing to other Presidents in the past with maybe more reasons for concerns?

Answers:

Erik Jensen, Professor Emeritus of Law, Case Western Reserve University

1. Mr. Trump may be affected by various statutory provisions dealing with conflicts of interest and limitations on the employment of family members, the details of which I won’t go into. (For that matter, I don’t know all the details.) And there’s a constitutional provision, often called the Foreign Emoluments Clause, that forbids anyone holding an “Office of Profit or Trust” from accepting any “present” or “emolument” (like compensation for services) from a “foreign State,” unless Congress gives its permission (as it has done for gifts of nominal value). The presidency is clearly an office of profit or trust, and, to the extent that Trump enterprises do business with corporations formed by foreign governments, many scholars think that this Clause might be implicated.

The possibility of statutory or constitutional violations is a serious concern, of course, but there is some fuzziness in the statutory and constitutional provisions. Reasonable people can disagree about what the technical requirements are. Whatever the law is, however, what’s really important, I think, is that the president seems to have clean hands. Any hint that a president is making decisions that could directly benefit his own investments or those of his family would be devastating to the president’s reputation.

At least we used to think that. Maybe this doesn’t matter as much as it used to in that Mr. Trump’s popularity seems unaffected by the sorts of criticism that would have been devastating in the past. But, having said that, it’s still hard to see that the appearance of conflicts of interest would strengthen his power as president. The reasonable thing for a newly elected president to do is to take steps to eliminate any conceivable appearance of impropriety.

2. Yes, I think this situation is unprecedented, if only because of the magnitude and nature of Mr. Trump’s investments. I can’t think of any prior president who came into office with operating businesses—businesses in which he has been an active manager—as extensive as Mr. Trump’s.

We’ve had wealthy presidents before, of course, but generally by the time they became president they were no longer active businessmen. Their investments were of a sort that could be put into a blind trust with some hope that the president wouldn’t know the particulars of the trust’s holdings.

It’s hard to see how anything like that would work with the Trumps, however. With businesses around the world bearing the Trump name, how could anyone even pretend that the president doesn’t know what the family is holding and operating? Having the Trump kids run the businesses doesn’t come close to dealing with the conflict of interest issues, particularly the appearance of impropriety.

There’s a way to deal with this, but it’s not easy. The Wall Street Journal has suggested that Mr. Trump needs to sell all of his current holdings and put the proceeds into a blind trust. That strikes me as the right way to proceed—it should take care of all legal and appearance-of-impropriety issues—but I’m skeptical that anything like that will happen.

The taxation matter: there’s no legal requirement that a candidate for the presidency disclose his tax situation, but making at least part of recent tax returns public had become the practice of presidential candidates for almost fifty years. I can understand Mr. Trump’s reluctance to make tax returns public; I wouldn’t want mine widely distributed, even if there’s nothing problematic in them. But candidate Trump’s unwillingness to disclose anything was, in recent history, without precedent.

Mr. Trump has said he will disclose at least some details once audits by the Internal Revenue Service are finished. But I don’t think very many people really expect that to happen, particularly since he won the presidency without having to make disclosures.

Ralf Michaels, Professor, School of Law , Duke University

1. Trump is not the first incoming President who is rich, and we actually do not know how rich he actually is, and we certainly cannot just take his word for it. He is the first President in recent times who broke the norm of sharing his tax records with the public. But most importantly, he is the first President who openly and shamelessly merges business interests with his office. His meeting with the Japanese Prime Minister Abe, excluding experienced advisers (and as far as we know without a briefing from the State Department), but including his daughter Ivanka and her husband, is a blatant violation of existing norms. His meeting with his Indian business partners is the same.

This is important under the law. Under the so-called emolument clause of the Constitution, Presidents are not allowed to accept gifts or favors from foreign governments. Given Trump’s extensive investment in foreign countries, it is hard to see how he could avoid the conflicts of interests that the clause wants to forbid. But it is important also under norms of democracy. Democracy requires a President to act in the interest of the country, not his own private interest. Trump himself criticized his opponent Hillary Clinton of corruption because she accepted donations to the Clinton foundation. His own entanglement is infinitely greater.

2. It is unclear how he could avoid the concerns. Yielding control over his company is clearly not a solution, not only because his son-in-law continues to play an important role in his cabinet. Some have suggested he transfer his assets to a blind trust. That would normally imply the need to liquidate the assets, a step he is clearly unwilling to take. Without such a step, the conflict of interest remains.

I doubt that he would want to do this. First, we must suspect that making money remains one of his goals. He said, in an early interview, if he ran for President he might be the first one to actually make money from it. And indeed, he ran his campaign with the argument that his success in business qualifies him for the Presidency.

Should we be worried? Very much so. Trump is not the first President who tries to benefit personally from the Presidency. But he is the first one, as far as I know, who does so openly, without even trying to conceal it. The consequence is a very real risk of kleptocracy and nepotism in a way in which we know it only from authoritarian undemocratic regimes in other areas of the world. Many fear that these are the regimes that Trump wants to emulate in other ways, too. Trump’s desire to enrich himself is only one part in the tendency of establishing an authoritarian regime.

Andrew Rudalevige, Professor of Government, Bowdoin College

1. The Trump campaign made a big deal of the “corrupt insiders” that supposedly dominate American politics. He stressed Hillary Clinton’s possible conflicts of interest with regard to The Clinton Foundation. He promised to “drain the swamp.” So it is very important that his administration both be, and seem to be, completely honest and transparent. For example, consider the money his company owes to foreign banks – like Deutschebank, which is negotiating with the US government over its role in the 2008 mortgage foreclosure crisis — including state-run banks like the Bank of China. What if the Bank of China forgave some of the debt – perhaps to encourage the US to be less aggressive in defending the South China Sea?  That might make people think the government is “bought off” in a far worse way than Trump complained about in his campaign. And there is a part of the US Constitution called “the emoluments clause” that forbids American officials from taking any gifts at all from foreign governments or heads of state without Congressional permission. As it stands, anytime a foreign diplomat stays at a Trump Hotel and pays more than a competing hotel would charge, you could argue that violates the law. If nothing else this would be a huge distraction for the Trump administration even if many of the charges turned out to be untrue.

Some editorial pages have called on Mr Trump to liquidate his assets (ie sell all his real estate, etc.) and put the proceeds into a blind trust, so that he does not know which of his official actions might help his own portfolio. This is what most prior presidents have done. Obviously Mr Trump does not want to do this. In any case his situation is more complicated because he has more physical property (he doesn’t have stocks he can sell, but buildings); plus a lot of what he claims as wealth is in the value of his name, his brand. How do you separate from that? At the very least, Mr Trump should be very transparent: make clear what exactly all his holdings and debts are, release his tax returns, and propose a law that would make sure that any decisions made by regulatory agencies are handled by civil servants, not by his political appointees (and certainly not by his family!)

2. For the reasons above, his situation is close to unique, and he has also been less than forthcoming about the potential for difficulties here. Basically, he has said “trust me.” But more than half of people polled say he is not trustworthy, so that doesn’t get us very far. He loves being rich – does he love being rich more than he wants to be president? This could be very complicated.

The only similar situation might be Nelson Rockefeller, who was confirmed as Vice President under Gerald Ford in 1974. Rockefeller was also very, very wealthy (much more so than Trump) and selling off his assets might have actually affected the entire economy. However, his affairs were already in the hands of trustees, rather than his own – he did not say that his children would handle it!

Robert Sedler, Distinguished Professor, Wayne State University Law School

It is important to understand that the American Presidency is a unique governmental concept, found in our 18th century Constitution, in which the entire executive power is vested in a single person. As a result the law treats the American President differently than other elected officials. There is a law regulating conflicts of interest by governmental officials, but it doesn’t apply to the President. As a result, President-elect Trump is not bound by any conflict of interest rules. He will try to structure his business operations in such away as to avoid a conflict of interest on his part, but his doing so is political rather than legal. Some American Presidents, such as President Kennedy, have been very wealthy, but he put his assets in blind trust. So have other Presidents. Again, whatever President Trump does will be what he chooses to do, and he doesn’t consider himself to be bound by what other Presidents have done.

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One Response

  1. it is so evident that it take a lawyer to explain what a crook businessmen is doing, and worst becoming our president. It is nepotism in any way you look at it, but you all find loopholes to make it right. It’s one way, not not every way you all think. He is going to have his sons and daughter doing business around the world, while he is the President, if he does not get impeach something is wrong.

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