Trump’s Business Conflicts: Total Divestiture Is His Only Answer

Posted in: Politics

Last month, on November 30, my co-columnist Michael Dorf insightfully addressed why both the apparent and real conflicts of interest facing President-elect Donald Trump are important. See “Why—and How—President-Elect Trump’s Conflicts of Interest Matter.”

Given the little that is known about Trump’s holdings, and his handling of these matters so far, Mike expressed concern that a Trump administration might pursue policies that favor Trump’s business interests at the expense of the national interest. Mike notes that this will unjustly enrich Trump, but given the size of our economy, it will not seriously harm the nation although it will ruin Trump’s reputation. The more serious problem will be the culture of corruption Trump will create if he does not remove his conflicts of interest, and this could hurt the nation because corruption is contagious.

Since Mike raised this disquieting issue, President-elect Trump has announced he will explain on December 15, 2016, how he plans to deal with his vast business holdings while serving as president. In fact, there is only one way Trump can effectively resolve this situation: He must divest himself from ownership in any property or entity that his actions or decisions as President of the United States might benefit. The proceeds of the divestiture must be placed in a blind trust managed by a disinterested institution or trustee—not one of his children.

Half Measures Will Fail

On December 7, 2016, the New York Times headline reported that the president-elect was considering a half-measure: “Donald Trump Is Said To Intend to Keep a Stake in His Business.” According to the accompanying article, Trump is “considering” turning over the operations of his business to his two adult sons, Donald Jr. and Eric. Daughter Ivanka, The Times reports, will withdraw from her family-related company and move to Washington, DC, with her husband, where both will assume unofficial roles in their father’s White House.

This story appears an effort by the Trump team to float a half-measure solution. But it will not work. Every attorney with knowledge and experience in this field of ethics who has paused to examine the situation has concluded that only a total divestiture by Trump will avoid potential conflicts. His organization has properties or projects in varying stages of operation—from early plans to build office, hotel, or residential facilities to fully operating businesses—in some twenty different countries. Foreign governments are already seeking favor with the new president by using these properties, or looking favorably on their operations, which competitors may believe to be unfair. The potential conflicts—and appearance of conflicts—are endless.

Given the propensity of Trump to prominently use his name in his business projects, these properties are also potential targets for terrorist groups. This creates an added danger for those who are members, guests or employees at these facilities, and an added burden for the governments responsible for security at the facilities. But is the added protection an unfair benefit for a President Trump? Indeed, the U.S. Government will have to spend taxpayer money to assist in protecting these properties. Only if President Trump has no interest in these properties will they be of no interest to terrorists.

Divestiture as the Price of Public Service

Richard Nixon’s presidency is not known as a historical model for ethical behavior, but Nixon insisted on a strict code of conduct for his White House and Cabinet throughout his presidency. Nixon himself, who was affluent but not wealthy, sold all his stocks and bonds after he won election in 1968—and invested the proceeds in real estate: A home in Key Biscayne, FL and another home in San Clemente, CA.

I served as White House counsel after Nixon’s initial cabinet had been selected and confirmed by the U.S. Senate, yet I was involved in conflict of interest clearings for several later appointees for the Supreme Court, independent regulatory agencies, and later cabinet post replacements. Without breaching any confidences, by not naming names, I can report that President Nixon made no exceptions in requiring that all his appointees to have NO CONFLICTS OF INTEREST, or potential conflicts.

Notwithstanding the abuse of power scandals that ended the Nixon presidency in disgrace, there was not a single scandal or even embarrassing situation that arose during his presidency relating to conflicts of interest. This was the result of his strict rules and enforced compliance. (Obviously, Vice President Spiro Agnew’s continuing to accept bribes that had started while he was still governor of Maryland ignored Nixon’s rules, and Nixon was as horrified by Agnew’s behavior as anyone.)

When problems arose, or if an appointee was unwilling to take a financial hit if necessary, Nixon’s position was that such a hit was the price of public service. I walked many very wealthy men (and a few women) through the process with their personal attorneys, and in a few instances divestiture was the only safe way to proceed. In several instances the financial cost was considered too high, and that person withdrew from consideration for public service when they felt that could not afford it. Most liquidated stock holdings if their post might influence the stock’s market pricing and placed their assets in a blind trust.

A blind trust, broadly described, places the assets—including the identity of the assets—under the control of a professional manager, a trustee, who runs the trust but without disclosing the holdings to the trustor. The starting valuation and periodic reports of the value, are shared. Years after the fact I had occasion to talk with one former Nixon cabinet officer who had been very worried about placing his holdings in a blind trust, and learned he was delighted he had done so because the trustee had done very well by him. Indeed, he felt the trustee had handled a market downturn and then rebound far better than he would have himself.

Trump’s Only Option

Donald Trump did not have to run for the nation’s highest office. The fact that he did not believe he would win, and made no preparation for winning, does not absolve him of responsibility to assume full responsibility for the difficult job of being President of the United States. This is not a part-time job.

During the campaign, and as his transition has progressed, it became clear that Trump really does not fully understand nor appreciate the job he is about to take on. The only modern president close to Trump in being unprepared is George W. Bush. But as the son of a president, Bush II had a good working knowledge of what was involved, and his own limitations for dealing with the responsibilities of the office. It was for this reason he ran with Dick Cheney, who was a former White House chief of staff and secretary of defense—as well as a member of Congress—who not only understood the presidency but relished the opportunity to run it from a backroom as vice president. Mike Pence is no Dick Cheney, although he served in Congress and as a governor, so he is way ahead of Trump in understanding the dimensions of the job.

Donald Trump is clearly planning to rely heavily on his vice president, much as Bush II did. Indeed, President Jimmy Carter, a whip-smart Navy nuclear engineer who had served as governor of Georgia, recognized he needed help in Washington, and placed long-time Minnesota senator Walter Mondale on his ticket as vice president, and when they won, Carter relied heavily on Mondale to run his White House. In the process, Jimmy Carter and Walter Mondale created the modern vice presidency where the person in that post knows Washington well and becomes a full partner in the presidency.

But even if Mike Pence proves to be a brilliant vice president, who is quietly able to assume almost all the burdens of the Trump presidency, if Donald Trump fails to divest ALL his holdings around the world, not a day of his presidency will pass that he will not have to deal with conflict of interest charges. Because he is the first post-Nixon president to not release his tax returns, and because he is the wealthiest man to be elected to the presidency, the news media will spend endless time investigating his conflicts. It will be the story of his presidency—just as it has been the core story of his transition to the presidency.

With time, his failure to divest will destroy his presidency. John Hibbing and Elizabeth Theiss-Morse explained in Stealth Democracy: Americans’ Beliefs about How Government Should Work, that a significant number of people understand what is going on—the processes of government—much better than government officials and politicians realize. Hibbing and Theiss-Morse discovered that Americans have on overriding concern about how government is operating and that is “whether or not people believe decision makers are acting in their own self- interest.” In other words, what motivates the decision maker. And if Americans believe Trump is making decisions that benefit himself, the GOP Congress will be able to protect him for a while. But not indefinitely. Not when the public has had enough of his self-dealing.

Divestiture is truly in his own best interest, not to mention the country’s.

2 responses to “Trump’s Business Conflicts: Total Divestiture Is His Only Answer”

  1. Joe Paulson says:

    Reports are that Trump will stay on as executive producer of The Celebrity Apprentice.

    Only in his “spare” time though.

  2. Catherine Comella says:

    Ah, America, the only country in the world where you can buy whatever you want, but you can’t get what you need.
    DT has filled his cabinet with business associates and friends. The rich get richer, and there is no doubt that his Presidency will serve his and his associate’s best interests. The working class? Come on people, what does DT know about the working class and how we live? You think he ever had to decide if he was going to eat or pay for his medication? Do you think he ever had a financial worry in his life? He is not a self starter. His father gave him a 1 million dollar “loan” to get him started. Dude, I’m still paying for my Master’s degree that I earned 8 years ago. My parents couldn’t afford to pay for my education or give me a million bucks to get started. I’ve been working since I was 15 years old. He’s a cartoon, and he’s a self absorbed egomaniac and a liar. Why can’t we see the Apprentice out takes? He’s so smart that he doesn’t pay does that mean the rest of us are stupid because we actually (have to) do pay our taxes? Imagine the amount of things that could get taken care of with his share of the burden..but he’s not one of us and never will be.. I’m so embarrassed and ashamed. I’m hoping he only inflicts a minimal amount damage during his term, and that by the Grace of God, it’s only 1.