A “Huge” Conflict of Interest? The Impact and Influence of President-Elect Trump’s Business Holdings

JUSTIN STERN—“I’m really rich,” Donald Trump announced to nobody’s surprise in June of 2015, reaffirming that he (1)  has a lot of money and (2) wants people to know it. That he is fantastically wealthy should not be a surprise—steaks, wine, and bottled water aside, Mr. Trump has made significant amounts of money in real estate, with substantial ownership interests in iconic buildings and licensing deals which transfer money to his businesses and affix his household name to structures around the world.

Before he became the President-elect, Mr. Trump’s assets were just that, assets, allowing him to have poured large sums of his own money into his campaign and repeat the mantra that he didn’t need money from special interest groups. But once it became clear that Mr. Trump had handed Hillary Clinton one of the most surprising political defeats in modern history, the issue of his vast business holdings transformed from an academic exercise in constitutional limitations to a real-world problem summed up by the following question: does Donald Trump’s wealth and engagement with his businesses, directly and indirectly, present a conflict of interest with respect to his new, upcoming role as President of the United States? It seems that there is a problem which needs to be resolved; as usual, though, the devil is in the details.

The federal conflict of interest law—18 U.S.C. § 208—does not, as it currently stands, apply to the President. The law’s definitions section—18 U.S.C. § 202—states that the President and Vice President are exempt, as are members of Congress and federal judges. (Note that Congresswoman Katherine Clark has introduced a bill which would require that the President and Vice President not be exempted from such legislation.) Further, on its face, the Constitution does not address the particular problem of conflicts of interested presented by the billionaire businessman-turned-President-elect.

Arguably, a potential problem for Mr. Trump appears in Article I, Section 9 of the Constitution, in the clause barring members of the federal government from receiving gifts, payments, etc. from foreign nations without the consent of Congress. Given that Mr. Trump allegedly has taken out loans from the Bank of China, a state-owned bank, his use of such money may skate eerily close to the line drawn by the so-called “emoluments clause.” Furthermore, given that Mr. Trump’s new hotel is just blocks from the White House, resourceful foreign leaders may stay there and make their spending at Mr. Trump’s hotel known to him—subtly of course—thereby attempting to curry favor with the Commander in Chief. That said, connecting those dots might be a stretch, and if the clause is damning for Mr. Trump, it likely would have also been for Sec. Clinton, whose foundation has received tens of millions of dollars from foreign nations.

Still, it is widely understood Mr. Trump should not (irrespective of whether he legally cannot) continue on as Chairman of the Trump Organization while simultaneously serving as President; the Trump Organization itself recently stated that it is in the process of formulating a transfer of control of the business entity and its portfolio to Mr. Trump’s three oldest children, Donald Jr., Eric, and Ivanka. On November 30th, Mr. Trump himself announced a forthcoming plan to orchestrate his detachment from the operations of his business.

In theory, this would remove the direct conflict of interest mentioned above. But in practice, the indirect conflicts are just as serious, especially if Mr. Trump continues to rely on the frequent advice and counsel of his adult children as he has throughout the campaign.

Whereas recent Presidents Bill Clinton and George W. Bush placed their wealth in the form of investment portfolios in blind trusts (President Obama did not), thereby attempting to remove an appearance of impropriety, the same maneuver would likely not pan out the same way for Mr. Trump. A significant portion of Mr. Trump’s money is invested in real estate; even if he transfers control of his companies to his children, it is unreasonable to assume that Mr. Trump would just forget the buildings in which he (even indirectly) holds significant ownership interests. And if he does, the giant letters making up his last name, plastered onto many of those buildings, might tip him off. There is no “blinding” Mr. Trump to the wealth he knows he has and to the vehicles with which he and his family continue to accrue that wealth.

Another possible scenario (in addition to the issue of the Trump hotel in Washington) in which the President-elect might bring a conflict to the surface could be as follows: suppose in constructing a portion the infamous and often-talked-about wall along the U.S.-Mexico border, Mr. Trump’s administration grants a construction contract to Construction Company ABC; with a wink and a nod, it might be mutually understood that Construction Company ABC will give a price break to the Trump Organization on their next condo building project. The tension between public service and pocket-lining has already been highlighted, though not by Trump himself; Ivanka Trump’s fashion company marketed a bracelet as having been worn by the company’s namesake in a 60 Minutes interview with, among others, Ivanka and her President-elect father.

It’s safe to say that, this year, Mr. Trump has defied the odds and astonished the pundits. Mr. Trump may surprise us again by solving this quagmire and avoiding the risks of not doing so. That said, clarifying the conflict of interest issue, and implementing a plan which can suitably wall-off the President-elect from his business empire, will be a major responsibility and focus of those managing Mr. Trump’s transition from wealthy businessman to President of the United States

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