Trump's conflicts of interest take White House into uncharted territory

With his children, and not a blind trust, running his company, little prevents the president-elect’s political and business careers from bleeding into each other

Sam Thielman in New York

—

When President-elect Donald Trump enters the White House next year he will bring with him potential conflicts of interest across all areas of government that are unprecedented in American history.

Trump, who manages a sprawling, international network of businesses, has thus far refused to put his businesses into a blind trust the way his predecessors in the nation’s highest office have traditionally done. Instead he has said his businesses will be run by his own adult children.

Donald Trump Jr, Trump’s eldest child, has insisted that Trump’s holdings would go into a trust managed by him and his siblings Eric and Ivanka Trump.

“We’re not going to be involved in government,” Trump Jr told ABC’s George Stephanopoulos in September on Good Morning America. “He wants nothing to do with [the company]. He wants to fix this country.”

Quote

Candace Smith  (@CandaceSmith_)
.@realDonaldTrump 3 eldest children + son-in-law are on his Presidential Transition Team Executive Committee: pic.twitter.com/SOXizI8rz7
November 11, 2016

Donald Jr, Eric and Ivanka Trump are all on the president-elect’s transition team executive committee, per ABC’s Candace Smith, as is Trump’s son-in-law Jared Kushner.

But according to regulators who have overseen potential conflicts of interests under two former presidents, Trump’s arrangements were unprecedented and present a host of issues.

This is in no way a blind trust, said Karl Sandstrom, former chairman of the Federal Election Commission (FEC), the regulatory body that oversees campaign finance, under Bill Clinton and George W Bush. “A blind trust is not anywhere near the same. You don’t still have access to the decision being made. That’s why you put assets in and don’t just have someone else manage the company,” he said. Trump’s assets will instead apparently remain united under his company, and operated under his name even if he is not directly in charge.

“Reagan spent some time in the private sector but he certainly wasn’t a CEO,” said Robert Lenhard, also a former FEC chair, appointed by George W Bush. “He wasn’t operating a set of companies like Trump is. Most of our presidents have come out of political careers – Eisenhower’s time out of office was mostly a hiatus between the military and the presidency.”

Trump owns hotels in Chicago, New York City, Las Vegas, Waikiki and, most recently, in Washington DC, just down Pennsylvania Avenue from the White House. As with any hotel chain, the Trump Organization will oversee power, water, maintenance, security, billing and any number of other logistical details that will now essentially be negotiated between the provider and the family of the president.

Abroad, Trump holds properties in Istanbul, where his election was met with satisfaction by that country’s president, Recep Tayyip Erdoğan, as well as Mumbai, Vancouver and Seoul, among many others. With Trump’s children running his businesses, there is also the matter of their bearing his name, and thus the name of the president, anywhere in the world when they arrive to negotiate leases and construction deals.

From his financial filings, the future US leader also appears to be a shareholder or beneficiary of several entities headquartered abroad, among them Excel Venture LLC in the French West Indies, and Caribusiness Investments SRL, based in the Dominican Republic. How Trump’s holdings in those countries will affect US relations with them remains to be seen; both are notable for their use in finance to avoid taxes. Trump has promised to cut the rate for repatriating cash into the US as an incentive for others who, like him, keep taxable funds overseas.

In Azerbaijan, Trump has a real estate project he said was “on hold” during the presidential campaign. His partner in the endeavor was Anar Mammadov, son of the Iranian transportation minister, Ziya Mammadov, who was accused in diplomatic cables released by WikiLeaks in 2010 of laundering money.

In Russia, where Trump’s election has been met with congratulations by President Vladimir Putin, Trump worked closely with the Russian-born American financier Felix H Sater, managing director of the New York-based firm Bayrock LLC. Sater and Bayrock founder Tevfik Arif worked closely with Trump and others in his organization. In a deposition, Trump said that he had discussed “numerous deals all over the world” with Arif, and that Arif had brought potential Russian investors to meet Trump at his office, according to a report in the New York Times.

Bayrock was examined closely during a lawsuit filed by its former finance director, Jody Kriss; the Times said the firm had “occasionally received unexplained infusions of cash from accounts in Kazakhstan and Russia”.

Also in Russia, there are Trump’s ties to Paul Manafort, who ran his campaign from March to August. Manafort, who helped to install Putin ally Viktor Yanukovych as president in Ukraine, was named in a corruption investigation by a Ukrainian authority working with the FBI.

Then there is the matter of the president-elect’s stock portfolio. Trump has holdings in Dakota Access pipeline company Energy Transfer Partners. In his first 100 days, Trump has pledged to remove every impediment to the pipeline, which has been the subject of protests violently suppressed by police in North Dakota. He also owns stock in Facebook, whose CEO Mark Zuckerberg posted that he was “feeling hopeful” on Wednesday, and in Bank of America – he has promised to deregulate the banking industry.

Michael Cohen, Trump’s attorney, defended Trump’s post-election business plans on Thursday. Speaking of Trump’s family, he said: “They’re really intelligent. They’re really qualified. That’s why he really didn’t run in 2012, because they were younger by four years,” he told CNN.

While conflicts of interest may cause scandals for the president, they are unlikely to add to his long list of legal woes. In 1982 the supreme court gave Richard Nixon “absolute immunity” to prosecution for most kinds of crimes committed while in office, setting a precedent for administrations to come. “The president’s absolute immunity is a functionally mandated incident of his unique office, rooted in the constitutional tradition of the separation of powers and supported by the Nation’s history,” wrote Justice Lewis Franklin Powell in the majority opinion, adding that “diversion of his energies by concern with private lawsuits would raise unique risks to the effective functioning of government”.

As checks on that immunity, Powell wrote, “There remains the constitutional remedy of impeachment, as well as the deterrent effects of constant scrutiny by the press and vigilant oversight by Congress. Other incentives to avoid misconduct may include a desire to earn re-election, the need to maintain prestige as an element of Presidential influence, and a President’s traditional concern for his historical stature.”

Those checks and balances are likely to be tested when the business mogul-turned-president takes office. Public officials below the president and vice-president are subject to conflict of interest rules. “The standards of conduct are government-wide with respect to conflicts of interest, and they are to be found in the code of federal regulations, and whether those basic rules are going to apply throughout from the top down,” Sandstrom said. “How do you enforce rules on others that you don’t abide?”