Ethics Authorities Raise Corruption Concerns Over Trump’s Children Running His Businesses And Transition
Research ››› ››› ZACHARY PLEAT
Media are reporting on concerns raised by watchdogs and government-ethics experts that President-elect Donald Trump is creating avenues for corruption by failing to put his business dealings in a true blind trust. Instead, Trump says he will hand over those business dealings to his children -- but his children are also serving on Trump’s White House transition team, where, experts note, they are in a position to choose the people who make regulatory decisions impacting the businesses.
Trump Says He Will Turn Over Businesses To His Children, Then Appoints Them To His Transition Team
Wash. Post: Trump Refused Ethics Officials’ Recommendation To Place Assets In Blind Trust Like “Many Modern Presidents” Have, Says He Will Give Companies To His Children To Run. The Washington Post reported on November 9 that many recent presidents have gone beyond legal requirements and “placed their assets in ‘blind trusts,’ run by third-party managers who keep complete control.” During the campaign, ethics officials urged President-elect Donald Trump “to pledge he would sell his businesses or cede them to an independent authority,” but he “has refused to make such a pledge, saying only that he would give companies to his children and executives to run.” [The Washington Post, 11/9/16]
Trump Placed His Children On His White House Transition Team. Reuters reported that “daughter Ivanka and sons Eric and Donald Jr. and son-in-law Jared Kushner accounted for a fourth” of Trump’s 16-member transition team, which he announced after the election. [Reuters, 11/12/16]
Watchdogs And Experts In Government Ethics Say Trump’s Decisions Open Door To Corruption
CNN: Ethics Experts Say “No President Has Ever Come Into Office With Such Potential Entanglements.” A CNN Money article reported that ethics experts say Trump’s arrangement to hand over control of his businesses to his children “doesn’t go far enough to ensure that Trump’s presidential duties don’t clash with his money-making dealings.” The article further reported that “ethics experts, from both sides of the political aisle, say that no president has ever come into office with such potential entanglements. And that opens Trump to scrutiny and potential corruption allegations -- even if he hands control to his children.” [CNN Money, 11/13/16]
Wash. Post: Trump’s Children Now Have Control Over Regulatory Personnel Who Could Affect Trump Businesses. The Washington Post reported that ethics watchdogs and political law experts are skeptical of Trump’s moves, with Meredith McGehee of the Campaign Legal Center calling his “blind trust” a “one-eye-closed-and-one-eye-open trust.” The paper says others “note that his children will now also have control over the people who will be put in charge of regulatory decisions that could affect his multi-billion-dollar fortune.” From the November 11 article:
Watchdogs who were critical of Trump's "blind trust" in the first place say this proves that the lines between President Trump and his money will be too fuzzy under this setup.
"The fact that they have been included as part of the transition team just shows how inappropriate their role in bridging the gap between him as a businessman and politician is," said Meredith McGehee, a strategic adviser at the Campaign Legal Center. "It’s a clear demonstration that there is no firewall between the two."
McGehee and others have also cast doubt on the idea that the so-called "blind trust" is actually blind at all. She calls it a "one-eye-closed-and-one-eye-open trust."
In addition to blurring the line between Trump's presidency and his money, skeptics note that his children will now also have control over the people who will be put in charge of regulatory decisions that could affect his multi-billion-dollar fortune.
Kenneth Gross, a political law expert at Skadden, Arps, Slate, Meagher and Flom, said it would be okay for Trump to involve his kids in the transition, but their dual roles are problematic.
"If the children run the so-called blind trust and also serve in some governmental capacity, formally or informally, this would further exacerbate potential conflicts and ethical issues caused by not separating his business holdings from his governmental functions," Gross said.
Added Karen Hobart Flynn, president of Common Cause: "Having your children run your business is not a blind trust no matter what his attorneys choose to call it. And having those same children involved in the transition only compounds the conflict." [The Washington Post, 11/11/16]
NPR: Former FEC Chairman Trevor Potter Calls “Number of Problems” Raised By Trump Business Conflicts “Mind-Boggling.” Former FEC chairman Trevor Potter called the “number of problems” that could emerge from Trump’s business conflicts “mind-boggling.” Potter pointed to Trump’s new Washington, D.C., hotel noting that any changes in the lease would be made through the head of the General Services Administration -- whom Trump will appoint. Potter also highlighted conflicts emerging from Trump having loans from foreign banks that “his administration will regulate,” as well as Trump’s “pending lawsuits working their way through federal court.” From the November 10 edition of NPR’s Morning Edition:
Trump's new hotel on Pennsylvania Avenue in Washington, not far from the White House, is built in a grand old federal post office building. He had to negotiate with the General Services Administration to build it, and the lease allows him to renegotiate the terms under certain conditions.
Trevor Potter, former head of the Federal Election Commission, says that represents a big conflict of interest for the president-elect.
"You're going to have a situation where the president appoints the head of GSA, and then the president's most visible asset in Washington is potentially subject to negotiation with that person over the terms of the lease and any changes in the lease," Potter says.
Potter says he's surprised there wasn't more attention focused during the campaign on the many potential problems that Trump's businesses might create. The president-elect has borrowed from foreign banks his administration will regulate. He does business in countries that are vital U.S. allies. And he has lots of pending lawsuits working their way through federal court.
"The number of problems is actually sort of mind-boggling," Potter says.
Just as important, Potter says, other countries could end up giving the Trump Organization special treatment in an effort to influence him.
"If his daughter or his son-in-law turns up in a foreign capital to negotiate a business deal on behalf of the Trump business, that foreign government is going to certainly think they're doing business with the family of the president of the United States, which indeed they will be," Potter says. [NPR, Morning Edition, 11/10/16]
CNN: Bush White House Ethics Lawyer Richard Painter Says Trump’s Actions Don’t Fulfill Constitutional Prohibitions On Federal Office Holders Receiving Foreign Gifts. Richard Painter, the chief White House ethics lawyer for President George W. Bush, told CNN that Trump’s planned actions are insufficient and that he must “unwind the business relationships with any foreign governments or company controlled by foreign governments” by the time he’s sworn in as president:
Ethics lawyers say Trump should follow predecessors Jimmy Carter, Bill Clinton and George W. Bush and use a blind trust.
That would require Trump to sell his assets and put the proceeds in the hands of a trustee with "no preexisting business relationship" with him, said Richard Painter, the chief White House ethics lawyer for former President George W. Bush. "It certainly can't be your own family members."
Painter said that Trump's family plan won't solve problems caused by a constitutional prohibition on federal office holders from accepting a "present, emolument, office or title" from a foreign country. Trump's business holdings are complex and global in their reach.
"No matter what, they are going to have to unwind the business relationships with any foreign governments or company controlled by foreign governments," said Painter. "That really needs to be done between now and January 20th." [CNN Money, 11/13/16]
NPR: Public Citizen’s Robert Weissman Says “There’s Zero Reason To Expect” Trump And His Children Wouldn’t Talk About Business Dealings. In a report on NPR, Public Citizen president Robert Weissman criticized Trump’s move to put his children in charge of his businesses, stating, “The idea that there’s some independence there is laughable.” From the November 10 edition of NPR’s Morning Edition:
Trump promises he won't interfere with the decisions his kids make, or even talk to them about business.
Robert Weissman, president of the liberal advocacy group Public Citizen, finds that hard to swallow. "The idea that there's some independence there is laughable," he says. "There's zero reason to expect they wouldn't talk about those issues, given everything we know about how they relate and how those businesses are run."
Weissman says even if Trump never talks to his children about company decisions, he built the company himself, so he's all too aware of what kinds of businesses he operates. That can influence the decisions he makes as president. Would he, for instance, want one of his regulatory agencies to fine a big German bank that he owes money to? [NPR, Morning Edition, 11/10/16]
The Guardian: Former FEC Chairmen Say Trump’s Arrangements Are Unprecedented And Inadequate. The Guardian reported that former FEC chairmen Karl Sandstrom and Robert Lenhard said Trump’s arrangements “were unprecedented and present a host of issues,” adding that the setup was “in no way a blind trust”:
[A]ccording 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.” [The Guardian, 11/12/16]