Trump's Vast Web of Conflicts: A User's Guide

By Darren Samuelsohn, Politico

16 November 16

 

onald Trump’s new hires should brace themselves for a full immersion in government ethics school.

They’re going to need it given the president-elect’s sprawling business empire and his lack of interest in selling off his companies and properties outright.

The Republican’s appointees will be running departments and agencies with direct ties to their boss’ businesses and wider political interests, from an IRS audit into his tax records to National Labor Relations Board enforcement of cases involving his hotel workers to the FBI’s investigation into the suspected Russian cyberespionage aimed at influencing an election that Trump just won.

Unlike past presidents who took office with considerable wealth, from George H.W. Bush to John F. Kennedy, the setup Trump is creating for his financial assets — leaving his three oldest adult children and a “team of highly skilled executives” in charge while he’s in the Oval Office — appears likely to expose large numbers of people the president hires to an unprecedented set of conflicts spanning his entire federal government.

Asked for comment about the incoming GOP administration’s potential conflicts, spokeswoman Hope Hicks pointed to a prior Trump Organization statement about the planned transfer of power to Trump’s kids that vaguely explained how the final structure will “comply with all applicable rules and regulations.”

Here’s POLITICO’s guide to the uncharted waters Trump and his new administration will be navigating:

Foreign affairs:

Trump has significant business interests in at least a dozen countries, though the full extent of his operations is unknown, in part because he has refused to release his tax returns.

The Republican either owns or has leased his name to hotels, golf courses and other properties in countries ranging from Azerbaijan to South Korea. The Trump Organization’s website also lists at least a dozen real estate holdings abroad, though it appears some, such as a golf club in Dubai, are still in the works. Trump also has a line of commercial goods, from clothing to furniture, largely manufactured overseas.

How Trump will approach the countries in which he is invested is unclear. He’s talked of banning Muslims from entering the United States, but he does business in Muslim countries. He appears willing to launch a trade war with China by imposing large tariffs and labeling the Chinese currency manipulators, but some of his goods are made there.

Trump also has spoken kindly of Russia (he talked by phone with President Vladimir Putin on Monday, the Kremlin announced), while claiming he has no businesses there. But there are reports that many of Trump’s businesses in other parts of the world are affiliated with Russian financiers, and his son Donald Jr., was quoted by the trade publication eTurboNews telling a real estate conference this in 2008: “Russians make up a pretty disproportionate cross-section of a lot of our assets. … We see a lot of money pouring in from Russia.”

So long as the Trump business empire remains intact, said Norman Eisen, President Barack Obama’s former White House ethics lawyer, the Republican and his appointees — from secretary of state to all of his U.S. ambassadors — will be shadowed by the conflict-of-interest cloud for pretty much every foreign policy move they make.

“All of us are going to have the question when he’s making decisions about the countries in which he has businesses, or assets or liabilities: Is he making those decisions in order to advance the public interest or his own private financial interests?” Eisen said. “As long as he has this web of international financial ties, we’re always going to have the question.”

Richard Painter, the former top ethics lawyer in George W. Bush’s White House, predicted Trump’s foreign business dealings could also lead to his political undoing. Because a piece of Trump’s real estate holdings — the Avenue of the Americas office building in Manhattan — involves a loan from the Bank of China, the new president could be vulnerable to charges of violating the Constitution’s Emoluments Clause, which bans U.S. government employees from accepting payment by foreign countries or the companies they own.

“All that needs to be unwound between now and Jan. 20 or he’s going to be accused of taking payments from foreign governments, and I can guarantee you the Democrats will use that as an excuse to impeach him when they get control of the House,” said Painter, who added that the prospects of a Democratic takeover are well within recent historic norms for a first-term president in a midterm election.

Banking:

Trump’s vast real estate holdings are propped up by millions of dollars in debt held by the world’s largest banks, including Deutsche Bank, Goldman Sachs and the Bank of China.

Those financial arrangements can make things especially tricky for Trump as Deutsche continues to navigate the Justice Department’s attempts to make it pay as much as $5 billion to settle claims that it misled investors when it sold mortgage bonds backed by risky loans. It’s unclear whether this case will be resolved before the Obama administration leaves office, and it could end up in the hands of Trump’s team.

The president-elect’s broader ties to the banking industry as a whole remain murky because his tax returns aren’t public. But with the Republican promising during his campaign to loosen banking regulations tied to the Dodd-Frank law, ethics lawyers are warning that the president could get in trouble if he’s seen as doing favors for an industry that’s helped him build his wealth.

“Is he doing that because he believes it’s the right thing or is he going to do it for better terms and easier lending for Trump deals?” Eisen said.

Law enforcement:

Trump’s Justice Department will be at the epicenter for politically tinged ethical questions, no matter how much its leaders try to stay above the fray.

The FBI, which dropped a pre-election bombshell regarding its investigation into Hillary Clinton’s email server, is still examining Russia’s suspected cyberespionage around the presidential race. On top of that, current and former DOJ, FBI and intelligence sources told POLITICO last month that federal law enforcement was looking into the connections between Russia, the release by WikiLeaks of Clinton campaign chairman John Podesta’s stolen emails, and questionable moves by several operatives who worked for and around the Trump campaign.

Trump will get to put his biggest imprint on DOJ through his nomination of a new attorney general. He’ll also have a big say in the direction of the FBI depending on whether he keeps Director James Comey around. Regardless of who he picks for those leadership slots, Eisen said, the DOJ leaders will be dealing with conflict of interest challenges if they’re “made to pursue a political agenda” in following through on the Republican’s campaign promise to prosecute Clinton over her use of a private email server, as well as in how they’d handle evidence if law enforcement went down any paths that weren’t favorable to Trump.

The Trump Justice Department also will be dealing with the interpretation of laws against racial and gender discrimination that could influence a variety of lawsuits facing the president’s businesses, as well as future cases.

Acting through the Justice and Labor departments, as well as the Equal Employment Opportunity Commission, the Obama administration has generally favored a robust enforcement of those laws, including readings that granted protection to transgender employees. But the Trump administration might be inclined to take a narrower view of those laws, something that could aid many businesses, including Trump’s.

Trump’s tax returns:

Throughout the presidential campaign, Trump fended off demands to see his tax returns because he’s under an IRS audit. He repeated the claim in an interview that aired Sunday on CBS’ "60 Minutes," calling it a “routine” matter that he reasoned the public wasn’t concerned about given his victory at the ballot box. “At the appropriate time, I will release them,” Trump said.

But as a practical matter, that IRS audit is being done by a Treasury Department that will soon have at its helm a Trump appointee. Legally, the audit won’t change now that Trump is president-elect. But former government officials explained that it will be reviewed at a higher level and any adjustment will be triple-checked.

Trump’s taxes could dog him throughout his presidency should he continue to resist making his returns public.

Granted, there are laws on tax-return confidentiality that do give the president the same protections as any other citizen — Trump’s returns won’t be automatically disclosed. But he could find himself in oversight cross hairs, especially if Democrats regain control of a branch of Congress while he’s still in office. That’s because the chairmen of the House Ways and Means Committee, Senate Finance Committee and Joint Committee on Taxation can all submit written requests for the records, and the Treasury Secretary is required to turn over a taxpayer’s return to a closed executive session of the committee. In addition, state attorneys general could also initiate audits of Trump, since they don’t defer to the IRS.

Trump’s D.C. hotel:

Trump’s transition team is already dealing with a major conflict over the luxury hotel the president-elect’s company just opened in the historic Old Post Office Pavilion a few blocks from the White House.

At issue is a 60-year lease the General Services Administration entered into in 2013 with the Trump Organization, long before its CEO was a presidential candidate.

With Trump preparing to be sworn in, his company’s role in running a property owned by the federal government raises both ethical and legal questions.

For starters, Trump will soon get to nominate a new leader for the GSA. Ethics experts say that move alone would put the government in a pickle since it would not be able to negotiate in good faith with a company affiliated with the president.

In an op-ed published Tuesday in The Washington Post, government procurement experts Steven Schooner and Daniel Gordon said the conflict of interest was so significant that the GSA “must terminate” the lease by Inauguration Day. They said U.S. regulations prohibit the government from entering into contracts with federal employees. And they cited the Trump Organization’s lease itself, which carries similar language blocking such an arrangement.

A GSA spokeswoman said the agency “plans to coordinate” with Trump’s transition team “to allow a path to be put in place to identify and address any potential conflict of interest relating to the Old Post Office building.”

Trump’s employees:

Trump’s business practices are also front and center with the NLRB, an independent agency charged with enforcing national labor law.

There are at least nine pending charges before the board involving Trump’s presidential campaign and his Las Vegas hotel. The president-elect’s most recent encounter, coming right before the election, involved a ruling against the Trump International Hotel Las Vegas, co-owned by the president-elect with casino magnate Phil Ruffin, that determined the business violated the law by refusing to bargain with a union representing more than 500 housekeeping, food and beverage and guest workers.

Going forward, some labor and ethics experts are concerned the five-member board will face an unprecedented quandary as it deals with cases involving the next president.

“They’re going to have to come up with a procedure for handling Trump cases,” Painter said.

Added James Gross, a labor law and history professor at Cornell: “There’s never, in the board’s history … been an occasion where, because of some conflict of interest and the president owning some business … that had a case before the board, where that even came up, let alone trying to figure out what to do about it.”

Pipelines and permits:

Trump ran for president vowing to eliminate regulatory red tape, and one of the early items on the GOP-led Congress’ to-do list includes rolling back a range of Obama administration environmental rules.

That should all sound good to business ventures connected to Trump, a longtime property developer who hasn’t shied away from battling green groups and local community activists in the past over environmental permits.

There’s actually one big project on the drawing board that’ll probably be waiting for Trump, the controversial Dakota Access pipeline. On Monday, amid nationwide protests, the Army Corps of Engineers put construction of the $3.7 billion energy project on hold, a move that could punt the matter to the incoming administration.

Environmentalists say they’re concerned Trump will put a finger on the scale in favor of the energy project and noted the Republican’s May 2016 financial disclosure filing included a line declaring between $15,001 to $50,000 worth of investments in the Dallas-based company seeking to build the pipeline, Energy Transfer Partners. That’s actually down from an investment he listed in an earlier form that was worth $500,001 to $1 million, a drop that appears to be linked to a decline in his holdings, as well as a 50 percent fall in the company’s stock price that ended at the beginning of this year.

It’s unclear just how much Trump-affiliated properties will grow during his presidency. CNBC last week cited a source close to the Trump family suggesting the organization was not planning “to do a lot of new deals or acquisitions” during the Republican’s administration but would “let the existing assets grow organically.”

Still, greens say they wouldn’t be surprised if Trump’s administration makes policy changes or permitting decisions that benefit the president’s bottom line.

“Real estate developments routinely tangle with federal and state environmental regulators,” said Michael Gerrard, a Columbia Law School environmental professor who more than a decade ago successfully fought a Trump golf course project in Westchester County, New York. “It’s easy to envision a circumstance where a federal regulator looking at an application from the Trump family would get extremely nervous.”