When Donald Trump starts work in the Oval Office in January, he will have more potential business and financial conflicts of interest than any other president in U.S. history. How transparently and directly he addresses those conflicts will provide an early look at what kind of a leader he plans to be, and what kind of an administration he plans to run.
The private company Trump controls and oversees, the Trump Organization, sits atop a lucrative array of real estate holdings, hotels, golf courses and licensing operations — all of which threw off, perhaps, as much as $557 million in revenue last year. (Trump reported that figure to the Federal Election Commission earlier this year, but it’s never been publicly verified by an independent auditor. Trump could help clear up the matter by releasing his tax returns, but he’s broken with recent presidential tradition by declining to do so.)
While most federal officials working in the executive branch can’t collect outside business income while serving in the U.S. government, longstanding conflict-of-interest laws exempt the president from that stricture. So a president is free to handle private business from the White House if he or she likes.
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Given that latitude, presidents have traditionally placed personal holdings such as stocks and bonds in blind trusts overseen by third parties who make independent investment decisions. The logic there is that the president is free to make official decisions without worrying about how they might appear to affect his or her fortunes.
The bulk of Trump’s wealth, however, is tied up in hard assets housed under the Trump Organization’s corporate umbrella. Those assets don’t lend themselves as easily to a blind trust as securities do. Trump has said that he wants to leave his three eldest children in charge of his company. That will work just fine, Trump has assured anyone who asks.
“I will sever connections and I’ll have my children and my executives run the company and I won’t discuss it with them,” he told Fox News in September. “It’s just so unimportant compared to what we’re doing about making American great again.”
If anyone is still worried that making America great again might give way to making a lot of money, Chris Christie, the New Jersey governor who has become Trump’s aide-de-camp, also has made assurances to the contrary. He ‘s emphasized that a wall will exist between the Trump presidency and the Trump Organization. Trump and his children, Christie said, would likely talk about “grandchildren” instead of deals and money.
“Listen, the father and the children have a lot of things to talk about other than the business,” Christie continued in an interview with MSNBC in September. “These are professional, smart people who will, as we can see with his tax returns, follow the advice of their lawyers and their accountants. And in this case I think any smart lawyer would tell the new president of the United States, ‘You have to absent yourself from your business.’ “
It’s hard to imagine that it could be that easy.
Like his campaign, Trump’s business operations have always been managed by a handful of people — with Trump at the center. He and his family are built into the system.
Plus, how do you approach a global enterprise whose primary value is derived through licensing and naming rights — especially when that name happens to belong to the president of the United States?
And then add this complication: The Office of Government Ethics forbids family members from overseeing blind trusts for those working in the executive branch, so the Trump children might not be eligible to run their family business.
All of this is to say that it is going to be very complicated; one more “unprecedented” item to add to the list of surprises Trump has introduced to the 2016 campaign.
Here, then, are the most immediate potential conflicts that would need to be resolved before Trump is sworn in as the 45th president of the United States:
▪ Domestic holdings: Trump’s hotel, real estate, media and entertainment interests all could theoretically benefit from any number of legislative and regulatory changes that come to pass in Washington. Until the public has greater tax and corporate disclosure from Trump, the extent to which he pursues policy outcomes without considering his own business interests will be hard to discern. We will have no way of knowing, for instance, if an element of tax reform benefits, say, a particular cohort of real estate investors and developers.Trump has called for forbidding those who have served in the executive branch and Congress from lobbying the federal government for five years after leaving office. He also wants to expand the definition of lobbying to anyone whose professional description is “consultant” or “adviser.”On the other hand, it is unclear if this ban will merely clear the field for a new team of lobbyists. For instance, Rudolph Giuliani, a possible Trump abinet member, worked until recently for Greenberg Traurig, a law firm that has lobbied in Washington on casino-related issues on behalf of the Trump Organization.
▪ Overseas holdings: Trump listed more than 500 businesses in his FEC filings and a number of them — which appear to be hotel, golf-course and licensing entities — operate in several countries in Asia, the Middle East and Eastern Europe. Revisions of global trade accords and other financial and diplomatic initiatives that originate in or involve the White House could potentially boost the prospects of some of those businesses.
▪ Banks: Trump has frequently carried large amounts of debt during his career, and his organization apparently owes as much as $650 million dollars currently — a significant portion of which is owed to foreign banks. One of Trump’s biggest lenders is Deutsche Bank. In FEC filings, the president-elect has listed among his debts $100 million in loans from Deutsche. Deutsche extended those loans for a golf-course development and for Trump’s new hotel in Washington, D.C. Deutsche, which is currently sorting through financial troubles and a Justice Department probe, has long been one of Germany’s most prestigious banks and has been intimately involved in the development of the German economy.
▪ Litigation: There are about 75 lawsuits pending that Trump has filed or has had filed against him, including the high-profile litigation and fraud investigation involving Trump University. Trump is going to have to make clear how he intends to resolve them. As my Bloomberg News colleague David Voreacos has reported, some legal experts think most of these cases will be settled. Trump’s presidency may protect him from being called as a witness in others, but it won’t grant him immunity from the suits themselves.
Trump has campaigned on the promise that he’s going to Washington to “drain the swamp” of tenured public officials and ethical conflicts. Separating himself from his own potential muck first would go a long way toward making sure that Trump is serious.
Timothy L. O’Brien is the executive editor of Bloomberg Gadfly and Bloomberg View.