ABC News(WASHINGTON) — If President-elect Donald Trump decides not to liquidate his assets and put his money in a blind trust, he won’t be violating the law, but breaking with 40 years of political norms set by his predecessors.
Meanwhile, his ownership in 564 companies around the world means Trump will have an unprecedented potential for business and financial conflicts-of-interest.
Every president since Jimmy Carter and the passage of the 1978 Ethics in Government Act has moved their assets into a blind trust, or liquidated them before entering office.
President Obama, for example, put his money in U.S. Treasury bills. Jimmy Carter put his peanut farm in a blind trust, under supervision of a trustee who was free to sell it.
By contrast, Donald Trump has indicated that he will not set up a blind trust or liquidate assets but instead turn management over to his adult children, while dismissing questions about his business ties.
Prior to the election it was well known that I have interests in properties all over the world.Only the crooked media makes this a big deal!
— Donald J. Trump (@realDonaldTrump) November 22, 2016
“We are in the process of vetting various structures with the goal of the immediate transfer of management of The Trump Organization and its portfolio of businesses to Donald Jr., Ivanka and Eric Trump along with a team of highly skilled executives. This is a top priority at the Organization and the structure that is ultimately selected will comply with all applicable rules and regulations,” a spokesperson for the Trump Organization told ABC News on Monday.
Trump told the New York Times on Tuesday that he’d “like to do something” to distance his business dealings and government responsibilities.
Conflict-of-Interest Law Doesn’t Apply to Trump, But Ethics Experts Still Urge Compliance
The president and vice president are exempt from a conflict-of-interest law that prohibits other federal officials from participating in government matters in which they or their family has a financial interest.
“You don’t want the president, if facing an international crisis, to say, ‘Sorry, I have a conflict of interest,’” Norman Eisen, formerly President Obama’s White House counsel and “ethics czar,” told ABC News.
Trump told the New York Times Tuesday that “the law’s totally on my side, the president can’t have a conflict of interest.” Adding that “in theory” he could continue signing checks at his company, but he is “phasing that out now” and giving responsibilities to his kids.
Nevertheless, every commander-in-chief over the last 38 years has voluntarily liquidated their assets or put together blind trusts, to prevent even the appearance of impropriety.
“It’s the right thing for him to do for his own reasons, as well as the country’s reasons,” Richard Painter, a University of Minnesota law professor and chief White House ethics lawyer during President George W. Bush’s administration, said in an interview.
“He could, legally, manage his business while in the White House. I don’t think he can do that politically, but he can do that legally,” said Trevor Potter, an attorney and former Republican Federal Elections Commission chairman.
“The threshold decision for Mr. Trump is whether he wants to treat the presidency as a full-time job,” added Matthew Sanderson, a Republican lawyer with Caplin & Drydale, who suggested that Trump sell some assets to third parties, sell the remaining core business to his children and place all proceeds in a trust.
In a Nov. 17 letter to the president-elect, 19 ethics lawyers and watchdog groups called on Trump to place his business assets and investments into a blind trust or equivalent.
“This means that control of these assets would be transferred to an independent trustee who would sell the assets and place the proceeds in investments which do not create conflicts of interest and which are not disclosed to you,” the letter stated.
Alternatively, these experts suggested, he could convert the Trump Organization businesses into cash and buy treasury bills and widely diversified mutual funds.
That liquidation process -– a leveraged buyout, rather than a series of asset-by-asset sales -– would be onerous and could take months, experts told ABC News. But the process could potentially be finished by the inauguration.
A quicker but less ideal solution ethically, would be for Trump to put his assets in a blind trust run by a business person he does not have a relationship with, instead of his children.
In theory, Trump could bring someone into Trump Tower and sign over his assets, Painter said.
But Trump would still invite scrutiny into the Oval Office because he would still have a sense of his portfolio and the assets, even if he is not directly supervising or managing them.
“You can almost see a daily, certainly a weekly question, whether some action he has taken … was designed to benefit himself or his family,” Painter said.
Ethics experts said Trump’s proposed transfer of his businesses to his children would not effectively prevent conflicts of interest.
“The proposal he has made … is an alternative that no ethics lawyer would suggest,” Potter said. “It’s a recipe for disaster for him and for his administration.”
What Ethics Laws Could Trump Violate?
Under the Emoluments Clause of the U.S. Constitution: “no person holding any office of profit or trust” should accept any “emolument, office or title, of any kind whatever, from any king, prince or foreign state” without congressional approval. Legal scholars interpret this to prohibit the President from accepting gifts or favors from foreign governments or foreign state-owned companies, banks and sovereign wealth funds without a waiver from Congress.
What might this look like? Perhaps a foreign government agrees to build an access road to an overseas Trump Hotel as a special favor. Or Trump’s companies receive a favorable loan from the Bank of China, which is a tenant of Trump Tower in New York City. Or foreign diplomats and members of royal families might pay a premium for space in a Trump property. These might violate the law if Trump got a sweetheart business deal.
But legal experts dispute how and if violations of the Emoluments Clause could even be enforced.
Painter says Congress could initiate impeachment proceedings, shining a spotlight on the House Judiciary Committee that kicks off the process. Lawmakers could also amend the Foreign Gifts Act to send a preemptive message to Trump – which the leaders of the House and Senate majorities would be responsible for shepherding through the U.S. Capitol.
While the White House Counsel and the Justice Department (which could potentially appoint an Independent Counsel) might help guide Trump on ethics matters, “ultimately the only real check would be the U.S. Congress,” said Paul Rothstein, Georgetown University Law Center. Congress has the power to investigate, impeach, or re-enact an Independent Counsel statute as it did during Watergate, Iran Contra, and the Bill Clinton investigation, Rothstein added.
But if his children run the businesses without a blind trust, ethical violations “would be exceedingly difficult to police,” according to Rothstein.
Eisen says it’s not clear if anyone would have standing in court to challenge Trump, although a business competitor – another developer, or hotel, for example – could potentially have standing. (Other ethics experts and lawyers disagree.)
As president, Trump will also be required to file annual financial disclosures – the same forms he filed as a candidate – under the 1978 Ethics in Government Act, and could be sanctioned for any false statements. The filings are reviewed by officials at the Office of Government Ethics.
Bribery Laws Could Also Apply Trump must also abide by anti-bribery laws prohibiting him from taking anything for an official act.
In the two weeks since he won the presidential election, Donald Trump has repeatedly appeared to mix his personal and official business – from meetings with overseas business partners eager to congratulate the new president-elect, to conversations made with world leaders and his family members.
While Painter says those exchanges, as reported, don’t appear to legally implicate Trump in any way, he believes they tread “dangerously close” to appearing to establish a quid-pro-quo.
“I think it’s a risk whether you’re president or you’re about to become president,” Painter said. “As he moves into office, he has to be more careful.”
He could also get in legal hot water if any member of the Trump Organization mixes company business with government business, or even tries to leverage Trump’s new status.
“That’s going to be a trigger to investigate whether somebody is committing a bribe,” said Painter.
The task of investigating any wrongdoing would fall to the Department of Justice. Trump has nominated Sen. Jeff Sessions, R-Alabama, a former U.S. attorney and the first senator to back his presidential bid, for the position of attorney general.
“We have never, ever, in U.S. history had a president with either the size or the complexity or the international aspect of the holding of the president-elect,” Potter said.
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