Figuring out how to eliminate conflicts of interest for an incoming U.S. president is a normal part of the transfer of power.
But president-elect Donald Trump presents some unusual challenges.
“We’ve never had quite an entanglement at this level,” says Kenneth Gross, a Washington-based political law expert who has counselled many high-profile politicians.
Trump arrives in the Oval Office with vast real estate holdings bearing his name all over the world, posing an unprecedented challenge of separating his personal interests from his political duties.
The Trump Organization’s corporate website lists international real estate holdings and properties in Canada, Panama, Uruguay, India, the Philippines, Turkey and Brazil, as well as golf resorts in Scotland, Ireland and the United Arab Emirates.
His foreign business interests pose a significant conflict of interest concern, according to Gross, because international dealings come with a genuine legal risk.
“[Trump] has to be sure that he’s not getting any benefit from those entities [as president] because that’s actually a violation of the U.S. Constitution,” Gross said.
Paul Rothstein, a law professor at Georgetown University in Washington, says that when a politician has global business enterprises that require governmental permissions, “it’s very important to put those businesses at arm’s length.”
One area of concern is the fact that Trump owes an estimated $364 million US to German financial giant Deutsche Bank, which is currently in settlement negotiations with the U.S. Department of Justice as a result of a mortgage securities investigation.
Gross points out that Trump also has business interests in countries considered to be “unfriendly” to the U.S. In August, a New York Times investigation revealed that his real estate companies owe hundreds of millions of dollars in debt, including to the Bank of China.
Trump was also building a hotel in Baku, Azerbaijan, but references to that property no longer appear on his corporate website. According to The Associated Press, the local partner in the project, Anar Mammadov, is the son of an Azerbaijani minister suspected by U.S. diplomats of corruption and money laundering for Iran’s military.
Trump’s interests in Turkey, including Trump Towers Istanbul, could also be problematic. Tensions with the U.S. ally have risen since a failed coup attempt in July led to a crackdown on the country’s military and mass arrests.
New Trump hotel in Washington
In October, the president-elect officially opened the Trump International Hotel in Washington, D.C. The hotel is a redevelopment of the city’s historic Old Post Office. Trump’s corporation leases the property from the U.S. federal government.
Gross and Rothstein acknowledge issues could arise in the ongoing administration of the lease arrangement.
“When there’s a landlord-tenant relationship, there are often disputes between them and then they have to reach some kind of mutual arrangement,” says Rothstein.
Rightly or wrongly, the public could suspect Trump of using his presidential leverage to influence the negotiations involving this property. It’s essential that the administration ensure there is no pressure to show favouritism to the hotel compared to other tenants leasing property from the government, Gross says.
Setting corporate tax rates
Some believe there is an inherent conflict of interest when a business mogul becomes president, because of his or her influence over corporate tax rates.
Gross says that line of reasoning is “probably going too far.”
He says that if the Trump administration makes a decision that affects businesses broadly, “it would be unfair to say, ‘Well, the real motivation for reducing taxes was to benefit his corporate enterprise or him personally.'”
Especially, he says, if the policies are consistent with what Trump promised during the presidential campaign.
Being a successful businessperson should not preclude someone from seeking the presidency, says Rothstein. He notes that the people who voted Trump into office knew his background.
The best way for Trump to guard against potential conflicts of interest is to put his financial holdings into a “blind trust,” Rothstein says, in which a trustee takes over the management of Trump’s portfolio and does not consult him about business matters while he is president.
Trump’s proposed plan to turn over his business operations to his children is not a blind trust and “certainly not a perfect solution,” Rothstein says.
“But it’s better than nothing.”
Pinpointing all of Trump’s potential conflicts of interest is a difficult task, says Gross, because “we don’t know” the full extent of his personal and business dealings.
Trump has not made his tax returns public, something presidential candidates normally do.
That means the public may not know about all of Trump’s financial assets and liabilities.
But the fact is, many of Trump’s potential conflicts of interest are likely more of a public perception problem than actual legal violations, because U.S. presidents and vice-presidents are exempt from many of the conflict of interest regulations governing other members of the executive office and Congress.
“The president and vice-president are quite free of any specific laws that might prevent or regulate conflicts of interest,” says Rothstein.
The thinking, he says, stems from the notion that if voters democratically elect someone to be president, they must believe he or she can be trusted to handle any potential conflicts of interest.
It also assumes that the U.S. electorate wants people “of accomplishment” to run for president, Rothstein said, and that those people shouldn’t be discouraged because they’re concerned about their financial interests.
“These laws go back literally to the beginning, where the president’s duties were considered to be so broad that they couldn’t be regulated,” Gross says.
“I mean, we have presidents who were advising on slavery in the 1800s who owned slaves.”
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