World·Analysis

President-elect Trump might regret not selling all his businesses

Donald Trump is right. As president, he would be exempt from conflict of interest laws and wouldn't be legally required to sell his businesses and put his assets in a blind trust. But, as Keith Boag explains, doing so could be a smart move for his presidency.

Trump isn't legally required to put his assets in a blind trust, but his predecessors did

U.S. president-elect has demonstrated a knack for making decisions that benefit his business interests, and that has some worried 10:05

This was the week president-elect Donald Trump had promised to finally reveal how he'll untangle himself from the many conflicting interests between his global business empire and the presidency.

He'd scheduled a press conference with his children for Thursday.

Instead, in a move familiar to those still waiting to see his income tax returns, Trump put the announcement off until next month.  

In an email dripping with superlatives about his business and political successes — "iconic properties" "world-class cabinet" — Trump spokeswoman Hope Hicks said his legal team simply needs a few more weeks to work out the details of his disentanglement.

"Busy times!" the president-elect tweeted.

It's thanks to Trump's Twitter account, though, that we have more certainty about what NOT to expect from him next month. He's not going to give up his businesses or put them beyond his reach. 

Yes, he will leave the businesses to focus full time on being president, but his sons, Donald Jr. and Eric, "plus executives," will manage them. "No new deals will be done during my term(s) in office," he tweeted Monday night.

That's not very different from what Trump said during the campaign when he mused about putting his empire into a blind trust that would be managed by the children from his first marriage.

"Well, I don't know if it's a blind trust if Ivanka, Don and Eric run it," he coyly pondered during a primary debate. "Is that a blind trust? I don't know."

Ivanka is out of that equation now and likely to play a more valuable role in the White House, but to answer Trump's rhetorical question: no, what he has in mind is not a blind trust.

Trump's sons, Donald Jr., left, and Eric, will run his businesses while he's running the country. (Jim Young/Reuters)

Trump will still know what all of his business interests are and he'll be in regular and intimate contact with the people running them. They are, after all, his family.

Together they will still share the same interests in the Trump businesses they have now — interests that might conflict with the public interest.

Last month at an editorial board meeting with the New York Times, Trump said, "The law is totally on my side, meaning the president can't have a conflict of interest."

He seems to have made this a guiding principle even though the law is the lowest possible standard of acceptable behaviour.

Examples from the past

It's true, as president, Trump would be exempt from conflict of interest laws, but that does not mean he couldn't have a conflict of interest. It means only that he would be acting legally even if he was acting unethically.

Presidents Lyndon Johnson, Jimmy Carter, Ronald Reagan, George H. W. Bush, Bill Clinton and George W. Bush all put their assets into blind trusts even though they weren't legally required to do so. (Barack Obama did not because his assets consisted mostly of treasury bonds and mutual funds that were deemed unlikely to create a direct conflict of interest.)

In Canada, when Paul Martin — not quite Trump but a wealthy man by any reasonable standard — sought the Liberal leadership in 2003, he faced questions similar to those hovering over Trump now.

Paul Martin took several steps to prevent even the appearance of a conflict of interest between his steamship business and his role as prime minister. (Tom Hanson/Canadian Press)

Martin owned several businesses, some of which, notably Canada Steamship Lines (CSL), were routinely affected by government regulations. 

Before he became prime minister, Martin gave his businesses to his three sons. The federal ethics commissioner required that Martin recuse himself from decisions affecting shipping policy. The Privy Council Office adopted protocols to ensure any decisions relevant to Martin's family business interests never got to the prime minister. And CSL had a management team separate from its owners.

For some of Martin's political opponents that still wasn't enough. Yet those kinds of remedies aren't even available to Trump, says Andrew Stark, a professor of political science at the University of Toronto.

"The president of the United States, for constitutional reasons, can't recuse himself from any policy decision. He is the executive in the constitution. He couldn't do what Paul Martin did here and hand those decisions off to another cabinet minister."

The Washington hotel

The popular example of how tangled Trump's interests are is the new hotel he opened on Pennsylvania Avenue in Washington, D.C., in October.

A few blocks from the White House, the hotel is a renovation of the historic Old Post Office building, which is owned by the federal government.

'The president of the United States, for constitutional reasons, can't recuse himself from any policy decision. He is the executive in the constitution.' - Andrew Stark, professor of political science at the University of Toronto

The Trump International Hotel has a 60-year lease with the federal General Services Administration (GSA). Under its terms, no elected official of the U.S. government "shall be admitted to any share or part of this lease." So the Trump Hotel would be ineligible as a tenant in the Old Post Office from the moment the hotel's owner becomes president.

But as president, Trump would effectively be his own landlord. He gets to appoint the head of the GSA and could choose someone willing to rewrite the terms of the hotel's lease.

A demonstrator in a Trump costume outside the grand opening of the Trump International Hotel in Washington back on Oct. 26. (Jonathan Ernst/Reuters)

Plus, the $200-million conversion of the Old Post Office into a Trump hotel was financed largely by Deutsche Bank, a lender with which Trump has done billions of dollars in business over the past 20 years.

Deutsche Bank is currently negotiating with the Department of Justice about how to resolve issues related to its lending practices prior to the 2008 financial crisis. Billions of dollars in restitution could be at stake. Government negotiators will ultimately report to people appointed by Trump, whose business has long been beholden to Deutsche Bank.

The hotel is also competing for guests among the sizable diplomatic community that regularly visits D.C. Those wishing to curry favour with the new administration might consider it a worthwhile gesture to book into the hotel with the president's name over the door.

And the hotel is just one of hundreds of businesses Trump owns.

Trump's options

So what's a poor billionaire to do?

The advice of the watchdog group Citizens for Responsibility and Ethics in Washington is simple and unequivocal: get rid of it all. Sell it — and not to a family member — then put the proceeds into a truly blind trust managed by someone who is truly independent.

By choosing not to do that, Trump will keep the controversy alive every day of his presidency. While he's not legally required to divest and put his assets in a blind trust, he is absolutely required to make decisions in the public interest and not his own. 

And if his friends in the Republican-dominated Congress ever become his enemies and are tempted to impeach and replace him with their friend, vice-president-elect Mike Pence, that might be the first place they look for grounds to make their case.

As Trump should know, nothing is too far-fetched anymore.

About the Author

Keith Boag

American Politics Contributor

Keith Boag writes about American politics and issues that shape the American experience. Keith was based for several years in Los Angeles and now, in retirement after a long career with CBC News, continues to live in Washington, D.C. Earlier, Keith reported from Ottawa, where he served as chief political correspondent for CBC News.

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