Day 6

Donald Trump's business holdings present an unprecedented potential for conflicts of interest

As a candidate, Donald Trump sat atop a sprawling business empire, one that's indebted to foreign banks, doing business in counties he will now influence as President and deeply affected by the tax code he will now have power to shape. Former elections enforcement official Ken Gross tries to unpack the web of potential conflicts of interest.
U.S. President-elect Donald Trump speaks to the press following a meeting at the Capitol in Washington, D.C. on November 10, 2016. (NICHOLAS KAMM/AFP/Getty Images)

by Brent Bambury (@notrexmurphy)

When Mitt Romney was running for President, he told the American people his personal wealth had a value of $250 million USD. Shortly after he made this disclosure, he agreed to put it all into a blind trust overseen by a federal official and to sell off any of his holdings "that are not fully compliant with federal disclosure and other rules."

The federal oversight of the trust was important. Romney was criticized for a trust he'd set up when he was Governor of Massachusetts because it was overseen by his personal lawyer and associate. A casual exchange of information seemed plausible. Romney needed to reassure the public that as President, his blind trust would be airtight.

Donald Trump is not taking that approach.

Two days after he won the election, Trump's lawyer Michael Cohen explained Trump would be putting his business and his assets in a blind trust controlled by his children Donald Jr., Ivanka and Eric.

"They're really intelligent. They're really qualified," Cohen told CNN. "Everything will be done legally. He's not interested in the company anymore."

As a candidate, Donald Trump sat atop a sprawling business empire that's indebted to foreign banks, doing business in countries he will now influence as President and deeply affected by the tax code he will now have power to shape.


Not so blind

"I don't know what law he's referring to," said Kenneth Gross  in response to Cohen's statement.

Gross is a Washington lawyer and a leader in the field of ethics and election law. He joined me on CBC Day 6 to talk about the issues around America's business mogul President Elect.

Gross says there are problems with the blind trust proposed by Cohen on CNN.

"The only law for blind trusts that applies to the executive branch of the U.S. government is one that requires the executive branch official to have an independent trustee. And this is how it was done by prior presidents Ronald Reagan, George H.W. Bush, George W. Bush."

"And your children don't qualify as independent trustees."

You can't say, 'Here kids, run the property, we're good to go.'- Kenneth Gross

Trump can't be forced to comply

In fact, the law that mandates a blind trust with an independent trustee for members of the executive branch makes an exception for the President and Vice President.  When the Bushes and Reagan and Romney all complied with it, it was for their own protection and to gain the confidence of the public.

Trump is not legally compelled to do the same, and he apparently has no intention to.

I asked Gross why making his adult children his trustees would invalidate Trump's blind trust.

"Well", he said, "for two reasons."

"One, he knows what's going in that blind trust."

"When you have assets and you put them in a blind trust you don't get amnesia. If I own the Empire State Building and I put it in a blind trust, I still know I own the Empire State Building. So, all the assets that he puts into the blind trust are not blind. They're quite visible."

"Secondly the other purpose of a blind trust is that the trustees, you know, act independently of the person who creates a blind trust."

"His family interest is coextensive with his self-interest. So obviously, if he is going to make a decision, a federal government decision, an official decision, it may well be designed to benefit those holdings and the fact that his children own it. That's the same benefit as if he was owning it."


Diplomacy and Trump's overseas holdings

The appearance of conflict or an actual conflict of interest arising from Trump's domestic interests is just one part of the problem. The extent of his overseas holdings exposes Trump to another level of difficulty. 

"I think if I were advising him," says Gross, "I would be looking first to my international holdings because he has holdings in countries like Russia, Turkey, Azerbaijan, places where the relationships with these countries are not always great."

"They're strained or they're unfriendly."

One of Trump's New York real estate assets, a building he partially owns on Avenue of the Americas, carries about $950 million USD in debt. The New York Times has reported some of that debt is owed to the Bank of China.

"China (is) another situation," says Gross. "A huge loan from the Bank of China and in many of these countries, these are just not private businesses that he's doing business with. They're directly or indirectly owned or controlled by federal governments."

"So that, to me, is something that you want to extricate yourself from."


An unprecedented potential for conflict

Later this month Trump is due in court before U .S. District Court Judge Gonzalo Curiel in the federal civil case over Trump University.  There are potential court cases over the allegations of self-dealing in his foundation, and claims of discrimination filed by several former employees. And there are allegations of sexual assault.

If Trump is subpoenaed in any of those cases he would have to appear, says Gross, even as President.

"Nobody, including the President, is above the law. That was litigated in the Paula Jones case with President Clinton when he was subject to allegations, and the Supreme Court unanimously ruled that he had to be subject to deposition. The same would apply to a President Trump."

Gross acknowledges Trump's business holdings are so sprawling it could be difficult for him to separate himself from them. But he says there are actions Trump could and should take with his business interests to prevent perceptions of conflict in the highest office in the land.

"It's a difficult process and I understand it's difficult. We have no precedent for a President of the United States with anywhere near this level of business entanglement coming into this position," Gross says.

"But it's an important thing that must be done."

"You can't say, 'Here kids, run the property, we're good to go.'"