Donald Trump insists there’s an easy solution to ward off any conflicts of interest between his presidency and his business empire. This week he’ll be asked to prove it.
Trump will hold his first press conference since July on Wednesday, and top advisor Kellyanne Conway said it was where he’d likely lay out his administration’s ethics plan — an announcement originally slated for mid-December.
Despite Trump’s claims, a host of lawyers and ethics experts say there’s nothing simple about disentangling a business worth billions from a government whose annual budget is measured in trillions — especially as initial signs from his transition team’s deliberations suggest Trump is not willing to permanently sever all ties with the company he built over decades.
Here’s the range of options, from strongest to weakest, that Trump’s team could pursue:
1. Take Trump Inc. public
The strongest step Trump could make to separate his interests from his company would be to take it public, turning control over to shareholders through an initial public offering of stock. Going public, and taking ownership away from Trump’s children or even another individual tycoon, would lessen the risk of anyone having too much sway with the president, as shares in the company would be widely held and traded, according to Richard Painter, a former White House ethics lawyer for President George W. Bush.
The sale could include the right to use Trump’s name, effectively separating the “Trump” brand from the president itself, according to Painter. For example, Disney and JPMorgan still bear their founders’ names long after the original families stopped owning them. Trump could then use the proceeds from the IPO to buy widely diversified investments that are considered conflict-free or put them into a blind trust over which he has no knowledge or control. That would be consistent with what other recent presidents have done.
Aside from any personal reservations about taking his company public, Trump’s unlikely to pick the public option due to a host of logistical complications. It would also expose his financials to scrutiny from regulators, bankers, investors and the public — something he has long resisted. And even in the unlikely event that Trump picks the public option, the amount of time it takes to prepare an IPO would make it impossible to finish before the inauguration or even very early in his administration.
2. Adopt a blind trust
Trump could take the approach former President Bill Clinton did: setting up a blind trust and hiring an independent professional investment manager to oversee his portfolio. In Trump’s case, he would instruct the trustee to sell his companies at a reasonable pace. Eventually, Trump would have no control over or knowledge of the investments.
It wouldn’t be fast or easy. Real estate properties are illiquid assets that don’t change hands frequently and are costly and time-consuming to trade. Dumping them all at once could be a fire sale. Also, because Trump’s businesses involve buildings bearing his name, it would be practically impossible to prevent him from knowing which properties were still part of his portfolio. What’s more, a blind trust wouldn’t be compatible with Trump’s apparent desire to return to his company when he leaves the White House.
3. Adopt a ‘half-blind’ trust
Trump aides and the Office of Government Ethics have discussed “discretionary trusts,” although it’s not clear if the arrangement was being considered for Trump or for some of his wealthy Cabinet appointees. An official who sets up a discretionary trust technically doesn’t own the assets anymore. But the official can appoint a family member to manage them and continue discussing the investments with the family member and even receive income from them.
Discretionary trusts have gotten the legal sign-off from federal ethics regulators before. But one probably wouldn’t satisfy Trump’s critics since it would let him continue to profit from his businesses. Putting assets into a trust could also produce a hefty tax bill for Trump, either as a gift or through capital gains.
4. Use an independent trust
Since Trump isn’t bound by the federal conflict of interest statute, he could perhaps stop at tapping an unrelated professional to run his portfolio, even if he continues to own and be aware of his investments. “Ring-fencing his business and ceding control to independent overseers would do the job,” the Economist suggested in a November editorial, as an alternative to liquidating his assets.
Even former Obama White House ethics lawyer Norm Eisen, a prominent critic of Trump’s business arrangement, considered this half-measure a step in the right direction: “I do think if he’s able to set up an independent trustee everyone will breath a deep sigh of relief,” he said.
But Trump associates have told POLITICO he doesn’t want anyone outside the family owning the rights to the Trump name.
5. Appoint a corporate monitor
New York Times Dealbook columnist Andrew Ross Sorkin suggested the Trump Organization appoint an outside monitor: someone with a sterling reputation who would have full access inside the company and would report to the public on potential conflicts. Sorkin suggested Kenneth Feinberg, the lawyer who oversaw victims compensation funds from the Sept. 11 attacks and the BP oil spill.
Feinberg told POLITICO he wasn’t interested in the job and hasn’t discussed the possibility with the transition.
But the general idea does appear to have gained some traction. Former House Speaker and one-time possible Trump running mate Newt Gingrich said in an early December interview he’d been urging Trump to turn the company over to his children while appointing a panel of three to five people — like former Attorney General Michael Mukasey and other respected legal experts — who’d meet monthly and review the company’s books “and make sure in no way it’s being used to the advantage of Trump.”
Late last month, the New York Times reported that both the Trump Organization and the Ivanka Trump brand are considering outside monitors who would prevent inappropriate contact between the companies and the government and provide independent input on business decisions. The Times named Mukasey as a potential trustee who would run the business alongside Trump’s adult sons, Eric and Donald Jr. (Mukasey’s assistant at the law firm Debevoise & Plimpton didn’t answer a request for comment.)
6. Leave it with Donald Jr. and Eric
Trump has signaled he will be handing control of his companies to his adult children. That was his answer during the campaign. “Run the company, kids, have a good time,” Trump said at a Republican debate in Charleston, South Carolina, last January. More recently, as Trump’s daughter Ivanka and her husband, Jared Kushner, took on more senior roles as close political advisers, Trump shifted toward handing the company to only his sons Donald Jr. and Eric.
But letting his sons run the company while continuing to own it does nothing to resolve Trump’s conflicts of interest, ethics experts agree. For example, federal agencies would still feel pressure not to buck the president’s family business, and those kinds of interactions are widespread: The General Services Administration leases the building for Trump’s Washington hotel while the Labor and Homeland Security departments have roles in foreign worker visa applications and illegal immigration enforcement, key issues at hotels and golf courses owned by or associated with Trump.
Wealthy donors and foreign governments would also see the sons as a way to curry favor with the president, as demonstrated by the “cuff links and camouflage” fundraiser scheduled for next week’s inauguration that the sons have since backed out of.
On top of all that, selling the company to Trump’s children presents its own problems: if Trump sold it to them at less than fair market value, he would probably have to pay a substantial gift tax. But the children probably couldn’t afford the sticker price, so they would need to borrow money or bring in an outside investors, which would create a major new conflict.
7. Build the [Fire]wall
To strengthen whatever other measures Trump takes, both the Trump Organization and the White House could establish rules to prevent inappropriate self-dealing.
For example, the company could prohibit referencing the president in sales meetings or marketing materials. The Trump administration, for its part, could bar senior government officials from participating in matters involving Trump’s companies and require career officials to treat Trump’s businesses as they would any other. It could also route all calls and emails involving his business — other than personal communications with Trump or his wife — to the White House counsel’s office.
Serious efforts to wall off the company from the administration would also help avoid potential violations of a federal insider-trading statute that does apply to the president. Legal experts warn that Trump might break the law if he or a family member used information gained from government duties to make money.
The firewall probably wouldn’t work with Trump’s children still at the helm of his company. “If it were up to some people, I would never, ever see my daughter Ivanka again,” Trump said in his November interview at the New York Times.
Trump has already committed to forgoing formal briefings on his business while president, and a spokeswoman said he’s open to limits on his ability to talk shop with his two adult sons. Alan Garten, an executive vice president and general counsel of the Trump Organization, also told POLITICO last week that the company would not use images of Trump on new advertisements and that there will be a prohibition against selling presidential memorabilia inside Trump-affiliated hotels and golf course pro shops.
8. The piecemeal approach
Trump could also just take individual steps to address his most controversial or troublesome holdings. To some extent, this is already happening. Trump promised “no new deals” during his presidency. The Trump Organization dropped pending or in-progress projects in Brazil, Azerbaijan, Georgia, Argentina and India, the New York Times reported. The company also settled a labor dispute with Las Vegas hotel workers and canceled plans for a controversial sea wall at Trump’s Irish golf course.
Trump also said he would shutter his foundation (although he can’t while the New York attorney general is still investigating the charity amid accusations of self-dealing). And Eric Trump said he will stop soliciting charitable contributions, acknowledging the “quagmire.”
But in other places, Trump has shown no interest in addressing glaring conflicts of interest. Most notably, he leases his Washington hotel from the General Services Administration, which is part of the executive branch. That means on Jan. 20 Trump is effectively both landlord and tenant. A provision in the contract says it can’t benefit an elected official, though some experts question whether it applies to Trump since he was already on the lease before becoming president). The GSA told House Democrats it’s reached out to the transition about resolving this conflict but received no response.
The Washington hotel, which has already become a favored venue for foreign diplomats, and Trump’s overseas assets are especially problematic because the Constitution’s Emoluments Clause prohibits the president from receiving payments from foreign governments. Democrats have warned that violations of the arcane provision could even lead to Trump’s impeachment.
Buildings bearing Trump’s name in risky regions could also pose a national security threat. The Trump Organization should bear the cost of additional security but in practical terms will need help from the U.S. or local governments. “I do not like the name Trump on buildings all over the world — it’s a national security issue,” Painter said.
For properties Trump doesn’t own but that pay him to use his name, he could renegotiate the licensing agreements as flat fees regardless of how the projects fare. That would remove any upside for Trump if he took actions that benefited those properties, said Matthew Sanderson, a political law expert at the firm Caplin & Drysdale.
Garten, the Trump Organization lawyer, told POLITICO that the company would be sticking to the licensing deals cut before Trump took office. “We have agreements in place and we have to abide by the agreements,” he said.
9. Going clear
Part of the widespread concern about Trump’s business holdings is how sprawling and opaque they are. Whatever else he decides to do, he could help allay some suspicions by agreeing to more public disclosures.
Peter Schweizer, the conservative author who attacked Hillary Clinton’s possible conflicts of interest because of her family’s foundation in the book “Clinton Cash,” told the Washington Post Trump should volunteer to make detailed quarterly disclosures about his family’s holdings and transactions.
An embrace of transparency, however, would mark a significant shift from Trump’s presidential campaign, in which he broke precedent by refusing to release his tax returns.
10. Do nothing
While Trump has repeatedly promised to do something about his conflicts of interest, he has just as often emphasized that he isn’t legally required to do anything. “The law’s totally on my side, the president can’t have a conflict of interest,” Trump told the New York Times.
Trump could do nothing or announce cosmetic measures with little to no actual effect, such as suggestions of continuing to own his businesses while letting his children run them.
Incoming Trump White House counsel, Don McGahn, “is a master at finding these kind of technical arguments on stuff,” said Meredith McGehee, chief of policy, programs and strategy at campaign finance reform group Issue One. “I would bet you dollars to donuts he’s going to try to come up with something and they’re going to try to put lipstick on a pig. He’s good at it.”
Trump could even go so far as to ask the GOP-led Congress to bless his chosen course, as Gingrich recently suggested lawmakers could do.
Katy O’Donnell and Josh Gerstein contributed reporting.