Trump’s Business Plan Doesn’t Meet Standards, Ethics Office Says

  • Presidents aren’t bound by same ethics law as Cabinet members
  • Agency says transferring business to sons isn’t a blind trust

Trump: Sons Will Take Over Business Interests

President-elect Donald Trump’s plan to have two of his sons run his business during his administration wouldn’t satisfy U.S. conflict-of-interest laws, although the president is exempt from those restrictions, the head of the U.S. ethics office wrote Tuesday.

The finding by Walter Shaub, who runs the Office of Government Ethics, highlights the uncharted ethical territory that Trump and the Trump Organization, an international real estate investment and brand licensing company, are entering, including the dearth of laws that apply to a president’s business affiliations.

“Transferring operational control of a company to one’s children would not constitute the establishment of a qualified blind trust, nor would it eliminate conflicts of interest under” the law, although that particular law doesn’t apply to the president, Shaub wrote to Tom Carper of Delaware, the ranking Democrat on the Senate Homeland Security and Governmental Affairs Committee, who had requested answers on Trump’s potential conflicts of interest.

The letter also pointed out that Trump’s first financial disclosure to the office isn’t legally required to be filed until he’s been in office more than a year -- by May 15, 2018.

“Traditionally, presidents voluntarily file an annual financial disclosure report by May 15 during their first year in office, but OGE does not know whether the president-elect will choose to adhere to that tradition,” Shaub added.

Eric, Don Jr.

The letter comes a day after Trump tweeted he would put his two oldest sons, Don Jr. and Eric, in charge and said they wouldn’t make “new deals” during his presidency. Trump’s message didn’t specify his own role or the extent of his ownership. Earlier Monday, Trump had postponed a news conference, originally scheduled for Thursday, in which he was to announce plans for the disposition of his businesses.

Donald Trump Jr and Eric Trump

Photographers: Andrew Harrer/David Paul Morris/Bloomberg

Career ethicists, as well as Democratic and some Republican officials, have worried that a decision not to sell the businesses or put them into a true blind trust -- controlled by someone who wouldn’t communicate with Trump -- could allow him to enrich his family even if he wasn’t involved in day-to-day operations.

"The OGE’s advice seems both consistent with past precedent and sound as a matter of law,” said Brad Malt, a partner at Ropes & Gray LLP in Boston, who managed Mitt Romney’s blind trusts during his time as Massachusetts governor.

Under the law, the OGE may require those or similar measures from a range of executive branch officials, including the wealthy individuals Trump is in the process of appointing to his Cabinet. The president himself is exempt, but the ethics office "has for more than three decades asserted authority to make nonbinding recommendations regarding a president’s conflicts of interest," the letter said.

‘Unique Circumstances’

"Given the unique circumstances of the presidency, OGE’s view is that a president should comply with this law by divesting conflicting assets, establishing a qualified blind trust, or both," the letter said. "However, although every president in modern times has adopted OGE’s recommended approach, OGE has no power to require adherence to this tradition."

Trump has about $3.6 billion of assets and $630 million of debt held in more than 500 companies, according to a July analysis by Bloomberg. His golf developments, tenant rosters, loans and licensing arrangements tie him to businesses and governments in 20 countries including Azerbaijan, China and the Philippines. His latest hotel, in Washington, is leased from the federal government under terms that appear to bar elected officials from profiting from the arrangement. 

"Clearly, transferring control of the Trump Organization to his sons Donald Jr. and Eric, as the president-elect announced his intention to do yesterday, does not solve the numerous conflicts facing the president-elect and his incoming administration,” Carper said in response to the letter.

On Nov. 30, when Trump tweeted he would exit his business operations without specifying whether he would maintain ownership, OGE had tweeted congratulations for what it appeared to conclude was a divestiture.

— With assistance by Caleb Melby

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