President-elect Donald Trump’s promise to erect a big, beautiful wall between himself and his business lasted slightly more than 48 hours.
Almost exactly two days after the January 11 press conference at which Trump announced plans purported to disentangle himself from his namesake business, the Huffington Post reported that the president-elect had scheduled a meeting with Steven Roth. Roth, a fellow New York-based billionaire real-estate developer, is in charge of Vornado Realty Trust, an investment firm that co-owns two of Trump’s most valuable properties, one in Manhattan and one in San Francisco, and served as an economic adviser during the campaign. What Trump and Roth discussed at their meeting remains unknown, nor is it clear when exactly the meeting was scheduled. Regardless, that the meeting came directly on the heels of the press conference at which Trump and his lawyer laid out a plan supposedly meant to resolve conflicts of interest, throws the reality of the problems that come from having a businessman as president—and one who seems completely uninterested in taking steps that would actually distance him from his business—into sharp relief.
Shortly thereafter, The Wall Street Journal reported that Roth may soon become involved with the Trump administration beyond just his pre-existing friendship and partnership with the president-elect. Trump, it seems, will soon be naming Roth and Richard LeFrak, yet another New York-based billionaire real-estate developer, to oversee a council of 15 to 20 builders and engineers who will be carrying out the president-elect’s $1 trillion infrastructure proposal, a situation which itself provides ripe opportunities for the pair to direct federal dollars toward projects from which they will financially benefit. This news comes on top of a December report in The Washington Post that Roth’s firm had put in a bid to rebuild the FBI’s headquarters, a deal that could be worth as much as $2 billion. In other words, Trump, mere days after promising to remove himself from his businesses, is instead ushering a longtime partner into his administration.
The move could also end up providing yet another avenue by which Trump could enrich himself in office and by which others could attempt to curry favor. Whether or not he intended to do so, the president-elect’s decision to place Roth at the head of such a large pool of money sends a signal to other companies about the continued intermingling of his business and his presidency: that working with the Trump Organization can be a path to increased influence or even appointment. And though Trump claims that he will no longer be in involved in day-to-day operations, he will be actively profiting off from the company, meaning that he will be personally making money off of the attempts of others to gain influence over American public policy.
The Background
President-elect Donald Trump will not be taking necessary steps to resolve his conflicts of interest before he takes office.
At his press conference on January 11—his first since June 2016—Trump and his lawyer Sheri Dillon laid out the plans that they claimed would resolve the questions about conflicts of interest that have dogged the president-elect since he was elected. Instead, what they announced were piecemeal steps that, though designed and packaged to mitigate the appearance of conflicts of interest, do almost nothing to substantively address concerns that his business entanglements will undermine his ability to faithfully execute the office of the presidency.
The first of these steps, presaged by numerous reports from both within and outside the Trump Organization and his transition team, was to relinquish his official leadership roles within his company. In his stead, Trump’s two adult sons, Donald Jr. and Eric, will be running day-to-day operations with a longtime associate of their father’s, with what so far amounts to a pinky-swear assurance that they will not discuss any aspect of the business with the president-elect. As has been previously written numerous times, such an arrangement does nothing to actually mitigate conflicts of interest; Trump’s relationship to his sons, who are members of his transition team, among his closest advisers, and, perhaps most importantly, his children, is far too close for their stated arrangement to qualify as a blind trust.
Additionally, Dillon’s description of how Trump will divorce himself from knowledge of their dealings does little to resolve the overarching problem of his pre-existing knowledge of his empire. The president’s holdings both in the United States and around the world are vast and highly visible; it is unreasonable to assert that reducing official reports to just the company’s overall profits and losses will prevent him from knowing if a policy or position will be beneficial to his company, a problem to which Dillon herself alluded by asserting that the president-elect “can’t un-know he owns Trump Tower.”
Similarly, Trump intends to create two positions, one within the government and one within his company, to act as ethical watchdogs over his behavior. These roles offer little reassurance unless the president-elect or someone on his team spells out a legally-binding way by which Trump will be held to these standards. In fact, arguably the only one of the many steps Trump and Dillon announced that will actually reduce the potential for conflicts of interest is their pledge that the Trump Organization would be pursuing no new foreign deals while Trump is in office and, according to a press release from Trump’s law firm released after the conference, will terminate several deals that are currently underway. However, considering that Trump had previously promised no new deals, period, and considering the numerous properties around the world he will still own, the promise does little to assuage concerns that Trump’s business will influence his presidency.
Dillon offered two preemptive defenses against the ethical and legal questions that Trump is likely to take once he takes office. The first is a reading of the much-discussed Emoluments Clause of the Constitution, which makes it illegal for federal officeholders to “accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign state.” According to Dillon, agents of foreign governments staying at Trump hotels do not violate this clause because it does not apply to “fair-value exchanges,” and “no one would have thought when the Constitution was written that paying your hotel bill was an emolument.” This, it should be said, is a minority position. Numerous experts, most notably Norman Eisen and Richard Painter, who served as ethics lawyers for Presidents Barack Obama and George W. Bush, respectively, and the constitutional law professor Laurence Tribe, have already voiced their disagreements in no uncertain terms, stating without reservation that Trump’s continued ownership of his properties will violate the Constitution the day he enters office. Moreover, the workaround Trump’s legal team has apparently created—donating profits from foreign governments’ payments to the U.S. Treasury—does nothing to change the fact that governments will likely attempt to curry favor with the president through his hotel, as he may view that as flattering, not to mention the hotel will still collect revenues on the stay.
Their second defense was one that Trump has repeatedly asserted since the election: The law barring executive-branch officials from maintaining financial holdings or business ties that overlap with their duties does not apply to the president or vice president. In this regard, they are correct; the law, passed in 1989, exempts the two chief executives from conflict-of-interest rules on the understanding that their purview is so broad that it would be almost impossible for them to completely disentangle themselves.
Regardless, legality does not imply propriety. Unless Trump acts to put actual distance between himself and his business ventures—and today’s press conference seems to indicate that he won’t—these questions will likely continue throughout his time in the Oval Office. Already, the director of the Office of Government Ethics, Michael Shaub, has declared Trump’s plans insufficient, remarking, “I don’t think divestiture is too high a price to pay to be the president of the United States,” and a number of Senate Democrats have introduced legislation that would force Trump to divest or face impeachment. Below is an attempt to catalogue the more clear-cut examples of conflicts of interest that have emerged so far; the most recent entries appear at the top.
Those Indonesian Politicians
That Emirati Businessman
That Virginia Vineyard
That Las Vegas Labor Dispute
That Kuwaiti Event
Those Certificates of Divestiture
That Carrier Deal
That Blind-Trust Issue
Those Fannie and Freddie Investments
That Phone Call With Taiwan
That Deutsche Bank Debt
That Secret Service Detail
That Property in Georgia (the Country)
That Phone Call With Erdogan
That Hotel in Washington, D.C.
That Argentinian Office Building
Those Companies in Saudi Arabia
That British Wind Farm
Those Indian Business Partners
That Envoy From the Philippines
Those Indonesian Politicians
Despite President-elect Donald Trump’s assurance that he has stopped pursuing deals since the election, his namesake organization apparently moved forward with a pair of projects in Indonesia. According to The New York Times, the two properties that will bear the Trump name, one overlooking a Hindu temple in Bali and the other abutting a theme park in West Java, presented ethical problems even before the election.
To begin with, through his Indonesian partner on the projects, the billionaire media mogul Hary Tanoesoedibjo (known in Indonesia as Hary Tanoe), Trump has forged relationships with several top Indonesian politicians. One such leader is Setya Novanto, the speaker of the country’s House of Representatives who temporarily lost his post for trying to extort $4 billion from the American mining company Freeport-McMoRan (a company which counts Carl Icahn, who will be serving as a special adviser in Trump’s administration, among its largest shareholders, and which has been frequently criticized by labor advocates and environmentalists). Trump had lunch with Novanto and several other Indonesian politicians during the campaign in September 2015 to discuss the Trump Organization’s planned expansion into Indonesia. At a post-luncheon press conference, Trump pulled Novanto in front of the cameras, calling him “an amazing man” and “one of the most powerful men” and asserting, “we will do great things for the United States.” (It is unclear exactly whom Trump meant when he used the word “we.”) Trump then asked Novanto to confirm that “they like me in Indonesia,” which Novanto did.
Another of the politicians who attended the lunch with Trump is Fadli Zon, the vice chairman of Indonesia’s House of Representatives, whose district includes one of the cities in which one of the Trump-branded properties will be built. According to the Australian Broadcasting Corporation, Zon is associated with a political movement seeking to unseat and jail the current governor of Jakarta, Basuki Tjahaja Purnama, also known by his nickname, Ahok, and has spoken at rallies against Ahok. The anti-Ahok movement is rooted partly in centuries of ethnic tension within the country: Ahok is both Christian, which has made him the target of attacks by hardline clerics claiming to represent Indonesia’s Muslim majority, and a member of the country’s historically oppressed Chinese minority, which was the target of a massacre in 1998. Aside from an interim governor appointed half a century ago, Ahok is the first governor of Jakarta to fall into either category, and is currently on trial for blasphemy for allegedly insulting the Koran, although Ahok’s supporters claim that it is Ahok’s accusers who are guilty of blasphemy for denigrating Ahok’s Christianity.
Both Trump’s question to Novanto and Zon’s presence at the meeting underscore another difficulty the president-elect introduces into the United States’ relations with Indonesia. Indonesia is both the largest predominantly Muslim country in the world and the nation with the largest population of Muslims. Novanto received significant blowback for his statement that, yes, Indonesians do like Trump, because it turns out that, no, many Indonesians don’t like Trump, in large part because of his on-again, off-again proposal to ban Muslims from immigrating to the U.S.; in fact, faced with mounting criticism, Novanto’s party apologized not only for Novanto’s statement but also for his mere attendance at the luncheon. Since Trump’s victory, both Novanto and Zon have stood up for the president-elect, arguing that Trump’s hardline stance toward Muslim immigration was merely campaign rhetoric and not actually reflective of the president-elect’s own beliefs, something Novanto claimed Trump personally assured him was the case. Regardless, it is clear that the Trump Organization’s planned expansion into Indonesia—which, again, is the reason Trump met with Novanto and Zon in the first place—could introduce major complications into the relationship between the president-elect and the political leaders of the world’s largest Muslim country, not to mention a significant trade partner and an important ally in the South China Sea region.
As if that weren’t enough, Tanoe himself has shown increasing interest in becoming involved in Indonesian politics. In 2014, Tanoe publicly supported the retired general Prabowo Subianto in the nation’s presidential election; Subianto lost to the country’s current leader, Joko Widodo. Then, in 2015, he helped found a new political party, the United Indonesia Party, or Partai Perindo, which intends to field candidates for national office in the near future, including Tanoe himself: Shortly after The New York Times reported on the project, Tanoe told the Australian Broadcasting Corporation that, “If there is no one I can believe who can fix the problems of the country, I may try to run for president.” If Tanoe does so, it will create the possibility that Trump will be dealing with a head of state with whom he has shared business interests, which, as Richard Painter told The New York Times, “makes it impossible to conduct diplomacy in an evenhanded manner”—especially considering that, after Trump’s election, stock in Tanoe’s company rose significantly. Moreover, Tanoe, like Ahok, is both Christian and ethnically Chinese, which some insiders consider an obstacle to his electoral chances, although Tanoe argues that it is not Ahok’s religion but his lack of firm leadership that has led to the large-scale protests against the governor. Nevertheless, if Tanoe does choose to run for office, it is difficult to see how his race, religion, and business partnership with a president-elect many see as blatantly Islamophobic could do anything other than create further difficulties both within Indonesia and in the country’s relationship with the U.S..
Since Trump and his lawyer announced on January 11 that the company would be suspending its unfinished development projects and pursuing no new foreign deals, the current state and eventual fate of the projects in Indonesia are unclear. Regardless, they have already created a remarkably complicated situation among the president-elect and politicians and businesspeople involved in the country’s political scandals and ethnic divisions, jeopardizing his ability to appropriately interact with the nation’s leadership.
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That Emirati Businessman
Though the biggest controversy over the New Year’s Eve celebration at Mar-a-Lago, Trump’s Florida estate, was apparently whether or not Joe Scarborough could accurately be described as having “partied” there, video footage taken by a guest and obtained by CNN the next day brought renewed scrutiny to President-elect Donald Trump’s own presence at the event. During a 10-minute speech given in front of the party’s 800-odd attendees, Trump praised his Emirati business partner Hussain Sajwani and Sajwani’s family, saying, “The most beautiful people from Dubai are here tonight, and they’re seeing it and they love it.” CNN identifies Sajwani as a “billionaire developer in Dubai” who has “paid Trump millions of dollars to license the Trump name for golf courses in Dubai.” Trump’s spokeswoman, Hope Hicks, defended the remarks by clarifying that the president-elect and Sajwani “had no formal meetings of professional discussions. Their interactions were social.”
Whether or not Hicks’s statement was true, Trump’s commendation of Sajwani is part of a pattern in which the president-elect praises his business partners in ways that suggest he has little interest in extricating himself from his company’s interests. Previously, he has name-dropped business partners in Turkey and Argentina while on official calls with the countries’ leaders; he also met, and took photos, with associates from India shortly after the election. Moreover, as with several of the countries in which Trump-branded buildings are located, the United Arab Emirates has a questionable record on human rights; Human Rights Watch specifically states that the nation “uses its affluence to mask the government’s human-rights problems.”
By singling out Sajwani, Trump also runs headlong into accusations that he and his family are selling access to his administration through their organization and family foundations. According to Politico, tickets to celebrate with the president-elect at Mar-a-Lago, went for upwards of $500; the stated attendance of at least 800 people means that the Trump Organization made at least $400,000 off of ticket sales for the event. (There is no indication that the party was a fundraiser for any outside organization, such as a charity or campaign fund, as is often the case when politicians attend such an event.) Whether or not the president-elect sees it as such, the event offered attendees the opportunity to be in the same room as Trump and bend his ear for a price. This follows consternation regarding an auction for a face-to-face meeting with Trump’s daughter, Ivanka, and a charity event that offered a reception with the president-elect and a hunting trip with his two sons, both of which have since been cancelled, as well as ongoing speculation that foreign entities will attempt to curry favor with Trump by booking rooms and events at his hotel in Washington, D.C. That Trump singled out Sajwani at the New Year’s Eve party lends credence to these concerns—it’s an instance of someone receiving the president-elect’s attention simply by buying a ticket to one of his events.
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That Virginia Vineyard
Among the dozens of properties President-elect Donald Trump owns is Trump Vineyard Estates and Winery in Charlottesville, Virginia, the source of his namesake wine. Since Trump was elected, the property has requested temporary H-2A visas for six foreign workers, according to The Washington Post. The visas, which are administered by the Citizenship and Immigration Services wing of the Department of Homeland Security, allow businesses to temporarily hire foreign, unskilled workers provided that the employer proves that there are not enough domestic candidates to fulfill a one-time or seasonal shortage and that the hiring will not depress wages for U.S.-born employees. Trump, of course, will be in charge of appointing a new Secretary of Homeland Security once he assumes the presidency, which gives Trump authority over the very department responsible for deciding whether to grant the visas that the vineyard has requested. His current nominee, retired general John Kelly, has a relatively scant track record when it comes to immigration, leaving open the question of how much influence Trump himself will have over the DHS’s policy on the matter.
On top of the fact that Trump will soon be able to influence the outcome of the request, that his organization has continued to request visas after his election underscores a tension in the president-elect’s stance on immigration. From the moment that he announced that he would be running for president, Trump made antagonism toward immigration the central aspect of his campaign, arguing that both legal and illegal immigrants are taking jobs that should be filled by native-born Americans and depressing wages for others. Though he did not specifically single out the H-2B visa, the president-elect has on multiple occasions spoken critically about the H-1B program, which enables employers to temporarily hire foreign workers for skilled jobs like those in the tech industry.
But the Trump Organization has long been a beneficiary of immigrant labor. For example, according to a Reuters report from August 2015, nine companies of which Trump is the majority owner have requested at least 1,100 foreign visas since 2000. The majority of these requests were from Trump’s Mar-a-Lago Club in Florida, which has requested at least 787 foreign visas since 2006, including 70 applications in 2015. (Meanwhile, The New York Times reported that, since 2010, only 17 of the nearly 300 domestic applicants for positions at the Mar-a-Lago have been hired.) The Trump Organization also famously may have benefited from illegal immigration: There is significant evidence that many of the Polish construction workers at the Trump Tower construction site in New York in 1980 were in the country illegally. In other words, Trump’s track record includes not just taking advantage of the very visa process he claims to abhor but also actually subverting existing law for his own profit. Now, by applying for visas for his vineyard, Trump is signaling that he expects that his business will continue to be able to profit from one of the very immigration programs he continually denounces.
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That Las Vegas Labor Dispute
On top of owning various properties and enterprises, Trump and his company employ roughly 34,000 people, according to an analysis by CNN. On December 21, several hundred of those workers resolved a labor dispute against the president-elect—one in which, had it continued for even a few weeks more, Trump would have had the unprecedented power to make appointments to affect its outcome.
Here’s the situation: In October 2015, several hundred employees, primarily housekeeping staff, at the Trump International Hotel in Las Vegas voted to join the local branch of the Culinary Workers Union. Trump Ruffin Commercial LLC, which owns the hotel and is itself owned by Trump and the casino magnate Phil Ruffin, contested the vote, first by enlisting an anti-union consulting firm (for whose services it paid $500,000) and then by filing complaints with the National Labor Relations Board (NLRB). Shortly before the election, the NLRB not only rejected Trump and Ruffin’s complaints but also found that, because the pair had refused to negotiate with the nascent union, they had violated federal law and their hotel was operating illegally. Trump and Ruffin have since appealed to the U.S. Court of Appeals for the District of Columbia.
On December 21, more than a year after the hotel’s workers first voted to join the union, the workers announced that they arrived at their first first collectively-bargained contract, achieved, according to an employee quoted in ThinkProgress, despite significant pressure from ownership that attempting to unionize would cost workers their jobs. According to the union, the new agreement “will provide the employees with annual wage increases, a pension, family health care, and job security” comparable to that of other Las Vegas hotels. Moreover, the Culinary Workers Union’s parent organization, UNITE HERE, has reached an agreement to represent workers at Trump’s recently-opened hotel in Washington, D.C..
Although this dispute has been resolved, it is included here because it exemplifies the type of situation in which Trump’s business interests are likely to overlap with his duties as president. Once he assumes office, Trump will be tasked with appointing members to fill current openings on the NLRB, the very body that ruled against him shortly before the election and will be tasked with resolving any future disputes between the hotel’s owners and its employees. Moreover, as Slate noted, the chief justice of the D.C. Court of Appeals is none other than Merrick Garland, whose nomination to the Supreme Court has spent months languishing in the Republican-controlled Congress and will likely be withdrawn once Trump becomes president. Finally, if disputes of this nature go beyond the Court of Appeals, the case would go to the Supreme Court, to which Trump will be appointing a justice once he assumes office, which is expected to tip the balance decisively in a more conservative (and likely anti-union) direction. In other words, no matter how far up the chain future disputes of this nature go, Trump’s presidency will give him new power to influence the results.
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That Kuwaiti Event
According to an anonymous source and documents obtained by ThinkProgress, representatives from the Trump Organization pressured the ambassador of Kuwait to hold its embassy’s annual celebration of the country’s independence at the Trump International Hotel in Washington, D.C. The event, held annually on February 25, was originally scheduled to take place at the Four Seasons Hotel in Georgetown; the location was allegedly changed after members of the Trump Organization contacted the country’s ambassador. ThinkProgress’s source “described the decision as political,” suggesting that the embassy chose to relocate the event in an effort to curry favor with the president-elect. The Kuwaiti ambassador has since disputed the report, telling The Washington Post that he had not been contacted by the Trump Organization and that the move “was solely done with the intention of providing our guests with a new venue.”
If ThinkProgress’s account is correct, Kuwait’s decision represents an escalation of a situation that has been developing since Trump’s election. The Trump International Hotel has been the subject of continual scrutiny for the conflict of interest it poses, in part because its lease explicitly bars elected officials from holding it, but mainly because Trump’s ownership of the hotel will almost definitely result in a violation of the Emoluments Clause, which prohibits the president from receiving payments from foreign powers—something that will arguably be happening any time a foreign government books a room at the hotel. Already, the hotel has begun advertising itself as a destination for diplomats and dignitaries, and the embassies of Azerbaijan and Bahrain have both scheduled events in the building. However, before the ThinkProgress report, there was no evidence that the Trump Organization had individually reached out to a foreign government in hopes of getting it to relocate an event to the hotel.
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Those Certificates of Divestiture
In addition to the many possibilities for President-elect Trump to pursue his financial interests in office, the unique makeup of his cabinet also creates a new set of financial motivations. While Trump’s own fortune automatically makes his administration the wealthiest in history, he has also surrounded himself with an unprecedented collection of billionaires and multi-millionaires whose investments are likely to also come under scrutiny.
Unlike the president-elect himself, those who are up for Trump’s cabinet, such as his proposed Secretary of the Treasury Steven Mnuchin and Secretary of Education Betsy DeVos, will be legally obligated to divest from any holdings which may pose a conflict of interest. However, as The Washington Post noted, even selling off their holdings offers an opportunity for Trump’s cabinet members to enhance their fortunes. A federal program known as a “certificate of divestiture” allows executive-branch appointees and employees to avoid capital-gains taxes when selling their assets. The program has existed since 1989, and most recently received attention when President George W. Bush appointed Hank Paulson, then the chief executive of Goldman Sachs as his Treasury Secretary in 2006. Paulson was forced to sell off $700 million in shares of the bank; the certificate of divestiture enabled him to avoid a potential $200 million in capital-gains tax liability. According to The Washington Post, the Office of Government Ethics is currently researching whether the president-elect himself would qualify for the tax break; even if he doesn’t, the unprecedented wealth of Trump’s cabinet promises to push this provision, and the financial incentives it creates, to the limit.
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That Carrier Deal
One of President-elect Donald Trump’s first major economic moves as president-elect was the deal that he and Vice President-elect Mike Pence struck with the air-conditioner manufacturer Carrier, which had planned to move 2,100 jobs from its Indiana plant to Mexico. Finalized on November 29, the compromise kept 730 of the plant’s jobs in Indiana in exchange for $7 million in tax breaks over 10 years. The deal immediately attracted praise and criticism on both sides of the aisle, with much of the scrutiny going toward the tradeoff between jobs and tax breaks and Trump’s idiosyncratic, ad-hoc negotiation techniques.
An additional detail soon emerged regarding the deal: According to his FEC filings (which, despite Trump and his spokesman Jason Miller’s unverified statements that the president-elect sold off his stock in June, remain the most recent public record of the president-elect’s finances), Trump holds stock in Carrier’s parent company, United Technologies. In 2014, his investment in the company was between $100,001 and $250,000, while in 2015, the stock is listed as worth less than $1,001, which could indicate that he sold some or most of the stock; each year, his holdings earned him between $2,500 and $5,000.
The paucity of information in the FEC filings makes it difficult to ascertain why his holdings appear to have decreased; regardless, the investment is not only one of several hundred but also a relatively minor one among Trump’s many holdings, some of which are worth over $5,000,000. As a result, it’s difficult to know how much, if at all, Trump may have considered the stock, particularly considering that he didn’t appear to remember his initial promise to save the Carrier plant. Additionally, Trump does not have stock in the next company he called out on Twitter, Rexnord Corporation (which is also based in Indiana), or its parent company, The Carlyle Group. Still, Trump’s deal with Carrier demonstrates the unprecedented challenge the president-elect’s conflicts of interest create: Unless he either puts his holdings in a truly blind trust or divests completely, a significant number of the decisions he makes will involve some level of financial incentive for himself as well as for the country.
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That Blind-Trust Issue
Over the past few months, a number of experts have called for President-elect Donald Trump to either sell off his business holdings or, if the illiquidity of his assets prevents him from doing so, to put as much as possible into a blind trust managed by a lawyer or other trustee with whom he will have no contact. Pursuing one of these two options is seen by many as an important step to distancing himself from even the appearance that he will be considering his own financial prospects in addition to those of the nation while in office. In response, Trump repeatedly said during the campaign that he intends to cede control of his business to his three adult children, Donald Jr., Ivanka, and Eric, although, as has been previously noted, doing so would barely even create the appearance of a blind trust given how his children are close advisers, members of his transition team, and, well, his children. (Trump has also alluded on Twitter to an upcoming press conference in which he intends to more fully explain his plans, although doubts remain that the arrangement he proposes will actually create the necessary barriers between Trump and his business.)
Moreover, even if one does take take the president-elect at his word that his children will be entirely separate from his administration, events since his election strongly suggest otherwise. All three have been seen in contexts that significantly diminish the appearance of separation Roughly two weeks before the election, Donald Jr. met with a pro-Russian group in Paris to discuss his father’s policy toward Syria and, according to Politico, was involved in his father’s search for a Secretary of the Interior; he was also spotted hunting in Turkey shortly after his father’s phone call with Turkish President Recep Erdogan in which the president-elect praised a Turkish business partner. Eric, meanwhile, appeared in photos with his father and a group of Indian businessmen mere days after the election. Officials within the State Department have begun to express frustration with the optics of the Trump family’s current system.
Much of the focus, though, has been on Ivanka, whom many consider to be among her father’s most trusted advisers, and the various ways she has indicated that she will remain a part of both the family business and her father’s administration. Ivanka also appeared in the photos with the family’s Indian business partners, and she and her husband Jared Kushner—also one of Trump’s advisers—sat in on a meeting between the president-elect and Japanese Prime Minister Shinzo Abe; reports later emerged that, at the time, Ivanka was in negotiation with the Japanese apparel company Sanei International, whose parent company is owned in large part by the Japanese government. A number of outlets have reported that, while Melania Trump will be the official First Lady, Ivanka plans to assume a policy portfolio akin to that of previous first ladies; one issue she apparently plans to take on is climate change, on which she recently met with her father and former Vice President Al Gore. Even the optics of physical distance are diminishing: According to CNN, Ivanka and Jared plan to move from New York to Washington, D.C. once the Trump administration begins. That the president-elect’s children appear involved in both the Trump administration and the Trump Organization presents a major threat to the long-established norm that presidents should distance themselves from business interests that could interfere with their official duties.
Finally, removing himself from day-to-day operations will do little to change the fact that Trump will retain substantive knowledge of the illiquid assets involved in his business, such as the numerous buildings and other products that bear his name, especially if he remains in frequent contact with his children. Even assuming that Trump does separate himself from any consideration of his holdings, his children will still likely be major players in the family’s organization, which will still bear at least the Trump name—arguably one of their most valuable properties, as much of the family’s wealth derives from licensing the name to third-party companies. Given the family’s oft-touted brand-consciousness (Ivanka, for example, briefly appeared to be distancing herself from the campaign, and several properties considered rebranding under the name “Scion” when it appeared Trump would lose), the situation epitomizes the way Trump’s, and his family’s, business interests may very well prove inextricable from his actions as president.
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Those Fannie and Freddie Investments
After railing against elites during the campaign, Trump has so far stocked his prospective cabinet with an array of billionaires whose policy positions seem likely to significantly benefit those who are also doing very well. Trump’s putative treasury secretary, Steven Mnuchin, is no exception: His resume includes stints as a banker at Goldman Sachs, a Hollywood producer, and the operator of a bank that has been described as a “foreclosure machine” and once foreclosed on a homeowner over a 27-cent discrepancy.
One of Mnuchin’s apparent beliefs is that the government should cede control of the mortgage guarantors Fannie Mae and Freddie Mac, which the government acquired during the 2008 financial crisis. The two financial institutions’ stocks rose by more than 40 percent after Mnuchin stated that he believes the Trump administration “will get it done reasonably fast.”
Doing so would be broadly compatible with Trump’s general antipathy toward regulation of the banking industry. However, The Wall Street Journal identified an additional wrinkle to the story: When Fannie Mae and Freddie Mac’s stocks rose, one major beneficiary was John Paulson, an adviser to the Trump campaign and a business partner of Mnuchin’s. Paulson’s hedge funds include significant investments in both Fannie and Freddie. Trump himself has invested between $3 million and $5 million across three of Paulson’s funds, according to his filings with the Federal Election Commission (which remain the only available window into the president-elect’s financial holdings). In other words, as Fannie Mae and Freddie Mac’s stock prices increase—and they have so far more than doubled since the election on the expectation that the incoming Trump administration will be more lenient toward the financial sector than Obama—Trump’s portfolio benefits.
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That Phone Call With Taiwan
When news first emerged that the president-elect spoke on the phone with Taiwanese President Tsai Ing-wen on December 2, the immediate reaction was uproar over his apparently impetuous breach of decades of U.S. protocol toward China and Taiwan. As my colleague David Graham explained, since 1979, the United States has participated in the “artful diplomatic fiction” of officially recognizing the mainland People’s Republic of China as the only legitimate Chinese government while maintaining loose, unofficial recognition of—and significant economic and military ties to—Taiwan. That Trump would speak to the president of Taiwan, especially before doing the same with Xi Jinping, the president of the PRC, flies in the face of a diplomatic tradition that has undergirded almost 40 years of U.S.-China relations.
Amid the days of dissembling that followed the phone call, an additional worrisome detail came out: At the time, the Trump Organization was apparently exploring expansion into Taiwan. Soon afterwards, the Trump Organization denied that it planned to do so; however, even before the controversy arose, the mayor of Taoyuan, Taiwan, the municipality in which the Trump Organization allegedly wants to build, described in a televised interview a meeting with a representative of the Trump Organization in September to discuss prospective real-estate projects, and at least one Trump employee was found to have posted on Facebook that she was in Taiwan at the time on a business trip. Based on the January 11 announcement that the Trump Organization will be suspending its development plans and will not pursue foreign deals in office, it would appear that any movement on development in Taiwan is no longer on the table.
The phone call, and the many statements that have followed, are of particular interest because of the extent to which they dovetail with some of the biggest concerns about Trump’s approach toward governance. In the ensuing 48 hours, Republican officials offered several, sometimes entirely contradictory, explanations of what initially appeared to be an impulsive move by Trump; depending on who was speaking, the phone call was actually initiated by Ing-wen (which, if technically true, ignores that it was Trump’s staff who arranged the conversation), was just “a courtesy,” or manifested a policy shift weeks in the making—although, regardless, it was made without first consulting the White House or State Department. The defense of the move, and the questions it creates regarding conflicts of interest, have largely hinged on the belief that, since voters apparently don’t mind, the reaction was overblown.
On this issue, though, whether or not voters care is immaterial to the central question. The president-elect of the United States breached decades of international protocol created to preserve a precarious balance of power. That decision raised not only the possibility that Trump was blundering into a potential international incident but also that he may have done so in part out of consideration for his business prospects.
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That Deutsche Bank Debt
Though he often brags about leveraging corporate-finance law to become “The King of Debt,” Trump’s numerous bankruptcy filings have left most large Wall Street banks reticent to lend to him, according to The Wall Street Journal. Among the few exceptions is Deutsche Bank, which “has led or participated in loans of at least $2.5 billion” to the president-elect since 1996, with at least another $1 billion in loan commitments to Trump-affiliated companies; more than $300 million of those loans have come since 2012.
The president-elect’s indebtedness does not itself pose a conflict of interest, but Deutsche Bank’s ongoing legal troubles very well might. The Justice Department is currently negotiating with Deutsche Bank regarding a preliminary settlement of $14 billion to resolve probes into allegedly misleading predatory lending practices in the leadup to the 2008 financial crisis; while it is believed that Deutsche Bank will push back against the sum, there has been no public news regarding negotiations since the initial figure was reported in September. Trump will soon be naming many of the officials with jurisdiction over this and other deals, prompting several House Democrats to send a letter to federal financial agencies calling for close scrutiny of how Trump may seek to influence the settlement through his appointments—although doing so would be just as in keeping with his general stance toward financial regulation as with active protection of his pocketbook. Other Democrats have called for the proactive appointment of independent prosecutors to avoid any appearance of conflict if the case is not resolved before Trump takes office.
Fears that Trump may unduly consider his indebtedness to Deutsche Bank in deciding his administration’s policy toward the financial sector go beyond general anxiety about deregulation. Deutsche Bank is <a href="http://www.telegraph.co.uk/business/2016/09/29/why-is-deutsche-bank-now-the-biggest