January 23, 2017

Private: The Conflicts of Interest Begin

Donald Trump, Emoluments Clause, Erwin Chemerinsky

by Erwin Chemerinsky, ACS Board Member and Dean and Raymond Pryke Professor of First Amendment Law, University of California, Irvine School of Law

The legal and constitutional problems posed by Donald Trump’s election are not hypothetical and began the moment he was inaugurated as president. Most immediately, Trump is the owner of Trump International Hotel, D.C. on the site of the Old Post Office. His ownership violates both the terms of his lease and the Emoluments Clause of the Constitution. Unfortunately, to this point, he either does not understand or does not care about the serious conflicts of interest posed by his business interests.

The issues with regard to the D.C. hotel are obviously just the beginning of such problems arising, but they also are typical of the serious legal troubles that Trump faces. In 2012, Trump succeeded in getting the bid to redevelop the Old Post Office and signed a 60-year lease with the General Service Administration. Trump beat out proposals from hotel chains including Hilton, Hyatt and Marriott.

Unlike many of his holdings which are owned by corporations, Trump himself is the majority owner in this hotel. The Washington Post reports that according to the financial disclosure form he filed with the Federal Election Commission, Trump owns 76.725 percent of the D.C. hotel project. Three of his children, Don Jr., Ivanka and Eric, each have 7.425 percent of the project.

Trump’s ownership is in clear violation of the lease which contains a provision that says no U.S. official “shall be admitted to any share or part of this Lease or to any benefit that may arise therefrom.”  There is a simple reason for this: it prevents a conflict of interest that would exist if government officials are in a lease agreement with the government. As president, Trump oversees the General Services Administration and Trump, as owner of the building, is leasing property from the GSA.

Moreover, Trump’s ownership of the hotel will likely place him in violation of the Emoluments Clause very shortly into his presidency. This provision prevents any federal officer from receiving any “present” or “emolument” from a foreign government. The Emoluments Clause was meant to broadly prohibit a United States official from benefiting from a foreign government.

But already there are reports of foreign governments wanting to house dignitaries and hold receptions at the Trump hotel. Trump will benefit from this and this violates the Emoluments Clause.

Two weeks ago, at a press conference, Trump said that he had solved the problem of the emoluments clause by promising to donate “profits” from foreign governments to the United States Treasury. But this misses the point: once Trump receives benefits from a foreign country, he has violated the Emoluments Clause no matter what he chooses to do with them.

Moreover, it is unclear what “profits” even mean here. Every time a foreign government or its officials use a Trump hotel rather than an alternative, Trump has benefited. It will be impossible to calculate what constitutes as profits from a foreign government. Moreover, there is every reason to be skeptical of this promise in light of Trump’s lack of transparency. In his press conference on Jan. 11, Trump again refused to reveal his tax returns and declared that the American people do not care about them. A promise to turn over profits is meaningless without a detailed method of accounting, which would require among other things access to his tax returns.

At the same press conference, Trump said that he would engage in no new foreign business deals. But that does not solve the problem. All of his existing holdings, including the hotel in D.C. already will lead to his violating the Constitution.

Trump somehow seems oblivious of this. He declared at the press conference that he could continue to run his businesses and be president. That is consistent with his earlier statement: “I can be president of the United States and run my business 100 percent, sign checks on my business.” Trump also has said, “The law is totally on my side, meaning, the president can’t have a conflict of interest.” That, of course, is simply false, as the problems with Trump International Hotel illustrates.

Turning his businesses over to his children to run solves nothing. Conflicts of interest law always includes members of a person’s immediate family. They are still Trump’s businesses and he still will profit or lose.

I expect that there will be many lawsuits to try and deal with Trump’s conflicts of interest. Perhaps they will be brought by competitor hotels and other businesses. Some likely will be brought by public interest groups. All will be dealing with an unprecedented set of problems because of Donald Trump’s extensive business holdings and his refusal to take meaningful steps to deal with the conflicts of interest and violations of the Emoluments Clause that are inevitable.