President Trump’s Massive, Unfixable, Unwaivable Conflict Of Interest…And Why Weren’t We Worrying About This BEFORE The Election?

trump-tower

Donald Trump, as President of the United States, will have an unprecedented conflict of interest—many, actually—that realistically cannot be fixed and never could. He will be President, and he will own a global set of businesses worth billions of dollars that his policies and decisions will unavoidably affect for better or worse, usually to his long term benefit or disadvantage.

Almost nobody, including me, and it’s my business to do so, focused substantially on the problem during the campaign. Trump, as  usually, airily dismissed the issue when it came up as if it was nothing, saying, “If I become president, I couldn’t care less about my company. It’s peanuts,” during one debate. “Run the company, kids. Have a good time.” Typical, stupid, and neither Clinton nor the moderator had the wit or information to follow up with the required, “Wait a minute, that doesn’t deal with the problem. Will you also not care about your kids, Mr. Trump? Your companies’ stockholders? Business partners? Employees?”

At least we know why Hillary was reluctant to pursue this issue, don’t we?

The Trump Organization’s executive vice president, Alan Garten, similarly brushed the problem away, saying in September, “His focus is going to be solely on improving the country. The business is not going to be a factor or an interest at that point.” That’s an incredible statement, naive at best, dishonest at worse. Of course it will be an interest. How could it not be? The question is whether it will be a factor. Human nature, and Trump’s nature, strongly suggest that it will be.

Who can tell with Trump? Maybe he really believes there’s no problem. After all, as I have written repeatedly and all evidence proves, the man doesn’t know ethics from ambergris. Whether he knows it or not, however, this is a massive  and potentially crippling problem for him and his administration, not to mention his children and his businesses. It is especially a problem because the same journalists who dismissed Hillary’s family foundation’s influence peddling while she was Secretary of State and after as another overblown conservative attack (after all, why should venality and hidden conflicts of interest interfere with electing the First Woman President?) have the long knives out to eviscerate Trump on any hint of impropriety, real or not, they can find.  This is real.

Think about it: on financial disclosure filings, Trump listed significant involvements in more than 500 companies, including business activities in countries where the U.S. has sensitive diplomatic or financial relationships, like Saudi Arabia, the United Arab Emirates, and China. The President-Elect’s business empire of hotels, golf courses and licensing deals in the U.S. and abroad benefit from U.S. tax breaks and  government subsidies. Trump’s real-estate holdings and other companies owe hundreds of millions of dollars to domestic and foreign banks. The biggest single lender to Trump’s empire is Deutsche Bank, the German financial giant that is currently negotiating a settlement with the U.S. Department of Justice to settle claims related to the 2008 mortgage collapse. A Manhattan office tower co-owned by Trump is partially financed by the Bank of China, even as Trump has promised to challenge China’s financial and trade practices. We don’t even know full extent of Trump’s business relationships around the world, since he has refused to release his tax returns.

Obviously the way out of these looming conflicts would be for Trump to sell all the businesses. No law says he has to, however, and such a requirement would be unrealistic and punitive, harming investors and business partners. Trump could give everything to his kids, putting himself into the role of King Lear for the future, but that’s not really a cure for the conflict. His family would still be tied to the business and its success.

Many Presidents, including Reagan, Clinton and both Bushes, placed their assets in blind trusts, run by independent third-party managers had complete control over them.Those cases aren’t truly parallel, however. None of them were full-time business moguls; these were investments that they were turning over to third parties. The closest parallel we have  was billionaire third party candidate Ross Perot (in 1992 and 1996), and I don’t recall a major issue being made about his business conflicts either. Perhaps this was because everyone knew he couldn’t win.

You know, like Trump.

Senators and Representative  must recuse themselves from deciding legislation touching on their own financial interests, under the Ethics in Government Act of 1978 enacted after Watergate. Presidents, however, are not covered by that tough legislation. Trump doesn’t have to do anything.

In legal ethics, such conflicts are called personal conflicts. They won’t disqualify a lawyer in a representation on the grounds that he or she cannot be independent and objective if two conditions are met. The client must give informed consent, and the lawyer must reasonably believe that the conflict won’t affect how she handles the case. In this personal conflict of interest, the equivalent of which would require any lawyer to withdraw, no ifs, ands or buts, neither condition can be met. The “clients,” us, have already consented by electing Trump President, though it was hardly informed consent. ( Why didn’t the New York Times put this issue on the front page before the election as part of its announced effort to derail his candidacy?)

As far as Trump reasonably believing that decisions he makes, knowing that it will cost his businesses millions or undermine the financial security of his children, won’t be affected by such concerns, that’s fantasy or delusion. A court would find such a massive conflict to be unwaivable— unethical per se.

To be fair, the power of the Presidency is so sweeping and the implications of the Office’s activities so wide-ranging that no President could be said to be completely unconflicted. We trust that for our Presidents, the best interests of the nation will prevail over all other considerations. Still, no President has ever had a conflict this massive, and Trump enters the office as the least trusted (and, based on past conduct, the least trustworthy) POTUS in history. Trump’s enemies, including Democrats, journalists and activists, can be counted on to use the conflict to cast doubt on Trump’s positions and decisions whenever it is politically advantageous. Imagine what Republicans would have said if Obama’s family  had personal energy interests that benefited from his killing the Keystone pipeline. Or forget hypotheticals: think about how Dick Cheney was constantly accused of pushing foreign policy decisions to benefit Halliburton, when he had no investments in his former employer at all.

In its story last week about Trump’s conflicts, the Washington Post quoted Ken Gross, a former elections enforcement official and lawyer who has advised presidential candidates from both parties, as pronouncing them “troubling.”  Ya think? How about frightening?

I know why I missed this issue, though it is no excuse. For me, Trump’s character, temperament, ethical and cognitive deficiencies were more than plenty to disqualify him from being nominated, and clearly from being elected. I never got to the business conflict problem. I should have. I apologize.

The Republican Party and Trump’s team, however, were obligated to anticipate the problem, think it through and have a plan to address it. So far, there’s no evidence that they did so. The news media, meanwhile, was so busy trying to prove Trump was a racist and misogynist and minimizing for Clinton’s misconduct that it didn’t tell the public, and maybe Trump himself, what they needed to know.

Good job, everybody.

_______________________

Sources: New York Times, Washington Post, NBC

Ethics Alarms attempts to give proper attribution and credit to all sources of facts, analysis and other assistance that go into its blog posts, and seek written permission when appropriate. If you are aware of one I missed, or believe your own work or property was used in any way without proper attribution, credit or permission, please contact me, Jack Marshall, at  jamproethics@verizon.net.

36 Comments

Filed under Around the World, Business & Commercial, Character, Ethics Alarms Award Nominee, Ethics Train Wrecks, Government & Politics, Journalism & Media, Leadership

36 responses to “President Trump’s Massive, Unfixable, Unwaivable Conflict Of Interest…And Why Weren’t We Worrying About This BEFORE The Election?

  1. dragin_dragon

    I’m going to interested in following this story as it develops…especially watching the contortions he goes through trying to prove no conflict. I don’t know why this never occurred to me, but it should have. Thanks.

  2. Chase Davidson

    Another example of the media’s staggering incompetence. They spent all their time focused on ‘gotchas’ and the offensive things he occasionally said (which were, admittedly, terrible) and ignored the more real issue of his many conflicts of interest. It’s a shame that we have a media so focused on salacious BS that they can’t report the more important story.

    • This really is a prime example of how journalism has failed us. This was and is a substantive issue with major implications politically and practically, unlike whether Trump’s pussy-grabbing talk means he just talks like a sexual predator or is one, or whether saying the “Second Amendment people” will deal with Hillary was a threat. The news media treats the public as morons, and as a result prevents intelligent decision-making.

  3. My first comment here, so it feels a bit brutish to start in this way, but, really?

    Small premise, I’m neither a resident nor a citizen of the United States, so my questioning here can be easily dismissed (as far as the fact that it will touch me anyway, but that is the nature of a globalized world).

    Anyway, back on track. I was somehow convinced that you considered this aspect and dismissed it as irrelevant. Not what I would have done, but who am I to judge? I simply thought it was the kind of difference between American and German culture that baffles me but leaves me with the doubt that I am wrong.

    Seeing as this is not what happened, if you want to laugh (or despair), you can see a possible evolution of the debacle as a similar thing happened in Italy not too long ago. The “conflict of interests” that plagued Silvio Berlusconi. The story is long, complicated but, I think, highly educational, and, consider this a fair warning, it will probably give our gracious host a stroke.

    • Huh? I said that I didn’t focus on the issue, and I meant it. If I had discarded it, I would have said so. Why are you convinced that I considered it? I just apologized for missing it, like, say, the entire US news media, business experts and the Clinton campaign, which either missed it or gave it short shrift.

      I just gave more than a fair warning: what do you think the post was about? What part of “frightening” is unclear to you? I don’t need an example from Italy. I completely understand the implications here and now.

      • Right, my bad, the you was intended as “you” people following the elections. I have phrased it badly, sorry.

        I am well aware that you apologized for it, I simply stated my disbelief about the situation. As I said, it was kind of surprising for me.

        My example was more akin to the possible solutions to this kind of conflict. Italy tried some, encountered some specific problems and, even if the situation is not the same, it could be used as a corollary for “things to avoid”.

        • People do not understand conflicts. They just don’t. They have to be pointed out and explained. Democrats really thought Clinton’s Foundation raising money from foreign powers while she was SOS was no big deal. It’s a HUGE deal. That was in the past and done, and they still refused to get it. Trump’s were prospective, but potentially bigger. Clinton could focus hard on them without implicating herself.

  4. Joe Fowler

    This is problematic, to say the least. Previous Presidents have had conflicts, and been extremely wealthy, however this is unique. Trump has been actively managing a multi-national ongoing concern which is certainly different than our early ‘landed gentry’ Presidents, however wealthy they might have been.
    This Wikipedia entry has an inflation adjusted chart of US Presidents inflation adjusted wealth: https://en.wikipedia.org/wiki/List_of_United_States_Presidents_by_net_worth
    Trump is an unprecedented case.

  5. charlesgreen

    “The closest parallel we have was billionaire third party candidate Ross Perot (in 1992 and 1996), and I don’t recall a major issue being made about his business conflicts either. Perhaps this was because everyone knew he couldn’t win.”

    Though it wasn’t presidential, Michael Bloomberg provides a very good example. He is a billionaire, he was favored and in fact elected, he was running an active business at the time he got elected mayor, and he truly did the right thing – turning over management to a third-party, effectively blind trust manager.

    • Yes, good example, though New York doesn’t implicate international conflicts.

    • “turning over management to a third-party”

      Turning over management only?

      Did Bloomberg still own the profits of his business or benefit from the profits of the business?

      If so, this isn’t an alleviation of the conflict of interest.

      • charlesgreen

        You’re right, he didn’t liqyifatevthe business, just turned over management of it. I’m not sure you can achieve complete lack of conflict without selling the business. Just saying he came closer than the other examples

        • That’s where I was eventually pointing. I don’t know if you can completely eliminate the conflict of interest.

          The best one can do I think is to actively go out of one’s way to be transparent in all decisions that fall within that particular realm while actively doing one’s best to counteract any bias that conflict could create in decision making.

  6. Chris Marschner

    One of the problems is that the only way to be elected is to be entrenched in politics or outrageously wealthy enough to be able to weather the onslaught of the opposition. This precludes virtually everyone from running.

    These issues are rarely considered when considering congressional candidates. In fact we fully embrace various professions such as law and medicine as qualifications for office. Both of these professions can financially benefit directly and indirectly from legislation they choose to pass. We cannot avoid such conflicts unless we cap near and long term incomes when one is elected to office.

    If you want to eliminate conflicts you must first find ways to allow average citizens to run effective campaigns and implement term limits. Finally, if the fourth estate would do its job objectively public pressure can help minimize the liklihood that politicians will abuse the trust we put in them.

  7. “it was hardly informed consent”

    I don’t think many Trump voters were not aware of his having a large business empire. The awful truth is they didn’t care, or felt, given the choice, that they didn’t as much as they cared about other things. Shame on Republicans for not coming up with a better candidate. Shame on Democrats for the same failing. Shame on the US political class for mishandling things so badly over the last 10, 20, 40, fill in the number years.

    • Knowing about it is not the same as informed consent. I knew about it a lot better than 99% of his voters, but I didn’t connect the dots.

      • Chris Marschner

        Jack

        I actually did consider this issue when his opposition was suggesting that his temperment might lead to nuclear war. Having economic interests around the globe would be more likely to cause him to think twice about going off half cocked. Secondly, negotiating treaties that benefit him may benefit many more than him. It is hard to ascertain whether or not he can make decisions on the international stage that harm other American interests and benefit him alone. Also we must remember that most international agreements on trade require Congressional ratification.

  8. J. Houghton

    I was never a Trump fan, but I was all along keenly aware of the almost absurd magnitude of the potential, actual and perceived conflict of interest. Obviously, it can not be resolved. Never could. Not even in a blind trust. Trump is different from any presidential candidate or president we have ever had before.

    But in consideration of the many factors that argue against a Trump presidency, I really didn’t care and still don’t care about the issue of conflict of interest as it may apply to his presidency.

    First, he and his family are absurdly rich already. They got theirs already. The presidency is just the “icing on the cake” for prestige, ego, and something that to tell the grand kids about. Compare this to the Clinton situation… leaving the White House “dead broke” and now a couple hundred million in the black and control of maybe a few billion more through the Clinton Foundation. Amazing how they did that… Maybe Hillary read some business articles and became skillful in the art of making speeches so eloquent and insightful that they are worth tens of thousands of dollars per minute! Seriously… does anybody believe this?

    Second, the media is ready to “slice and dice” Trump or anyone associated with his administration for jay walking or spitting on the sidewalk. Of course he will have to try to act honorably and ethically… or else face dire consequences. If he wants to do something truly greedy and stupid, he will be gutted by the media, and by others in the Republican party. He is a 70 year old rich guy. Does he really want to commit political suicide in front of the world?

    Third, of course he will act to benefit his business interests and the business interests of his children. So, what. It will most likely not just benefit his own interests. In fact, his self benefiting decisions might even help many others. Besides, treaties need Senate confirmation, and other actions require both houses of Congress to pass laws making presidential priorities into law so that those priorities are implemented.

    Yes indeed, there is an obvious potential for conflict of interest and there could be problems. So, what else is new?

    As for me, I am willing to accept the election results, hope for the best, and wait and see. Maybe we will all be pleasantly surprised.

    • zoebrain

      ” Second, the media is ready to “slice and dice” Trump or anyone associated with his administration for jay walking or spitting on the sidewalk. Of course he will have to try to act honorably and ethically… or else face dire consequences.”

      Dire consequences? He’d be sliced and diced anyway, even if spotless. So any negative stories about him will be seen as just more partisan BS, and probably overwhelmed by positively spun clickbait anyway.

      He’s immune to “dire consequences”. He’s already been gutted by the media, and the Republican party, hadn’t you noticed? The latter have learnt their lesson.

      As for money – the rich didn’t become that way by thinking any amount was enough. The object of power is power, the object of immense wealth is even more immense wealth.

      Philanthropy isn’t dead – see the Gates foundation – but is usually a tax dodge, often to churches or ,”charities” that give kickbacks, and the genuine variety hasn’t been fashionable since Carnegie. The robber barons keep their lucre now, lest bigger sharks get them.

      • That’s a rationalization, though—on the list!—“It would have happened anyway.” Maybe, but maybe not. The President is “Caesar’s wife,” especially this President. Hillary, Nixon..if the President is already not trusted, even a hint of an ethics breach will cause trouble. Of course, it shouldn’t matter, but a trusted figure and an untrusted one can do the same thing, and have them seen completely differently.

        • zoebrain

          Yes, it would have happened anyway. That’s not an excuse or rationalisation though, or at least, it wasn’t intended as such. It means only that there is no penalty imposed for being unethical, it is not “political suicide” now.

          It would have been even 5 years ago, I think. Certainly being so open about it, it was always (in)decently concealed. Hypocritical, yes, so really disgusting, but hypocrisy at least provides some bounds.

          “No mistreating the Abos….. When anyone’s looking” at least means there’s some of the time they’re not being mistreated. Heck, at the risk of Godwin violation, the Wannsee conference was streng geheim – top secret.

          Now, what are the bounds? None that I can see. Hopefully the Pence presidency* with the Trump badge will be seen in future years as an abberation, and not a precedent to be followed. Too over the top.

          *
          Donald Jr. wanted to make him an offer nonetheless: Did he have any interest in being the most powerful vice president in history?

          When Kasich’s adviser asked how this would be the case, Donald Jr. explained that his father’s vice president would be in charge of domestic and foreign policy.

          Then what, the adviser asked, would Trump be in charge of?

          “Making America great again” was the casual reply.

          • zoebrain

            Did I mention that I really loathe hypocrisy? Even though it does set bounds? I don’t think the gain is worth the cost. Just that there is a gain, as we’re now seeing now we’ve lost it.

          • Charlie Green

            That this astonishing interaction never got the press it deserved is one of the (many) tragedies of this election.

            Un-effing-believable!

            • zoebrain

              Oh, you ain’t seen nothin’ yet.

              As members of the Transition team, naturally there has been a request to grant these “blind trustees” TS security clearances.

              Information is compartmentalised, and you need both clearance snd Need To Know (NTK) to access any classified information whatsoever.

              The POTUS is the ultimate authority on who has NTK of course, though this is de jure rather than de facto, just by not giving data to the POTUS unless specifically asked. So he doesn’t know what questions to ask. See Oliver North et al. But they don’t have to access *everything,*.

              However, such things as commercial negotiations, contractual terms, trade secrets revealed to the government, contract evalation criteria, all the commercial intelligence gathered overseas and domestically by various 3-letter agencies, may all be authorised for disclosure to them. Only the sheer amount of such data would be overwhelming.

              The possibilities of monetarising the presidency are enormous. I’m sure they haven’t got a clue just how big this gravy train is. Not yet. I’m just seeing the ramifications here myself, and I was in the business.

              Nepotism laws can be circumvented simply by not giving them salaries, just power, so I’m told. “Advisors” whose advice is always followed.

              The Legal profession will make out like bandits. Every federal contract challenged for probity. Discovery denied or delayed – Trump’s legal team is infamous for that. Court orders ignored, challenged, appealed… Executive Privilege asserted… Why, the Grant administration will look like a model of probity even if there’s nothing untoward actually going on. The chances of which, on past record, are negligible.

              Expect stuff to go down in Russia, gloves off now. This strike was a victim of its own success. Winter coming on too.

              • When did you morph into Jeremiah?

                • J. Houghton

                  This is all very interesting and pretty much irrelevant and yesterday’ news. After HRC and Antony Weiner opened up the flood gates to the RF, the PRC and “Carl” who still lives in his mother’s basement… who really cares about security clearances? The horse is out of the barn.

                • zoebrain

                  I’m a safety critical engineer, Jack. It is my job to foresee possible problems, and prevent them or ameliorate them as much as is feasible.

                  Many problems are unforeseeable, so you build in belt and bracers, have string in the pocket, some crazy glue handy etc so reduce the risks when something happens you didn’t or couldn’t foresee.

                  This means perpetual pessimism and a Cassandra like approach.

                  But it also means planes *don’t* crash just because the hardware on not one but two out of three systems failed simultaneously. It means providing enough functionality so the plane has a good chance of landing safely even if all three systems fail. It means that even if it crashes, the passengers have the best chance possible of escape.

                  It means the spacecraft really does continue working 10 years after launch, and despite getting fried by record solar storms that couldn’t be predicted.

                  And when you screw up… Fukushima. Chernobyl. Apollo 1.

                  Now as a lawyer, please tell me where I’m wrong here, as I’ve been known to be. No appeals to tradition, or custom, only legal strictures that have genuine enforcement mechanisms.

                  You see, sometimes things like Fukushima, or Chenobyl, or Apollo1 happen. Then we have to move quickly, and do what can be done to assess the scope of the Charlie Foxtrot, and after that, do what we can. Best case, Apollo 13. Worst case, Apollo 1, and all we can do is start again.

    • charlesgreen

      A minor correction, if I may, to your characterization of Hillary Clinton’s speaking fees.

      Here is a link to the ten highest-paid public speakers in the world, circa 2010. Among them are Rudy Giuliani, Tony Blair, Sarah Palin, Ronald Reagan – and, topping the list, Donald Trump.
      http://www.onlineuniversities.com/blog/2010/04/10-highest-paid-public-speakers-in-the-world/

      Speaking fees at her level are a nothing-burger: the corporate world in particular has long ponied up to hear politicos and celebrities pontificate in person. It’s frequently not about access or pay to play, so much as it is about simple fandom – people with too much money indulging the star-struck nature of their employees to make them feel like big shots by having someone “important” come talk to them so they can brag to their neighbors about how cool they are.

      • RONALD REAGAN!!! Hell, I’d pay a lot to hear HIM speak! And he should charge a lot. Ronny’s incredible, you have to admit. You just CANNOT keep him down.

        As for the others…If I pay someone with no current power or prospect of having any but an actual historical figure or an entertainer, I’m paying for what I get. If I pay someone who will soon be in high office and my interests benefit from currying his or her favor, I’m paying for what I WILL get, I hope. The circumstances and appearances are different, hence what is being sold is different. Also, the post is misleading: a single fee, like Trump’s, doesn’t make him the Highest paid speaker, it makes him the speaker who got the highest fee. Trump 2010 is not Trump today. It also figures that a Billionaire would ask a lot to to speak (or nothing), since less money isn’t much motivation. I’m assuming that those seminars were high-priced affairs (Herman Kahn charged seminar goers 10,000 bucks each in the Eighties) and made a profit for the organizers, but one can’t call one anomaly typical of the speaker’s fees.

        There also has to be a distinction between one-off fees of those who only speak at special occasions, and those whose occupation is speaking.

        Also the list is now so out of date that it can’t really be cited as authority. Lance Armstrong,to name one, will come to your house and give a speech for a piece of cheese.

        Hillary’s fees looked venal and were, especially when before college audiences. When they were for countries and companies that had business or were likely to that she could benefit in an official position, it looked bad, and may have been bad. As you know.

        • charlesgreen

          Basically yes, and not just politicians. Try booking Malcolm Gladwell, or JK Rowling, or Jon Stewart. The speaker bureaus that represent top end talent (Washington Speakers Bureau, Leigh Bureau, Leading Authorities) all charge low-to-mid six figures for the very top speakers, and get it. You may or may not think it’s a scandal, but it’s a business, and not a small one.

  9. Jf

    This is a big concern, Trump and family members making government decisions that will benefit their empire. How could his Family have any say at all about ongoing issues,that more tha likely Know very little about !! I’m not in agreement w/this

  10. zoebrain

    https://www.washingtonpost.com/news/the-fix/wp/2016/11/13/giuliani-there-will-be-a-wall-between-trump-and-his-financial-interests/

    Senior Trump advisory Rudy Giuliani was asked Sunday about whether Donald Trump would put his business into a ‘blind trust’ to avoid potential conflicts
    He said the prospect would be unfair to the Trump children who would otherwise run the business. Noting that they can’t work in government because of anti-nepotism rules he said ‘He would basically put his children out of work’

    Apparently there will be a wall though between Trump and the businesses run by his offspring. A yuge wall. The very best wall.

    No word if Mexico is going to pay for it.

    Maybe I’m too cynical but…

    A quarter of the electorate would crucify him even if there wasn’t a real issue. Including much of MSM.

    A quarter of the electorate would still support him despite the real issue, possibly even more enthusiastically than before, so they don’t think of themselves as dupes. They’ve already tolerated worse.

    And a half of the electorate, seeing one story on InfoWars, another in the NYT, discard both and don’t care.

    The Crying Wolf syndrome I first talked about years ago. Keep on calling opponents fascist, racists etc and when a real fascist or racist – or some incompetent who just panders to them and lets them run things for him, I didn’t foresee that – comes along, he won’t be recognised.

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