When President-Elect Donald Trump is sworn in in January, he’ll effectively have two buildings on Pennsylvania Avenue: The White House, and his brand new luxury hotel, housed in the historic Old Post Office building.
In combination, the two form the nexus of a massive, nearly-guaranteed conflict of interest.
Trump has never been shy about mixing business with politics — during the campaign, he used the new hotel as a staging ground for a widely-anticipated political press conference, then turned it into a free media bonanza to publicize his new property. “Nice hotel — under budget and ahead of schedule,” Trump began his remarks, though ostensibly reporters were there to hear him announce he finally accepted that President Obama was born in the United States.
But now that Trump is poised to be the next President, the potential for exploitation has grown exponentially.
Trump now sits on both sides of the table
With the new hotel, a conflict of interest is practically guaranteed, as Steven L. Schooner and Daniel L. Gordon, both former government officials specializing in federal contract law, wrote in an article in Government Executive.
Trump’s family-owned company is leasing the historic building from the government’s General Services Administration (GSA). As president, Trump will appoint the new head of the GSA. This means that after January 20th, for the multi-million-dollar hotel Trump will be both tenant and landlord.
“The situation is a casebook example of both the appearance of a significant conflict of interest and an intolerable intermingling of an elected official’s governmental duties and his family’s personal financial interests,” wrote Schooner and Gordon.
The standard for conflicts of interest is not whether or not someone actually behaves inappropriately. That would be difficult to precisely determine — so instead, the standard is when there is the appearance that they might have the motivation to benefit from behaving in a biased way.
In this case, Trump’s entanglements with the hotel without a doubt create such appearance — and likely, his position in the government will confer an actual personal financial benefit.
The lease for the property is a 60–year agreement that requires an annual disclosure of detailed financial information and regular negotiations for rent adjustments.
These extensive disclosures are followed by negotiations over escalation of the rent and any other payments that the Trump Organization must pay to the government. Just imagine GSA pressing the Trump organization for more detailed revenue and expense information, or the President’s children negotiating annual rent adjustments with a career civil servant who reports to the GSA administrator appointed by their father, who serves at his pleasure.
Such a web of financial conflicts is explicitly prohibited by the GSA contract, which states that no elected official of the government can enter into a government lease, nor get benefits from it. Once Trump is elected, he’ll be in violation of the terms.
Trump has said that he will hand over control of his business to his adult children to deal with the massive, unprecedented conflicts his business empire presents. However, he has declined to actually divest from his businesses — so regardless of if he’s involved in the day-to-day, he’d still benefit from the hotel’s success, a clear violation.
The conflicts, however, go even further. Trump has made his children central to his transition team — so the exact same people are shaping his business empire and the future US government. That also sends a clear message to his business partners: Dealing with his children is dealing with people who have the ear of the president. There is no barrier between the Trump Organization and the Trump administration.
The only solution when it comes to the hotel, write Schooner and Gordon, is for the GSA itself to take action.
Most government contracts contain a clause permitting the government to terminate the contract, when appropriate, if it’s in the government’s interest to do so. But curiously, “the Trump hotel lease explicitly prohibits GSA from exercising this longstanding, well-established, Congressionally-mandated right.”
The ethically sound action, then, is for the GSA itself to terminate the lease, write Schooner and Gordon.
“Based on the agreement’s express terms, we believe that Trump has breached the contract. In the alternative, GSA should breach, or do whatever it takes to end, the contract.” Even this path, though, is likely to lead to an ugly spectacle: “Of course, the President-elect or his family business may sue the GSA. The Trump organization is notoriously litigious, and we do not expect trump to walk away from the lease and the prestigious property without a fight.”
Trump himself has given no indication he intends to grapple with the corruption of democratic safeguards his business empire presents. The options, then, are either for the GSA to retain the lease — and for a carefully preserved barrier against conflicts to fall on the most public stage imaginable — or for them to do as Schooner and Gordon prescribe and end the lease. This in turn could result in monetary damages paid by the government to the Trump Organization (though the payout may be much smaller than what Trump would have earned from the hotel itself).
So unless Trump shifts course, the path forward is fraught either way for the interests of the government and the people he now represents.
Trump’s endless conflicts
For many reasons — the symbolism of the hotel’s location, the clear language of the lease, Trump’s own blending of the political and personal in promoting the hotel — this is one of Trump’s most black-and-white conflicts of interest. But it’s far from the only one.
It’s not even the only conflict presented by this hotel. The Washington Post reports that the hotel is the new hot spot for foreign diplomats, who by purchasing lavish suites during their stay, may attempt to curry favor with the President. Since Trump hasn’t divested from his businesses, the money they spend there will eventually make its way to his pockets.
Ethics experts — including the former Chief Counsel to Presidents Bush and Obama, told ThinkProgress that this is a clear violation of the constitution’s emolument clause. This clause specifically prohibits the President from soliciting or receiving payments from foreign governments.
Trump’s international empire is “receiving a stream of such payments,” Norman Eisen, Chief Ethics Counsel for Barack Obama, told ThinkProgress.
In just the short time since his election, too, Trump has already blended government and personal business. In a diplomatic call with Argentine President Mauricio Macri, Trump reportedly inquired about the necessary government permits for a Trump property he had long hoped to build in Buenos Aires.
The day after the call, the investment group building the Trump-branded property announced that they were moving ahead with construction, which had previously been stalled.
Macri swiftly denied that Trump had asked about the permits. Reuters, however, then reported that Ivanka Trump had joined in on the diplomatic call. Ivanka Trump is likely to be the next CEO of the Trump businesses.
Ivanka also sat in on her father’s diplomatic meeting with the President of Japan.
In a meeting with a Nigel Farage, a British politician and member of the European Parliament, Trump also brought up another longstanding business issue his newfound leverage could help him with: The construction of offshore wind farms near his Scottish golf course.
Trump has gone to court multiple times to stop the farms, which are planned to be a source of renewable energy. His main objection? They will ruin the views from his luxury golf course.
Hope Hicks, a spokeswoman for Trump’s transition, at first denied that Trump raised the subject. In a later interview with the New York Times, Trump himself said he “might have brought it up.” One of the meeting’s attendees, Andy Wigmore, described the conversation in detail.
According to The New York Times, Trump has business interests in at least 20 countries. And in many of those countries, his holdings are tied up with local laws and local politics — interactions that are inevitably going to collide with Trump’s new power as the President.
In response to the growing scrutiny over his business empire after the election, Trump has been unrepentant. In the interview with the Times, he told reporters that “the law is totally on my side, meaning, the president can’t have a conflict of interest.”
On Twitter, he later said that “only the crooked media” was making his conflicts a big deal, and that people already knew he had a business empire with foreign interests.
Prior to the election it was well known that I have interests in properties all over the world.Only the crooked media makes this a big deal!
— Donald J. Trump (@realDonaldTrump) November 22, 2016
In all, he shows no sign of meaningfully separating himself from his business and personal interests. Instead, Trump is positioning himself to cash in on the Presidency.