Trump's blind trust blurs line between business empire and presidential role

WHEN ASKED ON television earlier this year whether a President Donald Trump would ever mix politics with business, his eldest son Donald Jr said there was no risk of that. The son, an executive in his father’s company, insisted the two wouldn’t discuss the business if dad ever got to the White House.

Then Donald Jr. added two words: “Trust me.”

The American people may have little choice.

This week, Trump said that three of his children would take over his business empire while simultaneously be part of his presidential transition team executive committee – resulting in a direct conflict of interest.

“The fact that they have been included as part of the transition team just shows how inappropriate their role in bridging the gap between him as a businessman and politician is,” said Meredith McGehee, a strategic adviser at the Campaign Legal Center told the Washington Post.

“It’s a clear demonstration that there is no firewall between the two.”

McGehee and others have also cast doubt on the idea that the so-called “blind trust” is actually blind at all. She calls it a “one-eye-closed-and-one-eye-open trust”.

For Trump’s business here in Ireland – Trump International Golf Links in Doonbeg Co Clare – the process is equally unclear.

Joe Russell, managing director of the golf course, told TheJournal.ie in the aftermath of the election result that for the past few months he had only been in contact with Donald Trump’s son Eric.

But he is unsure of the exact arrangement around the blind trust that Trump’s businesses must be placed in, and whether Donald Trump’s children will be allowed to continue to run the business.

“Come to think of it Eric hasn’t called me in the past few months,” he says.

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Blind trust

The aim of blind trusts is for presidents to put personal holdings such as stocks into a “blind trust” run by an independent trustee with no ties to the occupant of the Oval Office. But as with so many other areas of politics, Trump looks ready to upend this time-honoured practice.

Trump’s plans to hand control of his Trump Organization to three of his adult children and a trustee cannot be considered a blind trust, said Kenneth Gross, head of political law at the firm Skadden, Arps, Slate, Meagher & Flom.

Even if the president-elect were to appoint a trustee with no family ties, that would probably not remove the potential for Trump to use his new power over policy to enrich himself. Liquidating Trump’s holdings would be difficult, and so he would always be aware of what assets he holds.

Sprawling empire

Mahesh Kumar A. Mahesh Kumar A.

Voters have long worried about elected officials using their power to line their pockets – or those of business partners – and shape policies to advance their private interests. But rarely has an incoming president represented such potential for conflicts of interest.

No previous commander in chief has brought with him such a sprawling business empire with so much complexity, opaqueness and opportunity for self-dealing.

Trump owns golf clubs, office towers and other properties in several countries. He holds ownership stakes in more than 500 companies. He has struck licensing deals for use of his name on hotels and other buildings around the world and has been landing new business in even more countries – in the Middle East, India and South America.

Gross calls Trump’s holdings “unprecedented” in size and complexity for a president, a “tangled web” of potential conflicts that would be difficult to unravel.

As it turns out, Trump doesn’t even have to try.

AP / Press Association Images AP / Press Association Images / Press Association Images

Presidents are not required to set up blind trusts. In fact, they can even run a business from the White House, though Trump has said he will not. Federal ethics rules put strict limits on nearly all government employees and elected officials to prevent self-dealing, but the rules do not apply to the president.

One area where the public interest could clash with the personal involves Trump’s influence over federal agencies whose decisions affect his businesses.

In turning the government-owned Old Post Office into his new Washington hotel, Trump struck a complex rental and management deal with the General Services Administration. As president, he will appoint the head of the GSA.

And one of Trump’s lenders, Deutsche Bank, is in settlement talks with the Justice Department over its role in the mortgage blowup that sparked the 2008 financial crisis. Trump will appoint the head of that agency, too.

For his part, Trump has dismissed the idea that he is even interested in his business now. In an interview with CBS’ 60 Minutes last Sunday, he said he was fully engaged in efforts to “save our country”.

“I don’t care about hotel occupancy,” he added. He called matters like that “peanuts”.

Jimmy Carter stands in a large mound of peanuts. AP / Press Association Images AP / Press Association Images / Press Association Images

Blurred lines

The Trump Organization said in a statement that it is “vetting various structures” with the goal of transferring management to three of Trump’s children, along with a “team of highly skilled executives”.

Carter started the tradition of presidential blind trusts when he put his peanut farm in one. All the presidents who followed also set up one, according to Gross, save for Barack Obama, who mostly had holdings in plain-vanilla index funds.

With a blind trust, owners can’t control their portfolio and may not even know what’s in it. Trustees sometimes sell off holdings and invest the money elsewhere without the owner’s knowledge.

“It’s one thing to sell 1,500 shares of Procter & Gamble. You can do that easily,” Gross said. “It’s another thing to sell a golf course in a foreign country or extricate from a branding contract.”

In the 2012 presidential election, Republican nominee Mitt Romney, who had vast holdings from working at buyout firm Bain Capital, pledged to put his wealth in a blind trust certified by the Office of Government Ethics.

On CNN on Sunday, Trump adviser Rudy Giuliani suggested the president-elect could set up a blind trust. Later he suggested a more flexible arrangement might be necessary given the role of Trump’s children in his business. He called the situation “very unusual.”

“There’s no perfect way to do this,” Giuliani said. “You have to have some confidence in the integrity of the president.”

With reporting from Gráinne Ní Aodha

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