As many people have pointed out, President-elect Donald Trump has a problem: It’s called Article 1, Section 9, Clause 8 of the United States Constitution, better known as the “Emoluments Clause.” It says this:
“No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”
“The idea behind the clause is pretty intuitive,” Harvard Law professor Noah Feldman notes at Bloomberg View. “If federal officials can be compensated by foreign governments, they can be bought.” He adds: “It’s pretty clear that the clause was intended to stop foreign governments from currying favor with federal officials through gifts.”
But Trump’s massive business holdings ― more than 500 different corporate entities around the world ― and his refusal to sell them before he takes office places him on a collision course with the Constitution.
The Trump International Hotel in Washington is one of the more talked-about entities in which the incoming president will run afoul of this constitutional stipulation. The $800-a-night showpiece was already a source of ethical woes for Trump, owing to the fact that the building is leased from the government, which by law is prohibited from renting property to officials in said government. This means that as soon as Trump is sworn into office, he will technically be on both sides of the lease, as both tenant and landlord. But we digress.
The more serious issue with the new hotel is that representatives of foreign governments could decide to book rooms as a way of currying favor with the Trump administration, which is already happening. And despite the efforts of Trump’s tax attorney, Sheri Dillon — who this week said that Trump would give away the profits (after expenses) his hotels made from foreign governments ― big concerns remain about foreign money flowing through Trump’s resorts.
All the attention this week to Trump’s plan for avoiding profiting from foreign delegations at his hotels only served to distract from the real news that came out of his press conference on Wednesday: Trump is not planning to do anything to keep foreign influence from flowing into the other 500-plus companies he owns.
Here’s the thing: The Trump Organization is not one, single corporate entity that can be said to be “Trump Inc.” Instead, the president-elect’s business empire is made up of hundreds of individual LLCs, each housing assets that range from a high-rise in Uruguay to a helicopter in Manhattan.
Judging from Trump’s financial disclosure forms, scores of these companies are basically dormant ― little more than a name on a piece of paper and a license to sell stuff. This is fairly common in commercial real estate, where deals can take decades to finalize, and where partnerships can run into trouble during periods of recession and spring back to life when times are good.
Trump’s own development of Manhattan’s West Side Yards — which Trump has said was the “best deal” he ever made — took years to develop, and was dormant for several years after Trump and then-Mayor Ed Koch got into a scrap in the late 1980s over tax abatements, which Koch ultimately refused to provide.
While the development was on hold, Trump received an offer from fellow developer William Zeckendorf Jr. in 1989 to buy the property, but Trump wouldn’t sell, even though Zeckendorf offered nearly four times what Trump paid to acquire it. It wasn’t until 1994 that Trump’s creditors forced him to sell. (The property ended up in the hands of Hong Kong developers, who used Trump’s name on some of the buildings; he eventually walked away with minority stakes in a pair of office buildings now worth $640 million.)
Now that we know Trump has hundreds of paper companies in dozens of countries, it’s time to revisit the Emoluments Clause from a new angle.
Take, for example, Trump’s two inactive companies in Egypt — Trump Marks Egypt Corp. and Trump Marks Egypt LLC. Both were incorporated in 2007, but currently exist in a form of suspended animation. Egypt, like many developing countries, has high levels of public corruption, and low rates of prosecution for high-ranking officials accused of misusing government funds.
In this environment, it’s not a stretch to see how it might be in the interest of the Egyptian state to revive Trump Marks Egypt Corp., in the hopes that doing business with Trump’s sons in Egypt could help strengthen the fragile government’s relationship with an American administration that currently provides Egypt with $1.46 billion a year in foreign aid. I mean, it’s hard to make the argument, if you’re Egypt, that you should do anything but revive the deal you struck years ago to do who-knows-what with Donald Trump.
In order to shield the fact that such a deal was being financed with government funds, in many parts of the world it would be relatively easy to pass the money through a corporate entity run by an ally of the current leadership. Heck, that kind of stuff already happens all the time!
As it happens, Trump’s lawyer’s only assurance in this regard was that his “company would make no new foreign deals,” which leaves the door open for Trump to reap riches off any foreign deals set up in the past. Whether they’re lying dormant, were put on hold for a minute, or are furiously being negotiated in the eight weeks between Trump’s election and his inauguration, these projects all share one thing in common: They could technically be considered ongoing business matters that existed prior to Trump taking the oath of office.
If any of these foreign deals suddenly come back to life during Trump’s presidency, it’s safe to assume Trump’s attorneys would argue that they were pre-existing business affairs, like his D.C. hotel and his Manhattan skyscrapers — not new deals struck between Trump’s family members (who want to make money), and state actors (who want a business partner in the Oval Office).
“The notion that there won’t be new deals doesn’t solve the problem of all the existing businesses,” Walter Shaub, director of the Office of Government Ethics (whom congressional Republicans are now threatening to subpoena), noted this week.
Although Trump has announced that he will be handing off these affairs to his two eldest sons, the president-elect cannot unknow the existence of his hundreds of shell companies or his stalled overseas deals, any more than he can forget that he has two grown sons. While Trump insists he will not discuss these matters with his adult children, there’s no way to either police or enforce this promise.
In case you weren’t already freaking out, consider this. Just as foreign favor-seekers can look for ways to enlarge Trump’s empire, they can also threaten to shrink it as well. As The New York Times reported in November:
And in Turkey, officials including President Recep Tayyip Erdogan, a religiously conservative Muslim, demanded that Mr. Trump’s name be removed from Trump Towers in Istanbul after he called for a ban on Muslims entering the United States. More recently, after Mr. Trump came to the defense of Mr. Erdogan — suggesting that he had the right to crack down harshly on dissidents after a failed coup — the calls for action against Trump Towers have stopped, fueling worries that Mr. Trump’s policies toward Turkey might be shaped by his commercial interests.
Mr. Trump has acknowledged a conflict of interest in Turkey. “I have a little conflict of interest because I have a major, major building in Istanbul,” he said during a radio interview last year with Stephen K. Bannon, the Breitbart News executive who has since been designated his chief White House strategist. “It’s a tremendously successful job. It’s called Trump Towers — two towers, instead of one. Not the usual one. It’s two.”
And even here, we’ve only begun to scratch the surface of the constitutional conflicts. In addition to the aforementioned entanglements, Norm Eisen (who served as a presidential ethics adviser in the Obama administration), Richard Painter (who served in the same capacity for President George W. Bush), and Laurence Tribe (constitutional law professor at Harvard University) outline several more in a paper published by the Brookings Institution in December, titled, “The Emoluments Clause: Its Text, Meaning, and Application to Donald J. Trump.”
According to Eisen, et al., areas of concern include:
“Shortly before the election, President Duterte of the Philippines named Jose E.B. Antonio, a business partner of Mr. Trump and founder of a company behind Trump Tower Manila, as a special envoy to the United States.”
“The Industrial and Commercial Bank of China ― owned by the People’s Republic of China ― is the single largest tenant in Trump Tower. Its valuable lease will expire, and thus come up for re-negotiation, during Mr. Trump’s presidency.”
Trump’s businesses owe hundreds of millions to Deutsche Bank, which in December agreed to a $7.2 billion settlement with the U.S. Department of Justice ― “a settlement that will now be overseen by an Attorney General and many other appointees selected by and serving at the pleasure of Mr. Trump.”
The authors’ overall assessment is very straightforward:
Wholly apart from any quid pro quo arrangements of demonstrable bribes or payoffs, the Emoluments Clause will be violated whenever a foreign diplomat stays in a Trump hotel or hosts a reception in one; whenever foreign-owned banks offer loans to Mr. Trump’s businesses or pay rent for office space in his buildings; whenever projects are jump-started or expedited or licensed or otherwise advantaged because Mr. Trump is associated with them; whenever foreign prosecutors and regulators treat a Trump entity favorably; and whenever the Trump Organization makes a profit on a business transaction with any foreign state or foreign-owned entity.
Despite what you’ve just read, all is not lost. There is one more avenue of influence that could be exerted over the incoming president and his future foreign business partners: Public pressure from public exposure. That’s right, folks, the crooked media with its fake news and its rude questions might just be our last, best hope to stop the president from becoming the world’s most popular business partner.
Indeed, two such projects have already fallen victim to the hot glare of investigative reporting: The first was a Trump-branded resort on the Black Sea in Batumi, Georgia. The second was a Trump-branded office tower in Buenos Aires. Both of these developments were briefly revived in the weeks after the election — but have since been canceled.
In all likelihood, the media attention on strained U.S. relations with the countries where these deals were situated likely played a role in killing them..
But if reporters are the last, best hope, we’ve got to do a much better job than we’ve been doing these past few weeks. Case in point: Given the opportunity to probe the president-elect and his attorney on foreign business dealings at this week’s press conference, only one reporter opted to do so, weakly inquiring, “What is your response to your critics who say not only you, but also your Cabinet is filled with conflicts of interest?”
If that’s the best the media can do, then Trump and his family are poised to make billions of dollars by running roughshod over the Constitution.
Christina Wilkie is a White House reporter for the Huffington Post, where she covers the incoming Trump administration. Jason Linkins edits “Eat The Press” for The Huffington Post and co-hosts the HuffPost Politics podcast “So, That Happened.” Subscribe here, and listen to the latest episode below.
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