WASHINGTON ― The General Services Administration said Thursday that Trump International Hotel in Washington isn’t violating its lease with the government, even though it appears to prohibit an elected official from benefiting.
The declaration by the GSA that the president’s business is in full compliance with lease terms comes after the Trump Organization modified its business structure to conform to legal language that appears to prohibit an elected official from taking part in the lease. In addition, Trump said he removed himself from management positions with his companies and placed his sons Donald Trump Jr. and Eric Trump in charge. The president is keeping his full ownership stake in his businesses, and he can reap the spoils when he leaves office.
Trump’s November victory raised questions over the obvious conflicts of interest surrounding his D.C. hotel. Aside from his tenancy in a government-owned building where he has now become landlord, the hotel has attracted a flock of foreign dignitaries, lobbyists and other influence-seekers. Wealthy Cabinet members are living there, while the president’s business partners and donors make sure to stay at the hotel when they are in town.
The GSA announcement did little to mollify critics of the government’s lease with Trump.
Democrats, who had sought a GSA review of the lease since the election, greeted the decision with extreme skepticism. Rep. Elijah Cummings (D-Md.), the ranking Democrat on the House Oversight and Government Reform Committee, and Rep. Peter DeFazio (D-Ore.), the ranking Democrat on the House Transportation Committee, said GSA officials had previously told them that Trump was not in compliance with his lease.
“GSA changed the position it held before President Trump took office,” Cummings and DeFazio said in a joint statement Thursday. “This new interpretation renders this lease provision completely meaningless ― any elected official can now defy the restriction by following this blueprint. The letter provides a completely inadequate explanation for its decision and instead footnotes news articles and recites the complex structure of trusts and limited liability corporations through which President Trump and his family own the hotel. This decision allows profits to be reinvested back into the hotel so Donald Trump can reap the financial benefits when he leaves the White House. This is exactly what the lease provision was supposed to prevent.”
Steven Schooner, a government procurement legal expert at George Washington University Law School, has been highly critical of Trump’s roles in the hotel as both landlord and tenant. (Schooner is a member of a team of pro bono lawyers representing a Washington restaurant suing the Trump hotel for unfair business practices.)
Schooner said in an email to HuffPost that he sees conflict in the GSA finding that the hotel complies with its lease. “Not only is the conclusion unexpected and unpersuasive, as a matter of law, but, as a matter of policy, it is harmful to the integrity ― and thus credibility ― of GSA, the Presidency, and federal procurement process,” he wrote.
“It is deeply troubling that the contracting officer’s letter makes no reference to the underlying conflicts of interest, which, of course, undercuts any suggestion that he (the contracting officer) engaged in independent analysis,” Schooner continued. “The [contracting officer’s] decision favors the President, who, in effect, is his supervisor, just as it favors the GSA (in terms of maintaining the status quo); but it also pleases his (the [contracting officer’s]) ultimate supervisor ― the head of the agency ― who serves at the President’s pleasure.”
Trump, his sons, and his daughter Ivanka signed the lease in 2013. It included a provision stating, “no … elected official of the Government of the United States … shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom; provided, however, that this provision shall not be construed as extending to any Person who may be a shareholder or other beneficial owner of any publicly held corporation or other entity, if this Lease is for the general benefit of such corporation or other entity.”
Trump’s lawyers provided the GSA with numerous arguments for why this provision should not apply to the president. Their most consequential argument pointed to a provision banning elected officials from taking part in the lease, but exempting anyone “who may be a shareholder or other beneficial owner of any publicly held corporation or other entity, if this Lease if for the general benefit of such corporation or other entity.”
Trump’s lawyers argued that the term “publicly held” applied to the word “corporation,” but not to “other entity.” To ensure that profit earned through the lease would fall to the “general benefit” of this “other entity,” the lawyers altered the structure of the Trump-owned limited liability companies involved in the hotel. In an amendment to the operating agreement, Trump’s lawyers declared that the company owning the hotel and its lease will not distribute any funds to the president or any entity connected to him while he’s in office. Instead, those funds will be held by the hotel’s main corporate body and will only used for business activities.