Management Matters Management MattersManagement Matters
Practical advice for federal leaders on managing people, processes and projects.

Exploiting Public Office for Private Gain

ARCHIVES
The manager of Trump Towers in Istanbul, above, had condemned Trump’s calls to ban Muslims from entering the United States. Turkey was not included in the ban Trump issued Friday. The manager of Trump Towers in Istanbul, above, had condemned Trump’s calls to ban Muslims from entering the United States. Turkey was not included in the ban Trump issued Friday. AP Photo/Emrah Gurel

At no time in the modern era has the nation’s chief executive appeared not only willing, but eager to exploit the nation’s highest office for the benefit of his personal, family, and business wealth. Conflicts of interest—the divided loyalties associated with serving two masters—might seem vague to some, but the problem is real.

The details of President Trump’s business arrangements matter. For example, turning over operations to his sons may reduce the president’s distractions, but Trump’s ownership and interest in his businesses remain, and therein lies the rub.

Yes, the President Can Have a Conflict of Interest

At a Jan. 11 press conference, where Trump announced his new business arrangements, he incorrectly declared that he couldn’t have a conflict of interest. Walter Shaub, director of the U.S. Office of Government Ethics, sees it differently: “A president is no more immune to the influence of two masters than any subordinate official. In fact, our common experience of human affairs suggests that the potential for corruption only grows with the increase of power.”

But lost in the day’s hullaballoo was Shaub’s clarification: “We can’t risk creating the perception that government leaders would use their official positions for profit.”

Rather than bending over backwards to ensure that his actions are beyond reproach, Trump does the opposite. At that same press conference, Trump disclosed that he was “offered $2 billion to do a deal in Dubai with a very, very, very amazing man, a great, great developer from the Middle East, Hussein [Sajwani of DAMAC Properties].” He explained that he “turned it down,” as if to demonstrate he was putting the nation’s interests ahead of his own. But Mother Jones later detailed the access enjoyed by Sajwani (who has an ongoing project with Trump) and other “wealthy foreign business partners” to the Trump family during the inauguration festivities.

Additionally, Trump has offered no solution to resolving the conflict of interest surrounding the Trump International Hotel in Washington, where he is now both landlord and tenant. A growing body of evidence suggests that Trump has done nothing to resolve this blatant conflict. The General Services Administration, which administers the hotel’s lease, told lawmakers that it “received no communications from Mr. Trump” after he won the Republican primary nor after he won the election in November. In a Jan. 11 press release, GSA suggested that it was not involved in, or familiar with, the details of Trump’s conflict mitigation plan prior to the press conference. To date, GSA has offered no additional information.

There are many troubling signs that Trump already is profiting from his office. At the first of the year, Mar-a-Lago, the Trump Organization’s Palm Beach resort, doubled its initiation fee, from $100,000 to $200,000. For those seeking access to the President, it’s a smart investment. Earlier this month Trump designated Mar-A-Lago as his “Winter White House” and received local approval to land a helicopter at the property and build a heliport.

On Jan. 19, at a televised press conference, Sean Spicer, now the White House press secretary, endorsed the Trump International Hotel in Washington, concluding that: “It’s an absolutely stunning hotel. I encourage you to go there if you haven’t been by.” Later that day, Trump dined at the hotel, adding luster to the bragging rights of guests. As if to further promote the hotel, during the nationally televised inaugural parade itself, the president and his family exited the motorcade near the Trump International Hotel, drawing further attention to the property.

The ethical questions surrounding Trump’s judgment took an even darker turn late Friday, when the president, claiming to combat terrorism, issued an executive order barring citizens of certain countries from entering the United States. Yet, as the Washington Post noted, the countries targeted did not include three terrorism-plagued countries where the Trump Organization has business—Turkey, Indonesia and the United Arab Emirates. It's worth noting that the general manager of Trump Towers, Istanbul, had previously criticized the ban

Problems to Come

Five days after Trump took office, the Trump Organization announced that it planned to open more than two dozen hotels in major metropolitan areas across the country. The opportunity to expand the brand proved too lucrative to resist. At the Jan. 27 joint press conference with British Prime Minister Theresa May, the president name-dropped, Turnberry, his Scottish golf course.

Of course, the president’s promise to retain additional ethics and compliance support might help reduce these conflicts, but the odds don’t look good.

Compliance and ethics mean more than working around the rules and defending an institution from attack. The ultimate goal is to create an institutional culture, an ethos from the top down, where "doing the right thing" comes first. That’s why appointments to the president’s ethics team have disappointed seasoned observers and strongly signaled a “Trump first” mentality: 

  • To discuss his new business arrangements, the president turned his Jan. 11 press conference over to a private attorney, Sheri Dillon, whose practice focuses on tax controversies and litigation, rather than ethics or compliance.
  • George A. Sorial, a long-time Trump executive, was tapped as the Trump Organization's chief compliance counsel. Sorial defended the now notorious Trump University, characterizing the fraud lawsuit against it as “completely ridiculous,” prior to Trump paying $25 million to settle the suit. After the Better Business Bureau gave a negative rating to Trump University, Sorial threatened to sue the bureau if it did not withdraw the review.
  • For his external or independent ethics advisor, Trump appointed Bobby Burchfield, a well-known and successful litigator. Ethics and compliance experts bemoaned that Burchfield lacks the profile, credentials, or experience expected of attorneys retained for such a position.
  • The law firm's Jan. 11 white paper lacks most of the key aspirations that a seasoned compliance professional would include in an institution's code of conduct and, instead, reads like a declaration of what counsel anticipates Trump can get away with.

Public Office, Private Gain

We begin from the premise that federal ethics requirements make clear that a government “employee shall not use his public office for his own private gain” or “use or permit the use of his Government position … to endorse any product, service or enterprise.”  While the regulation does not explicitly apply to the president, the principle it expresses – forbidding the use of public office for private gain — does apply to the president. Indeed, courts have recognized the trust or fiduciary obligation of government officials even in the absence of specific legislative or regulatory endorsements of those duties.

Ethics experts around the world understand that public corruption begins with the use – or more specifically, misuse – of public office for private gain. The basic principles regarding conflicts of interest recognized by the Senate Select Committee on Ethics begin with “The Prohibition on Profiting from One's Official Position.” The first discrete prohibition in the House Ethics Rules is that Members “should not in any way use their office for private gain.”

Looking abroad, the Organization for Economic Cooperation and Development publishes the widely used Managing Conflict of Interest in the Public Sector, a toolkit to assist developing countries in combatting corruption and building credible institutions. It includes a diagram, “How a conflict of interest can become corruption,” that shows how trust is destroyed when a public official misuses official power or resources for improper personal gain. We are saddened that such training appears necessary for the U.S. president.

The president, like other government officials, is in a position of trust, and owes certain legal obligations by reason of that position. He is entrusted with governmental power, but is required to use that power on behalf of the people, not himself or his private businesses.

At some point, the courts or Congress will be forced to determine whether income from the president’s business violates the Constitutions’ Emoluments provisions.  Apologists for a new, populist President may roll their eyes, but legislators on both sides of the aisle must take responsibility for what lies ahead. Congress has the authority to curb this behavior. The time to act is now.

This is not idle speculation. Today, the public has no idea whether foreign governments, lobbyists, and special-interest groups are funneling money to the President through Trump’s hotels and other businesses. That’s exactly what the drafters of the Constitution and the well-established conflict of interest prohibitions sought to avoid.

We fear that the president is playing a dangerous game in which he wins financially but the public loses. Absent a change in direction, irreparable damage will be done to the presidency and to the nation.

Steven L. Schooner is the Nash & Cibinic Professor of Government Procurement Law at the George Washington University (GW) Law School. Kathleen Clark is Professor of Law at the Washington University in St. Louis and a leading expert on government ethics.

FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec