Lawmakers: GSA Found Trump Will Breach His Hotel Lease, Absent Divestment

This story has been updated with a statement from GSA. 

In the latest twist in the unprecedented ethics dispute over President-elect Trump’s luxury hotel in Washington’s Old Post Office Building, four House Democrats Wednesday said the General Services Administration has determined that the hotel lease does in fact pose a conflict of interest that must be addressed before Inauguration Day.

The Democrats on the Oversight and Government Reform Committee and the Transportation and Infrastructure Committee wrote a Dec. 14 letter to GSA Administrator Denise Turner Roth offering their take on weeks of written exchanges and meetings with GSA Public Buildings Service Deputy Commissioner Michael Gelber. The “deputy commissioner informed our staff that GSA assesses that Mr. Trump will be in breach of the lease agreement the moment he takes office on January 20, 2017, unless he fully divests himself of all financial interests in the lease for the Washington D.C. hotel,” the lawmakers said. “The deputy commissioner made clear that Mr. Trump must divest himself not only of managerial control, but of all ownership interest as well.”

Also significantly, “the deputy commissioner informed our staffs that GSA has received no communications to date from Mr. Trump’s business organization about this issue,” the lawmakers added. “This raises serious questions about how Mr. Trump plans to proceed.”

A GSA spokeswoman issued a statement Wednesday contradicting the lawmakers' characterization of the discussions:

GSA does not have a position that the lease provision requires the president-elect to divest of his financial interests. We can make no definitive statement at this time about what would constitute a breach of the agreement, and to do so now would be premature. In fact, no determination regarding the Old Post Office can be completed until the full circumstances surrounding the president-elect’s business arrangements have been finalized and he has assumed office. GSA is committed to responsibly administering all of the leases to which it is a party.

Trump won the 2013 bidding for rights to revamp the historically protected building that had struggled to find private tenants, and opened Trump International Hotel with fanfare to guests this September, in the midst of his presidential campaign.

The Capitol Hill letter was signed by Reps. Elijah Cummings, D-Md.; Peter DeFazio, D-Ore.; Gerry Connolly, D-Va.; and André Carson, D-Ind. The group had written to GSA on Nov. 30 seeking details on GSA’s plans to deal with the lease. Sens. Tom Carper, D-Del., and Elizabeth Warren, D-Mass., had also pressed for details.

The lawmakers also expressed concern over Trump having his daughter Ivanka work on the hotel project. “Ms. Trump is all of the following—the President-elect’s daughter, a top presidential transition team official, a lessee under the contract GSA oversees, and the primary contact for GSA on the lease,” the lawmakers wrote. “The conflicts of interest are obvious.”

Many of the possible conflicts of interest in this unusual transition period case were unearthed in an op-ed that appeared in short form in The Washington Post and in longer form on Nov. 28 in Government Executive. “To protect the integrity of the federal government’s procurement process, GSA must end its lease arrangement with President-elect Trump now,” argued Steven Schooner, the Nash & Cibinic Professor of Government Procurement Law at The George Washington University Law School, and colleague Dan Gordon, who was President Obama’s first administrator for federal procurement policy.

In response to the letter from lawmakers, Gordon said, “Mr. Trump fully divesting his ownership interest in the hotel lease may well avoid a breach in the lease. But unless the entire Trump Organization is removed from any interest in the lease, we will still be left with an intolerable situation.” The Trump Organization’s continued involvement would mean it “will remain the property's tenants, while Mr. Trump, as the head of the executive branch, will effectively be the landlord,” Gordon said. This risks “opening the federal Treasury to Mr. Trump's whim, whether to be generous or strict regarding how much to charge his children for use of ‘his’ property.”

Schooner added that the absence of communication between Trump and GSA “is consistent with our expectations and an incomprehensible level of arrogance and denial on the part of the Trump people.” Given that Trump launched his campaign more than a year ago and the GSA contract was signed in 2013, Schooner added, “it is a mind-boggling reflection of disrespect for the system that the Trump organization did not have a proactive, constructive approach to an obvious problem.”

Trump transition team officials said Wednesday that the GSA hotel lease will be "something that comes up" when Trump unveils his business plans in January. The officials have not set a specific date for releasing the business plans.

Eric Katz contributed to this report.