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Why Trump’s past business interests could create conflicts

November 23, 2016 at 6:40 PM EST
President-elect Donald Trump has said "the law's totally on my side" in regards to potential conflicts of interest. But recent meetings with some current and potential foreign investors have raised new questions. Judy Woodruff gets perspectives from Richard Painter of the University of Minnesota and Kenneth Gross of Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates.
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JUDY WOODRUFF: One area of uncharted territory under a Trump presidency centers on potential conflicts of interests with his businesses.

Yesterday, the president-elect told The New York Times, “The law is totally on my side.”

But recent meetings with some current and potential foreign investors have raised new questions.

We explore those now with Richard Painter. He’s a University of Minnesota law professor who was President George W. Bush’s top ethics attorney in the White House. And Kenneth Gross, he’s an ethics law expert who advised New York Mayor Michael Bloomberg when he went from businessman to public official.

And we welcome both of you to the “NewsHour.”

I’m going to start with you, Richard Painter.

When Donald Trump says the president can’t have a conflict of interest, is he right about that?

RICHARD PAINTER, University of Minnesota: Well, no. Of course the president can have a conflict of interest.

I mean, think about where we would be today if President Roosevelt had owned the buildings in Germany during the war or the years leading up to the war and large loans from Deutsche Bank.

You can have conflicts of interest that are very detrimental to the American people. You need a president who is going to stand up to foreign dictators, who is going to focus on the needs of the United States, and the need for peace in the world and also strength.

And these conflicts of interest are real. Whether or not a specific federal criminal statute applies to the president, which it doesn’t, even though it applies to every other executive branch employee, but there are other rules that do apply to the president, including the Emoluments Clause of the Constitution, which says the president cannot receive payments from foreign governments.

And that’s something the Trump Organization needs to deal with, because they have outstanding loans from the Bank of China, which is controlled by the government of China. And they have foreign diplomats checking into their hotels and renting the expensive suites.

And that needs to be dealt with. So the law does apply to the president and he can have conflicts of interest, and he needs to get rid of them.

JUDY WOODRUFF: Kenneth Gross, how do you see that? How clear are the rules, the laws that apply to the president?

KENNETH GROSS, Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates: Well, what’s clear is that the domestic conflict of interest law doesn’t apply to the president. That’s the letter of the law.

What the ethics surrounding a president and what the conventions say he should be doing is a very different thing. The Emoluments Clause, as Richard has mentioned, which is this gift provision from the original Constitution, but is alive and well today, does apply, but the application of that is not so clear.

You know, what sort of foreign corporations would come into play? Are they really owned by a foreign government and exactly is what an emolument? Is it just a payment or does it actually have to be a benefit…

JUDY WOODRUFF: A kind of benefit.

KENNETH GROSS: … if it’s a commercial transaction? So, yes, there are issues of interpretation as well.

JUDY WOODRUFF: Richard Painter, what do you say Donald Trump needing to do in order to remove any question of a conflict of interest, given his significant and widespread holdings?

RICHARD PAINTER: Well, I think the first step is to make sure that he complies with the Constitution, and he does need to address the emoluments issue.

And I have suggested to his transition team that they ought to have an assignment over to the United States government, an assignment of any and all payments from foreign governments that are covered by the Emoluments Clause.

That is an answer to the problem of a gift from a foreign government. You can give it to the United States government. He could do that today with a simple assignment of those payments, plus an audit that would take place every year to make sure we swept them all out.

That’s the bare minimum. And I think the Electoral College ought to insist on that before voting, just as they would want to see a birth certificate if that were at issue or anything else. That’s important constitutionally.

(CROSSTALK)

JUDY WOODRUFF: Richard Painter, let me just stop you right there, because I want to make sure what everybody understands what this emoluments business is.

So, what we’re talking about is anything that would benefit Donald Trump’s businesses, being sure that doesn’t benefit — doesn’t interfere in any way with the U.S. government.

KENNETH GROSS: Yes. As well as I can define this…

RICHARD PAINTER: Well, no, that’s too broad. That’s too broad.

JUDY WOODRUFF: OK.

KENNETH GROSS: OK. OK.

So, what we have here is a provision in the Constitution that says you cannot receive a present, meaning a gift. Then there is this question of emolument. It clearly applies to someone who works in the National Institute of Health that wants to work for a foreign government, because he’s providing a service.

And if he gets a payment for that, that raises questions under emoluments and has to be dealt with by the Department of Justice. If there’s a commercial transaction, a foreign government is paying rent into a place that they’re renting that is owned by Mr. Trump, the president of the United States, that — I have not seen the emolument provision applied in quite that situation. It’s not a service. It’s a commercial transaction.

JUDY WOODRUFF: Well, without getting too much in the weeds here in the few minutes that we have, Richard Painter, how do you see — again, what are you saying that Mr. Trump needs to do?

RICHARD PAINTER: Well, if those are above-market rents or they’re below-market interest rate loans from the Bank of China, I think those are presents, just like any other present.

But the point is that he could right now assign over to the United States government anything covered under the Emoluments Clause of the Constitution, and we can sort out later what it is, pursuant under audit. And that needs to be done before the Electoral College vote.

The broad issue can be addressed by divesting himself of all of his assets through an initial public offering or some other way to convert the assets to cash. Many American families do that when they want to move on from their business. And, here, there’s a very good reason to move on. He’s going to become the president of the United States.

JUDY WOODRUFF: But, Ken Gross, he has talked about putting his assets in what is called a blind trust that his children would run. Would that take care of what we’re talking about?

KENNETH GROSS: It really doesn’t.

It’s not a blind trust, first of all. He knows what he put in it. In order for it to be a true blind trust, he would have to liquidate his assets first.

That is not realistic in any kind of short period of time. I don’t know about going public with everything. That’s not so easy either. So, I understand that most his assets are illiquid, and they don’t all create conflicts of interests.

I think — I agree that you need to look internationally first. But having a trust with your children in charge doesn’t meet the requirements of blind trust, if he were required to meet those requirements, which he’s not.

JUDY WOODRUFF: Richard Painter, just quickly, how much of this is complicated by the fact that we don’t know publicly what Donald Trump’s business interests are? He has not released his tax returns. He has made a financial statement, but a lot of this is not public information, is it?

RICHARD PAINTER: No, it’s not.

And I urged him to release the tax returns during the campaign, but he decided not to do that, even though every other candidate has and every president. But, going forward, I think the answer here is for him to sell these business interests, take the company public or come up with some other answer.

It will leave him with a few billion dollars to give some to his kids, and put the rest in a blind trust, and be a good president. And he made this decision that he wants to be a president, rather than a businessman. And now that he’s made that decision and he won, it’s time to do it.

JUDY WOODRUFF: And, Ken Gross, just quickly, is that what he has to do, sell it all off and…

KENNETH GROSS: I’m not going that far, because it’s not realistic.

I think, internationally, though, that’s where the primary focus should be.

JUDY WOODRUFF: Kenneth Gross, Richard Painter, we thank you both.

RICHARD PAINTER: Thanks.

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