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11/17/2016

Conflictor-In-Chief: President Trump’s Many Conflicts of Interest

by Craig Klugman, Ph.D.

Every year, my university requires me to file a conflict-of-interest (COI) statement. I had to ask the COI committee for permission in order to use the ethics textbook that I edited for my classes (since I do not receive any residuals on it, there’s no conflict, but had I received money for each sale, I would have). When I give a talk to a national professional group I have to list honorariums for talks and consulting. I even have to report if my spouse has any positions, grants, or funding from a company that could potentially compromise my objectivity. If I had children, the rule would also apply to their investments and connections. The goal is transparency—in the absence of avoidance, that such conflicts are acknowledged and broadcast. Such rules also apply to most elected officials at all levels. However, the election of Trump has raised the question of avoiding and acknowledging conflicts of interest to a new height.

Consider that in a 60 Minute interview on Sunday, Ivanka Trump wore a bracelet. After the broadcast, her marketing group sent out a message that the bracelet was part of her personal jewelry line and could be purchased for $10,800. If you liked the dress she wore at the RNC convention this summer, then you are out of luck. The dress was part of her line of clothing and is sold out at Macys and Nordstroms. Her national stage has turned into free advertising.

Donald Trump has said that he will turn over his business interests to his children. Previous Presidents have put their business interests and holdings into blind trusts where they would not know what was in their portfolio and would also have no interaction with directing operations. This also means that immediate family members are not involved with such business operations. Consider that Trump never released his tax returns during the campaign so it’s not necessarily clear what all of his business holdings and investments are and suggests he is not willing to be as transparent as COI would require. Unless Trump plans to never talk to his children about business or politics at all, his turning over the business to them hardly qualifies as a blind trust. Besides, the trustees of such an arrangement would have to have no interactions or involvement in governing: His family has served as advisors during his campaign. Trump has already appointed several of his children to his political transition team and is considering his son-in-law, Jared Kushner, for a major role in the administration. Real COI would require that Jared and Ivanka, his spouse, not to talk about either of their work lives to one another.

A major issue likely to hit this administration early on is approval to build the Dakota Access Pipeline—an oil pipeline from North Dakota. This is a project that Obama was against, but Trump has stated he would approve it despite continuing environmental and first nation concerns. What has not been spoken of is that Trump is an investor in this pipeline—it’s in his financial interest for the project to go forward. Will Trump really be tough on China as he stated in the campaign when he has a stake in the Bank of China? Will the administration be influence on Obamacare when one of its advisors, Peter Thiel serves on the board of Oscar Health-an Obamacare management group, that is also owned by Jared Kushner’s brother?

The goal of conflict of interest rules is so that a person in a position of making decisions is not influenced to make choices that provide benefit to the person or his/her family. As Bryn Williams-Jones points out, it’s not only financial conflicts, but also “personal (e.g. career advancement) or institutional (e.g. reputation) interests.” Howard Brody suggests that a nonfinancial conflict exists when two conditions are met: “1. The arrangements carry a serious risk of threatening the public trust needed to carry out…the role” and “2. The arrangements are avoidable—they are not necessary for the social role to be fulfilled.” Certainly giving administrative positions to family members may violate COI (as well as nepotism rules), influencing the awarding of contracts in industries where one has business interests, negotiating treaties with other countries, and so on. The potential for government decisions being crafted to benefit Trump industries (rather than for the broader US) are strong. And even if the conflicts can be avoided, the goal is to avoid even the appearance of conflict , which clearly cannot be avoided here.

This rule applies to most people who work in the executive branch of the federal government. However, COI laws do not apply to the President or the Vice-President. The thinking is that the executives should not be constrained on decision-making. We must also consider that Trump is very interested in building infrastructure across the country and in constructing a giant wall across our southern border. His family happens to be involved in the real estate and construction businesses. The spirit of the law would say that none of their companies could even consider bidding on these or related projects. But the law does not require that and as Trump has stated several times in his campaign, he follows the letter of the law, not its spirit.

Even more complicated is that the Trump companies have significant investments and business dealings with overseas companies. Will negotiating and maintaining relations with other countries be influenced by his business holdings? Should Trump be restricted from talking to the leaders of countries with which his companies have relationships? Will the public ever believe that he is making deals that are in the best interest of the country instead of his own business?

Rudy Giuliani has suggested that Trump remove himself completely from his companies. George W. Bush’s ethics advisor Richard Painter says Trump’s business interests pose political and legal risks. Painter says that Trump should sell off his assets before taking office. At the very least, Trump should have no contact with his businesses including contact with the leaders of his business. Yes, that may mean not seeing her children or giving control of his company’s over to non-family members for the next few years. This is a tall order, but as the chief executive, the President should be a role model of ethical propriety.

In case some have read this far and believe this blog is simply Trump-bashing, I will point out that Hillary Clinton’s involvement with the Clinton Foundation, which has relationships with many governments throughout the world, would have required similar deliberations and separation of her and Bill from daily involvement with the Foundation.

I am intending this piece to be part of a conversation, not a judgment or a final ethical analysis. Williams-Jones points out that it’s important to have these conversations about what conflict of interest is and that it is more than just financial entanglements. As he writes, COI is often used as a “trump card,” a phrase that has taken on new meaning.

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