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By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends most of her time in Asia researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as scribbles occasional travel pieces for The National.
President-elect Donald Trump on Wednesday announced on Twitter that he would hold a news conference on December 15 to “discuss the fact that I will be leaving my great business in total in order to fully focus on running the country in order to MAKE AMERICA GREAT AGAIN! (his emphasis).”
Trump further tweeted:
Hence, legal documents are being crafted which take me completely out of business operations. The Presidency is a far more important task!
Trump faces real difficulties as he seeks to turn over what I assume will be temporary control over his assets while he serves as President. In the past, when affluent people have held public office, they placed their assets in a so-called “blind trust”. (How blind these trusts actually were is a question I defer to another day.) It was possible to do this because most of the assets held were paper assets– e.g., shares and bonds– which were largely liquid, and which had an easily determinable market value. Such assets could be passively managed throughout an individual’s tenure in public service.
By contrast, most of Trump’s assets are in real property or other non-paper assets. They require more active management. Further, many (most, all– no one knows for sure as I’ve yet to see any comprehensive statement of Trump’s holdings) are illiquid. This means that even if Trump wished to divest himself of these assets, it would be difficult to do so.
Recently, a veritable journalistic cottage industry has developed to discuss the conflicts of interest created by Trump’s extensive ownership of assets and his upcoming role as President of the United States. Articles have appeared in the Wall Street Journal, the Financial Times, the New York Times and Politico that spell out some of the legal, political, and practical problems arising from potential conflicts between Trump as an owner of a business empire and Trump as President.
In this post, I’ll address what several sources have highlighted as the most serious potential problem: the emoluments clause of the United States Constitution. Article 1, Section 9 of that document states that “No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”
Over to the New York Times to tease out some of the potential problems:
Mr. Trump’s companies do business with entities controlled by foreign governments and people with ties to them. The ventures include multimillion-dollar real estate arrangements — with Mr. Trump’s companies either as a full owner or a “branding” partner — in Ireland and Uruguay. The Bank of China is a tenant in Trump Tower and a lender for another building in Midtown Manhattan where Mr. Trump has a significant partnership interest.
Experts in legal ethics say those kinds of arrangements could easily run afoul of the Emoluments Clause if they continue after Mr. Trump takes office. “The founders very clearly intended that officers of the United States, including the president, not accept presents from foreign sovereigns,” said Norman Eisen, who was the chief White House ethics lawyer for Mr. Obama from 2009 to 2011.
“Whenever Mr. Trump receives anything from a foreign sovereign, to the extent that it’s not an arm’s-length transaction,” Mr. Eisen said, “every dollar in excess that they pay over the fair market price will be a dollar paid in violation of the Emoluments Clause and will be a present to Mr. Trump.”
The Supreme Court has never squarely considered the scope of the clause, and there are no historical analogies to help understand how it should apply to a president who owns a sprawling international business empire. Earlier presidents worked hard to avoid even the appearance of a conflict of interest involving a foreign power, said Zephyr Teachout, a law professor at Fordham who ran for Congress in New York this year as a Democrat and lost.
“The reason we don’t really have a lot of precedent here is that presidents in the past have gone out of their way to avoid getting even close to the Emoluments Clause,” she said. (Jerri-Lynn here: I’ve omitted all citations in this extended quotation; interested readers are directed to the original article to find these).
Now, at this point, I should bring up a rather elementary point. Just because something’s unconstitutional, doesn’t mean that any such unconstitutional activity will necessarily be prevented, precluded, or punished. Much of what I’m about to discuss applies a pretty basic common sense test (but I believe would stand up to more serious scrutiny by lawyers or others with specialized knowledge).
For starters, there are some who claim the clause doesn’t apply to the President, as the New York Times and Fox News have reported. I don’t think that’s a sound position, but if you disagree, you can stop reading here.
Yet while I agree with the Wall Street Journal that: “U.S. law exempts presidents and vice presidents from conflict-of-interest rules, which require many federal employees to recuse themselves from decisions involving their financial interests”, and although I haven’t made an exhaustive search, I also assume one of many existing anti-corruption or anti-bribery statutes might conceivably apply to the President. Some of these even may rest on authority provided in the emoluments clause. Is it possible that President Trump in some way might fall afoul of some such statute? Let’s assume yes.
But, here’s the problem: who enforces these statutes? The Answer: The Attorney General of the United States. Yup, that’s the same Attorney General who serves at the pleasure of the President, and can be removed for any whim or reason. Does anyone honestly think that an Attorney General is going to seek to prosecute President Trump for violating an anti-bribery statute? Good– I didn’t think so.
Next issue: Can any third party– an aggrieved private citizen, for example, or more interestingly, a business competitor, successfully sue the President for violating the emoluments clause? I’ll take these issues in turn, starting first with our aggrieved private citizen.
This often comes as a surprise to non-lawyers, but the reality is that the US legal system strictly limits who can sue. Persons must have standing in order to bring a suit (as compared to some countries, such as India, and US states, such as California (but only for state law violations), where it is possible to bring a public interest litigation to right an obvious wrong). In US federal court, the authority for bringing a suit comes from Article III of the Constitution. To summarize very broadly an extremely complicated area of the law, to have standing to sue, plaintiffs must be involved in an actual case or controversy– meaning that one cannot bring a case just to determine what a court MIGHT decide. Further, a long series of cases has also established that plaintiffs must have suffered a particularized injury in order to prevail in a lawsuit. This provision prevents someone from bringing a suit arguing, hypothetically, that as a taxpayer, s/he has been harmed by a general policy of the US government.
What does this mean? Well, I would suggest that no one should spend hard-earned money and try to find a lawyer to bring a suit alleging that President Trump has violated the emoluments clause– or any other federal anti-corruption or anti-bribery statute, for that matter– anytime soon. That matter would almost certainly be dismissed on the basis that the plaintiff lacked standing to sue.
A more interesting issue is raised by the notion that a business competitor might have standing to sue. That might mean in the present context that some business competitor of Trump’s– Hilton Hotels, to pluck an example from the air– might choose to contest the award of some particular contract or more ambiguously, a particular policy decision.
In contrast to Politico, which calls the notion of competitor standing a “controversial legal theory”, I suggest that such a basis for standing is quite common in suits disputing the award of government contracts. Where I concur with the Politico analysis is in what the remedy might be: a rescission of a particular contract award, or maybe, a rollback of a policy. But no court is likely to look to make a decision that invokes the emoluments clause, and as a result tells Trump: You’re fired! Sorry, DNC, better luck in 2020.
Given that legal remedies are unlikely to enforce the emoluments clause, that leaves impeachment as the only remedy for addressing the conflicts of interest between Trump’s business interests and his role as President.
Now, I have seen too many otherwise sane and sensible people suggesting this is a possibility.
Let’s review the basics of impeachment.
Article II, Section 4, says:
The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.
So that means– as those who’ve paid attention to recent US history know– that the President may be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanours. Removal from office following impeachment has never occurred for any President in US history.
Let’s also cover the procedural aspects of impeachment:
Article I, Section 2 says:
The House of Representatives shall choose their speaker and other officers; and shall have the sole power of impeachment.
So, the House of Representatives is responsible for drawing up articles of impeachment. What does that mean in the present, hypothetical case? The 2016 election had Republicans capturing 241 seats, compared to 194 Democrats: a clear Republican majority.
Does anyone seriously believe that the new Republican-majority House will vote to impeach Trump for conflicts of interest that may either have arisen or between his business empire and his role as President?
Now, even though I stand by what I just wrote, just for the sake of argument, what would happen if the House did vote to impeach Trump?
Well, again, turning to the US Constitution, Article I, Section 3 provides:
The Senate shall have the sole Power to try all Impeachments. When sitting for that Purpose, they shall be on Oath or Affirmation. When the President of the United States is tried, the Chief Justice shall preside: And no Person shall be convicted without the Concurrence of two thirds of the Members present.
Judgment in Cases of Impeachments shall not extend further than to removal from Office, and disqualification to hold and enjoy any Office of honor, Trust, or Profit under the United States, but the Party convicted shall nevertheless be liable and subject to Indictment, Trial, Judgment, and Punishment, according to Law.
What does this mean? The Senate would be responsible for trying the case of impeachment– a Senate, let me remind you, that when seated in January 2017, will also have a Republican majority. Does anyone honestly think that the necessary 2/3 concurrence of all members present can be found in a Republican-majority Senate? Believe what you choose to believe: I certainly don’t think so.
Please, can we lay to rest the idea that Trump would be impeached for ANYTHING. Or, if you’re not willing to follow me that far, at least defer further impeachment discussions until after the 2018 mid-term elections.
Relax, readers. There are plenty of things to worry about concerning the incoming Trump administration. This isn’t one of them.