The President-Elect and his lawyers at Morgan Lewis have released a plan that purports to address the conflicts of interest arising out of his various business ventures (hereinafter “the Plan”). Although I believe that the Plan does not go nearly far enough, I view it as a step in the right direction. Others are far less sanguine.
The full Plan can be found here. In essence, it calls for the transfer of the Trump Organization and its assets to a trust, which will be managed by Mr. Trump’s sons and current Trump executive Allen Weisselberg, with the assistance of an “ethics advisor.” Mr. Trump will resign all of his positions with the Organization, will be walled off from its operations, and will not receive information about the Organization except general financials. The Plan also prohibits the Organization from entering into any new foreign deals and puts in special measures to vet new domestic transactions. The Plan also creates a Chief Compliance Officer position within the Trump Organization to ensure that employees do not seek to leverage Mr. Trump’s new position for the Organization’s benefit. Lastly, the Organization will donate “profits” from its hotels’ dealings with foreign governments, presumably to put to rest commentators' concerns about the Constitution's emoluments clause. For more on this issue, see this excellent Marketwatch article that quotes both me and Andy Grewal (who has done impressive work rebutting some of the more expansive readings of the once-obscure emoluments clause).
The Plan obviously does not call for the divestment of Mr. Trump’s most valuable assets, and he will clearly benefit from the Organization’s continuing operations. Nevertheless, since Trump will have no role in the Organization’s management and is not supposed to be informed of the Organization’s operations going forward, there is less of a risk that he will be faced with a decision that pits the best interests of the country against those of his business. Nor will foreign entities be able to curry favor by signing deals on highly favorable terms with the Organization. This will surely not be enough for some critics, but all Presidents have been in a position to pursue initiatives that will advantage them (e.g., lowering of taxes). The unique risk with respect to Trump is that domestic or foreign entities will seek to obtain favorable policy through his business. If the Plan accomplishes what it is supposed to, Trump will not have sufficient contact with the business for this to occur and the Organization’s deal-making going forward will be significantly circumscribed in any event.
I nevertheless have some strong misgivings about the Plan. As an initial matter, it is important to recognize that its effectiveness will largely depend on the Ethics Advisor and Chief Compliance Officer. The President-Elect should select well-respected individuals with significant experience in compliance and ethics to fill these positions and not individuals with longstanding ties to the Trump family. The hires must also receive the resources needed to enforce the prohibitions in the Plan and should issue periodic reports certifying compliance therewith.
The Plan should also prohibit the Organization from entering into new domestic transactions (as it has with respect to foreign ones). Any major deal that the Organization makes during the Trump Presidency is bound to give rise to the perception that the entity or individual involved is seeking to buy the President’s favor. In addition, any such deal would unjustly enrich the Organization because it would reflect an increase in value of the Trump brand through Mr. Trump’s assumption of the Presidency.
Nor should Mr. Trump’s sons manage the Trust or have roles in the Organization during his Presidency. Because of their close relationships to their father and the fact that they will naturally have significant contact with him outside of public view, there is a very high risk that nonpublic information about the Organization or government policy will be exchanged (inadvertently or otherwise). By the Plan’s own admission, the Trump Organization is effectively an asset management business at this stage, and there is no reason that an independent trustee could not be selected to oversee it. An independent trustee would have no reason to meet with Mr. Trump, and the public would be secure in the knowledge that nonpublic information will not be exchanged that could be used to advantage the Trump Organization. The Trump family could re-assume control of the business at the conclusion of the Presidency.
The Morgan Lewis plan for managing the President-Elect’s conflicts is not perfect. Indeed, there is unlikely to be a perfect plan. However, those concerned about Trump’s numerous business conflicts would be well served to suggest concrete improvements rather than continuing to insist on divestment, which poses its own ethical challenges.