With confirmation hearings beginning, attention is shifting slightly away from Trump and toward those who may make up his administration. Like the president-elect under whom they may soon be serving, many of Trump’s nominees have been pulled from the upper echelons of the business community or are otherwise political outsiders.
Also like Trump, many of them have come under significant scrutiny for how their pasts may lead to conflicts of interest with the roles they are nominated to serve. These are especially noteworthy because, unlike during the transitions to previous administrations, it appears that this year’s confirmation hearings will begin before the Office of Government Ethics has had adequate time to perform background checks. This highly unusual turn of events goes against the explicit objection of the Director of the OGE, who wrote in a letter to the Senate’s Democratic leadership that he is “not aware of any occasion in the four decades since OGE was established when the Senate has held a confirmation hearing before the nominee has completed the ethics review” and warned, “For as long as I am Director, OGE’s staff and agency ethics officials will not succumb to pressure to cut corners and ignore conflicts of interest.” (Also of note is a letter from current Senate Majority Leader Mitch McConnell, who in 2008 sent then-Senate Majority Leader Harry Reid a letter detailing his expectations for thorough ethical clearance but is now questioning the motives of those calling for the same for Trump’s nominees.)
Moreover, in contrast with the rules for the president, there are both explicit rules regarding conflicts of interest for appointed officials and a long history of appointed officials abusing their offices for personal financial gain. With regard to the former, the law “prohibits an executive branch employee from participating personally and substantially in a particular Government matter that will affect his own financial interests” or those of his family members, a general partner, or any organization with whom he or she “serves as an officer, director, trustee, general partner, or employee” or may one day be employed. Violations could result in jail time of up to five years, a fine of up to $50,000, or both; investigations into alleged misconduct fall under the purview of the Justice Department.
For the latter, perhaps the most infamous example of executive-branch officeholders acting in their personal financial interests is the Teapot Dome Scandal of the 1920s, in which Warren G. Harding’s Secretary of the Interior Albert Fall was convicted of accepting bribes in administering the leases for oil reserves in Wyoming and California. The administration of Ulysses S. Grant, meanwhile, was plagued by scandals in seven federal departments, ranging from gold speculation in the State Department to bribery for postal contracts, to the Whiskey Ring scandal, which led to the resignation of Grant’s Supervisor of Internal Revenue and his personal secretary. In recent decades, more than 100 of Ronald Reagan’s appointees, including Attorney General Edwin Meese and Deputy Chief of Staff Michael Deaver, were investigated for financial impropriety, leading to numerous firings and resignations. During the Obama administration, opponents accused Steven Spinner, who served in multiple high-level roles in the Department of Energy, of inappropriately pushing for a $535 million loan guarantee for the solar company Solyndra while his wife worked at a law firm representing the company. Even more recently, allegations of conflicts of interest were arguably central to the 2016 presidential campaign, in which Trump repeatedly accused Hillary Clinton of inappropriately commingling her office as Secretary of State with her family’s foundation.
Adding to all of these concerns is the fact that Trump’s family members appear likely to have a larger role in his administration than a president’s family has had in any administration since John F. Kennedy’s appointment of his brother as Attorney General led to the creation of executive-branch anti-nepotism laws. Ivanka Trump, for example, is poised to take on many of the duties typically expected of a First Lady, and has sat in on at least one of her father’s meeting with a head-of-state; her adult siblings, Donald Jr. and Eric, are members of their father’s transition team and often seen as among his closest confidants, although it remains unclear what, if any, official roles they will take on in his administration. And Trump’s son-in-law Jared Kushner, whom many expect will be one of the president-elect’s top advisers once he takes office, has real-estate and publishing interests of his own that could intersect with his official duties.
As my colleague Olga Khazan noted, the question with conflicts of interest is not if, but when and how much they will affect behavior. Research into doctors who receive gifts from drug companies—often as apparently meaningless as a pen or clipboard—shows that “even small kickbacks can change well-meaning individuals’ behavior” by subtly changing how a doctor perceives the company behind the gift.
As such, The Atlantic will be expanding our coverage of Trump’s conflicts of interests to include those expected to serve in his administration. Below is the current list of Trump’s prospective administration members, official and otherwise, whose actions or financial entanglements have prompted concerns over conflicts of interest. Because the law requires most aspirants for executive-branch positions to resolve such questions before entering office, some have already taken the steps necessary to mitigate conflicts of interest; these steps will be noted as applicable. The most recent updates appear at the top:
- EPA Administrator Scott Pruitt
- Secretary of Health and Human Services Tom Price
- Trump’s Family Members
- Secretary of State Rex Tillerson
- Secretary of Commerce Wilbur Ross
- Secretary of Labor Andy Puzder
As with so many of Trump’s appointees so far, Scott Pruitt, the president-elect’s pick to lead the Environmental Protection Agency, has a long history of opposition to the very department he is expected to lead. As the attorney general for the state of Oklahoma, Pruitt spent his tenure fighting EPA regulations, including joining with several other Republican attorneys general in a number of lawsuits against the agency over the Obama administration’s plans to reduce greenhouse gas emissions.
According to Democrats in the Senate, this history of antagonism toward the EPA involves conflicts of interest that could undermine his ability to execute his role with the organization. In a letter to the Office of Government Ethics, several Senators expressed concerns that Pruitt’s history of accepting large donations from fossil-fuel companies could impact his decisions. In particular, they pointed to his involvement in numerous Political Action Committees, most notably the Rule of Law Defense Fund, a nonprofit offshoot of the Republican Attorneys General Association that has received at least $175,000 in donations from the Koch brothers’ lobbying group Freedom Partners. Pruitt, his opponents say, has “blurred the distinction between official and political actions, often at the behest of corporations he will regulate if confirmed to lead [the] EPA,” and he and his staff “have worked closely with fossil fuel lobbyists to craft his office’s official positions.” Pruitt has announced that he will be stepping down from his position as chairman of the RLDF, and two PACs that support him plan to shut down; however, Protecting America Now, a recently-created organization supporting Pruitt, is expected to remain active, creating an avenue by which companies could seek to inappropriately influence his behavior in office.
Pruitt’s behavior as Oklahoma’s attorney general compounds concerns about Pruitt’s coziness with corporate donors. In 2010, Pruitt inherited from his predecessor a lawsuit against Tyson Foods and several other major poultry companies over the allegation that chicken manure was polluting Oklahoma’s water; the lawsuit could have resulted in tens of millions of dollars in damages. Pruitt, who received tens of thousands in campaign contributions from the poultry industry, chose to drop the lawsuit. Moreover, 13 of the 14 suits Pruitt helped bring against the EPA over federal regulations involved at least one company that had donated to Pruitt or a PAC from which he had benefited. According to ABC, Pruitt twice joined lawsuits against the EPA on behalf of Murray Energy, an Ohio-based coal company that then donated to the Republican Attorneys General Association, an organization Pruitt chaired. In another instance, Pruitt sent a letter to the EPA alleging that federal regulators had overestimated natural-gas wells’ contribution to air pollution in Oklahoma; according to The New York Times, however, “the three-page letter was written by lawyers for Devon Energy, one of Oklahoma’s biggest oil-and-gas companies, and was delivered to him by Devon’s chief of lobbying.”
Pruitt also has a non-financial conflict of interest: He is currently suing the EPA over the Clean Power Plan, one of President Obama’s signature energy policies, and the suit appears likely to continue well into his term as head of the agency. Though Pruitt’s ethics pact with the Office of Government Ethics will require him to receive outside authorization before engaging “personally and substantially in particular matters” involving Oklahoma for his first year in office, when pressed on the matter in his confirmation hearing, he refused to commit to recuse himself from the case—not to mention that, even if he does, his leadership of the organization is likely to weigh heavily on the decision-making process of those tasked with carrying out the agency’s defense in court.
Secretary of Health and Human Services Tom Price
In terms of policy, Representative Tom Price, President-elect Donald Trump’s choice to lead the Department of Health and Human Services, is perhaps best known for his strident stance against the Affordable Care Act. The Republican congressman (and former orthopedic surgeon) from Georgia has been one of Obamacare’s most vocal opponents over the past several years and is the author of the Empowering Patients First Act, one of the more comprehensive replacement plans the GOP has so far put forth.
Price, as one of Trump’s nominees who comes from government rather than the private sector, does not have business entanglements nearly on par with many of the president-elect’s other picks. Still, there have been concerns about his conflicts of interest during his tenure as a congressman, and while Price has complied with ethics rules in advance of his congressional hearing, his past behavior would seem to make him an odd fit for a position in the proposed Cabinet of a president who ran on an explicitly anti-corruption platform.
The concerns about Price’s conflicts of interest as a congressman involve stocks he purchased while in office. According to The Wall Street Journal, Price has bought and sold more than $300,000 worth of stocks in healthcare, pharmaceutical, and biomedical companies since 2012. Meanwhile, he was the sponsor of nine health-related bills in the house, as well as a co-sponsor on 35 more. Time, meanwhile, determined that Price invested as much as $90,000 across six pharmaceutical companies shortly before participating in an ultimately successful campaign to block a regulatory change that would have damaged those companies’ bottom lines.
According to The Daily Beast, at least one of Price’s stock deals was possible precisely because of his position. Rather than issue stock on the open market to raise capital, a small Australian biotech firm called Innate Immunotherapeutics chose to offer stock to “sophisticated U.S. investors” at a deeply discounted rate, at one point selling shares valued at 90 cents to Price and others for 18 cents apiece. According to Price’s financial forms, he bought between $50,000 and $100,000 of the stock in 2016 and, as of their report, has seen a 400 percent paper gain.
According to both The Daily Beast and The Wall Street Journal, Price has after his nomination complied with necessary disclosure rules and will be divesting from about 40 companies, Innate included, that would otherwise create conflicts of interest during his tenure in the Cabinet. However, as with many biotech startups, Innate Immunotherapeutics’ viability rests in part on whether it is able to secure approval from the Food and Drug Administration, which is a part of HHS, the very department Price will likely soon be leading. The company is currently seeking to move forward with testing of a new treatment for multiple sclerosis. It certainly can’t hurt that the man in charge of the agency that will be deciding its fate will have likely made a tidy sum off of the special deal he received on the company’s stock.
More specific accusations have arisen about Price’s stock in the medical-device manufacturer Zimmer Biomet. According to CNN, Price bought between $1,001 and $15,000 worth of shares in the company in March 2016. Less than a week later, Price introduced an act that, had it been passed, would have been a major boon to Zimmer Biomet. The bill, which never made it to a full vote, concerned a Centers for Medicare and Medicaid Services (also part of HHS) regulation regarding payments for knee and hip implant procedures which, if implemented, would have been significantly damaging to Zimmer Biomet’s position as one of the leading manufacturers of the implants. Price’s bill, however, would have delayed the new CMS rule, thereby helping the company. Shortly afterward, Zimmer Biomet’s political action committee donated to Price’s reelection campaign. Though, as is often the case, evidence of a direct causal relationship between Price’s purchase, the bill, and the later donation is elusive, the confluence has been enough for some opponents, most notably Senate Democratic Leader Chuck Schumer, to posit that Price’s behavior may have broken the law.
Trump’s Family Members
Though Trump has not—in fact, cannot—appointed any members of his direct family to a post in his administration, it nevertheless appears that they will likely have significant input in his administration. According to numerous sources, Trump’s eldest daughter, Ivanka, is likely to take on a policy portfolio roughly on par with that of a typical first lady; just what it will comprise is not yet known, although based on meetings she has taken since the election with Leonardo DiCaprio and Al Gore, climate change has arisen as a possibility. Meanwhile, according to NBC, her husband, Jared Kushner, will be serving as a senior adviser to the president. And though Trump’s adult sons, Donald Jr. and Eric, apparently will not be serving in any official capacity within their father’s administration, they are nonetheless widely seen as among his closest confidants and are members of his transition team.
Already, Trump’s three aforementioned children’s proximity to the president-elect has created significant conflicts of interest. (Trump’s other adult child, Tiffany, does not appear likely to be part of the administration.) Much of this revolves around their father’s professed commitment to resolving issues with his namesake corporation by putting his assets into a trust that will be managed by Donald Jr. and Eric. As I have previously written, though Trump and his supporters have referred to the plan he has described as a blind trust (or, more recently, a “half-blind trust,” which is a thing that doesn’t exist), the children’s long-standing role as advisers to their father means they don’t have nearly enough separation to maintain a true blind trust. (And since so much of Trump’s business derives from real estate and his personal brand, even a real blind trust would not be sufficient to allay concerns about conflicts of interest, as he will retain his knowledge of what those assets are).
Additionally, since Trump’s election, Ivanka, Donald Jr., and Eric have all been photographed in meetings that compromise even the illusion of distance from their father’s political dealings. All three appeared in photos of a summit between their father and the leaders of numerous technology companies, as well as a meeting with the president-elect and his Indian business partners. Ivanka and her husband sat in on a meeting between their father and the Japanese Prime Minister Shinzo Abe, even though Ivanka was at the time negotiating a branding deal with a company owned in part by the Japanese government. Donald Jr. and Eric, who the president-elect has decided will run the business in his stead, have both attended meetings on their father’s behalf.
Along with the conflict-of-interest problems, all three have drawn criticism for allegedly selling access to the administration through their companies or charitable foundations. After Ivanka appeared on 60 Minutes, her company sent out an advertisement for the $10,000 bracelet that she wore on air. On December 6, the Eric Trump Foundation initiated an online auction for a chance to have a meeting over coffee with Ivanka; as criticism mounted, the foundation removed the web page, though not before the bidding reached more than $70,000. And both Eric and Donald Jr. were involved in a planned, but ultimately cancelled, charity fundraiser scheduled for the day after their father takes office whose attendees could pay up to $1 million for a private reception with the president-elect as well as a hunting trip with one of his two sons. In the aftermath, Trump announced that Eric would be closing down his foundation to prevent further speculation.
Meanwhile, Jared Kushner’s business entanglements also create conflicts with his expected role in the Trump administration. First and foremost, some ethics experts believe that his involvement will trip federal anti-nepotism laws that have been in place since after John F. Kennedy named his brother Robert to the post of attorney general, although Trump’s and Kushner’s lawyers have concluded otherwise. On January 7, just two days before Trump’s transition team confirmed that Kushner would officially be taking a position, The New York Times reported that he has been pursuing a deal with the Chinese financial giant Anbang Insurance to redevelop 666 Fifth Avenue, a centerpiece of his real-estate holdings. Kushner’s brother, Josh Kushner, is a co-founder of the healthcare startup Oscar, which could stand to make millions off of the potential restructuring of the insurance market should Trump pursue repealing and replacing the Affordable Care Act.
According to The New York Times, Kushner’s lawyer has said that he is taking several steps to mitigate conflicts of interest. These include getting rid of his common stocks and his stake in the New York Observer, selling many of his assets to his brother, creating a family trust to be controlled by his mother, and resigning from his role as chief executive of Kushner Companies. Though Kushner is so far taking more active steps than his father-in-law has, problems remain. As is the case with Trump’s proposed trust, having a family member administer a trust does not create nearly enough separation to make it truly blind. Moreover, like the president-elect’s business, many of Kushner’s assets are real-estate; simply handing over their operations doesn’t override Kushner’s existing knowledge of what will affect their value, even if he says he will recuse himself from decisions that may affect them. In other words, as with his father-in-law, conflicts of interest will remain unless Kushner takes more complete steps to distance himself from sources of income that could influence his decision-making in the White House.
Secretary of State Rex Tillerson
After weeks of speculation and apparent interest in several more conventional possibilities, Trump eventually settled on Rex Tillerson, the CEO of ExxonMobil, as his nominee for Secretary of State. Though Tillerson, who has a net worth in the hundreds of millions, is actually among the less wealthy of Trump’s nominees, his position as head of the world’s largest publicly traded international oil-and-gas company has led to questions as to whether he will be able to fully divorce his business interests from his official duties.
As is the case with the president-elect he is expected to serve, much of the consternation over Tillerson relates to his apparently unusually copacetic relationship with Vladimir Putin. In fact, according to Steven Coll’s book on the company, Private Empire: ExxonMobil and American Power, the relationship, which culminated in Tillerson receiving an award called “the Russian Order of Friendship” from Putin, was a key reason Tillerson was chosen as the company’s CEO in 2006. Alexey Pushkov, the head of the foreign affairs committee in the lower house of Russian parliament, weighed in on Tillerson’s nomination on Twitter shortly after it was announced, calling the nomination “a sensation.”
Along with his ties to Putin, Tillerson’s nomination has raised concerns because of Exxon’s complicated relationship with the U.S. government. According to the Financial Times, while Tillerson was in charge of the company, Exxon signed multiple deals with the Russian state-owned oil company Rosneft—whose chief, Igor Sechin, is considered a member of Putin’s inner circle—to develop resources in the Black Sea, Siberia, and the Arctic Circle. These developments ceased, however, when the United States sanctioned the Russian oil industry in response to the country’s invasion of Ukraine in 2014.
As could be expected for a person in his position, Tillerson was an active opponent of the U.S.’s sanctions throughout the process; after all, the sanctions have prevented Exxon from moving forward with deals reported to be worth billions of dollars. That Tillerson has publicly questioned the utility of sanctions—and has made at least five visits to the White House since Obama authorized the sanctions—is in a sense inextricable from his role with Exxon. As Secretary of State, he will have significant sway over those sanctions, which means that he could plausibly pursue a policy that would make his former company billions.
So far, Tillerson has taken a number of steps to comply with conflict-of-interest rules. According to CNN, Tillerson will be selling off his more than 600,000 shares in Exxon—currently valued at more than $54 million—before taking office. In addition, rather than paying Tillerson his expected retirement package (2 million Exxon shares, valued at more than $181 million, over the next decade), the company will put the value of the retirement package into a blind trust that will not be allowed to invest in the oil company. And should Tillerson return to work in the oil-and-gas industry in the next 10 years, he would forfeit the entire sum. He is also expected to recuse himself from any issue that may affect his former company for his first two years in office.
Tillerson’s divestment offers something of a model for future appointees as well as potentially for Trump himself. Though Tillerson, like Trump, has yet to respond to pressure to release his tax returns, he has created an arrangement by which his previous entanglements are sufficiently remote that he can reasonably say they no longer pose a conflict of interest.
Secretary of Commerce Wilbur Ross
Wilbur Ross, Trump’s choice to lead the Department of Commerce, is one of several wealthy businesspeople in Trump’s proposed cabinet. Ross, who Trump called “a champion of American manufacturing” and “one of the greatest negotiators I have met,” is a billionaire investor who made much of his fortune by buying and reselling distressed companies, including those in the steel, coal, and textile industries. Along the way, Ross had a record of outsourcing jobs and slashing benefits for workers at the companies that he took over, as well as for a 2006 explosion at a mine operated by a company he owned.
Ross’s financial holdings also create significant conflicts of interest that he will have to navigate before he assumes office. For example, Ross has a stake in, and sits on the board of, ArcelorMittal, the world’s largest steel producer, a company that frequently has a major stake in the Commerce Department’s regulation of the steel industry, including its monitoring of exports, imports, and tariffs. In fact, according to ProPublica, during the first 100 days of Trump’s administration, the Commerce Department is likely to be ruling on investigations into unfair pricing of steel imports from Belgium, France, Germany, and Italy, all of which could significantly affect ArcelorMittal’s profits and stock prices. Ross is also a vice chairman of the Bank of Cyprus, where he served alongside Viktor Vekselberg, a Russian oligarch who Putin recently placed in charge of a major initiative to bring high-tech jobs to Russia and who was once accused of hiring gunmen to take control of a Siberian oil field. Though Ross has stated that he intends to step down from his position, his namesake private-equity firm, WL Ross & Co., will retain its stake in the institution.
Beyond the specific entanglements involving ArcelorMittal, Ross’s job as Secretary of Commerce would give him opportunities to advance his general interests in the steel industry: Unless he not only steps down from his position at ArcelorMittal but also sells his stake in the company, Ross will be profiting off of any decision by his own department that makes the company more money. As was noted during the campaign after it was reported that Trump used Chinese steel in some of his development projects, the Department of Commerce recently began a probe into the government-backed Chinese steel industry’s avoidance of American tariffs and use of a “dumping” strategy, in which the Chinese companies undermine the American industry by flooding the market with their product at an artificially low price. As Trump’s commerce secretary, Ross would be in charge of continuing the probe and developing a strategy moving forward, which could be done in a way that makes his own holdings more valuable.
So far, representatives of Trump and Ross have dismissed these concerns by comparing Ross’s situation to that of Penny Pritzker, the billionaire businesswoman who has served in the role under President Obama since 2013. In order to comply with the Office of Government Ethics’ conflict-of-interest rules, Pritzker sold off her stake in more than 200 companies and resigned from her position with Hyatt; Ross could conceivably do the same and put his resulting assets in a blind trust. Until he does so, his billions in holdings and industry involvement could influence, or at the very least be seen as influencing, his decision-making in office.
Secretary of Labor Andy Puzder
Andy Puzder, Trump’s nominee to lead the Department of Labor, is one of Trump’s many nominees with a history of antagonism toward the very body he will soon be leading. As the CEO of CKE Restaurants, which owns the fast-food chains Carl’s Jr. and Hardees, Puzder developed a long track record of opposition to minimum-wage and overtime rules and paid-leave policies; he also characterized the department’s policies under President Obama and current leader Tom Perez as “deterrence by ‘gotcha’ enforcement.”
Along with his antipathy toward the department, Puzder would bring to the position significant financial entanglements that could threaten his ability to discharge his duties in office. Among the Department of Labor’s duties is investigating claims of wage-and-hour-law violations and occupational safety hazards. Fast-food chains are frequent targets of such claims; during Puzder’s tenure at CKE, the Labor Department investigated allegations of wage theft and other problems at several Hardee’s franchises, finding violations in nearly 60% of cases.
Complicating matters is the fact that such actions typically target the individual franchisees rather than parent companies like CKE. According to Bloomberg, of the 108 investigations into CKE-affiliated stores since 2004, only six were at corporate-run restaurants, none of which yielded a fineable violation. When Puzder first emerged as a possible candidate for the position, a source close to him suggested that, since 94 percent of Hardee’s and Carl’s Jr. restaurants are franchises not directly operated by CKE, Puzder may not have to recuse himself from his company in order to carry out his duties as Secretary of Labor.
However, as is true for the president-elect himself, simply being uninvolved in the day-to-day operation of a profitable enterprise does not resolve conflicts of interest. The problem is not Puzder’s level of control over CKE and its individual franchises but the fact that he makes money off of a company that frequently comes into conflict with the very department that he will soon be heading, which could create perverse incentives to pursue policies against the interests of the company’s employees or the general public. As such, it remains an open question how Puzder will distance himself from CKE to avoid the possibility that his role with the company will interfere with his potential role in the Trump administration.
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