Last week, President-elect Donald Trump’s lawyers issued a brief, largely unnoticed memo defending Trump’s plan to “separate” himself from his businesses. We believe that memo arbitrarily limits itself to a small portion of the conflicts it purports to address, and even there, presents claims that depart from precedent and common sense. Trump can convince a lot of people of a lot of things—but neither he nor his lawyers can explain away the ethics train wreck that will soon crash into the Oval Office.
It’s been widely acknowledged that, when Trump swears the Oath of Office, he will stand in violation of the Constitution’s foreign-emoluments clause. The emoluments clause forbids any “Person holding any Office of Profit or Trust under [the United States]” from accepting any “any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State” (unless Congress explicitly consents).
By “emolument,” this provision means any benefit derived from dealing with a foreign government. It is well-settled that receipt of such emoluments is strictly prohibited for persons holding positions of trust with the U.S. government. A U.S. official need not also have an “office” with a foreign government in order to receive an emolument from it.
The Framers included this provision in the Constitution to guarantee that private entanglements with foreign states would not blur the loyalties of federal officials, above all the president. Yet that lesson seems lost on Trump, whose continued significant ownership stake in the Trump Organization forges an unbreakable bond between Trump and a global empire that will benefit or suffer in innumerable ways from its dealings with foreign governments. Trump’s actions in office will thus be haunted by the specter (and perhaps reality) of divided interests.
As we have argued, the only adequate solution to this and other conflicts of interest, taken by presidents of both parties for the past four decades, is divestiture into a truly blind trust or the equivalent.
At last week’s unusual press conference, Trump—lawyer in tow—refused to take those steps. Instead, after marveling at his own generosity, Trump finally explained his big plan: keep an ownership stake in the Trump Organization, but resign from management and have his adult sons (joined by an executive) run the business during his presidency.
Trump’s lawyer then elaborated: The Trump Organization will make no new foreign deals while Trump is president; all new domestic deals will be subject to internal ethics review; Trump will not receive regular updates about the business; and the profits that Trump hotels make from foreign governments will ultimately be donated to the U.S. Treasury.
Several hours later, the law firm Morgan Lewis issued a memo entitled “Conflicts of Interest and the President.” In three short pages, this memo outlined why Trump’s plan purportedly complies with the Foreign Emoluments Clause.
First, it’s worth noting a critical concession in the memo. While some commentators have taken the extreme view that the emoluments clause doesn’t apply to the president—a claim that doesn’t withstand scrutiny—Trump’s lawyers did not rely on that position. In fact, they squarely rejected it, stating that the president’s “obligations under the Constitution” include “the obligations created by the … Foreign Emoluments Clause.”
From this promising start, however, the memo goes badly awry. It bases its defense of Trump exclusively on the proposition that the president may engage in arms-length, fair-market-value exchanges with foreign powers—on the theory that the phrase “emolument” covers only “payment or other benefit received as a consequence of discharging the duties of an office.”
There are two specific problems with this defense: First, it utterly fails to account for the many other ways in which Trump will still violate the foreign emoluments clause; and second, it is wrong on its merits.
The first problem alone is fatal. Trump has promised not to enter any new foreign deals, and, at the end of each year, to return “profits” from “hotels and similar businesses” to the U.S. Treasury. But this arrangement leaves open a vast universe of ways in which Trump will, by virtue of his continuing ownership interest, foreseeably benefit (or suffer) personally from how foreign nations interact with the Trump Organization. This is the core evil that the foreign emoluments cause sought to address.
In this light, the Morgan Lewis memo’s focus on hotels and unspecified “similar businesses” is arbitrary. The foreign emoluments clause is not limited to hotels; it encompasses any and all benefits that Trump collects from foreign governments. And since the whole Trump Organization is permeated with foreign money—and subject to an endless variety of potential advantages in foreign lands—a serious plan would have accounted for the whole empire, not just its hotels.
Consider the Trump Organization’s many existing overseas investments, loans from foreign-government-controlled banks, sales and rentals of real estate to foreign governments, and foreign benefits that grease the skids in financially valuable ways for its various projects. So long as Trump is both president and privately financially interested, these and other Trump Organization affairs could be magnets for special treatment in commerce, taxation, regulation, and investigation—benefits from foreign powers that qualify as gifts or emoluments.
But even following Morgan Lewis and focusing only on hotels, it’s unclear how “profit” will be defined, for purposes of returning monies to the U.S. Treasury that may constitute emoluments. Does profit mean everything above the actual cost of providing items or services? If so, how are those costs to be defined? If not, what does “profit” mean? And how will the Trump Organization quantify benefits such as the social cachet that may result from a foreign government deciding to host a series of lucrative events at a local Trump property?
Further, the emoluments clause applies not only to foreign states, but also to corporations they own or control. How, exactly, will the Trump Organization identify all such entities?
And by what authority will the U.S. Treasury take possession of the money that Trump Hotels makes in profit from foreign powers? Will the amount be publicly disclosed—and, if so, with what level of granularity?
Of course, public disclosure is a concern for other reasons, too. Based on the Morgan Lewis memo, there will be virtually no accountability or transparency at all. As Isaac Arnsdorf has argued, Trump’s “pledge to separate his private interests from public money depends almost entirely on him and his team following their own rules, with almost a total absence of public disclosure, outside oversight or independent verification.”
In sum, the Morgan Lewis memo—by focusing on hotels and “similar businesses,” and defending only fair-market-value transactions—simply misses a huge part of Trump’s constitutional violation.
But even with respect to this limited set of transactions, the Morgan Lewis memo is lacking.
The fundamental problem is that it loses sight of the purpose of the foreign emoluments clause. As then-Assistant Attorney General Samuel A. Alito, Jr. emphasized in 1986, the “answer to [an] Emoluments Clause question must depend [on] whether the [arrangement] would raise the kind of concern (viz., the potential for ‘corruption and foreign influence’) that motivated the Framers in enacting the constitutional prohibition.”
Given the undisputed purpose and sweeping text of the clause, it makes no sense under any approach to constitutional interpretation to say that an otherwise forbidden foreign payment to the president is allowed, but only if the president is not engaged in the specific duties of his office when he gives that foreign government its money’s worth in services. Imagine if the president owned a company that made billions of dollars annually, all as a result of profitable, fair-market-value transactions with Russia and China. Is it really conceivable that such an arrangement would be constitutional, given the basic purpose of the foreign emoluments clause?
For this reason, the Department of Justice’s Office of Legal Counsel has, in its well-reasoned opinions, prohibited federal government employees from accepting any sort of payment—fair market value or otherwise—from a foreign government. Trump’s legal team doesn’t distinguish the logic of these opinions; it just asserts that they involve “different factual circumstances.” Of course, that could be said about pretty much any precedent, especially since Trump represents a sui generis conflicts maelstrom.
The underlying concern here is that it is precisely Trump’s beneficial government services that foreign powers may hope to purchase for their money whenever they patronize or advantage his businesses. That is, foreign powers (and their agents) may pay Trump, in his capacity as owner of valuable business assets around the world, so that Trump, in his capacity as president, will play in their interest and push U.S. policies in their direction. It may be impossible to prove this on a case-by-case level, given the complex and often hidden motives guiding presidential conduct, but the whole theory of the foreign emoluments clause is to guard against the very possibility of transactions raising this creeping danger.
Trump’s lawyer, Sheri Dillon, has said that “Trump wants there to be no doubt in the minds of the American public that he is completely isolating himself from his business interests.” But if that were actually true, Trump would have done more—much more—to separate himself from his global business empire. Instead, he adopted the mere shell of a plan, utterly inadequate to the demands of the Constitution.
Trump will thus place himself in clear violation of America’s basic charter from the very first instant of his presidency.