Whatever else President-elect Donald Trump represents, it’s clear he premised his appeal in large measure on the idea that he “built a very great company” — inviting voters to think of him as America’s CEO. At his Wednesday news conference, Trump (sort of) laid out how he proposes to resolve the conflicts of interest that his vast holdings create. He’ll presumably turn over management of the Trump Organization to his adult sons, who’ll make decisions “without any involvement whatsoever” from the president-elect, appoint an ethics adviser to vet potential conflicts and avoid entering into any new deals with foreign partners. If he were up for a job as an actual corporate chief, would that plan be good enough?
If the president-elect wants to be America’s chief executive officer, then we ought to think about the country as a corporation. We, the people, are its shareholders. As citizens, we’re already vested, and we also invest in our country via the taxes we pay. If that’s the case, to whom does the chief executive owe a duty: the company or himself? Answer: the company. For example, in Delaware, the state where more than 50 percent of Fortune 500 companies are incorporated, the law says the chief executive owes duties of loyalty and care to the corporation, which in this scenario would be the United States of America. The chief executive officer must put the corporation first, before his private interests, and do what he thinks, in good faith, is in the best interest of the corporation. If Trump’s really going to run the country as a chief executive would, his first loyalty has to be to America Inc., not himself. That’s what comes with the job.
That’s what I tell my clients when advising them on issues of corporate governance and strategy, including helping them navigate conflict of interest questions. If the United States were my client, and President-elect Trump were its prospective chief executive, I would tell my client that Trump’s plan doesn’t pass muster. And I’d advise America to insist on nothing less than the full disclosure of all Trump’s material assets and liabilities before he took over the job. Then Americans and Congress — the company’s board of directors — could decide how to proceed to resolve his conflicts (or perhaps even rescind the job offer).
Consider: Trump’s lease of government property for the Trump International Hotel in Washington is a conflict. A conflict of interest exists because Trump wears two hats in the same deal. He’ll soon be America’s chief executive while also owning a hotel in a deal with America. The Trump Organization is reportedly trying to restructure around $300 million in debt to Deutsche Bank at the same time Deutsche Bank is negotiating a settlement with the Justice Department — an agency Trump will soon control — for “mishandling the mortgage bonds of other banks.” In his news conference this week, Trump bragged that he was “offered $2 billion to do a deal in Dubai” but that in an effort to minimize conflicts, he turned it down. Not, however, before adding, “I didn’t have to turn it down because, as you know, I have a no conflict situation because I’m president.” What he didn’t note was that there’s already a business relationship between the Trump Organization and the developer who made the offer, who is also believed to have ties to the emir of Dubai. There’s a long listof potential conflicts out there.
It doesn’t matter that the Trump Organization will apparently be controlled by his sons — Trump still owns the Trump Organization, so his business interests and his impending role as president still represent conflicting duties. In the business world, Trump would have to disclose information about his business holdings to the corporation’s board of directors or its shareholders for a vote to approve, in good faith, the ongoing existence of each conflict of interest. In the case of a president, the Office of Government Ethics can fill that role. Or Trump could make this information public. Public opinion could then sway Congress to act to resolve Trump’s conflicts.
By appointing his own ethics adviser to handle the conflicts, rather than deferring to the Office of Government Ethics, Trump is, effectively, telling his board and shareholders that a problem exists but that he is keeping them in the dark on the specifics. In effect, trust me. But any good business lawyer will tell you that companies get into trouble when they shy away from accountability.
If you’re not convinced, consider Brand America’s products: freedom, equality and democracy, to name a few. The nation’s democratic ideals are what we seek to uphold. Any of America’s opportunities that are thwarted because Trump’s private dealings run counter to sustaining and championing those ideals represents a conflict.
If we have an opportunity, let’s say, to encourage our brand of human rights in the Philippines, Trump cannot usurp that opportunity to benefit his private business holdings, which may be impeded by such an expansion. As it stands, the new envoy to the United States of the regime of Philippine President Rodrigo Duterte happens to be the same individual building a Trump Tower in Manila. If America has a business opportunity to enforce the Equal Credit Opportunity Act that protects consumers rights vis-a-vis lenders, Trump could not usurp that opportunity to benefit his private companies, which are indebted to numerous banks.
If Trump is on both sides of any issue involving his companies and America’s interests, these aren’t potential conflicts of interest, they are actual conflicts. If he intends to keep his promise to run America more like a business, the only legal and ethical questions moving forward are: Can these conflicts be waived, and, if so, how? The corporate lawyer’s answer is full transparency and disclosure of all of Trump’s material assets and liabilities.
Clearly, America is not a corporation, and the president isn’t its chief executive. But Trump can’t claim credit for running America like a business if he keeps us in the dark about his conflicts of interest and asks us to just trust him. That’s no way to run a business.
First published in the Washington Post: