The Trump Conflict-Of-Interest Plan, On its Own Terms

January 12, 2017
posted by Bob Bauer

Donald Trump’s plan for mitigating, not eliminating, the potential for conflicts between his business and his presidency has not satisfied the most senior executive branch ethics regulators or a number of the commentators well-versed in ethics standards. He will retain his interest in his businesses known as the Trump Organization, but not management control, which will pass to his sons. His counsel has detailed various steps to accomplish his “complete” severance or isolation from business operations. To the extent that the business surrenders any advantage from the presidency, it is a cost to the foreign operations: no new foreign deals, and all foreign government payments to his hotel will be donated to the Treasury. Mr. Trump maintains that he is not required to go farther and, in the words of his counsel, he “should not be expected to destroy the company be built.”

It is possible that under pressure, the Trump team will reverse course and yield to the demand for divestment and a blind trust, but after all the time the Trump team and counsel have devoted to considering his course of action, this seems unlikely. Then the question would be: if this is the plan, how exactly will it work, and with what degree of transparency allowing for an evaluation of the seriousness and effectiveness of the controls the Trump Organization plans to put in place?

For example, the Organization has not named but will establish the positions of ethics adviser and chief compliance counsel. The adviser will review all domestic deals and issue written approvals of any that “potentially raise ethics or conflict of interest concerns.” The chief compliance counsel will be charged with ensuring that the “Trump businesses… are operating at the highest levels of integrity and not taking any actions that could be perceived as exploiting the office of the presidency.”

The relationship between the two, adviser and counsel, is one question. Will the adviser be required to consult with the chief compliance counsel in the course of reviewing a deal? According to Trump counsel, the adviser is a member of the “management team.” Normally, management would turn to counsel for advice, especially where the issue is one of law as well as applicable ethical standards (the ethics adviser is responsible for ensuring that "the Trump Organization continues to operate in accordance with the highest… legal… standards.")(emphasis added). Does this plan anticipate that the adviser will issue an approval only with the concurrence of the compliance counsel?

Category: Donald Trump, Ethics

Press reports on Mr. Jared Kushner's pending appointment to his father-in-law’s senior White House staff noted the nepotism issue and cited differences of opinion about whether the anti-nepotism statute applies at all. Mr. Kushner's own lawyers have acknowledged that there are arguments going both ways, but they had, they thought, the stronger legal position. Kushner’s legal team now looks forward to an opinion from the Office of Legal Counsel, which can consider the issue and rule as soon as the Trump Administration takes office, and they seem confident that OLC will come out in their favor.

Non-lawyers are surely bracing themselves for this fight. One question is whether the anti-nepotism statute was effectively narrowed by one enacted years later, with the result that the law does not restrict an appointment such as this to the president's immediate personal staff within the White House Office. In other words, a president’s appointments are still subject to anti-nepotism restrictions, but not all appointments--and, specifically, not a senior White House staff appointment like this. Mr. Kushner's lawyers also argue that the White House is not an "executive agency" whose appointments are governed by this law.

For the non-lawyers, hearing that there are arguments of merit on both sides, the question will be what precisely is at stake. What will be consequence--the presumed harm--of the pending appointment? And the answer to this question bears on how the law is most reasonably understood.

Category: Donald Trump, Ethics

The Law-or-Ethics Question for Congressional Ethics

January 9, 2017
posted by Bob Bauer

The Republicans in the House made a mess of things on their first day by first moving suddenly to limit the authority of the Office of Congressional Ethics, then retreating under pressure. When action is taken on a matter of Congressional ethics, and both Donald Trump and the New York Times editorial board take exception, something seems to have gone very wrong.

But Frank Bruni has noted that OCE is not all perfection, and that there is a case for a “bipartisan and transparent review of its role” in the congressional system for defining and enforcing ethical standards.  No one would argue that the current arrangement is working especially well.  The Office of Congressional Ethics was meant as one possible improvement: A check on the Members’ instinct to protect themselves or to shy away from judging their colleagues. But OCE’s record is a complex one. The tension and sometimes open conflict between the House Ethics Committee and OCE, one criticized as too passive and the other as too “zealous,” makes for a confused-- and, if public confidence is the measure, not reassuring-- picture of the state of congressional ethics.

The assumption has long been that congressional ethics depends on reliable enforcement, and that, in the House, with the help of OCE and a push here and there from public opinion, Members can be cajoled and pressured into doing the right thing.  A deeper question may be: what is it that we wish the Members to do--what is the appropriate understanding of their ethical responsibility?

OCE represents a further step toward what might be called the law enforcement model of ethics. The House establishes rules for, say, policing conflict of interests or self-dealing or misappropriation of funds, and then it turns the enforcement over to a cadre of lawyers and law-type procedures. The Members (and staff) who come before the Committee are entitled to representation by legal counsel, and they usually have it. We have allegations of “violations”; a discovery process that includes sworn testimony; and the lawyers hash out whether the rules apply on the specific facts, building into the analysis whatever in the way of precedent might be available.

Because there is the risk that the House’s own lawyers, those serving with the Ethics Committee, may do the bidding of self-protective Members, OCE supplies an independent enforcement function. It operates by design and rule like a law enforcement agency, and it recruits lawyers--most notably, ones with a white-collar criminal or regulatory background--to investigate and advise on the recommendations to the Committee the Office should make. The establishment of OCE answers the long-standing call for Members to “delegate” responsibility for enforcing their ethical obligations, and with this conversion of self-regulation to regulation-by-others, the legalization of ethics advances.

Category: Ethics

The Quandaries of Ethics Reform in the Trump Era

December 19, 2016
posted by Bob Bauer

There is now bipartisan interest in a change in the lobbying rules to reach the “back room” or “shadow” lobbyist. Most immediately, the proposal has been to have the new Administration expand the ban by Executive Order on federal government employment of lobbyists to include these individuals believed to be lobbyists in all but the name. This would close a much-derided “loophole,” one that has been especially infuriating to those who do register under the lobbying disclosure law while watching others, who seem to do pretty much what they do, escape on an apparent technicality. An amendment to the Executive Order to capture “shadow lobbying” could be followed by a corresponding change in the lobbying laws to greatly enlarge the numbers subject to mandatory disclosure requirements.

The appeal to close a loophole packs its usual punch. It answers the frustration over apparent inconsistency (the demand that those doing similar things be treated alike), and the extension of reporting requirements to “shadow lobbying” would help create a more complete picture of the total dollars spent on influencing public policy. But, as always, there are complications and competing considerations that should affect how a reform like this is designed--with what limiting principles--and how it is administered.

Foreign National Influence, Foreign National Interference

December 15, 2016
posted by Bob Bauer

In 1968, the Nixon presidential campaign successfully persuaded the South Vietnamese government to scuttle peace talks with the North. The goal was to end any possibility of an election-eve accord that would boost the prospects of the Democratic presidential nominee, Hubert Humphrey. Candidate Nixon and his agents assured the South Vietnamese, who took the deal, that a Nixon presidency would better protect their interests. This was a glaring case of foreign interference with elections. The election turned out to be close and the intervention was very plausibly a factor in the outcome. See, e.g., Tim Weiner, One Man Against the World: The Tragedy of Richard Nixon 19-26 (2015).

This is the kind of “interference” in an election that Congress is preparing to investigate. It remains to be seen whether the inquiry will eventually become more far-ranging-- whether it will also examine other forms of foreign influence over the electoral and policy processes that are less brazen but still consequential.

For example, the Federal Election Commission recently could not agree on strengthened restrictions on campaign spending that serves foreign interests. Foreign nationals are prohibited generally from making contributions or expenditures in federal elections, but the rules are porous. Companies controlled by foreign nationals, including those directly or indirectly controlled by foreign governments, may establish PACs and fund campaigns with money contributed by their American executives. The law prohibits foreign nationals associated with the ownership or management of the company from directing or indirectly participating in these funding decisions. The enforcement challenge is obvious: how to capture this “participation,” which may include oral directives or suggestions that are not easily discovered. Beyond this, Americans in the employ of the wholly controlled USA subsidiary might guide their funding decisions by close reference to what they believe or know to be their foreign owners’ interests and preferences.