How do conflict of interest rules apply to Trump ? - Wall Street Journal

By JOE PALAZZOLO and  JACOB GERSHMAN
Jan. 18, 2017 4:48 p.m. ET

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President-elect Donald Trump’s complex web of business holdings in the U.S. and abroad has raised a number of ethical questions without precedent in modern times, due to the breadth of the holdings and his plans to distance himself from them while in office.
What a president can and can’t do, ethically speaking, is a question defying easy answers, but below is a guide to help readers understand the laws and constitutional provisions that constrain the highest office in the land.
Which ethics laws apply to the president?
The president is bound by federal statutes that prohibit bribery and illegal gratuities, or things of value given to officials for the purpose of influencing them. The president is also subject to the federal Stock Act, which bars insider trading by government officials, and a federal anti-nepotism law that bans government officials from appointing relatives to or employing them in agencies controlled by the officials.
He must also file personal financial disclosures that include sources and amounts of income, as well as the approximate value of property held and liabilities owed, among other things.
What parts of the U.S. Constitution are at play here?
Mr. Trump’s business interests could potentially bump into an anticorruption provision of the Constitution known as the Foreign Emoluments Clause, said some legal scholars.
Article I, Section 9, Clause 8 of the Constitution states that “no Person holding any Office of Profit or Trust under [the United States] shall, without the Consent of Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”

The framers, according to scholars, wanted to make sure that the country’s diplomatic corps wouldn’t be tainted by even the suspicion of divided loyalty. They had in mind the diamond-encrusted snuff boxes that Louis XVI had bestowed on Benjamin Franklin and other diplomats as retirement gifts.
Over time, the clause faded into obscurity. The Supreme Court has never clarified its scope, leaving the question of how it might apply to the president a matter of speculation.
What exactly does the Foreign Emoluments Clause prohibit?
It is an open question.
The most expansive interpretation of the clause reads it to ban any kind of payment to the president from a foreign government, except with congressional consent. “Even ordinary, fair market value transactions that result in any economic profit or benefit” are covered, said a Brookings Institution analysis from December by former White House ethics lawyers Norman L. Eisen and Richard W. Painter and Harvard Law School professor Laurence H. Tribe.
Other scholars said its reach is much narrower. University of Chicago law professor William Baude said he doesn’t think the clause would apply to routine transactions, like a foreign official renting out a Trump hotel room at a fair-market rate.
And a few scholars, notably Maynooth University law lecturer Seth Barrett Tillman, argue that the president isn’t covered by the provision at all. Mr. Tillman said the language of the clause suggests that it extends only to those holding federal appointed or statutory offices, such as cabinet members, but not to the president or vice president.
Mr. Trump’s legal advisers don’t believe the clause stretches as far as the Brookings authors would argue. The “Constitution does not forbid fair-market-value transactions with foreign officials,” said a “white paper” released by the law firm handling Mr. Trump’s conflict-of-interest business restructuring. But his lawyers haven’t disputed the applicability of the clause to the president and vice president.
How would a violation of the Foreign Emoluments Clause be enforced?
Many scholars are skeptical that a private party would have standing to bring a lawsuit against Mr. Trump that alleges a foreign emoluments clause violation, as no federal statute expressly creates a private right of action for a violation.
Beyond that obstacle, a plaintiff would have to show that an alleged gift or emolument caused the litigant to suffer harm and that the injury that could be remedied by the court. Clearing those hurdles would likely be difficult, according to legal experts.
Courts might deem Congress the more appropriate branch to be the enforcer, given that the emoluments clause already gives Congress the power of consent to certain gifts.
Congress could launch investigations into any alleged violations of the clause, block a president’s policies and nominees, and, in the most severe cases, open impeachment proceedings, said scholars. Assuming the emoluments clause applies to the president, a knowing violation could be an impeachable offense depending on the circumstances.
President-elect Trump has said on Twitter and elsewhere he can’t have a conflict of interest under federal law. Is he correct?
The president, vice president and members of Congress are exempt from a law that prohibits federal officials from participating in government matters in which they have a financial interest, said Kathleen Clark, an ethics expert and law professor at Washington University.
Still, Mr. Trump said in a November tweet that he believes it is “visually important, as President, to in no way have a conflict of interest with my various businesses.”
To that end, he and his lawyers announced a plan to put his assets into a trust and let his two adult sons run the Trump Organization.
How does that plan compare to arrangements made by previous presidents?
It is a departure from the practices of the past 40 years. “Every president in modern times has taken the strong medicine of divestiture,” Walter Shaub, head of the U.S. Office of Government Ethics, said in a recent speech at the Brookings Institution in Washington.
Mr. Shaub and other ethics experts have said Mr. Trump should sell off his holdings, calling his plan to wall himself off from his businesses inadequate.
Sheri Dillon, a lawyer for Mr. Trump, said the selling of his assets presented its own problems and would be subject to “criticism and scrutiny,” regardless of the price paid.
Mr. Trump recently promoted clothing company L.L. Bean on Twitter. Is that allowed?
Yes. Federal ethics regulations ban government employees from using their office “for the endorsement of any product, service or enterprise,” but they don't apply to the president.
Could Mr. Trump still face repercussions for any alleged conflicts of interest?
A president can’t be criminally prosecuted for violations of the conflict-of-interest law, but private citizens could use lawsuits involving his businesses to shed light on them and any favorable treatment they might have received as a result of his ascension to power, ethics experts said. Revelations of such conflicts could damage the president politically.
Under the broad rules that govern what is known as discovery, a phase of litigation in which parties exchange evidence, a president could be forced to surrender business records or even give testimony under oath. Mr. Trump’s many contractual relationships and business competitors expose his operations to a range of potential claims, like any organization of its size.
In the 1997 case Clinton vs. Jones, the U.S. Supreme Court ruled unanimously that then President Bill Clinton could be sued while in office, siding with Paula Jones in her sexual-harassment case against Mr. Clinton. Mr. Clinton’s testimony in Ms. Jones’s case about his workplace relationships led to his impeachment for obstruction and perjury. Mr. Clinton was later acquitted in the Senate.
Much about Mr. Trump’s businesses may be under wraps now, but plaintiffs’ lawyers “are going to be able to get a whole lot of stuff, thanks to the Clinton v. Jones case,” said Mr. Painter, an ethics official in President George W. Bush’s administration who is now a professor at University of Minnesota.
Public-interest groups are likely to probe for conflicts inside the administration, using the Freedom of Information Act, a law governing the public release of government records.
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