aside Trump’s Washington DC Hotel Lease Is In Danger Of Being Breached (Conflict Of Interest Issue)

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It has been widely reported that the republican President-elect Donald Trump will be making decisions on how to divest himself from all of his financial dealings that could possibly present his office with serious “conflict of interests” problems in the future. This dilemma couldn’t be more clear as the president-elect is confronted with being in breach of contract with his company’s current lease of the Washington DC’s Old Post Office Pavilion, as soon as he is sworn into the Office of the Presidency on January 20, 2017.Related image

On 11/29/16, Steven L. Schooner and Daniel  Gordon of The Atlantic, penned the following report about the above described situation, “Has Trump’s Election Breached His D.C. Hotel Lease?” Here are excerpts:

“Our sister publication, Government Executive, recently published this analysis of the lease signed by the Trump Organization for the Post Office Pavilion in Washington, D.C. It focuses on a provision that bars any “elected official of the Government of the United States” from deriving benefit from the lease. Critics of the president-elect have already raised other concerns about how his business dealings will intersect with his public duties, citing the Constitution’s Emoluments Clause and statutory limitations. But the concerns raised in this analysis are not hypothetical, but rather stem directly from a provision in a signed contract that is currently in force.”Image result for photo of trump international hotel in washington dc

“As the clock ticks down towards President-elect Donald Trump’s January 20 inauguration, the window is rapidly closing on the General Services Administration’s opportunity to extricate itself from the Trump Organization’s lease of the historic Post Office Pavilion. The lease—in which Donald Trump would, in effect, be both landlord and tenant—now presents unprecedented and intolerable conflicts of interest.”

“As interest groups, domestic and foreign, contemplate booking rooms in the Pennsylvania Avenue landmark turned Trump International Hotel to curry favor with the President, it is easy to assume that Trump’s involvement in that lease presents challenges just as abstruse as his overseas business operations. Those overseas entanglements may, indeed, require analysis of the Constitution’s hitherto rarely discussed Emoluments Clause. Conversely, understanding and addressing the problems raised by the Trump Organization’s 60-year, $180 million lease is far simpler.”Related image

“GSA need not wait for constitutional experts to weigh in, nor for Trump’s lawyers to craft a comprehensive solution to appropriately distance Trump from his entire web of business interests. The lease presents relatively straightforward government contracting issues, and the contracting agency with responsibility for addressing those issues is GSA. To protect the integrity of the federal government’s procurement process, GSA must end its lease arrangement with President-elect Trump now.”

When In Doubt, Read the Contract

“The Post Office lease differs from many of Trump’s other business arrangements. That’s because, in writing the contract, the federal and D.C. governments determined, in advance, that elected officials could play no role in this lease arrangement. The contract language is clear:”Related image

“No … elected official of the Government of the United States … shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom…”   

“The language could not be any more specific or clear. Donald Trump will breach the contract on January 20, when, while continuing to benefit from the lease, he will become an “elected official of the Government of the United States.” The lease agreement, like many government contracts, is a lengthy document. Yet this clause represents a material (that is, significant) contractual term. While we recognize that some of the statutory ethics rules that generally apply to federal officials exempt the president and vice president, the prohibition on benefiting from the Old Post Office Pavilion lease does not exempt Trump. The terms of the contract were freely agreed to by the Trump Organization. Had President Obama or Vice President Biden (or any other elected official of the U.S. Government) attempted to participate in the original lease agreement in 2013, we are confident that GSA would have rejected their proposal. The lease’s plain language (a term favored by the late Justice Antonin Scalia) makes clear that Trump will be violating the lease’s terms when he becomes an elected official on Inauguration Day.”Image result for photo of trump international hotel in washington dc

An Important Policy

“The lease’s language is not meaningless boilerplate. The clause is consistent with longstanding prohibition on entering into contracts with federal employees. The prohibition extends to any “business concern or other organization owned or substantially owned or controlled by one or more government employees.” This “policy is intended to avoid any conflict of interest that might arise between the employees’ interests and their government duties, and to avoid the appearance of favoritism or preferential treatment by the Government toward its employees.”

“That perfectly describes the problem here. The Old Post Office Pavilion lease is between GSA—whose administrator President Trump will appoint—and Trump’s family-owned company. Specifically, the lessor is Trump Old Post Office LLC, which, of course, is part of the Trump Organization, a privately owned conglomerate, of which President-elect Trump is chairman, president, and majority stakeholder. The situation is a casebook example of both the appearance of a significant conflict of interest and an intolerable intermingling of an elected official’s governmental duties and his family’s personal financial interests.”Related image

“During the campaign, Trump suggested he would step away from his business before taking office, turning the company over to his children, Donald, Jr., Ivanka, and Eric. Trump’s lawyers may argue that that should end the matter (pointing out that most government conflict-of-interest rules extend only to the individual, spouse, and dependent children, and not to adult children). While turning over the Trump Organization to the president’s adult children may address the lease language (though only if—a big if—it ensures the president fully divests and no longer receives “any benefit” from the lease), it in no way ends the problems with GSA’s lease.”Related image

The Kids Are Not Alright

“As long as the president’s adult children control GSA’s leasing partner, GSA and its staff will confront what any reasonable person would view as the appearance of a conflict of interest.  (This common-sense “reasonable person” test is frequently used to assess conflicts of interest.)  The principles of ethical behavior for government officials demand that no individual serve two masters, that government officials not be in a position to choose between the public interest and their own personal benefit. That is the essence of a conflict of interest. That is why we would not tolerate a judge deciding a case involving a family member, or a case in which she or he stood to personally benefit financially from the outcome.”

“The GSA employees handling the Trump lease will be caught between their duty to protect the interests of the building’s landlord—that is, the government, the public, and the taxpayers—and their duty of loyalty to the GSA administrator, who will be appointed by, and serve at the pleasure of then-President Trump. Having the building’s tenant represented by “other” Trumps (the president’s offspring) is plainly insufficient to “avoid strictly any conflict of interest or even the appearance of a conflict”—particularly where the President’s name will remain as the hotel’s name, brand, trademark, and marquee.”Image result for photo of trump international hotel in washington dc

“To make matters worse, since the election, Trump’s adult children have assumed prominent roles in Trump’s official transition team and interacted with foreign officials, thus eliminating any independence or “walling off” that might exist in other circumstances. For those who were hoping to see Trump establish a blind trust to manage his business interest, this is neither a trust, nor blind.”

The Ethics Office Can’t Bail Out GSA

We are sympathetic to GSA’s quandary. Yet, despite media suggestions to the contrary, GSA cannot foist this challenging situation on the Office of Government Ethics. OGE is a policy shop. Its website explains that it “does not handle complaints of misconduct, nor does OGE have investigative or prosecutorial authority. OGE’s mission is one of prevention.” GSA is the contracting agency that entered into the lease with the Trump Organization, and it must clean up this mess.