Sunday, December 18, 2016

The Emolument Clause in Light of Trump's Risk to be Swayed by Private Financial Interest

Howard Chandler: Scene at the signing of the U.S. Constitution
The United States constitutional convention convened in Philadelphia on May 14, 1787. The final draft of the constitution was signed by 39 of 42 delegates who remained in Philadelphia on September 17, 1787. Congress promptly submitted the proposed constitution to the states for ratification. In order to persuade reluctant New York, and other states, Alexander Hamilton, John Jay, and James Madison published their Federalist Papers, one of the highlights of our democracy, between October 1887 and August 1888. In February 1788 a compromise was reached promising that a Bill of Rights securing basic political rights would also be adopted. The Constitution took effect on March 4, 1789.

Over the succeeding 225 years the world has changed dramatically. The constitution has evolved with the times, not as much as it might have or should have, but change it did. 

What has not changed is human nature. The fact that private financial interests can subtly sway even the most virtuous leaders remains as true now as then.  And it was to guard against such influence over our leaders from foreign powers that the framers included Article I, Section 9 in the constitution, the Emolument Clause: 
“No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”
--Merriam Webster (2016): "Emolument: 1. the returns arising from office or employment usually in the form of compensation or perquisites; 2. archaic advantage."

The clause represented "a sweeping American rejection of European corruption and foreign influence," say Norman Eisen, Richard Painter, and Laurence Tribe in an article examining the Emoluments Clause published this week by Brookings. I will refer to them as EPT. 

Does the Emoluments Clause Apply to the President?

Yes, the emoluments clause applies to the president. EPT show how this has been confirmed repeatedly by the President's Office of Legal Counsel, most recently in 2009 when Obama received his Nobel Peace Prize. It's consistent with the plain meaning of the clause, of course. The presidency is referred to in the constitution as an "office" (e.g. Art. II, Section I). Do read EPT's article which goes into convincing details.

What Qualifies as an Emolument?

The clause prohibits "any kind (of emolument) whatever" and thus signals that it is to be given a broad interpretation. When the constitution was ratified, the term was often used as a catch-all phrase for improper remuneration, say EPT. The word "emolument" was understood "to encompass any conferral of a benefit or advantage, whether through money, objects, titles, offices, or economically valuable waivers or relaxations of otherwise applicable requirements." 

"The Clause unquestionably reaches any situation in which a federal officeholder receives money, items of value, or services from a foreign state," say EPT.

The Clause "just as plainly," say EPT, "covers any transaction between a federal officeholder and a foreign state in which the foreign state offers a 'sweetheart deal' or any other benefit inconsistent with a purely fair market exchange in an arms-length transaction not specially tailored to benefit the holder of an Office under the United States."

Finally, say EPT, "the best reading of the Clause covers even ordinary, fair market value transactions that result in any economic profit or benefit to the federal officeholder." They point to the text which prohibits “profit” from any employment, as well as “salary.” It seems clear, therefore, that even remuneration fairly earned in commerce can qualify and that the Framers sought to prohibit even reasonable money-for-services arrangements between officeholders and foreign states. "It would be absurd to imagine," say EPT, "that an otherwise forbidden emolument in the form of a foreign government’s payment to the American President could be cured if the President were to give that foreign government its money’s worth (or more) in services advancing that government’s interests, which might well be contrary to our own." EPT are lawyers, and I might add we lawyers have no difficulty grasping that if the President were a partner in a law firm and prince Bandar were to bring his account to the firm while the president is in office, this would be a prohibited emolument even if the firm provides good advice at market rate.

What qualifies as a "King, Prince, or Foreign State?"  

It is settled in all circumstances, say EPT, that the Clause applies not only to "foreign states" but also to their agents and instrumentalities. Therefore, OLC has determined that “corporations owned or controlled by a foreign government are presumptively foreign states under the Emoluments Clause" [citing to 33 Op. O.L.C. 1, 7; n.6 (2009)]

The Office of Legal Counsel has relied on various factors over the years, including: 1) whether a foreign government has an active role with the decision making entity (i.e. the entity granting the emolument); 2) whether a foreign government, as opposed to a private intermediary makes the ultimate decision to grant an emolument; 3) and whether a foreign government is a substantial source of funding for the entity that grants the emolument. OLC considers these factors in light of the underlying purpose of the Emoluments Clause.

When he was an assistant Attorney General in 1986, current associate Supreme Court Justice Samuel Alito put it as follows: "The answer . . . must depend [on] whether the consultancy would raise the kind of concern (viz., the potential for ‘corruption and foreign influence’) that motivated the Framers in enacting the constitutional prohibition." Laying the groundwork for potential Supreme Court battles to come, EPT are very complimentary of Alito's approach here: "That is precisely the kind of commonsense approach that is important to understanding this Clause," they applaud.

The Corruptibility of Donald Trump

We are thinking about the Emoluments Clause, of course, because never in the history of the Republic has an incoming president been so at risk to be swayed by private financial interests as Donald Trump.

Consider these potential domestic entanglements, say EPT: There are more than ten cases pending before the National Labor Relations Board challenging Trump labor practices—which has two vacancies, both to be filled by Trump.  The Internal Revenue Service is auditing Trump, who will soon pick its new chief.  The Trump International Hotel in Washington, DC is located in the Old Post Office and leased from the General Services Administration (GSA); once Trump takes office, he will be in violation of the lease, which bars elected officials from sharing in any benefit.  Trump owes several hundred million dollars to banks, but is now responsible for selecting the next Treasury Secretary and may influence interest rate policy.

The Associated Press reported on December 13, that Trump's business entanglements are a "complex and opaque hodgepodge of an empire scattered around the globe." Here is the New York Times on November 14, 2016:
Mr. Trump has had business deals with foreign governments or individuals with apparent ties to foreign governments, including multimillion-dollar real estate arrangements in Azerbaijan and Uruguay. His children have frequently traveled abroad to promote the Trump brand, making trips to Canada, the United Arab Emirates and Scotland. Closer to home, the Bank of China is a tenant in Trump Tower and is a lender for another building in Midtown Manhattan where Mr. Trump has a significant partnership interest. 
The Trump Organization's website boasts that Trump directs new project acquisition and development in regions “from Eastern Europe to Southeast Asia, the Middle East to South America, mainland China to the United States.”

Think about such a business empire doing business in China. Many major Chinese Businesses are intimately connected with the Chinese government. See my article about "Who is the Shanghai Construction Group" HERE. Think about Trump's nomination for Secretary of State, Rex Tillerson, and his connection to Rosneft, the Russian oil conglomerate.

"It seems a virtual certainty," say EPT, that many transactions between foreign states and the Trump empire will "create the risk of divided or blurred loyalties that the Clause was enacted to prohibit." We are not assured by the fact that Trump has failed to disclose his tax returns, or that he keeps the details of his business entanglements opaque. "Presidents," say EPT, "often act covertly on the basis of extremely complicated motives. Disentangling any potential improper influence resulting from special treatment of Mr. Trump's business holdings by foreign states (will) be extremely difficult." Already the American people are confronted with uncertainty and innuendo and our political discourse is rife with unresolved and unresolvable accusations of corruption, say EPT.

They go on: 
This is exactly what the Emoluments Clause is meant to head off at the pass. Rather than deal with potential impropriety in a case-by-case manner, or with ad hoc managerial walls between the President and his private interests, the Constitution forbids the very circumstances that give rise to such concerns in the first place. By imposing clear limitations, the Clause avoids a situation in which the American people must try to read the President’s or a foreign leader’s mind, searching for hints of private favoritism toward foreign powers, or of foreign attempts to seduce the American President into compromising our national interest for his private profit.
The numerous conflicts arising out of Trump's business empire, his personality, and his behavior, are a huge concern. Both during the campaign and since the election, Trump has promoted the close connection between himself and his businesses.  It seems natural, suggest EPT, that some foreign leaders will conclude that there is advantage to be gained by doing business with the Trump organization. Foreign leaders may be tempted to reach out to Trump through his business channels rather than through official channels.  The idea festers in the reality that Trump seems intent on continuing to operate from Trump Tower in New York City as well as from the White House.

"Trump answers the phone directly. I just call him and we talk," said Paul Ryan on 60 Minutes recently. He's an approachable guy for the right people.  Some of these people will undoubtedly be interested in commingling state interests with business interests.

Beyond actual conflicts and emoluments that may exist today, EPT worry that Trump's ongoing promotion of the Trump empire will have a snowballing corrupting effect:
The risks of improper dealing may be increased if foreign powers come to believe, even mistakenly, that offering benefits to Trump-associated businesses is important to maintaining good will with the President. At the very least, that perception could affect the conduct of foreign nations, resulting in many more situations that present the appearance of impropriety and fuel persistent doubts (at home and abroad) about the integrity of our political system.
And EPT bring forth worrisome examples that have already occurred in the very brief time since the  election. For example, Trump recently took a break from picking his cabinet in order to meet privately with developers from India doing business with the Trump organization. During this meeting he made observations about the Indian political leadership which were then released to the press both in India and the United States. Since his election, Trump has met in his office with developers and business partners from the Philippines. In a recent telephone call with President Erodgan of Turkey Trump "went out of his way" to praise his business partner in the Trump Towers in Istanbul.

Since the election Trump has used his Twitter account to lash out at people critical of his businesses. Such conduct, say EPT, serves to create the impression that Trump makes no distinction between his private interest as a business tycoon and the public interest that he supposedly represents as the president-elect. Such conduct--which shows no evidence of abating--sends a strong message to foreign states that they too should draw no distinction between Trump the man, his business interests, and his office as President.

Trump is a walking, talking, Emolument Clause violation, say EPT. They are surely correct.

What's to be Done?

Trump has placed himself and the country in an untenable position. Nothing good will come of this. 

EPT have no convincing remedy. None of the pseudo blind trust ideas floated by Trump will help. The idea that having the children manage the business empire, even as they too are involved in the administration, and even as Trump does not divest himself from any of those interests, is a cynical joke. The only true remedy, say EPT, is for Trump and his children to completely divest themselves of all ownership interest in the Trump business empire. They will not be doing this. 

GOP operatives are suggesting we need to just get used to this violation.  Trump is unique. Yes, Trump will violate the Emoluments Clause, he will promote his personal financial interest, he will accept sweetheart deals, compensation, and gain advantage from his dealings with foreign states. He will make the Trump Empire great again! We should accept this, because, after all, Trump will make America great again, too. 

Trump's violations of the Emoluments Clause are an impeachable offense. It's not going to happen under Speaker Ryan. All we can do is pay attention to these conflicts. Sooner or later a transgression is bound to get political traction. 

There is still time for the Electoral College electors to not vote for Trump. But the Electoral College doesn't meet as a body, and as Jack Balkin has pointed out, there simply is not enough time to organize the Electoral College to act independently of voters. It won't happen. 

Litigation does not seem to offer an attainable remedy. The courts are likely to consider the President's Emolument Clause violation a political question, private parties would have difficult standing issues to overcome, and it is very unclear what kind of remedy the courts could fashion. 

Whether despite his conflict of interest problems, President Trump and the GOP led Congress will "Make America Great Again" remains to be seen. For now, what is certain, Trump will make America corrupt again. 

Read the excellent EPT Article HERE.

Follow me on Twitter @RolandNikles

The 13 States in 1789

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