Steven L. Schooner and Kathleen Clark | March 9, 2018 | 0 Comments

Analysis: The President’s Hotel Donation Ruse

The Trump International Hotel in Washington. The Trump International Hotel in Washington. Hunter Bliss/Shutterstock.com

Last week, a remarkable ethics episode briefly percolated to the top of the boiling cauldron known as the Trump administration news cycle. The Trump family appeared to acknowledge the public’s concern that foreign governments are attempting to influence the president by spending money at Trump hotels. Sadly, the response—a cynical, half-hearted gesture—merely reminded us that the Trumps do not take the Constitution seriously.

Trump Organization compliance officer George Sorial announced that the organization made an unspecified “voluntary contribution” to the Treasury Department, fulfilling Trump’s “pledge to donate profits from foreign government patronage at our hotels and similar businesses” while Trump is President. The theatrical announcement brought to mind Trump’s flamboyant January 2017 promise (made while surrounded with camera-friendly “files”) to put his businesses into a “trust.” Trump’s subsequent failure to establish a blind trust rendered the measure meaningless because Trump retains ownership of his businesses and may draw funds from them at any time.

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A week later, Eric Trump confirmed a report that the voluntary donation was $151,470. For that low—and certainly inadequate—sum, the Trumps bought some positive news coverage from a few media outlets. Compliance experts and serious journalists were more skeptical. The announcement raised more questions than it answered and highlighted this administration’s disregard for norms of transparency, ethics, and the public interest. This was nothing more than a publicity stunt.

Access For Sale

Since the November 2016 election, individuals, corporations, special interest groups, and foreign governments understood they could influence President Trump by spending lavishly at Trump properties. Unlike campaign donations, which can be made only by U.S. nationals and must be publicly disclosed, Trump hotels welcome spending by all comers (including foreign citizens, governments, and companies) and require no public disclosure. Garry Trudeau aptly nailed this grift in a Doonesbury comic.

No Transparency, No Credibility

Sorial’s superficial announcement makes a mockery of the public’s expectations for transparency in governance. Even after an enterprising reporter uncovered the donated sum, it bears emphasis that we still have no idea which foreign governments patronized their properties, the amounts they spent, or the total amount of revenue the Trumps received. The Trump Organization failed to explain the methodology behind the figure, offered no supporting data, and provided no verification by an independent accountant or auditor. The glitzy brochure the Trump Organization published last year on this topic clarified that they prioritized their clients’ privacy and the Trump family brand’s value over any Constitutional obligations or respect for public service ethics requirements or norms. Their lack of transparency only exacerbates the problem and reinforces the public’s cynicism.

It’s impossible to give Trump the benefit of the doubt here, especially given the family’s well-documented record of overstating and misrepresenting its philanthropy. Indeed, last year, the Washington Post's David Fahrenthold won the Pulitzer Prize for reporting on Trump’s exaggerated and frequently unfulfilled charitable promises. Given the President’s perpetual disregard for facts, his multiple bankruptcies, and the Trump University fraud settlement, no prudent person or competent compliance official would “take his word for it.” Extensive documentary support would be necessary to assess the adequacy of the $151,470 sum, particularly in light of anecdotal evidence that the Kingdom of Saudi Arabia alone spent more than $250,000 at Trump’s Washington hotel during a six-month period that included the 2016 campaign, election, and inauguration.

Emoluments Aren’t Limited to Profits

Drilling down, Trump’s decision to donate “profits from foreign government patronage” fails to adequately address the problem of foreign governments lining Trump’s pockets. The Constitution prohibits the acceptance of “emoluments,” not “profits” as that term is understood in the modern, complex business vernacular. Emoluments are any benefits, advantages, gains or returns associated with payments from foreign governments. Yes, emoluments include profits, but they are by no means limited to profits.

This isn’t rocket science; it’s a rudimentary business principle. Every foreign dollar spent at a Trump property benefits the first family. Booking empty rooms in a month when a hotel is losing money may not generate a profit, but reducing the Trumps’ losses obviously provides a benefit. Also, the Trumps could easily manipulate—and minimize—what they deem a “profit” for their Washington hotel by accelerating the amortization of their up-front renovation costs.  

Lowering the Standard

This latest publicity stunt conforms to the president’s pattern of behavior, which demonstrates that he does not take the Constitutional emoluments prohibition or his public responsibilities seriously. The President’s legal team—White House counsel Don McGahn, compliance attorney George Soriol, tax attorney Sheri Dillon, and fixer Michael Cohen—consistently eschew the aspirational standard of “do the right thing,” instead gravitating toward a standard of “do what you can get away with.” This tone set at the top has not been lost on cabinet officials and White House staff.

Unfortunately, this also reminds us of GSA’s disappointing failure to address one of the most dramatic conflicts of interest imaginable. We knew before the inauguration that the lease to operate the Trump International Hotel in the historic Post Office Pavilion would pose unprecedented conflicts of interest—both apparent and actual. GSA embraced the Trump administration’s laissez-faire disregard for public service ethics and, instead, chose to be fully complicit in an easily avoidable high-profile conflict. In so doing, GSA sullied its reputation, undercut its credibility, created a globally-recognizable public service corruption case study, and sent the worst possible message to the acquisition community and civil servants. GSA has demonstrated, through its actions, that longstanding policies on conflicts of interest are (to GSA) empty words, rather than important restraints necessary to maintain the public’s confidence in government.  What a shame.

Steven L. Schooner is the Nash & Cibinic Professor of Government Procurement Law at the George Washington University (GW) Law School.  Kathleen Clark is Professor of Law at the Washington University in St. Louis and a leading expert on government ethics.

Image via Hunter Bliss/Shutterstock.com.

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