Trump’s business dealings test a constitutional limit

Police officers guard the door to the lobby of Trump Tower on Fifth Avenue in New York, Nov. 17, 2016.

WASHINGTON — Not long after he took office, President Barack Obama sought advice from the Justice Department about a potential conflict of interest involving a foreign government: He wanted to know whether he could accept the Nobel Peace Prize.

The answer turned on the Emoluments Clause, an obscure provision of the Constitution that now poses risks for President-elect Donald Trump should he continue to reap benefits from transactions with companies controlled by foreign governments.

“Emolument” means compensation for labor or services. And the clause says that “no person holding any office of profit or trust” shall “accept of any present, emolument, office or title, of any kind whatever, from any king, prince or foreign state” unless Congress consents.


It took David J. Barron, a Justice Department official who is now a federal appeals court judge in Boston, 13 single-spaced pages to answer Obama’s question.

Two things were clear, he wrote. The Emoluments Clause “surely” applied to the president, and the prize, which included a check for about $1.4 million, was the sort of thing that would be barred if it came from a foreign state. In the end, however, Barron concluded that Obama could accept the prize because the committee that chose him was independent of the Norwegian government and the prize itself was privately financed.

But he said that the answer would be different if a foreign government sought to make a payment to a sitting president. In a footnote, Barron added, “Corporations owned or controlled by a foreign government are presumptively foreign states under the Emoluments Clause.”

Trump’s companies do business with entities controlled by foreign governments and people with ties to them. The ventures include multimillion-dollar real estate arrangements — with Trump’s companies either as a full owner or a “branding” partner — in Ireland and Uruguay. The Bank of China is a tenant in Trump Tower and a lender for another building in Midtown Manhattan where Trump has a significant partnership interest.


Experts in legal ethics say those kinds of arrangements could easily run afoul of the Emoluments Clause if they continue after Trump takes office.

“The founders very clearly intended that officers of the United States, including the president, not accept presents from foreign sovereigns,” said Norman Eisen, who was the chief White House ethics lawyer for Obama from 2009 to 2011.

President Barack Obama accepts the Nobel Peace Prize during a ceremony at Oslo City Hall in Oslo, Norway in 2009.
President Barack Obama accepts the Nobel Peace Prize during a ceremony at Oslo City Hall in Oslo, Norway in 2009. —Doug Mills/ The New York Times

“Whenever Mr. Trump receives anything from a foreign sovereign, to the extent that it’s not an arm’s-length transaction,” Eisen said, “every dollar in excess that they pay over the fair market price will be a dollar paid in violation of the Emoluments Clause and will be a present to Mr. Trump.”

The Supreme Court has never squarely considered the scope of the clause, and there are no historical analogies to help understand how it should apply to a president who owns a sprawling international business empire. Earlier presidents worked hard to avoid even the appearance of a conflict of interest involving a foreign power, said Zephyr Teachout, a law professor at Fordham who ran for Congress in New York this year as a Democrat and lost.

“The reason we don’t really have a lot of precedent here is that presidents in the past have gone out of their way to avoid getting even close to the Emoluments Clause,” she said.

But if Trump takes a different approach, it is not clear that anyone would have standing to challenge him in court.

“There are a lot of very smart lawyers turning that question over in their minds today,” Eisen said, adding that a business competitor injured by foreign favoritism toward a Trump company might have standing.


But Richard W. Painter, who was the chief White House ethics lawyer for President George W. Bush from 2005 to 2007, said such a business most likely would not have standing to sue.

“It’s not there to protect a competitor,” he said of the clause. “It’s there to protect the United States government.”

The way to address violations of the clause, Painter said, is not a lawsuit but impeachment.

Lawmakers could take steps short of impeachment, particularly because the clause itself describes a role for Congress, which can give its consent to payments that would otherwise be barred. Painter said Congress should embrace that role by passing a resolution directed at Trump.

“It should send a clear message to him that he should divest his assets, and that they will regard dealings with his companies that he owns abroad and any entities owned by foreign governments as a potential violation of the Emoluments Clause unless he can prove it was an arm’s-length transaction,” he said.

Teachout agreed that Congress had “an institutional, constitutional obligation to make sure that Trump isn’t violating this clause.”

“You would think the responsible action — Republican, Democrat, whatever,” she said, “would be for Congress to say, ‘We want to make sure that there isn’t a violation of this clause, and in order to do so, we need to look at the transactions to make sure they’re fair market transactions instead of gifts.’”

Not everyone agrees that the clause covers the president. Seth Barrett Tillman, a lecturer at the Maynooth University Department of Law in Ireland, noted that a different clause of the Constitution, which makes bribery an impeachable offense, specifically mentions the “president, vice president and all civil officers of the United States.” The different language in the Emoluments Clause, along with historical evidence, he said, indicates that it does not apply to the president.

“That isn’t to say that we shouldn’t be concerned as a policy matter with Trump,” Tillman said. “I just want to see the conversation moved away from constitutionalizing what should be an argument about good governance.”

Laurence H. Tribe, a law professor at Harvard, said that he found Tillman’s argument “singularly unpersuasive” and that it “would pose grave danger to the republic, especially in the case of a president with extensive global holdings that he seems bent on having his own children manage even after he assumes office.”

In 2011, Jay D. Wexler, a law professor at Boston University, published “The Odd Clauses,” a book about the Constitution’s more obscure provisions. He said such obscurity could be impermanent, as the recent attention to the Emoluments Clause demonstrates.

“I’ve seen over and over how parts of the Constitution that were considered vestigial or irrelevant for decades or more can suddenly resurface and take on enormous importance with a quick change of events,” Wexler said.

“The framers were prescient men who created a government that could withstand the worst of human foibles — corruption, vindictiveness, the thirst for tyranny — and wrote a Constitution to combat those foibles in many of their forms, not all of which will always be present, but which emerge in different guises in different eras,” he said.


Eric Lipton contributed reporting.


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