Federal ethics chief criticizes Trump’s plan for business trust

President-elect Donald Trump said Wednesday that he would place his vast business empire in a trust controlled by his two oldest sons and take other steps in an attempt to remove any suggestion of a conflict of interest with his decisions as president. But he said he would not sell his holdings.

Hours later, the government's top ethics monitor said the plan was wholly inadequate and would leave the president vulnerable to "suspicions of corruption."

The unusual public criticism from Walter M. Shaub Jr., director of the Office of Government Ethics, followed Trump's most detailed explanation yet of his plans to distance himself from the global business operations of the Trump Organization. No modern president has entered the White House with such a complicated array of holdings.

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The steps Trump outlined include turning over to the U.S. Treasury any profits received at his hotels from foreign government clients. An ethics officer and, separately, a chief compliance counsel will be appointed at the Trump Organization to watch its operations and ensure that it is not receiving special terms, payment or favors as a result of its ties to Trump, even as the organization is managed by a trust controlled by his two oldest sons and a longtime legal associate.

Sheri A. Dillon, a longtime lawyer for the Trump Organization, said that many of the alternatives ethics lawyers have advocated, such as selling off Trump's business assets entirely or putting them in a blind trust that would be managed by an independent party, were not practical.

Pointing out flaws in a blind trust, she said, "President Trump can't unknow he owns Trump Tower, and the press will make sure that any new developments at the Trump Organization are well publicized."

In addition, she said, the price of a sale of assets would draw scrutiny, and Trump would still be owed royalties.

The president-elect, speaking at a news conference Wednesday in Trump Tower, repeated his view, expressed shortly after his election, that as president, he will be exempt from conflict of interest laws that apply to all other federal employees except the vice president. But he and his legal team said he would still take voluntary steps to avoid even a perception of a conflict, such as the appearance that a decision he made as president might benefit one of his business ventures.

But Trump and his advisers would not release basic information about this plan. Trump has filed information with the federal government that indicates he is worth at least $1.5 billion, but that information has not been independently verified, and the value of the assets being transferred into the trust is not known.

Trump's representatives would also not release the names of people who stand to benefit from any profits the trust generates, or say whether Trump would be able to reverse the transaction. On Wednesday, Trump rebuffed a renewed call to release his tax returns, which presidents have done for decades and which would show how much profit he makes from his business endeavors, including golf courses, marketing deals and commercial office space.

Shaub, who was appointed by President Barack Obama, said that he did not believe selling assets was too high a price to pay to be president and that Trump must divest them in order to avoid conflicts of interest.

"We can't risk creating the perception that government leaders would use their official positions for profit," said Shaub, whose office establishes ethical standards for 2.7 million civilian employees in the White House and more than 130 executive branch agencies. "I appreciate that divestiture can be costly. But the president-elect would not be alone in making that sacrifice."

He criticized Trump's decision to put his assets into a trust, instead of under the far stricter control of an independent manager, known as a blind trust.

"The only thing this has in common with a blind trust is the label, 'trust,'" Shaub said during an unusual news conference Wednesday at the Brookings Institution, a policy research center in Washington. "His sons are still running the businesses, and, of course, he knows what he owns."

Even some Republican ethics experts questioned how far Trump had gone to confront the many ethical issues he faces. They noted, for example, that Trump had not promised to prohibit communication between federal employees and anyone at the Trump Organization, or his current or future business partners.

"If you don't have a real firewall, outsiders will view doing business with the Trump Organization as a way to gain access to the administration or to influence it," said Matthew T. Sanderson, a Washington lawyer who worked on the Republican presidential campaigns of John McCain, Rand Paul and Rick Perry.

In fact, Trump and his legal advisers seemed on Wednesday to revise a promise that the president-elect had made on Twitter in December: that there would be "no new deals" by his company while he was in the White House.

Now, his legal team said, this standard will apply only to foreign deals. Dillon said the Trump Organization had canceled about 30 pending deals, costing it millions of dollars. But the company will continue to look for new business opportunities — be it hotels, golf courses or other ventures — within the United States at a time when the Trump Organization brand has an unrivaled profile.

Instead, the Trump enterprise will clear new transactions with an ethics adviser to be named by the president-elect in the coming days. That person will vet the deals for potential conflicts, using a standard that Trump's advisers said had not yet been determined. A spokeswoman for Trump said he had always intended the "no new deals" promise to apply only to foreign deals.

The influence Trump will have over foreign and domestic policy as president has raised questions about whether U.S. policy could affect his bottom line. For instance, he will oversee the regulation of banks, some of which lend money to his company, and he will have frequent contact with foreign heads of state, including some who run countries where the Trump Organization does business.

He has consistently used his position to showcase his real estate properties, inviting dignitaries and Cabinet hopefuls to visit him at his golf club in Westchester County, New York, and his Mar-a-Lago resort in Palm Beach, Florida.

And the business offers have been flowing in, Trump says. Last weekend, Trump said he had turned down a $2 billion deal in Dubai.

"I don't want to take advantage of something," Trump said.

The Dubai offer came from Damac, a major developer in the Persian Gulf region that is building the Trump International Golf Club, Dubai, and an adjacent luxury housing development.

Trump and his legal team appeared to be particularly sensitive to the suggestion that Trump might violate the so-called emoluments clause of the Constitution, which prohibits federal employees from taking any "present, emolument, office or title, of any kind whatever, from any king, prince or foreign state."

Dillon, the Trump Organization lawyer, who works for the Washington firm Morgan Lewis, said the clause, in her view, did not apply to market-value transactions such as a foreign government's paying a hotel bill. But to address the issue, the organization plans to donate to the federal government the "profits" derived from any payments from foreign governments to hotels it owns. Representatives of the organization did not reply when asked how this calculation would be made or whether a public accounting of the payments would be provided.

But Trump Organization officials said this agreement would not apply to golf courses or other businesses. That means Trump could still benefit from payments by foreign governments, critics said.

Erwin Chemerinsky, the dean of the University of California, Irvine School of Law, also said the plan to turn over profits from foreign government payments to Trump's hotels was not sufficient to eliminate the constitutional issue.

"As soon as he receives the payment, he will have benefited, even if he later decides to give it away," Chemerinsky said. "This will mean he will have violated a provision of the Constitution."

Separately, Trump's daughter Ivanka Trump said on her Facebook page that she was both separating herself from the Trump Organization and turning over management of her brand of handbags, jewelry, shoes and other accessories to another executive.

But ethics experts said the family might have figured out a way to accelerate the growth of their business while taking modest steps to separate themselves from the day-to-day operations.

"It's hard to imagine anything she could do to help the brand more than simply being a part of the White House apparatus," Robert Weissman, president of Public Citizen, a liberal nonprofit, said of Ivanka Trump. "The only solution for all of this is for them to divest — and that does not include handing it to another family member."