Four House Democrats said the Federal agency that leases Trump the land for his Washington hotel has concluded the President-Elect will be required to fully drop his stake in the Pennsylvania Avenue project.
But the agency itself cautions it's too soon to say for sure, adding it's waiting to see how Trump decides to handle conflicts of interest between his businesses and his Administration.
The Democratic lawmakers said the General Services Administration (GSA) told them Trump would be in violation of his lease with the agency as soon as he is sworn in on Inauguration Day, pointing to a line in the contract that prohibits any "elected official" from being "admitted to any share or part of this Lease or to any benefit that may arise therefrom."
In a letter sent Wednesday to GSA Administrator Denise Turner Roth, the Democratic lawmakers recount their version of GSA's position, which they say the agency relayed to them, and ask for a series of financial and contractual documents related to the lease.
“The Deputy Commissioner informed our staff that GSA assesses that Mr. Trump will be in breach of the lease agreement the moment he takes office on January 20, 2017, unless he fully divests himself of all financial interests in the lease for the Washington D.C. hotel. The Deputy Commissioner made clear that Mr. Trump must divest himself not only of managerial control, but of all ownership interest as well," Reps. Elijah Cummings of Maryland, Peter DeFazio of Oregon, Gerald Connolly of Virginia, and Andre Carson of Indiana wrote. The Deputy Commissioner for the GSA's Public Buildings Service referenced in the letter is Michael Gelber.
Later Wednesday, the GSA said it hasn't yet reached a conclusion because Trump still hasn't said how he will separate himself from his businesses.
"GSA does not have a position that the lease provision requires the President-elect to divest of his financial interests," and agency spokesperson said. "We can make no definitive statement at this time about what would constitute a breach of the agreement, and to do so now would be premature. In fact, no determination regarding the Old Post Office can be completed until the full circumstances surrounding the President-elect’s business arrangements have been finalized and he has assumed office."
Trump said late last month he planned to hold a press conference this Thursday to announce his plans to turn over operation of his business empire to his children. However, earlier this week he postponed that event until sometime in January. It appears he is planning to cede management control to his sons Donald Jr. and Eric, but retain Ownership in the Company.
On Tuesday, the President-Elect tweeted that his firm would do "no new deals" during his Presidency, but he did not explain precisely what he meant. Trump Transition officials did not immediately respond to a request for comment on the lawmakers' letter.
Last month, GSA, which is effectively the Federal Government's landlord, issued a statement saying it "plans to coordinate with the president-elect’s team to address any issues that may be related to the Old Post Office building.” However, the lawmakers say the GSA official who met with Congressional staff Dec. 8th said the agency got no substantive response from the transition team after alerting them to the issue.
Several experts on Ethics rules and Government contracting have argued that the provision limiting involvement of public officials in the lease effectively bars Trump from benefiting from it in any way once he takes office. However, other experts said the wording of the clause, in particular the use of the word "admitted", could be interpreted to bar Trump from acquiring any interest in the project after becoming President but not to retaining a stake he already has.
The Democrats' letter suggested GSA has sided with the lawyers who say Trump's becoming President does break the lease.
If Trump doesn't divest, the GSA would officially notify him of the breach and could then refer the matter to the Civilian Board of Contract Appeals (CBCA), according to the letter. The Board is an independent tribunal formed in 2007 to resolve disputes, considered by a panel of two or three Judges who are appointed by Senior officials in their respective agencies and only removed for cause.
The Board does not have the power to order the GSA to keep Trump's lease but can award him money damages for losing it, according to Steven Schooner, the George Washington University Law Professor who first publicly pointed out how Trump would break his lease. "I am confident that the CBCA will interpret the contract consistent with GSA's position," Schooner said.
But David Drabkin, a former GSA senior Procurement Executive, said the GSA official misspoke when he said the agency would refer the mater to the Appeals Board. Under the terms of the contract, the GSA would first have to enter mediation, and then Trump would have the right to appeal either to the Board or to the Court of Federal Claims, he said. "If litigation ensues it could take years to be resolved, ultimately it could go to SCOTUS," Drabkin said, referring to the U.S. Supreme Court. "I’m disappointed that the President-Elect postponed his announcement about his plans to address these issues tomorrow. Until we know what he’s going to do, it’s hard to know what the government will do."
The new Trump International Hotel sits on Federal property and is operated under a 60-year lease issued by GSA. Trump appears to owns about 77% of the entity leasing the hotel, according to GSA records released to BuzzFeed. His children, Ivanka, Don and Eric, own most of the remainder. Ivanka Trump has been the main person handling the lease on behalf of the Trump Organization, according to the letter.
The Trump children's continuing role in the transition complicates matters. But if the GSA would accept Trump transferring the hotel to his children, it would be quick and simple to accomplish, according to Kevin Fullington, Co-Chairman of the Government Relations practice at Herrick Feinstein. The Trump entity that lease the hotel could rewrite its operating agreement so that Trump wouldn't receive any money from the hotel, he said.
The GSA told the House Democrats its Contracting officials would stand up to political influence and base their decisions on laws and regulations, according to the letter.
Rep. Elijah Cummings of Maryland, the Ranking Democrat on the House Oversight and Government Affairs Committee, said the lawmakers stood by their letter and their assertion that the GSA agreed Trump would break his lease if he doesn't divest.
“We understand GSA’s position that this breach has not yet occurred, will not occur until Donald Trump is sworn in as president, and is officially viewed as a ‘hypothetical’ issue until that time," Cummings said in a statement. "We also share GSA’s hope that the agency will not have to address this issue if President-elect Trump divests his ownership in the lease before then. But the simple fact is that GSA informed our staffs that they interpret this lease provision as prohibiting any elected official from having any ownership interest in the lease, and we stand 100% behind our letter."
Divesting from running his Trump Enterprise and still retaining stock interests in the company does not resolve his Conflict of Interest.
NYC Wins When Everyone Can Vote! Michael H. Drucker
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