Wednesday, December 14, 2016

GOP-Backed Law Forbids Trump from Using Presidency for Personal Profit


President-Elect Trump’s business empire represents an unprecedented source of conflicts of interest between his Presidential duties and the hundreds of private companies he controls, which he has said he will not sell and will leave to his sons to run. Luckily for Trump, the President of the United States is exempt from most of the conflict of interest rules that govern other Federal employees.

“In theory, I can be president of the United States and run my business 100 percent,” Trump bragged to The New York Times in November.

But a 2012 law called the STOCK Act could throw a wrench in Trump’s plan. A section of that law states that “no executive branch employee may use nonpublic information derived from or acquired through their position as an executive branch employee as a means for making a private profit.”

“The STOCK Act bars the President from: using nonpublic information for private profit,” the Independent Office of Government Ethics (OGE), which handles Executive Branch Ethics issues, wrote in a Monday letter to Sen. Tom Carper (D-Del.).

The measure was originally designed to apply only to members of Congress. But Republicans, annoyed that it covered the GOP-controlled House and Senate but not the Obama administration, made sure to extend it to the Executive branch, including the President and Vice-President.

Some 232 Republicans in the House and 44 in the Senate voted for the bill. Just four Republicans opposed it.

“Republicans in Congress thought, ‘What’s good for the goose is good for the gander,’ and they fought to make sure the president and the vice president were subject to all the provisions of the bill,” said Craig Holman, a Lobbyist at the Nonprofit Government watchdog Public Citizen, which helped draft the law. “Today the STOCK Act is one of the few government ethics laws that fully applies to the president and the vice president.”

In questions of ethics, the rules matter. “OGE guidance is very important for executive branch officials including the president,” Richard Painter, who served as Top Ethics Lawyer to President George W. Bush, explained in an email. “When OGE interprets criminal statutes ― some of which apply to the president and some of which do not ― its views are very important and likely to be given substantial weight when the DOJ and courts interpret the statutes. Those who do not follow such advice do so at their own risk. This could also factor into a decision by the House to impeach an official who is subject to impeachment.”

The STOCK Act was created to prohibit members of Congress from trading on nonpublic information they obtained in the course of their duties. But the words “making a private profit” in the law could be read to mean any kind of private profit, not just one from the stock market, experts say.

“The STOCK Act is intended to prevent public officials from using their office for private gains, period. And unlike other similar laws, this one applies to the president and vice president,” said Brendan Fischer, Associate Counsel at the Nonprofit Campaign Legal Center.

The bottom line is that if Trump were to use nonpublic information, the kind that, as President, he would likely receive every few minutes, to inform a decision he makes regarding one of his Companies, he could find himself in violation of the STOCK Act, even if he wasn’t trading stocks.

But the OGE can’t discipline or fire the President. Only Congress can do that, through impeachment. And Congress is controlled by Trump’s Party.

The STOCK Act’s rules against trading stocks based on Nonpublic information are currently enforced by the Securities and Exchange Commission, with penalties comparable to insider trading violations committed by the public.

These penalties “are very serious, and can be felonies,” Holman said. “But the SEC is quite frightened of Congress, and no doubt frightened of President Trump, so they’ve been reluctant to pursue cases against Congress. After all, it’s Congress that controls the purse strings and their budget.”

The same is true for the OGE, Fischer said. “They’re legally an independent agency, but the Director is appointed by the President. It’ll be interesting to see if Trump’s administration will hold themselves to these same standards.”

“OGE’s involvement in ethics issues related to the President has significant limits,” the Agency wrote in its letter to Carper. “A 1980 memorandum of understanding between OGE and the U.S. Department of Justice withholds from OGE authority to issue binding opinions on the statutory prohibition against bribery.”

Democratic Rep. Tim Walz (Minn.), an original sponsor of the 2012 STOCK Act, thinks it’s time to update the legislation. “We’ve been trying to see how to revitalize this,” Walz told HuffPost. “Now more than ever, I think it’s absolutely appropriate ... to restore faith in the system [and] to have transparency in it.”

Asked whether he thinks the current STOCK Act is sufficient to prevent lawmakers from enriching themselves with insider knowledge, Walz hesitated. “I would have thought so once, and I’m not looking to embarrass the president-elect,” he said, “but the reason you ask for things like tax returns, or what you’re doing with your stocks, is to make sure people know that’s not happening.”

Trump has so far refused to release his tax returns to the public, breaking with decades of Presidential protocol, and Trump’s Transition team did not respond to questions from The Huffington Post about how he plans to comport with the requirements of the STOCK Act. Last week, Trump spokesman Jason Miller told reporters that Trump had sold all of his shares in public companies, some $40 million worth, six months ago. But Miller refused to provide any evidence of the transactions, or to say what Trump did with the proceeds.

Because of Republican efforts, Section 9 of the STOCK Act instructs the OGE to issue legal guidance on how the prohibition on profiting from nonpublic information applies to the President and Vice-President. That guidance would apply to Trump, Vice-President-Elect Mike Pence and all future Presidents and Vice-Presidents.

The OGE hasn’t issued that guidance yet, but Monday’s letter to Carper makes clear that the Agency believes the law extended Federal Ethics rules regarding using Nonpublic information for private profit to the President.

When the OGE did issue rules around the ban on employees using Nonpublic information for private gain, it included examples to guide employees on their activity. The agency’s examples present clear lines on what Trump can and cannot do.

A Government employee who learns that a company will be awarded a new contract cannot advise a friend, a family member, or an acquaintance to purchase stock in that company. If someone has access to Government contract information, they cannot disclose that contract information to someone else who is bidding on the same contract, nor can they help that person or company write their bid in a way that would make it more competitive when compared to the former bid.

The final example presented by the OGE is the one that creates the most problems for the President-Elect. An employee of the Army Corps of Engineers involved with an Environmental organization would be banned under the law from passing Nonpublic information about, say, the construction of a dam to a member of that Organization or to a reporter.

There is no shortage of Nonpublic information that the President learns in the course of the job. With Trump’s financial interests, both current and future, implicated in domestic and foreign policy, there is little doubt the President will come across Nonpublic information that will have an impact on his bottom line. Under this example, one leak to a reporter or one conversation with someone at the Trump Organization would implicate him in a Felony violation of the STOCK Act.

Previous Presidents have avoided this problem by selling their assets, like the Trump Organization, or putting them in a blind trust. Trump has said he will do neither.











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