Thursday, December 22, 2016

Zephyr Teachout's Take on Trump Conflict of Interest Problems


Zephyr Teachout is author of Corruption in America: From Benjamin Franklin’s Snuff Box to Citizens United (Harvard University Press 2014), Associate Law Professor at Fordham Law School and a former Democratic gubernatorial and Congressional candidate in New York.

I was at her book signing and took part in the Q&A.

With a characteristic combination of delay, omission and Twitter, Trump announced last week that his sons, two of his closest advisers, would take over running his Companies and that he would keep his ownership stake. He would not liquidate his assets and put them into a true blind trust. This week, Trump’s team floated a new idea, a kind of trust that also wouldn’t be “blind” in any real way, since it would allow Trump to keep any eye on how his businesses are doing. All this means that when Trump becomes President, he and his family could still be getting payments and favors from his Company’s foreign clients, from China to Georgia to the Philippines, who often have interests at odds with America’s.

It also means that Trump threatens to be the most corruptible President in American history.

In research for her book Corruption in America, which documents the early history of conflict of interest law, she found many ways in which money has been used to win power, but there has been no other President who was so vulnerable to corruption by outside business interests as Trump now is. Instead, since the early days of the Country, Presidents have gone out of their way to distance themselves from even the appearance of conflicts of interest. Not only does Trump’s decision to keep his businesses violate the Foreign Bribery clause of the Constitution, also known as the emoluments clauses, but with that violation, Trump is upending 240 years of tradition and a core conviction of the Founders: that a stable, safe, Representative Republic depends on protecting against the Foreign corruption of our officeholders.

Article I, Section 9, Clause 8 of the Constitution, the Emoluments clause, forbids taking gifts or payments from foreign Governments, stating that no American officeholder shall, “without the consent of the Congress, accept of any present, emolument, office, or title, of any kind whatever, from any king, prince, or foreign state.” That strong language (“any kind whatever”!) was no accident. At the Constitutional Convention, the framers saw corruption as the central threat to the Republic and talked about it more than other concerns like Political Factions or violence.

MHD:

There’s also a Domestic Emoluments Clause (in Article II), which explicitly applies to the President and prohibits him from receiving, on top of his salary, “any other Emolument from the United States, or any of them.” Together, these Clauses prohibit the President from receiving, other than his salary, any “emolument” or any compensation, gift, or other form of profit or gain, from Foreign Governments, the United States, or State Governments and their instrumentalities of interstate commerce.

Significantly, the Domestic Emoluments Clause is absolute in its prohibition, while the Foreign Emoluments Clause allows Congress to give its consent to Presidential receipt of otherwise forbidden Emoluments, Congress can’t wish away violations of the Domestic Emoluments Clause even if it wanted to. The Framers were clear: no Emoluments beyond the President’s salary from the Federal Government or the States. Period.


The most likely agents of corruption, the Founders believed, were Foreign Countries that could use structural weaknesses in the fledgling American political system to corrupt our politics. History suggested that States would spend what they needed to secure influence. And if larger and wealthier Countries like France or Britain could find ways to get American officials on their payroll or give them lavish gifts, those Governments could in turn influence American trade policy, or the terms of war and peace.

New York delegates Alexander Hamilton and Gouverneur Morris were especially worried. Hamilton imagined “foreign powers” who would “interpose,” while Morris “drew the melancholy picture of foreign intrusions as exhibited in the History of Germany, & urged it as a standing lesson to other nations,” according to notes from the Constitutional Convention. Massachusetts delegate Elbridge Gerry, the Framer best known for his insistence on the Bill of Rights, argued, “Persons having foreign attachments will be sent among us & insinuated into our councils, in order to be made instruments for their purposes. Every one knows the vast sums laid out in Europe for secret services.” James Madison, from Virginia, cited several examples from world history, from ancient Greece to contemporary Europe, and argued that it “was naturally to be expected that occasions would produce” further foreign meddling. In fact, one of Madison’s arguments for Federal power in general was that the alternate plan, with no Federal veto authority over individual States, “left the door open” for Foreign entities to more easily influence States.

The Constitution includes several provisions demonstrating this fear of Foreign infiltration, not just the Emoluments clause. It demands a long residential period for Foreigners before they can run for Congress. Article II mandates: “No person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President.” The requirement that a treaty be ratified by a two-thirds vote of the Senate, as opposed to either three-quarters or a simple majority, was debated in terms of the fear that Foreign Countries would be particularly interested in trade, and therefore would try to corrupt a majority of Senators or the President to get favorable deals or block retaliations.

The Foreign Bribery clause that was ultimately included in Article I represented, at the time of the drafting of the Constitution, the special American commitment to fighting what the Founders saw as corrupt European practices. In the 18th century, it was a custom of the International Community for Kings to give expensive personal gifts to Ambassadors as a form of flattery, bribery, and even supplements to salaries, constituting large parts of the Diplomats’ income. This practice was anathema to the new Americans because it threatened not only dependency on Foreign powers, but a continuation of the corruption that they had fought a revolution to escape. John Adams, after a Diplomatic tour, said of France, “there is everything here too which can seduce, betray, deceive, corrupt and debauch.” President Thomas Jefferson explained in 1801, “We have a perfect horror at everything like connecting ourselves with the politics of Europe” because Conflicts of Interests and use of favors meant that “someone or other will always be bought off.”

Under the Constitution, even the smallest gift from a Foreign State would have to go through Congressional approval, what Jefferson called “the gridiron of Congress”, before it could be accepted. The initial draft of the new Constitution that was circulated did not include the full Foreign Bribery clause, but merely prohibited accepting titles of nobility. On August 23rd, however, delegate Charles Pinckney of South Carolina “urged the necessity of preserving foreign Ministers & other officers of the U.S. independent of external influence” and moved to insert the clause forbidding “presents” and “emoluments,” in addition to offices or titles, “from any King, Prince or foreign State.” The provision passed without discussion.

This was no trivial clause. At the Virginia Convention debating the Constitution, Edmund Randolph used the example of a President taking Emoluments from a Foreign power as grounds for Impeachment. And ever since, Presidents have taken the prohibition extremely seriously, scrupulously avoiding violations.

In 1860, a general textbook, Exposition of the Constitution, explained that while Presidents were sometimes given gifts from Foreign powers, the presents were “usually deposited in the public offices, it not being courteous to decline them.” President Andrew Jackson, for instance, did not keep a gold medal sent from Simon Bolivar, but turned it over to Congress, to comply with the Clause. President Martin Van Buren was offered horses, pearls, a Persian rug, shawls and a sword by Ahmet Ben Haman, the Imam of Muscat in 1840. But the Imam was told that the President was forbidden by the Constitution to accept the presents for his own use. Van Buren even wrote him to explain that it was a “fundamental law of the Republic which forbids its servants from accepting presents from foreign States or Princes.” The President was able to take the gifts only after a joint resolution of Congress authorized him to dispose of the presents by giving some to the State Department and giving the proceeds of the rest to the Treasury. President John Tyler was given two horses by the same Imam; he also submitted them to Congress, which authorized him to auction them off and give the proceeds to the Treasury.

The particulars of protocols have varied, but the practice has been consistent since the early days of the Republic: Foreign gifts are documented and typically given to a Public Agency, whether the Treasury, the Department of State or the National Archives. And while there have been occasional charges that some domestic gifts crossed ethical lines, such as concerns raised about poor record keeping of gifts during Bill Clinton’s Presidency, there has been never been a situation in which Foreign powers are making and receiving substantial payments to and from a President’s family business. Consider the difference between the President getting a beautiful expensive shawl from the Government of Indonesia, even one worth thousands of dollars, and the President being regularly enriched by rental payments from a Foreign Government. After all, the State-owned Industrial and Commercial Bank of China is the biggest tenant in Trump Tower. The President-Elect’s family will also be indebted to the Chinese Government since Trump owns a 30% stake in a partnership that borrowed $950 million from lenders that include the State-owned Bank of China. Both business relationships are a corruption risk of the highest order.

Recent Prime Ministers and Presidents from other Countries who have kept the business in the family while serving in office have not fared well. The family of businessman-turned-Thai Prime Minister Thaksin Shinawatra made millions when his policies allowed his family-owned telecommunications company to be sold for nearly $2 billion dollars in a tax-free deal. That led to mass protests and a military coup, ousting Shinawatra from power in 2006. Billionaire businessman Silvio Berlusconi aced constant questions about corruption related to his business interests, and ended his long career as Prime Minister with a weakened Italy and convictions for bribery, fraud and tax evasion.

What are we to do if Trump simply flouts the Emoluments clause, which he is poised to do? So far, neither Trump nor a member of the Transition team has explained why his behavior would be Constitutional, though Trump insists he is acting within the law. Because the clause calls on Congress to approve any Foreign payments, “without the consent of Congress”, before they are Constitutionally acceptable, Trump’s announcement puts a Constitutional responsibility on Congress to use its power to stop the incoming President from taking unauthorized Foreign payments. Democrats in Congress have introduced a bill that would require Trump to liquidate and divest. Theoretically, Congress could also choose to approve the Foreign payments that Trump and his businesses receive while he’s in office. But it cannot do nothing. If Congress fails to act, not only will Trump be flouting the Constitution, Congress will. And any State Emoluments could be an impeachable event.

At the founding of the United States, the Framers were worried about corruption because we were so small and weak compared with the powerful Europeans. Now, the situation is reversed, the stakes are much higher. Our Foreign Policy is so consequential that Foreign powers cannot afford to pass up opportunities to influence it. Governments around the world are poised to use the leverage of debt and payments to Trump businesses to make sure their policy, not the policy that serves American citizens, goes through, not just in trade and diplomacy, but in the most serious of scenarios: war and peace.

A few years ago, Russia’s Putin reportedly sent Trump a decorative lacquered box as a gift when Trump brought his Miss Universe pageant to Moscow. Although Trump was merely a real estate and media mogul at the time and had not yet expressed his admiration for Putin as he did during the Presidential Campaign, the incident is an echo of one that happened nearly 240 years ago, but with a very different outcome.

When Benjamin Franklin left Paris in 1785 after serving as America’s Minister to France, King Louis XVI gave him a beautiful snuff box encrusted with 408 diamonds “of a beautiful water,” featuring a portrait of the king with powdered hair and red cheeks, wearing white lace around his throat, two gold chains on his shoulders and blue robe with gold fleurs-de-lis. This lovely box was not seen with kind eyes by the young American contemporaries. In accordance with the provision in the Articles of Confederation that would later become the Emoluments clause in the Constitution, Franklin was allowed to keep the box only after submitting it to the Continental Congress for approval.

We fear that Trump doesn’t understand the lessons of Franklin and the Founders when it comes to Foreign influence, that once in the White House, Trump will still be inclined to forgo Congress and take that box, and so much more.











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