Trump Should Have Divested from His Business

It’s interesting to read the following paragraph without having any idea of the context. What were they asking about? What did Eric Trump do?

The White House referred a request for comment to the president’s outside counsel. Jay Sekulow, a lawyer for Mr. Trump, declined to comment. A person close to the situation said Eric Trump had acted as the president’s son and not in his role as a company executive. The Trump Organization declined to comment. Lanny Davis, a lawyer for Mr. Cohen, declined to comment.

Here we can surmise that something occurred that would be illegal or at least highly unethical if Eric Trump did it in his capacity as a Trump Organization chief executive, but completely kosher and forgivable if he did it strictly as a favor to this father. In a way, that this argument can even be made is part of the problem with having a president who has not adequately divested himself from a sprawling business empire. If what Eric Trump did was wrong, then maybe Eric Trump shouldn’t be put in a position to choose between ethics and family. And if what he did is ordinarily considered a crime, then it’s a problem that his relationship with the president is inoculating him against accountability.

So, what did Eric Trump do?

President Trump personally directed an effort in February to stop Stormy Daniels from publicly describing an alleged sexual encounter with Mr. Trump, people familiar with the events say.

In a phone call, Mr. Trump instructed his then-lawyer Michael Cohen to seek a restraining order against the former adult-film actress, whose real name is Stephanie Clifford, through a confidential arbitration proceeding, one of the people said. Messrs. Trump and Cohen had learned shortly before that Ms. Clifford was considering giving a media interview about her alleged relationship with Mr. Trump, despite having signed an October 2016 nondisclosure agreement.

Mr. Trump told Mr. Cohen to coordinate the legal response with Eric Trump, one of the president’s sons, and another outside lawyer who had represented Mr. Trump and the Trump Organization in other matters, the people said. Eric Trump, who is running the company with his brother in Mr. Trump’s absence, then tasked a Trump Organization staff attorney in California with signing off on the arbitration paperwork, these people said.

Set aside the dysfunction of this family which has the father’s second son working to cover up that his dad cheated on his third wife by having an extramarital tryst with a pornographic actress in the same hotel room he had shared the night before with a Playboy bunny. Eric Trump shouldn’t have been using Trump Organization employees to do legal work on this. That’s why they argued the lawyer wasn’t really doing this work as an employee, but more as a favor.

In March, the Trump Organization denied any role in the arbitration, saying its lawyer assisted in her “individual capacity.” At the same time, the White House issued blanket denials when asked about a hush payment to Ms. Clifford and directed questions to Mr. Cohen, who had called the deal a private transaction between himself and the former adult-film star.

When a chief executive orders an employee to do some legal work, it turns out neither of them are doing anything as part of the company. If either of them were, that would be a problem, but they’re just working informally—moonlighting, if you will.

On Friday, we saw the highly unusual development of a federal judge ruling that 200 members of Congress actually do have standing to take the president to court for violating the Emoluments Clause of the Constitution by doing business with foreign governments at his hotels and resorts. This will be appealed to the Supreme Court where, if seated, Brett Kavanaugh could be the deciding vote. But however the dispute is decided legally, it’s another example of why it’s problematic to have a president who has not truly divested themselves from a business. For one thing, the Trump Organization stands to make or lose money based on decisions Trump makes. For another, foreign leaders and domestic lobbyists know they can curry favor with the president by patronizing his businesses.

According to Forbes, the president is losing money despite his best efforts to profit off his presidency.

By refusing to divest, Trump raised an unprecedented question: How would the most divisive presidency in modern American history affect a company built on the president’s persona? Forbes has been working to answer that question since the moment Trump got elected, interviewing nearly 200 colleagues, partners and industry observers. While the experiment continues to unfold, in real time, the early results are in. Much as he’s trying—and he’s definitely trying—Donald Trump is not getting richer off the presidency. Just the opposite. His net worth, by our calculation, has dropped from $4.5 billion in 2015 to $3.1 billion the last two years, knocking the president 138 spots lower on the latest The Forbes 400 (which will be published in full tomorrow).

I’d argue that this is about the worst possible result. A president with a healthy, profitable business would have some ethical conflicts, but a president with a faltering unprofitable business has too much motive to use his position to try to turn things around.

Trump isn’t a sympathetic example here, but I could picture another businessperson whose company and assets were harmed by his political career for whom we might feel some genuine empathy. It shouldn’t cost someone a fortune or innocent employees their jobs just because a businessman runs for and wins the presidency.

That’s why total divestiture is an absolutely vital requirement. If you don’t want to give up or damage your business, then don’t take the risk of running for president.

In fairness, Trump didn’t think he would win and doesn’t appear to have even contemplated that he might. But he did win, and then he didn’t do what he was ethically required to do as a result.

If the Democrats take control of Congress, I’ll be fascinated to see how they try to handle this.

Martin Longman

Martin Longman is the web editor for the Washington Monthly and the main blogger at Booman Tribune.