With the departure of Office of Government Ethics (OGE) Director Walter Shaub fast approaching, questions about ethics and the Trump administration have resurfaced. Since resigning as OGE Director earlier this month, Walter Shaub has said that he could not perform his job in the way that he felt he should because of President Trump’s potential conflicts of interest and pushing back on OGE’s requests and recommendations by the administration. In this interview, Stanford Law Professor Robert Gordon discusses law, ethics, President Trump, the OGE, and ongoing questions about the president’s business ties and potential conflicts of interest.
What is the main purpose of the OGE? And is the administration legally bound to cooperate with it?
In the wake of the Watergate scandals, Congress in 1978 legislated strict new conflict-of-interest rules for executive appointees and created the OGE to oversee implementation of the rules. I say “oversee” rather than “enforce” because OGE has no enforcement power. The Inspectors General of the various agencies and departments are charged with investigating complaints; and only the Attorney General has authority to bring civil enforcement actions against persistent violators.
The legislation exempted the President from the conflict-of-interest rules. That was not because, as Trump has put it, “the President can’t have a conflict of interest.” It was rather because the scope of the President’s authority and official actions is so broad that it is not practical to ask him to recuse himself from all decisions that might affect his economic interests. In the past, the director of OGE has worked with incoming presidents to get them to divest themselves of business interests that might pose obvious and direct conflicts, or to put those interests in a blind trust, or limit them to investments in funds managed by others. Every President from Carter through Obama has cooperated with OGE, except the current incumbent.
We’ve read that Shaub recommended that President Trump liquidate his vast business and personal holdings, or put them into a trust, arguing that it was the only truly ethical option—and the only way to avoid the appearance of conflict of interest. This advice was ignored. How do you think President Trump’s potential conflicts of interest should be dealt with? Is the current state of affairs satisfactory—legally and ethically?
Shaub’s is still the best advice. Critics of that advice say it asks too much of the head of a far-flung family business empire to surrender his interests in it for the Presidency. The critics might have a point, if Trump were being asked to liquidate his empire, which seems to be mostly a set of branding ventures that pay him to put his name on hotels and resorts and casinos and golf courses. But he was only asked to put his projects and brands in the hands of trustees who would manage them without consulting him or reporting to him. He could resume management after leaving office. Even this much separation was too much for Trump. He turned over management of the family businesses to his sons; he receives quarterly reports on their performance; and obviously feels free to talk to them about how the ventures are doing. Some of the receipts from his businesses, like membership fees in his resorts (which have doubled since he assumed office) he receives directly. Meanwhile the Trump family has been speeding ahead with plans to develop many new Trump-branded ventures, capitalizing on the family patriarch’s new prominence as head of state.
Every one of these ventures stands to gain or lose from policies or decisions of our own government or foreign governments: favorable or adverse tax treatment, labor law and immigration policy, interest rates, environmental and safety regulations, decisions to investigate or prosecute crimes like money-laundering, etc. Perhaps most worrisome are distortions in foreign policy resulting from the desire to solicit favors or inflict penalties on countries where Trump has investments or other business dealings such as loans. That is why there is suddenly so much interest in the Emoluments clauses of the Constitution, which forbid American officials from receiving gifts or favors or concessions from foreign governments without Congressional permission; and prevent state and local governments from adding to the President’s compensation. Trump has now been sued by competitors with his businesses, state and local governments, and a group of Congressmen for Emoluments violations (though those lawsuits may fail if the courts hold that nobody has standing to bring them or that they are not justiciable in any court). At one point Trump promised to segregate foreign officials’ payments to his hotels and resorts and repay them to charity, but seems to have given up on that plan.
What aspect of President Trump’s business holdings most concerns you?
The most alarming aspect of Trump’s business ventures is their connections to kleptocratic governments and organized criminals, especially from countries in the former Soviet Union. For many years corrupt officials, oligarchs and mobsters have been buying up luxury properties like the Trumps’ and using them to launder illicit gains from their enterprises. (See the latest issue of the New Republic for more on this.) It isn’t clear how much Trump himself has known about these dealings. It is clear that around the 1980s and 90s, after many of his ventures had failed and Trump was unable to get credit from Western lenders, he turned to more unorthodox sources of financing. It is certainly conceivable that some of these sources may have information that compromises him and gives them leverage over his decisions; or at least that explains his curiously indulgent attitude toward Russia and its leaders and apparent indifference to whether they helped his campaign. Issues of this type and magnitude would be well beyond the capacity of OGE to address, as I’m sure Walter Schaub was well aware. If there is any substance to them it may have to wait to be uncovered by Robert Mueller’s investigation.
Shaub did score a significant victory in his mostly futile battles with the Trump Administration. The Administration had granted many waivers from the conflicts rules to recruit its staff. Schaub thought that the waivers should be public; the Administration argued the rules didn’t apply to the White House staff; the White house eventually gave in and made the waivers public.
Shaub has said that, after his experience in the Trump Administration, he now believes that the federal ethics rules need to be strengthened. Do you agree? If yes, why?
Shaub has called for some useful reforms, like giving OGE some subpoena power to compel disclosures of documents recording potential conflicts. He would also like to make it routine for the President to make his tax returns public, which every modern presidential candidate but one has done.
But an agency like OGE is never going to be given the mandate to police some of the most troubling problems with our democracy: the appointment to regulatory bureaucracies of lobbyists opposed to their core missions; and the “revolving door” that allows former officials to trade on the knowledge and contacts they gained in office to make a fortune as lobbyists. Under our Constitution, Congress has most of the responsibility to weed out corruption by legislating against it and exercising its oversight functions; but as we’ve seen, when Congress is controlled by the same party as the executive, its oversight functions tend to atrophy.
Many critics of the ethics rules think that they are too picky and detailed, and that the prospect of filling out the forms has discouraged talented people from public office. There’s probably some truth to that critique, but it’s a small problem compared to the effective takeover of the public sector by special interests.
Shaub has also said that he’ll be free to advocate for federal ethics from outside the Administration in his new position as senior director for ethics at the Campaign Legal Center in Washington, a nonpartisan group that advocates campaign finance reform and litigates voting rights cases. Is he bound, legally and/or ethically, to keep his inside knowledge quiet after resigning his position in the Administration?
I doubt that Shaub has much inside knowledge to share: the mission of his office is to promote transparency. He may want to share some of the details of his difficult tussles with the Administration; but nothing forbids former officials from talking about what happened while they were in office, unless the information was confidential or classified.
How important is OGE? And does its authority need to be beefed up?
OGE is one among many institutions of government whose effectiveness depends on other officials and citizens respecting its authority and the norms and conventions sustaining its mission. Every President since the OGE was established has worked with the office and accepted its guidance about how to minimize or eliminate his potential conflicts of interest—until Trump. Schaub’s OGE has been one of many victims of the disregard of generally observed norms.
Professor Robert Gordon is a legal historian with an expertise in American legal history, evidence, the legal profession, and law and globalization that spans four decades.