The Trump Legacy: A Gladstonian Finale?

For a man whose biographer describes him as obsessed “with protecting his image,” President Donald Trump seems oblivious to how flouting conflict of interest norms is blackening that image.  Perhaps he thinks that the criticisms leveled (examples from GAB: here and here, major media: here, here, and here) are just the carpings of Clinton supporters that will fade over time. And that his presidential accomplishments will overshadow whatever he may do to grow the Trump patrimony while holding the office.

He might want to consider how conflict of interest charges have sullied the image of one of Britain’s finest leaders since he left office 123 years ago.  So great has the fuss been that that no biographer, no matter how sympathetic, and no history of 19th century Britain can ignore the charges. Continue reading

Shareholder Proposals as a Response to Trump’s Conflicts of Interest

Donald Trump’s continuing failure to place his assets in a blind trust creates an opportunity for him to abuse the public office of the Presidency for private gain—his own and his family’s. The Trumps have shown themselves willing to work with blatantly corrupt business partners in the past; now, with the awesome power of the Presidency, Trump is in a unique position to do significant damage to the anticorruption agenda. People who, like me, are bothered by the conflicts of interest have sought ways to fight back. While my last post discussed the viability of the Trump anticorruption boycotts, here I discuss a different but potentially complementary approach: shareholder proposals.

What is a shareholder proposal? Every year, each shareholder receives a long booklet of information, called a proxy statement, from every company in which he or she holds stock. These proxy statements are compiled by corporate leadership and distributed to shareholders, who are asked to vote on certain matters: electing directors to the board, hiring the corporate accounting firm, and approving executive compensation. At the end of the proxy statement come the shareholder proposals, short recommendations for the board of directors. Shareholders are asked to vote for or against those proposals.

Under SEC Rule 14a-8, any shareholder (or group of shareholders) who holds $2,000 or 1% (whichever is less) of the company for at least one year may submit a proposal. (There are a few other procedural requirements as well, but they are not too onerous.) Although shareholder proposals are merely advisory—the directors and management retain their power to make decisions on behalf of the corporation—shareholder proposals in the past have been used to advance social and political goals. For example, social activists used shareholder proposals to urge divesting from South Africa during the apartheid era. Last year Exxon Mobile included shareholder proposals to place a climate expert on the Board and to report on compensation for women. A shareholder proposal for Coca-Cola asked the company to report on its operations in high-risk regions with poor human rights records.

In this vein, anticorruption activists who hold stock in corporations that do business with the Trump family brands (such as Amazon, Macy’s, or Zappos) could submit shareholder proposals urging those companies to report on or cease all such business. To be sure, shareholder proposals are merely recommendations to the board. But shareholder proposals are nonetheless a low-cost tool in the anticorruption advocate’s toolbox that can help keep public attention on the issue and prevent the normalization of Trump’s conflicts.

An anti-Trumpian-conflicts-of-interest shareholder proposal, cast in the formalistic style typical of such proposals, might look something like the following:

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Profiting from the Presidency? Tracking Corruption and Conflicts of Interest in the Trump Administration

The Trump Administration has been dogged by accusations that President Trump, as well as his family members and close associates, are seeking to use the presidency to advance their personal financial interests. We’ve had numerous posts on this blog about these issues (see, for example, here, here, here, here, and here), including a recent overview of the relevant federal laws and regulations that might apply to some of the alleged problematic conduct.

Because it can be hard to keep track of the various allegations related to corruption and conflict of interest in the Trump Administration–and because accusations of “corruption” are sometimes framed quite broadly–we’re going to try to keep track of credible allegations that relate specifically to President Trump, his family, and his close associates exploiting the office of the presidency for personal financial gain. Just as President Trump’s son Eric will be providing President Trump with “quarterly” updates on the Trump Organization’s business affairs, we will do our best to provide readers with regularly updates on credible allegations of presidential profiteering. (We are not the only ones keeping track of these issues. For other useful resources and compilations, see here, here, and here.)

We will organize the issues into the following four categories, which capture four related but distinct ways that political leaders leverage the power of public office to enrich themselves, their families, and their cronies:

  1. U.S. Government Payments to the Trump Organization
  2. Use of the Power of the Presidency to Promote Trump Brands
  3. U.S. Government Regulatory and Policy Decisions that Benefit Business Interests of the Trump Family and Senior Advisors
  4. Private and Foreign Interests Seeking to Influence the Trump Administration Through Dealings with Trump Businesses

You can find our first report here.

Anticorruption Tools in the Anti-Trump Toolkit: A Primer

[Kaitlin Beach provided helpful research and thoughtful contributions to this post.]

Since Donald Trump’s election, critics have asserted that his presidency presents unprecedented risks of corruption, cronyism, and conflict of interest. Many argue that President Trump and members of his administration are already engaging in conduct that is not only unethical, but also illegal. Because it can be hard for non-specialists to keep track of the myriad rules that have been referenced in the context, this post provides a brief, non-technical overview of the most important federal laws and regulations that are designed to prevent corruption, conflict-of-interest, and self-dealing in the U.S. government, focusing on those that have been most widely or most creatively discussed in relation to fighting a purportedly corrupt Trump administration.

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Is Going After Trump’s Businesses Under State Law Such a Good Idea?–Some Criticisms To Consider

As regular readers of this blog are aware, although I share the concern that the Trump family’s extensive private business interests pose significant corruption risks, I’m skeptical that existing federal law supplies the tools needed to attack this problem. Some of the most important federal conflict-of-interest laws don’t apply to the President, and some of the creative attempts to sue the President in federal court for alleged violations of the Constitution’s Foreign Emoluments Clause face what I fear are insurmountable legal obstacles. Several commentators have proposed reforms to federal law that would deal with the presidential conflict-of-interest problems more effectively, and some Members of Congress have introduced such legislation. But as a practical matter, given Republican control of Congress, these proposals—whatever their symbolic value—are not going anywhere.

If federal law isn’t going to help, might state law be the answer? Shortly after Donald Trump tweeted critical comments about Nordstrom’s department store’s decision to drop his daughter Ivanka’s clothing line, ethics expert Norm Eisen suggested that this tweet might be a violation of California’s unfair competition law (UCL), which prohibits “any unlawful, unfair or fraudulent business act or practice.” Around the same time, Fordham Law Professor Jed Shugerman wrote a lengthy blog post, which got quite a bit of well-deserved attention, suggesting that state corporate law tools could be used to go after alleged violations of the Emoluments Clause by Trump’s businesses. Picking up on some of these suggestions, I argued in previous posts that the California UCL, or others with similarly broad phrasing, might be a viable basis for an Emoluments Clause suit, and further that states could amend their UCLs, consumer protection laws, business organization laws, and anticorruption laws in ways that would make it harder for businesses owned or controlled by the President of the United States (or his immediate family) to leverage political power for private commercial gain in ways that would adversely affect the interests of the states’ citizens.

The idea that state (or local) laws might be used in this way is not purely hypothetical or speculative. A couple of lawsuits are already invoking UCLs as a basis for going after allegedly unlawful overlap between the Trump family’s business interests and their political power. First, a Washington, D.C. restaurant brought a private suit alleging that Trump’s ownership interest in the Trump International Hotel in Washington, D.C., which occupies a building leased from the federal government’s General Services Administration (GSA), violates the terms of the lease, and that this in turn gives rise to a violation of D.C.’s UCL. (That suit, however, was dealt a major blow when the GSA ruled—implausibly—that Trump is not in violation of the lease.) Second, a San Francisco clothing retailer has sued Ivanka Trump under California’s UCL, alleging that various actions by Donald and Ivanka Trump, and others, to promote Ivanka’s brand have unlawfully hurt competitors such as the plaintiff. And in what many took as an encouraging sign, the New York State Attorney General Eric Schneiderman recently hired former Assistant United States Attorney Howard Master, who handled public corruption prosecutions under recently-fired U.S. Attorney Preet Bharara, and news reports indicate that Mr. Schneiderman is looking into the possibility that Trump’s alleged Emoluments Clause violations also put him in violation of state law.

I’m cautiously optimistic about this line of attack, particularly if state attorneys general and state legislators get involved, and I’m currently working on developing some more concrete proposals along these lines. (As the modern cliché goes, “Watch this space.”) At the same time, though, I’ve talked to a number of smart, thoughtful people who are skeptical that pushing for state-level responses—particularly by aggressive state attorneys general—is such a good idea. While these criticisms haven’t yet convinced me to change my mind, they’re important enough that those of us attracted to the state law approach ought to take them seriously and reflect carefully before we charge ahead. So, let me try to summarize what I take as the three most important arguments against trying to use state law tools to make it more difficult for the Trump family to profit from the presidency: Continue reading

Targeting Trump Businesses as a Response to Conflicts of Interest

Many people, myself included, believe Donald Trump’s failure to place his assets in a blind trust is more than just problematic. The full extent to which President Trump may be abusing public power for private gain—that is, engaging in corruption—is unknowable, so long as his business empire remains opaque and his tax returns stay buried. Even where Trump’s business interests are out in the open, a “shadow of corruption” hangs over the actions he takes as an ostensible public servant.

Some of the people who share these concerns are exploring ways in which they might engage in consumer activism as a response to Trump’s conflicts of interest. Consider two organizations that are leading broad boycotts against the Trump Administration. Don’t Pay Trump is a web browser extension that allows one to, in their words, “keep your money out of Trump’s tiny hands.” It alerts the consumer when he or she is making an online purchase from a business that sells Trump products. A second initiative, #grabyourwallet, is a more established and exceedingly low-tech enterprise which also calls for “flexing consumer power.” #grabyourwallet maintains what looks like an excel spreadsheet that displays companies ripe for a Trump boycott. It provides the necessary tools to the activist consumer: name and number of the company, reason it should be boycotted, suggested sample of what to say, and updates on successes. #grabyourwallet received credit for the recent Nordstroms decision to drop Ivanka Trump’s produces from its stores, which earned Nordstroms a Presidential tweeted complaint on February 8th.

Both of these organizations attempt to decrease the profitability of Trump businesses, albeit for different reasons. Don’t Pay Trump seeks to weaponize consumer power to affect administration policy, while #grabyourwallet is explicitly motivated by the Trump family’s conflicts. It is difficult to say how effective the anti-Trump boycotts might be, given the absence of direct analogies to the current situation. Nonetheless, we might be able to draw some lessons from past corporate boycott efforts:

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State-Level Responses to Trump’s Corrupt Mix of Business and Politics: Some Preliminary Proposals

In my last post, I suggested that legal responses to concerns about corruption in the Trump Administration—in particular, concerns about Trump’s use of the presidency to enrich his family—might be more successful at the state level than at the federal level, and might be more viable if they do not attempt to target Trump directly, but rather deploy state law tools to limit the Trump family’s ability to leverage Trump’s position for commercial gain. My last post noted two proposals for lines of legal attack that could be initiated by state attorneys general (or possibly by private parties) under existing bodies of state law: state unfair competition laws (some of which are framed very broadly) and state corporate laws (which give states considerable power to regulate corporations, and possibly limited liability companies (LLCs), operating pursuant to state charters).

These proposals are attractive because they do not require any changes in existing laws. At the same time, and for that same reason, the laws in question are not necessarily well-tailored to the specific and unprecedented corruption/conflict-of-interest problems at issue in the Trump Administration. For that reason, it might be worth exploring potential changes to state law that would give state enforcement agencies, and possibly private litigants, more effective tools to rein in some of the most egregious sorts of potential conflicts, and thereby to enforce a more rigid separation between the Trump Administration and the Trump family’s business interests. Even though Republicans control the large majority of state governments, there are several states where Democrats and sympathetic Republicans might well have enough clout to pass such legislation—including, perhaps most importantly, California, New York, and Delaware. (Many other states have popular ballot initiative processes that might enable the passage of legislation even over the objections of Republican-controlled state legislatures.)

What might such state-level legislative reforms look like? This is a topic I hope to explore in a series of future posts, but here let me throw out a few relatively simple preliminary ideas: Continue reading