April 7, 2020

Trusting Blindly

By Stephen Tuttle | Jan. 21, 2017

President Trump wants us to trust him blindly while refusing to place his assets in a blind trust. His sons will run his businesses, he says, and they will never discuss it, ever. Trust him. 

Modern presidents and cabinet officers are almost always people of substantial means. Since their holdings might be impacted by their decisions, they divest their assets to avoid a conflict of interest or even the appearance of one. 

They most often accomplish this by putting their assets into a blind trust. An independent trustee is appointed and those assets are then under his or her control. At that point the individual who owns the assets is no longer allowed to control them, make suggestions regarding them, have knowledge of what's happening to them or even communicate with the trustee. Hence the phrase “blind trust.”

Any potential conflicts of interest are eliminated, as the person has no knowledge of what has happened to the assets. 

It should be noted here there is no law requiring Trump to take such action. It is an old and wise tradition, but not a requirement.

When he claims he's placing his assets in a blind trust to be run by his sons, he's pretty much demonstrating an ignorance of the concept. Neither family members nor business associates are allowed to be the trustee of a blind trust for obvious reasons.

We're now asked to believe when the Trump family gathers, daddy Trump, a notorious control freak, won't casually ask his boys how the business is going. Of course he will.

Such interactions could well create the impression the president is making decisions feathering his own nest rather than in the national interest. That, despite his assertions to the contrary, would be illegal. 

To be fair, it would not be easy at all for Trump to divest himself of his far flung business entanglements. Stocks, real estate and other investments are easy enough to hold in trust. But Trump's holdings, or at least what we know of them, are a little trickier.

Part of the problem is his refusal to release his tax returns as every president for nearly a half century has done. As a result, we don't actually know the number of pies in which he has his fingers nor exactly where all those pies might be (again, it should be noted there is no legal requirement Trump release his tax returns.)

We don't even know what he's worth. He claims, without documentation, he's worth $10 billion. The Wall Street Journal puts the figure at $4.5 billion. The Guardian, a Manchester, England-based daily newspaper, lowered the amount to $250 million. We simply don't know. 

What we do know is messy.

For example, how would he divest naming agreements? Trump only owns or partially owns about 10 percent of the various properties bearing his name in big gold letters. The rest simply pay for the right to use the Trump name. Presumably the folks who do own those properties felt there was a business advantage to acquiring the Trump name.

Trump can't divest properties he doesn't own and the naming agreements provide valuable cash flow, lots of it, to the Trump Organization. Should the Trump name come off those properties? Do the licensing fees go to the trustee? Should the property owners have a say? How does he divest himself of a product which is literally nothing more than his name?

Then there are the Trump children, three of whom work for his business. Most presidents had children far too young to be involved in daddy's business, which was usually politics. But Trump is our oldest president ever, with grown children who followed him into the Trump Organization. Should they be forced to resign?

Should the entire Trump Organization be turned over to a trustee? How would that work without the brand himself being involved?

And what of the creditors? Various sources have claimed the Trump Organization has debt somewhere between $100 million and $350 million. We know from myriad lawsuits Trump doesn't much like paying the full debt to his creditors. He “negotiates” or goes to court. A blind trust trustee could sell Trump assets to pay those debts, in full, without Trump having a say. It's pretty clear he wouldn't like that.

Trump also has foreign business interests and, seemingly, a desire to engage with Russian billionaires. That could well call into question his foreign policy decisions, especially any agreements he cobbles together with Vladimir Putin.

Divesting Trump's holdings would be complicated, time consuming and maybe even groundbreaking. It would likely devalue the business considerably.

Still, allowing his family to control the Trump Organization could be worse, inviting constant conflict of interest scrutiny that will be an ongoing distraction. And a public grown weary of trusting him blindly. 

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