Donald Trump, the businessman, is about to run headlong into Donald Trump, the president. With his stunning election victory on Tuesday night, Trump now confronts more potential conflicts of interest than any other president in U.S. history. How – or even whether – the billionaire navigates this minefield could have sweeping implications at home and abroad.
He pays rent to the federal government for the rights to operate his new hotel in Washington, his international deals could influence statecraft and his biggest lender, Deutsche Bank AG, is currently negotiating a settlement with the Justice Department over its mortgage-securities business.
While most of Trump’s $3 billion net worth derives from properties in America, he also has licensing and management agreements for projects in Turkey, South Korea, India, Uruguay, Brazil and the Philippines. He owns three golf courses in Ireland and Scotland, with two more planned for the United Arab Emirates.
He faces the prospect of foreign leaders seeking to curry favor with the U.S. president by green-lighting projects or providing favorable terms to developers linked to Trump. He is also entwined in the U.S. court system. He is facing a racketeering lawsuit against his failed Trump University, one of the more than 1,300 times he’s sued or been sued since 2000, a Bloomberg analysis found.
How Trump, the first billionaire to become president, will handle these investments and other conflicts will face intense scrutiny, with little precedence to guide him or the public. No laws exist that will require him to distance himself from the Trump Organization. While he will be required to continue to file asset disclosures, presidents are otherwise mostly exempt from the 1978 Ethics in Government Act -- an exception derived from the belief that such rules could keep commanders-in-chief from making tough decisions.
“I can’t actually think of any existing legal restrictions on his engaging in self-dealing other than the rules that are specified in the Constitution,” said Robert Kelner, chair of the Election and Political Law Practice Group at Covington & Burling LLP.
Trump has said he would place his business in a blind trust run by his children, although he acknowledged in a January debate that his suggestion doesn’t necessarily constitute a true blind trust. “Well, I don’t know if it’s a blind trust if Ivanka, Don and Eric run it,” he said. “If that’s a blind trust, I don’t know. But I would probably have my children run it with my executives and I wouldn’t ever be involved because I wouldn’t care about anything but our country, anything.”
To make a blind trust, Trump would need to liquidate all his assets and then appoint an independent trustee to oversee them, a process made virtually impossible by the nature of Trump’s businesses, said Norm Eisen, a visiting fellow at Brookings Institution who previously served as the Obama administration’s ethics czar.
Still, there are things Trump could do to limit perceptions of conflicts, Eisen said. He could appoint an independent chief executive officer to the Trump Organization, institute a list of Trump Organization executives he won’t talk to, and remove his children from leadership roles there.
The last suggestion is unlikely given Eric, Ivanka and Donald Trump Jr.’s heightened roles at the business. “It’s going to leave us with a lingering set of questions as his kids are in and out of the Oval Office,” Eisen said.
Trump is also grappling with debt, at least $630 million, according to a July appraisal by Bloomberg. About half is owed to Deutsche Bank. The government initially requested $14 billion to settle a mortgage-securities investigation, the bank said in September, adding that it expected to pay less eventually.
One of the trickiest conflicts Trump faces overseas is in Turkey, a key U.S. ally in the battle against Islamic State in Syria and Iraq. In Istanbul, the U.S. president-elect has a deal with Turkish billionaire and media mogul Aydin Dogan to brand a $300 million two-tower complex with Trump’s name.
Turkish President Recep Erdogan attended the opening ceremony with Trump in 2012. After Trump called for a ban on Muslims entering the U.S., Dogan tried to break the contract, which paid Trump royalties of as much as $5 million last year, according to his latest financial disclosure. In June, Erdogan called for Trump’s name to be removed from the towers, but today he greeted Trump’s electoral victory with optimism, saying he hoped it would be “favorable” for the region. Shares in Dogan Sirketler Grubu Holding surged almost 11 percent on Wednesday after Trump’s victory.
Trump also owns two golf courses outright in Scotland -- in Turnberry and north of Aberdeen -- that are each losing millions of pounds, according to the latest financial accounts. Following the Brexit vote in June, Scottish First Minister Nicola Sturgeon called for a re-run of Scotland’s independence referendum if the terms of the U.K.’s departure from the European Union harm Scotland, where a majority of voters wanted to remain in the bloc. All this raises the question of how Trump would respond to the prospect of Scottish independence, a move that could impact the future profits of his golf courses there.
Trump also has a branding agreement for an apartment block in Manila called Trump Tower at Century City. Philippines President Rodrigo Duterte last month named Century Properties Group Inc. Chairman Jose E.B. Antonio, Trump’s partner in Manila, as a special envoy to the U.S. As Century Properties shares rallied on Wednesday, Duterte welcomed Trump’s win, saying it would help enhance U.S.-Philippine relations.
Other possible conflicts loom in Canada, where towers in Vancouver and Toronto are Trump-branded and have faced calls from local residents to remove his name. In India, Trump has licensed his name to two major developments in Pune with the Panchshil Group and in Mumbai with Lodha Group, potentially affecting U.S. policy towards India and Pakistan.
Trump’s companies are generally doing well. Sure, booking websites reported that visits to Trump-branded hotels have slumped and Doral, his largest and most valuable golf resort, has hemorrhaged conferences and groups to other Miami properties, say two people familiar with the market.
But a presidential sheen to the Trump name could reverse those businesses’ fates. And Trump’s most lucrative and least sexy business -- collecting rents for office and retail spaces -- has remained strong throughout his campaign.
One of Trump’s most valuable assets is a 30 percent stake in two office towers -- one in New York, the other in San Francisco -- appraised at $590 million in July. Trump’s name isn’t on either one. A Bloomberg investigation in June found that office space at Trump’s 40 Wall St., valued at $540 million, was occupied by fraudsters, thieves, boiler rooms and penny-stock schemers.
At his namesake Trump Tower in New York, the most valuable component is the near-priceless retail spaces at its base, where Gucci keeps its flagship store. Were it to end its ten-year-old lease, vacating nearly 49,000 square feet near Bergdorf Goodman and Burberry, the Trump Organization could fill the space at rates from five-to-10 times the current rent. So too around the corner, where he owns the rights to lease 6 East 57th St., a 90,000-square-foot store that has been rented to Nike for two decades.
“I’ve done deals at those properties and can tell you that the only thing the luxury retailers there are thinking about is the retail traffic, who works in the building and on the street, and all of that is very positive,” says Faith Hope Consolo, retail brokerage chairman at Douglas Elliman Real Estate.
And apartments in Trump-branded Manhattan buildings have outperformed the market since June 2015, according to data compiled by real estate firm StreetEasy. As some buyers have been priced out of the high end of New York’s luxury market, they’ve turned to “luxury-adjacent” buildings such as Trump’s, which are mostly older and less expensive with fewer amenities, says Krishna Rao, economist at StreetEasy.