US ethics chief blasts Trump plan to keep business profits

Posted at 6:30 AM, Jan 12, 2017
and last updated 2017-01-12 08:30:53-05

WASHINGTON (AP) — The director of the federal government's ethics agency Wednesday blasted President-elect Donald Trump's plan to maintain his business empire by turning it over to his sons instead of selling off all his corporate assets and placing remaining profits in a government-approved blind trust.

U.S. Office of Government Ethics Director Walter Shaub took the rare step of commenting publicly about a presidential ethics decision, warning that Trump's solution to a potential cascade of conflicts spurred by his global business holdings breaks 40 years of precedent by presidents from both parties.

Shaub, a 2013 Obama appointee who also worked at the agency during the George W. Bush administration, openly pleaded with Trump to reconsider his plan before his inauguration. Shaub said Trump should commit to "divestiture," a process under which he would sell his corporate assets and place the profit in a blind trust administered by a neutral trustee approved by the OGE.

Emails between the OGE and the Trump transition team obtained by the Associated Press show that Shaub repeatedly tried to engage with Trump's aides late last year to persuade the president-elect and his Cabinet choices to agree to divestiture as the cleanest way to clear aware potential ethics conflicts posed by their investments and businesses.

But while lawyers for several Trump picks, including prospective Secretary of State Rex Tillerson and senior adviser Jared Kushner, have worked closely with the OGE in shaping divestiture plans, Trump's own lawyers and aides gave the federal agency no official advance notice of his plan to turn over his global empire to his sons, according to an official familiar with interactions between the two sides.

The official, who requested anonymity to detail the sensitive contacts between the two sides, said that Shaub met once with Trump's prospective White House counsel, Don McGahn, in recent weeks, but only to discuss ethics plans for several of Trump's picks, not for Trump's own plan to deal with his holdings.

An outside attorney for Trump, Sheri Dillon of firm Morgan Lewis & Bockius, said that Trump plans to have his companies' operations directed by his two sons, but they would pursue new deals only in the U.S., not abroad. Additionally, Dillon said, Trump would put his business assets in a trust but would hand over management of his international real estate firms to a management company based in New York.

Shaub said during a rare appearance at the Brookings Institution that he was "especially troubled" by Dillon's comment that Trump's liquid assets from stock and investment sales he made in recent months before the presidential election would be placed in a "diversified portfolio of assets" approved by the OGE.

"No one has ever talked to us about the idea, and there's no legal mechanism to do that," Shaub said. He added that the only OGE-approved method is the government-qualified blind trust set by the Ethics in Government Act.

Shaub said his agency's unusual Twitter comments last year complimenting Trump for considering divesting his assets was his decision, made to "use the vernacular of the president-elect's favorite social media platform to encourage him to divest."

Shaub said he now worries that Trump has no intention to go through government-approved divestiture, a move that risks "creating the perception that government leaders would use their official positions for profit." Shaub said he had been initially encouraged by a Trump tweet last year that "no way" would he allow any conflicts of interest.

"Unfortunately," Shaub said, "his current plan cannot achieve that goal."


Associated Press writer Julie Bykowicz contributed to this report.