The Trump Conflict-of-Interest Mess

Donald Trump’s announcement last week that his steps to address his conflicts of interest will not include divestiture of his holdings presumably surprised no one. But it is still very big news, which, in my view, has important implications for the country – and not just in the COI realm.

Trump’s apparent reason for this decision is that given the nature of the holdings any divestiture would be very disadvantageous to him financially. I have no reason to doubt that point. Trying to liquidate his interest in the Trump Organization would be, without question, much harder to do than selling publicly traded stock – and would subject him to a very sizable “haircut.”

But, as others have pointed out, as Commander in Chief, he will be asking US military personnel to risk making sacrifices far greater than those he is willing to require of himself.  Indeed, in other contexts – particularly dealing with climate change and the escalating national debt – any meaningful solutions will require some degree of sacrifice by millions of Americans.

The lack of ethical leadership shown by the President Elect on COIs could indeed weaken efforts to deal with a wide range of grave challenges requiring sacrifice that the country faces. To me this is potentially the greatest harm from his decision. (For more on the link between morality-based sacrifice and the success of human societies see Jonathan Haidt’s The Righteous Mind.)

Still, while I disagree with where Trump comes out on divestiture there is at least a logic to it. But the explanation given for the closely related issue of his refusal to release his tax returns – that being under audit prevents him from taking this step – is simply false.

A lesson I learned as a young criminal defense lawyer which has served me well as an older C&E lawyer is that if a good reason can’t be given for something then the real reason is usually a bad one. Of course, this isn’t always the case (as behavioral ethics has demonstrated).  But it is true enough to ask – particularly when viewed in light of his decision to not divest – if Trump is hiding something damaging by not releasing his tax returns.

Regardless of what his reason actually is, a presumption of guilt will  – based on his false explanation –  likely shape the perceptions of his deals, holdings and business partners that are already known and those that emerge from what will doubtless be an endless voyage of discovery by investigative journalists. The loss of trust at risk here will be harmful not only for Trump but also the country as a whole, in the same way that Watergate was harmful.

A gloomy forecast, indeed – particularly given that this condition may well last for four years. But what does it mean for the C&E practitioners who are most of the readers of this blog?

I’d like to think nothing – and to assume that this can all be relegated to the realm of politics, which is far off and distinct from that of the business world, which is largely my focus. But we cannot ignore the warning of Justice Louis Brandeis: “Our government is the potent, the omnipresent teacher. For good or for ill, it teaches the whole people by its example.” While Brandeis was speaking about violations of law (which Trump’s decision on COIs does not involve) the point seems just as applicable to ethics.

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