How Trump Could Ease His Conflict-of-Interest Problem

Donald Trump
Joe Raedle | AFP | Getty Images

Dear President-elect Trump:

The potential conflicts of interest between your huge business empire and your future job have been well documented. The possibility that corporate interests or foreign countries could try to bribe you, as president, in both large and small ways is substantial.

Consider this small example: Over the weekend, the chief executive of one of the largest companies in the nation — who was a Hillary Clinton supporter — told me he planned to have his staff stay at your new Trump International Hotel on Pennsylvania Avenue as an "easy way" to ingratiate himself with your new administration.

As far as I have seen, so far you appear unfazed by the headlines about kleptocracy. "Prior to the election, it was well known that I have interests in properties all over the world," you wrote on Twitter. "Only the crooked media makes this a big deal!"

You have said that you have no plans to sell your companies or put them into a blind trust — which wouldn't be effective anyway, since it's impossible to blindly hold real estate assets that have your name affixed to them. In the meantime, there are reports that you may lease multiple floors of Trump Tower to the Secret Service for millions of dollars, which you would pocket.

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The entire situation is — how else to put it? — untenable.

You understand the conundrum. "In theory, I don't have to do anything" to distance yourself from your business holdings, you told journalists at The New York Times last week, "but I would like to do something — I would like to try and formalize something."

So, in the spirit of offering a constructive solution rather than demagogy, let me offer you an idea: Voluntarily agree to hire what is known as a "corporate monitor," an independent overseer with unfettered access to your organizations who will provide regular reports to the public about any possible instances of conflicts.

Many well-known companies have done this under regulatory and legal duress, but you could do it voluntarily and pay for it yourself, offering a jolt of trust to those who fear you could engage in self-dealing.

I even have a suggestion for someone to take this role — someone who told me on the phone Monday that he would be happy to do so. (More on that later.)

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There is a clear benefit to you, Mr. Trump. You'll be able to accomplish a lot more. If voters and the members of Congress perceive that your legislative proposals are meant to enrich you, your family or your business partners — even if that is not the case — you run the risk of undermining whatever progress you hope to make.

Let me flesh out the idea. First, it would be preferable for you to sell your empire — which, by the way, you could do without having to pay taxes on any profits. Rules designed to entice the wealthy into public service, which allow executive branch employees to dispose of their assets in certain defined ways to avoid conflicts of interest, would be a good option for you. Henry Paulson used this option in 2006 when he left Goldman Sachs to become Treasury secretary.

The next-best option would be the arm's-length one, which was advocated in a recent article in The Economist. Mr. Trump, the magazine said, "must ring-fence his private interests and put them under independent supervision. It is the only fix that is both principled and practical."

But whatever you do, the most critical piece is the corporate monitor, someone with an impeccable reputation.

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The name of someone who could be that person: Kenneth R. Feinberg. As you'll recall, he is the lawyer who oversaw the September 11th Victim Compensation Fund, worked as the special master for TARP Executive Compensation, and served as a government-appointed administrator of the BP Deepwater Horizon disaster victim compensation fund. He also supervised General Motors and Volkswagen in their recall struggles.

Mr. Feinberg's reputation is considered beyond reproach. He is known as a straight shooter who cannot be bought or sold.

Admittedly, this is not a perfect solution, but assuming that the person selected for the role of corporate monitor is trusted, it would go a long way toward assuring the public that your political and business interests won't overlap or compromise America's interests.

Yes, some of your critics will deride the corporate monitor as mere window dressing. And the fact that this would be a novel application of the corporate monitor role — such people are typically appointed as part of a settlement in a legal case, as a move by a company to ease the punishment — might give you pause.

But appointing one would also suggest that you take the conflict issue seriously, not only to the American public but also to the rest of the world, which has long looked to the United States as a model of democracy. If your administration even raises the specter of corruption in the White House, that would undermine the entire country, as well as our economy.

Companies like Apple, BP, Deutsche Bank, JPMorgan Chase, Siemens and Zimmer have been subject to corporate monitors. Typically, such a person is installed at the behest of the government after a business has been involved in breaking antitrust laws or foreign corrupt practices laws. For example, the hedge fund manager Steven A. Cohen was required to hire a corporate monitor to oversee Point72, his family office, as part of an insider trading settlement.

A corporate monitor traditionally provides reports to the Justice Department or the Securities and Exchange Commission to make sure the company he or she oversees is in compliance with the law.

A New York Times contributor, Steven Davidoff Solomon, has critically called the idea of corporate monitors in the business context "a full employment act for former federal prosecutors that may have little effect on the way any company that is forced to hire a monitor conducts its business."

That's true when companies hire cronies or others friends. That's why it is important to hire someone truly independent.

"The mere presence of a corporate monitor can help to change the culture of a company and how it approaches its internal controls and compliance and ethics programs," Ryan C. Pisarik and Jason T. Wright, of the corporate advisory service Stout Risius Ross, said in a note to clients.

When I called Mr. Feinberg to run my idea by him, he paused to consider it. We went over the positives and the negatives.

He seemed to warm to it quickly. "The perfect is the enemy of the good," he said. He told me, "You'll get pushback" from critics who will say the monitor is "in bed with the guy paying him."

Still, he said the idea brought to mind a famous quote from Justice Louis D. Brandeis: "Sunlight is said to be the best of disinfectants."

Assuming the monitor has no operational authority and no bonus associated with performance, Mr. Feinberg said, "At least we know from an unimpeachable source, here is the way it is."

So, would Mr. Feinberg accept the position? "I'll take the job," he said with both a laugh and a genuine sense of sincerity.

In that same spirit, I want you to know, Mr. Trump: I'll happily waive my finder's fee if you take up this idea.

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