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Trump's conflict-of-interest plan is good enough, for now

Rick Newman

Donald Trump’s critics already hate his new plan to disengage from his real-estate company and prevent conflicts of interest while he’s president. But for most Americans, it will be good enough.

The incoming president hired a prominent law firm to figure out how he can withdraw from his eponymous, privately owned company, the Trump Organization, without selling the whole thing or putting it in a blind trust, to be run by somebody else. The plan is substantive and clever, with Trump’s populist touch for good measure. The real question may not be whether the plan goes far enough, but whether Trump will abide by it religiously. If he does, it could put concerns about Trump using the presidency to benefit his business interests to rest.

Here are the basics of the plan: Trump’s sons, Donald, Jr. and Eric, will run the company. Trump and his daughter Ivanka will relinquish their roles in the company, and Trump will never receive any information about the company that’s not public. Trump’s ownership stake in the company will be placed in a trust, with no involvement by Trump. The company will be allowed to make domestic deals while Trump is president, but will make no new foreign deals. And an independent ethics adviser will review those domestic deals to make sure there’s nothing fishy.

Oh, there’s one other thing. When representatives of foreign governments stay at Trump-controlled hotels in the United States, the proceeds will go straight to the US Treasury. Those donations will be puny by Washington’s Brobdingnagian standards, but it’s the kind of clever showmanship Trump excels at—and it will allow him to claim he’s taking one for Team America by giving up a portion of his profits.

Unreasonable expectations?

Good-government groups such as Common Cause and the Project on Government Oversight lambasted Trump’s plan, arguing that it’s implausible Trump wouldn’t discuss the family company with his own family members. If he did violate his own rules, it’s possible nobody would know. And there remain plenty of ways for the Trump Organization to capitalize on connections made through Trump’s position as president–if not now, then certainly once Trump leaves office.

That’s all true, but most voters probably won’t care, because the bulletproof solution is unreasonable by Main Street standards. The cleanest way for Trump to assure his company and his family won’t profit from a Trump presidency is to sell the company and exit the business completely. If that happened, neither Trump nor his family would be able to return to the business later, unless they bought it back. The firm Trump inherited from his father and built into something much bigger—with hopes to bequeath it to his own kids, someday—would disappear from the family history. Trump would also have to sell at a discount—possibly a deep one–to liquidate complex real-estate holdings in more than a dozen countries on short notice. It could cost Trump $1 billion or more in lost value just to become a public servant. To many Americans, that would be unfair, if not ridiculous.

Trump’s lawyer, Sheri Dillon of the law firm Morgan, Lewis & Bockius, made a couple other valid points while describing the plan at Trump’s much-anticipated news conference on Jan. 11. For one thing, selling off Trump’s company would generate potential conflicts of its own. Brokering such a deal would probably generate 8- or 9-figure fees that would go to …. whom? Goldman Sachs? Deutsche Bank? Some other Wall Street firm almost sure to be associated with Trump or one of his well-heeled Cabinet picks? And Dillon asserted, correctly, that at least some of the value of the Trump Organization lies in the reputation of the Trump name, and, let’s face it, the Trump personality. A sale would separate the company from the person who animates it, changing the entire enterprise.

No new foreign deals

The prohibition on foreign deals is a meaty provision that will cost the Trump Organization revenue and profit. Dillon also said the company has canceled more than 30 pending deals that were in the works before Trump got elected, another move that will cost the company money. So Trump is putting his money where his mouth is.

Questions remain. Trump, at the press conference, said he had a discussion in early January with a developer hoping to involve him in a $2 billion real-estate project in Dubai. Why was Trump even talking with him, if foreign deals are off the table? Is Trump teasing? Why would he tempt himself if he’s serious about recusing himself from company business, like an alcoholic hanging out in a bar?

Still, the real test of Trump’s ethics will be his behavior while in office, not his plan—which could backfire if he appears to be cutting corners. Just ask Hillary Clinton. When she became secretary of state in 2009, she vowed there would be a firewall between her office and the nonprofit Clinton Foundation her husband ran. Turns out the firewall got breached, leading to unending controversy over matters Clinton may have had nothing to do with, such as the purchase of a uranium company that required US government approval, by foreigners who gave money to the Clinton Foundation. Concerns about Clinton’s self-dealing—whether valid or not—clearly hurt her presidential campaign, contributing to her loss to Trump.

If Trump were completely venal, fully intending to exploit his presidency for personal gain, he might get away with a fig-leaf plan meant to prevent personal gain. But it would crumble eventually, and possibly wreck Trump’s presidency. Few explosive secrets are actually kept in Washington, and Trump is already so controversial that there must be thousands of potential leakers in the federal bureaucracy and the broader Beltway orbit. It would be extraordinarily difficult for a corrupt President Trump to hide his perfidy for long.

Trump likes to point out that the president is exempt from conflict-of-interest rules that govern other federal employees. But the president isn’t exempt from criminal law or political disaster, and voters will turn quickly on any leader they feel puts his own interest above the nation’s. Trump cares a lot about his ratings, and he has made some big promises that require political muscle and persuasion. If he squanders all that for a few secret deals, the biggest loser will be Trump himself.

Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman.