Trump: Wealth and Governing

Donald Trump to Place Business Holdings in a Trust Run by Adult Sons

Some ethics experts say the trust and other measures don’t create the firewall needed to fully insulate him from his holding

President-elect Donald Trump says that he, as president, could run the Trump organization. But, Trump says, “I don’t like the way that looks,” so he will have his two sons, Don and Eric run the company.

Peter Nicholas and
Alexandra Berzon

President-elect Donald Trump said he would put his assets into a trust and relinquish control of his business to his two adult sons in an effort to avoid conflicts of interest during his presidency.

Mr. Trump will sever management ties to the Trump Organization and play no role in its operations under the terms of the trust. While he is in office, his real-estate empire will abide by “severe restrictions on new deals,” an attorney retained by the president-elect said. If foreign governments make payments to his hotels—including a new one near the White House—Mr. Trump plans to donate all profits to the U.S. treasury, said the attorney, Sheri Dillon.

The announcement drew sharp criticism from ethics experts who said the steps laid out Wednesday are inadequate to create a clean separation between Mr. Trump’s business interests and his presidency.

In a news conference, Mr. Trump said he is legally entitled to serve as president and run his business, but has opted not to do that. His sons Eric and Donald Jr. will run the Trump Organization, he said, adding that “they’re not going to discuss it with me.”

On a table next to the lectern, the Trump transition team piled stacks of paper laying out the terms of the trust.

According to the agreement, Mr. Trump will add to the Trump Organization’s management team an ethics adviser who will give written approval of new deals that could raise concerns about conflicts of interest.

No new foreign deals will be permitted, Ms. Dillon said. In his remarks, Mr. Trump said that over the past weekend he turned down an opportunity to do a $2 billion deal in Dubai because he wanted to avoid creating an ethics issue.

New domestic deals will be allowed but will go through “a vigorous vetting process,” Ms. Dillon said.

According to some experts, the trust and other measures envisioned by Mr. Trump don’t create the firewall needed to fully insulate him from his holdings. The trust he is creating to hold his businesses will continue to receive millions from their profits and will be run by family members—not an impartial third party.

An analysis by The Wall Street Journal of Mr. Trump’s financial disclosures last year estimated his 2016 pretax income at $160 million. A spokeswoman for the Trump campaign said this figure was wrong by “a lot,” but didn’t elaborate.

Mr. Trump also will continue to be aware of the sources of this income. For example, Mr. Trump’s financial disclosures said he received $1 million to $5 million from his licensing deal with the Trump International Hotel and Tower in Panama. If the U.S. were to get into a dispute with that country during the Trump administration, a desire to maintain this revenue stream could potentially influence Mr. Trump’s decision-making, some experts argue.

Some ethics experts have called on Mr. Trump to sell his assets, citing a Constitutional clause that addresses payments from foreign governments and other potential conflicts they say could put the president’s financial interests out of step with those of the U.S. more broadly.

In a speech after Mr. Trump’s announcement, the official who runs the U.S. Office of Government Ethics said the plan was wholly inadequate and that Mr. Trump must sell off his assets.

The official, Walter Shaub, said the trust Mr. Trump is creating isn’t blind, and that as president he will be well aware of how his official actions might affect his financial interests. Mr. Shaub said his office doesn’t have enforcement powers, but would like to work with Mr. Trump to revise the plan.

“His sons are still running the business and of course he knows what he owns,” Mr. Shaub said.

During his press conference on Wednesday, President-elect Donald Trump delved into the controversial issue of Russian hacking and named his nominee for VA Secretary among other big announcements. Photo: Seth Wenig/Associated Press

The Trump attorney, Ms. Dillon, said that selling the business would give rise to a host of other problems. Mr. Trump would still be entitled to royalties from the use of his brand name, she said. And the price paid would inevitably be subject to scrutiny, with critics asking if the buyer overpaid “to curry favor with the president-elect,” Ms. Dillon said.

She also said putting his assets into a blind trust managed by someone outside the family, as other presidents have done before taking office, isn’t feasible. “President Trump can’t unknow that he owns Trump Tower, and the press will make sure that any new developments at the Trump Organization are well publicized,” Ms. Dillon said.

She also rejected the contention that Mr. Trump risks violating the Constitutional clause that forbids government officials from accepting gifts and benefits from foreign countries. She mentioned a scenario in which people rent rooms in a Trump hotel.

“No one would have thought when the Constitution was written that paying your hotel bill was” a gift, she said. Instead, it would have been thought of as a value-for-value exchange, she said.

Mr. Trump’s business interests dwarf those of previous modern presidents. His foreign holdings include deals to license the Trump brand and manage hotels in foreign countries under development partners who themselves have diverse business interests.

Most of the major deals announced by the Trump Organization in recent years have been foreign licensing deals.

Under pressure from ethics attorneys and others, the Trump Organization has since the election canceled deals in Georgia, Brazil and Azerbaijan with partners who were under government corruption probes or the subject of media reports of past corruption issues.

Company executives have said they don’t intend to or have the ability to cancel other deals with buildings under construction, which they say are under tight contracts.

Mr. Trump’s sons, and their sister Ivanka Trump, have increasingly assumed leadership positions at the Trump Organization over the past decade, engaging in new deals on the company’s behalf and running much of the business while Mr. Trump was campaigning for president.

Ms. Trump, who transition officials expect to play a role at some point in the new White House, will no longer be involved in management of the Trump Organization, attorneys for the family said.

In certain respects, the Trump Organization is very much a family business. The Trump children said in depositions last year that they continued to consult with their father on key business decisions and to seek his advice.

Donald Trump Jr. and Eric Trump have also helped their father on the political side throughout the campaign and transition period and have sat in on transition meetings ahead of Mr. Trump’s presidency. They helped vet Mr. Trump’s vice president-elect, Mike Pence.