Friday, June 22, 2018
Business

PolitiFact: Giuliani correct that President Trump will be exempt from conflict-of-interest laws

The statement

Financial conflict-of-interest "laws don't apply to the president, right? So, the president doesn't have to have a blind trust."

Rudy Giuliani, Nov. 13 on CNN's State of the Union

The ruling

President-elect Donald Trump has said his children will manage his business dealings. Many presidents in the past have put their assets in a blind trust, which is when an independent trustee manages another person's assets without the person's input.

But Trump doesn't actually have to do any of this because the financial conflict-of-interest laws don't apply to him as president, said former New York City Mayor Rudy Giuliani.

Giuliani has the law pretty much right. Trump, as president, has no legal obligation to detach himself from his businesses and financial interests.

The law at issue is Title 18 Section 208 of the U.S. code. It says federal executive branch employees can't participate in government matters in which they or their immediate family have a financial interest.

Because of this law, some federal employees put their investments in a blind trust. This allows them to sidestep the regulation and participate in a matter that might otherwise pose a conflict of interest.

But the president and the vice president, despite being executive branch employees, are exempt. According to the law's definitions, Title 18 Section 208 does not apply to them, and it also doesn't apply to members of Congress or federal judges.

"It appears that presidents have mostly escaped the normal web of ethics and conflict-of-interest laws," said Scott Amey, general counsel at the Project on Government Oversight, a nonpartisan government accountability watchdog.

Amey added that presidents are allowed to accept gifts in many cases, too.

It's been this way since at least 1974, when the Justice Department issued a letter saying Title 18 Section 208 did not apply to the president. Congress expressly codified the exemptions in 1989.

In the 1974 letter, the Justice Department said the legislative history of this conflict-of-interest provision indicated that it was never intended to apply to the president. Additionally, the Justice Department said placing conflict-of-interest laws on the president could constrain him in a potentially unconstitutional manner, though it did not give specific examples.

"As the head of the executive branch, the president may not be able to — and arguably under the Constitution it might not be possible to require the president to — recuse from government decisions," said Richard Briffault, a professor of legislation at Columbia Law School.

While Title 18 Section 208 is the primary conflict-of-interest provision, there are other relevant rules, including a couple that don't exempt the president.

Trump and Vice President-elect Mike Pence will have to disclose their finances, which is required of all high-level federal employees, Briffault said. But the disclosures are not as detailed as federal tax returns, which Trump has not released.

Then there's the Constitution's Emoluments Clause, which bans U.S. government employees from accepting presents or compensation from foreign governments, noted Kathleen Clark, an expert on legal ethics and a law professor at Washington University in St. Louis.

The Trump Organization has numerous foreign ties, including several overseas real estate deals with possible foreign government connections.

"If any of Trump's business arrangements involve the receipt of payments from foreign governments, I believe that he, or his entities from which he receives money, would have to forgo those payments, or he would have to detach from those entities," Clark said.

We rate Giuliani's claim True.

Edited for print. Read the full version at PolitiFact.com.

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