Why Trump Would Almost Certainly Be Violating the Constitution If He Continues to Own His Businesses

Far from ending with President-elect Trump's announcement that he will separate himself from the management of his business empire, the constitutional debate about the meaning of the Emoluments Clause — and whether Trump will be violating it — is likely just beginning.


That's because the Emoluments Clause seems to bar Trump's ownership of his business. It has little to do with his management of it. Trump's tweets last Wednesday said he would be "completely out of business operations."


But unless Trump sells or gives his business to his children before taking office the Emoluments Clause would almost certainly be violated. Even if he does sell or give it away, any retained residual interest, or any sale payout based on the company's results, would still give him a stake in its fortunes, again fairly clearly violating the Constitution.


The Emoluments Clause bars U.S. officials, including the president, from receiving payments from foreign governments or foreign government entities unless the payments are specifically approved by Congress. As ProPublica and others have detailed, Trump's business has ties with foreign government entities ranging from loans and leases with the Bank of China to what appear to be tax-supported hotel deals in India and elsewhere. The full extent of such ties remains unknown, and Trump has refused to disclose them, or to make public his tax returns, through which many such deals, if they exist, would be revealed. Foreign government investments in Trump entities would also be covered by the clause, as would foreign government officials paying to stay in Trump hotels, so long as Trump stands to share in the revenues.


One misconception about the Emoluments Clause in early press coverage of it in the wake of Trump's election is being clarified as scholars look more closely at the provision's history. That was the suggestion that it would not be a violation for the Trump Organization to conduct business with foreign government entities if "fair market value" was received by the governments.


This view had been attributed to Professor Richard Painter, a former official of the George W. Bush administration, and privately by some others. But Professor Laurence Tribe, the author of the leading treatise on constitutional law, and others said the Emoluments Clause was more sweeping, and mandated a ban on such dealings without congressional approval. Painter now largely agrees, telling ProPublica that no fair market value test would apply to the sale of services (specifically including hotel rooms), and such a test would apply only to the sale of goods. The Trump Organization mostly sells services, such as hotel stays, golf memberships, branding deals and management services.


The Emoluments Clause appears in Article I, Section 9 of the Constitution. It bars any "person holding any office of profit or trust under" the United States from accepting any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign state" "without the consent of the Congress." The word "emolument" comes from the Latin emolumentum, meaning profit or gain. The language of the clause was lifted in its entirety from the Articles of Confederation which established the structure of the government of the United States from 1781 until the ratification of the Constitution in 1788-89. The clause was derived from a Dutch rule dating to 1751.


The clause was added to the draft Constitution at the Constitutional Convention on Aug. 23, 1787 on a motion by Charles Pinckney of South Carolina. As Gov. Edmund Randolph of Virginia explained to his state's ratification convention in 1788, Pinckney's motion was occasioned by Benjamin Franklin, who had been given a snuffbox, adorned with the royal portrait and encrusted with small diamonds, by Louis XVI while serving as the Continental Congress's ambassador to France. As Randolph said,


"An accident which actually happened, operated in producing the restriction. A box was presented to our ambassador by the king of our allies. It was thought proper, in order to exclude corruption and foreign influence, to prohibit any one in office from receiving emoluments from foreign states."


The Continental Congress in 1786 had consented, after a debate, to Franklin keeping the snuffbox, as it had earlier with a similar gift to envoy Arthur Lee. At the same time, consent also was given to diplomat John Jay receiving a horse from the King of Spain.


The clause was part of the basis for Alexander Hamilton's defense of the Constitution, in Federalist 22, as addressing "one of the weak sides of republics": "that they afford too easy an inlet to foreign corruption."


There is no question that the Emoluments Clause applies to the president. President Obama's counsel sought an opinion in 2009 on whether it barred him from accepting the Nobel Peace Prize. The Justice Department concluded that it did not, in part based on historical precedent (the Prize had also been awarded to Presidents Theodore Roosevelt and Woodrow Wilson, Vice President Charles Dawes and Secretary of State Henry Kissinger), but primarily because the Norwegian group that awards the prize was not deemed a governmental entity.


The clause does not seem ever to have been interpreted by a court, but it has been the subject of a number of opinions, over the years, of the attorney general and the comptroller general.


Nearly all of these opinions have concluded that the clause is definitive. In 1902, an attorney general's opinion said it is "directed against every kind of influence by foreign governments upon officers of the United States." In 1970, a comptroller general opinion declared that the clause's "drafters intended the prohibition to have the broadest possible scope and applicability." A 1994 Justice Department opinion said "the language of Emoluments Clause is both sweeping and unqualified." Among the ties deemed to violate the clause was a Nuclear Regulatory Commission employee undertaking consultant work for a firm retained by the government of Mexico.


Congress has passed one law giving blanket approval to a set of payments from foreign government entities. Known as the Foreign Gifts and Decorations Act, it is limited to gifts of "minimal value" (set as of 1981 at $100), educational scholarships and medical treatment, travel entirely outside the country "consistent with the interests of the United States," or "when it appears that to refuse the gift would likely cause offense or embarrassment or otherwise adversely affect the foreign relations of the United States." The specificity of these few exceptions reinforces the notion that other dealings with foreign government entities is forbidden without congressional approval.


One attorney-general opinion from the Reagan administration offers the possibility of a more permissive interpretation of the Emoluments Clause, indicating it could be limited to "payments which have a potential of influencing or corrupting the recipient." But whatever the meaning of this, it was the same Reagan Justice Department that banned the NRC employee from the Mexican-funded consultancy a year later.


Ironically, an "originalist" reading of the clause — usually favored these days by conservatives as exemplified by the late Justice Antonin Scalia and current Justice Clarence Thomas — would seem to bind Trump more stringently, while a "living constitution" approach — exemplified by liberals such as the late Justices Louis Brandeis and Thurgood Marshall — might offer him greater latitude.


Clearly, deciding what the Emoluments Clause means in a specific case is a complicated legal question. (The opinion on Obama's acceptance of the Nobel Prize runs to 13 printed pages.) But just as clearly, the judges of its meaning with respect to President Trump will be politicians rather than the Supreme Court.


The controversies that swirled around Presidents Richard Nixon and Bill Clinton established a number of key points. Among them are that the sole remedy for a violation of the Constitution by a president in office is impeachment, and that the House of Representatives is the sole judge of what constitutes an impeachable offense, while the Senate is the sole judge of whether such an alleged violation warrants removal from office. (Impeachments are very rare: articles of impeachment have been voted against only two presidents, Andrew Johnson and Clinton, both of whom were acquitted by the Senate, while Nixon resigned ahead of likely impeachment. Fifteen federal judges have also been impeached, and eight removed, while four resigned.)


The arguments of scholars and lawyers on the meaning of the Emoluments Clause may influence the public, and their elected representatives. But if Trump decides not to dispose of his business, it will be up to Congress to decide whether to do anything about his apparent violation of the Constitution.


ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.








Ralph Rau

6 months ago

15 Lakh cr worth of currency was demonetised. It was estimated that 20% or 3 Lakh cr would be extinguished. RBI would have benefited by this amount and Govt would have received nothing.
Suddenly Govt announced one more IDS with 50:50 sharing.
Now it is expected that entire 15 Lakh cr will come back into the banks. RBI gets no benefit. Govt will get 1.5 Lakh cr to reduce its fiscal deficit.
I can see the big grin on the face of Hasmukh.

Mahesh Shah, others being probed for 'false declaration': Finance Ministry
The Income Tax Department has initiated inquiries against Gujarat businessman Mahesh Shah and four other persons for making "false" declarations under the Income Declaration Scheme (IDS) "to determine the intention" behind their action, an official statement said on Sunday.
Mahesh Shah, a businessman from Ahmedabad in Gujarat, recently created a sensation by declaring a whopping Rs13,860 crore in unaccounted wealth under the IDS that ended on September 30. 
Shah went underground on November 29 and appeared at the ETV studio in Ahmedabad a week later only to claim that the declared money did not belong to him and he was used as a front by some businessmen and politicians to declare their money.
Besides, an inquiry was ordered on the family of four -- Abdul Razzaque M. Sayed, his son Mohammed Arif Abdul Razzaque Sayed, his wife Rukhsana Abdul Razzaque Sayed, and his sister Noorjahan Mohammed Sayed -- residents of Mumbai's Bandra who filed a total declaration of Rs 2,00,000 crore, according to the Finance Ministry statement.
Among the declarations received, the Income Tax Department found these two sets of declarations "suspicious" and did not take them on record, which showed a total declaration of Rs67,382 crore made by 71,726 declarants as on October 1, it said.
"These declarations from Mumbai and Ahmedabad were kept pending for investigation about the genuineness of the same and were not included in the total value of declarations announced on 1st October, 2016. After due inquiry, it was found that these declarants were persons of suspicious nature and very small means and the declarations could have been misused," it added.
"Therefore, after due consideration, the Income Tax Department decided by November 30, 2016, to reject these two sets of declarations of Rs2,00,000 crore and Rs13,860 crore. The department has since commenced enquiries against these declarants to determine the intention behind these false declarations," said the statement.
An Income Declaration Scheme (IDS) was announced in the Union Budget 2016-17 under which declaration of undisclosed income or asset could be made by agreeing to pay 45% of the declared amount as tax, surcharge and penalty. The scheme closed on September 30 this year.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.


Nifty, Sensex to be on an uncertain course – Weekly closing report
We had mentioned in last week’s closing report that Nifty, Sensex were heading higher. The major indices of the Indian stock markets shot up in the earlier part of the week but gave up most of the gains and closed with small losses. With too many factors at play such as rising oil and dollar, the impact of demonetisation and possible rate hike in the US, the Indian indices will remain volatile. 
On Monday, The key domestic indices provisionally closed on a flat-to-positive note, with buying witnessed in oil and gas, metal and FMCG stocks. The wider 51-scrip Nifty of the National Stock Exchange (NSE) edged up by 12.60 points or 0.16% to 8,126.90 points. The Sensex touched a high of 26,413.99 points and a low of 26,183.22 points during the intra-day trade.
The trends of the major indices in the course of the week’s trading are given in the table below:
Banking stocks slipped in opening trade after RBI hiked CRR on incremental deposits. The Indian rupee opened higher by four paise at 68.42/$ against the previous close of 68.46/$. Depreciation of the rupee and prolonged outflow of foreign funds eroded the risk-taking appetite of investors. The INDIA VIX was down 2.01% at 17.2575.
Indian equities markets on Tuesday were lifted by value buying, coupled with short covering and an appreciating rupee. However, gains were capped due to some selling pressure during the second half of trade. The Sensex touched a high of 26,587.07 points and a low of 26,354.66 points during the intra-day trade. The BSE market breadth was tilted in favour of the bulls with 1,585 advances and 1,012 declines.
Most European indices opened positive as investors awaited the outcome of the referendum over constitutional reforms in Italy.
Indian shares climbed to a near three-week high on Wednesday as a gauge of lenders snapped its two-day losing streak and automakers extended their rally. The S&P BSE Sensex gained nearly 1% to 26,652 and the NSE Nifty advanced 1% to 8,224. Both the indices gained for a fourth straight session, with the Nifty closing above the 8,200-mark for the first time since 11 November.
The market breadth was firmly in favour of the buyers at 1,765 advances against 827 declines and 202 stocks remained unchanged. India's fiscal deficit for the April-October period of the current financial year stood at Rs4.23 lakh crore, or 79.3% of the budget estimate, data released by the Controller General of Accounts showed on Wednesday.
The Indian economy grew at 7.3% in the second quarter of the current fiscal year, lower than the 7.5% forecast by economists. While slightly weaker than expected, the growth trend has so far has been in line with the forecast of achieving 7.6% growth this fiscal.
Profit booking, along with a political logjam in Parliament over the demonetisation drive and lower European markets, subdued the Indian equities markets on Thursday. Weak European cues and domestic liquidity concerns also caused selling pressure. Higher global crude oil prices, buoyant Asian markets, appreciation in rupee and largely positive macro-economic data arrested any major fall. 
Pharmaceutical stocks rallied after the Delhi High Court quashed the government's notification in March, which had banned 344 fixed-dose drugs. Telecom stocks like Bharti Airtel, Idea Cellular and Reliance Communications lost ground after Reliance Jio Chairman Mukesh Ambani said starting December 4, all subscribers will get voice, data, video and full bouquet of other Jio applications free till March 31, 2017. The scheme is called "Jio Happy New Year offer".
Asia closed higher with the Japan's Nikkei rising 1% as regional manufacturing surveys led by China beat expectations. Brent crude oil futures gained 1% on top of the 8.8% rally in the previous session after OPEC and Russia agreed to restrict production.
On, Friday the Sensex closed down 329.26 points or 1.2% at 26,230.66, and the Nifty slipped down 106.10 points or 1.3% at 8,086.80. About 878 shares advanced, 1,785 shares declined, and 129 shares were unchanged.
European bourses were lower as political uncertainty in Italy and France intensified. France's CAC, Germany's DAX and Britain's FTSE were down 0.8%-1.4%. Bajaj Auto, Hero MotoCorp, Cipla and Bharti Airtel were top gainers while Adani Ports, Maruti, Tata Motors, Asian Paints and HDFC were losers in the Sensex.



We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)