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The Trump DC hotel’s possibly illegal lease and massive ethical problems, explained

Libby Nelson is Vox's policy editor, leading coverage of how government action and inaction shape American life. Libby has more than a decade of policy journalism experience, including at Inside Higher Ed and Politico. She joined Vox in 2014.

President-elect Donald Trump is enamored of his new hotel on Pennsylvania Avenue in Washington, DC. He even took time away from the campaign trail for it — including turning a press conference about his previous false allegation that President Obama hadn’t been born in the US into a giant advertisement for the property.

At the time, when the consensus was that Trump would lose, this made sense for his post-campaign future. But now that Trump is moving up the street to the White House, the hotel has become something else: a blatant conflict of interest.

The hotel embodies Trump’s toxic mixture of family, business, and politics. It gives foreign governments and domestic lobbying groups a way to personally enrich Trump by patronizing his business, and it gives him the opportunity to make policy decisions and appointments that could directly affect his financial future.

Unlike many of Trump’s other conflicts of interest, there may be something the government can do. Since Trump rents the building from a federal agency called the General Services Administration, the GSA could find him in breach of his contract, which bars any elected official from leasing the building or benefiting from the lease — a standard clause meant to ensure a level playing field.

Four House Democrats claimed in a letter released by BuzzFeed News Wednesday that an official at the GSA said in a briefing that Trump will be in breach of contract the moment he takes the oath of office unless he ends his ownership interest in the hotel. (The GSA later denied this report in a statement to Vox, saying it’s “premature” for the agency to take an official position on the matter.)

Even if Trump gets off the lease by giving it to his children, though, it won’t end the many brazen conflicts of interest the hotel — and the broader interplay between Trump’s businesses and his administration — represents.

Trump might have to give up his hotel once he’s sworn in

Trump International Hotel Opens In D.C.
The Trump International Hotel in the Old Post Office building.
Chip Somodevilla/Getty Images

The opulent luxury hotel, located less than a mile from the White House, has become a $315-per-night symbol of the unprecedented conflicts of interest Trump’s administration could bring.

The Trump International Hotel was Trump’s foothold on Pennsylvania Avenue long before winning the White House seemed plausible. Congress ordered the Old Post Office, a federally owned landmark, to be redeveloped in 2008, and the Trump Organization won the contract in a competitive process in February 2012. Ivanka Trump was largely in charge of the renovation, which was finished earlier this year.

In August 2013, Trump signed a 60-year lease with the government that gave Trump the right to convert the Old Post Office Building into a hotel. One of the clauses in the lease forbids any elected official in the federal government or Washington, DC, from holding or benefiting from the lease.

Determining who actually holds the lease is complicated because of the way Trump structures his businesses. Technically, the leaseholder on the Old Post Office building is “Trump Old Post Office LLC.” That company is, in turn, made up of other Trump companies — “DJT Holdings,” “Ivanka OPO,” “Eric OPO,” and “Don OPO” among them. All of the companies were registered anonymously in Delaware, making it very difficult to figure out who ultimately owns them.

BuzzFeed News’s Aram Roston cross-referenced the corporation names with campaign finance disclosures and found that Trump, via his company DJT Holdings, owns 78 percent of Trump Old Post Office; his children, via their own companies, own the remaining 22 percent, although they didn’t put up any money for the renovation project. The upshot is that Trump himself owns the majority of the company that signed the lease.

And so the moment Trump takes the oath of office, he might be breaching the contract he signed, because he’ll be an elected official, as GovExec magazine noted shortly after the election. In a letter released by BuzzFeed News on Wednesday, four House Democrats — Reps. Elijah Cummings, Peter DeFazio, Gerald Connolly, and André Carson — said an official at the GSA told them in a briefing that Trump cannot hold the lease and will be in breach of contract once he becomes president.

A GSA spokesperson disputed this report, saying the agency has no position yet and won’t until Trump takes office. But Cummings, the leading Democrat on the House Committee on Oversight and Government Reform, said the GSA official said the agency won’t take a public position until the breach has actually occurred. “We stand by our letter,” he said.

Trump might be able to avoid the issue by giving the lease to companies owned wholly by his children or their trusts. But that doesn’t get rid of the other conflicts of interest the hotel lease represents. The mere existence of the Trump International Hotel presents opportunities for Trump to abuse his power to protect his beloved hotel and the businesses his children are controlling while he’s in office.

“He ought to sell his shares in the company that owns the hotel, along with the rest of this global empire,” Richard Painter, the former chief ethics lawyer for President George W. Bush, said at a congressional forum on Trump’s conflicts of interest Wednesday.

Trump is about to control the GSA, which controls the lease on his hotel

Donald Trump Holds Ribbon Cutting Ceremony For The Trump International Hotel In Washington, D.C.
The grand opening for the Trump International Hotel in October 2016.
Chip Somodevilla/Getty Images

Trump doesn’t appear to be particularly concerned about the fact that he’s about to be in breach of contract. He didn’t get in touch with the GSA about the contractual issue his presidency would present either before or after the election, according to the House Democrats’ letter, and the Trump transition team hadn’t responded to questions from the agency about how they’ll proceed.

That’s in keeping with Trump’s other responses to concerns about his conflicts of interest. He’s typically said that he’ll be handing his companies over to his children — a solution that ethics experts, including the Office of Government Ethics, agree is insufficient — and dismissed or ignored requests for more details.

The Trump transition team didn’t respond to a request for comment from Vox.

As president, though, Trump’s conflicts of interest will go beyond the hotel lease. He will have significant power over the future of the hotel. He’ll appoint the next government services administrator, the head of the agency that is leasing him the hotel. The government services administrator he appoints has the power to name judges to the administrative court that oversees contract disputes, the Civilian Board of Contract Appeals.

In other words, Trump’s hotel lease, by the end of his presidency, will be an agreement between companies Trump started and a government agency he oversees. Disputes on that lease will be heard by the Civilian Board of Contract Appeals, made up of judges who are appointed — and can be removed — by the GSA administrator that Trump picks.

The judges have career appointments, and the GSA administrator can only remove them with good cause, so the prospect of a court that rubber-stamps Trump’s business moves is still somewhat remote. But it’s technically possible. And the prospect is far from the only conflict of interest the hotel presents.

Trump’s hotel symbolizes all the conflicts of interest in his presidency

Trump’s conflicts of interest are so numerous, and raise so many worrying possibilities, that it can be hard to keep track of them all. The overarching concern is that Trump will be the first president in decades to routinely face a choice between benefiting his companies and benefiting the country.

And the hotel itself manages to be entangled in many of those potential conflicts, serving as an encapsulation of the complications that Trump’s refusal to sell his businesses could create for his presidency and the country.

Trump intermingles family, political, and business ties in a way that’s highly unusual in professional politics and presents opportunities for bribery and corruption. His adult sons, Don Jr. and Eric, are supposed to be managing his businesses during his presidency while his daughter Ivanka plays an as-yet-undefined role in Washington. But all three children are also on the executive committee for his transition; Donald Trump Jr. reportedly interviewed candidates for interior secretary.

Ivanka, meanwhile, has been a leader on the hotel project, and one of its suites and its spa are named after her. Aside from separating her personal social media account from that of her brand, she hasn’t said if she’ll give up her own business interests while her father is in office. And if her role is unofficial, she won’t be required to.

Trump’s businesses also present opportunities for foreign governments to try to influence him by greasing the rails for his projects or booking rooms in his hotel. Lawyers and scholars argue that this would violate the emoluments clause of the Constitution, which forbids the president from accepting titles, gifts, or services from foreign governments — “exactly what the Founding Fathers were worried about,” Painter said.

“The rest of the world will fall all over themselves to find ways to appeal to the president’s commercial interests,” Norm Eisen, the White House chief ethics lawyer, said at the congressional forum.

The Trump hotel has already promoted itself to diplomats as a place to stay in DC — typical for a luxury hotel, but most luxury hotels don’t also carry the perk of personally enriching the president, perhaps helping countries that choose to stay there get into his good graces. (The same can be said for domestic lobbying groups, which are always looking for hotels for their members to stay in and venues to host events.)

The kingdom of Bahrain, for example, is celebrating its 45th national day at the Trump hotel. And while Bahrain is a US ally, there have been points of friction in recent years. The US government provides military aid to the country, for example, but refuses to do so for its internal security because of its spotty record on dissidents and human rights.

Meanwhile, Trump has the power to make policy on a range of issues that could affect his businesses. Beyond the fact that he’ll choose the next government services administrator, a dispute over unionization at the DC hotel could go before the National Labor Relations Board, a board whose members Trump will have the power to appoint. His Department of Justice will negotiate a settlement with one of his creditors.

And he has already shown a willingness to use his political career to build his brand and sell products — exemplified by his attempt, after winning the Republican nomination, to trademark the phrase “American idea.”

In general, Trump hasn’t devoted much attention to assuaging concerns about his conflicts. He has implied that he plans to pick up the reins of the Trump Organization once he’s done in the Oval Office, after temporarily putting his children in charge. On Tuesday, he even canceled a December 15 press conference at which he was scheduled to talk about how he’d resolve these issues. Instead he tweeted that his children will make “no new deals” while they’re “managing” (not owning) the company.

Even if Trump manages to resolve the issue with the hotel lease during his presidency, that won’t change the fact that he has no intention of giving up control of his businesses in the long term. As long as everyone knows where Trump’s business interests lie, his presidency presents conflicts of interest and opportunities for corruption unparalleled in recent history.

Watch: It’s on America’s institutions to check Trump

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