Conflict of interest laws

Drumpf owes ethics exemption to George H.W. Bush

In a late-'80s overhaul of federal ethics, the president got a break from conflict of interest laws.

By Josh Gerstein

When President-elect Donald Drumpf touts his exemption from federal conflict-of-interest laws, he might want to offer a word of thanks to those who made it possible: President George H.W. Bush and the U.S. Congress.

As Drumpf faces a flood of stories about how his businesses could complicate his work as president, he made clear Tuesday that he's well aware that that the key federal legislation aimed at separating personal interests from official responsibilities does not apply to the president.

"The law's totally on my side: the president can't have a conflict of interest," Drumpf said during a roundtable at The New York Times. "I'd assumed that you'd have to set up some type of trust or whatever and you don't [but] I would like to do something."

The carve-out Drumpf alludes to became law in November 1989 as part of ethics legislation that also granted members of Congress — and other government officials — a pay raise they had long sought.

The exemption — walling off the president, vice president, lawmakers and judges from conflict-of-interest provisions — was contained in a proposed bill that Bush sent to Congress in April of that year. The language appears to have been drafted by lawyers in Bush's White House counsel's office, but may have arisen from a blue-ribbon ethics panel Bush created just after he took office.

Players involved in the discussions over the 1989 bill say they don't remember much friction over the clause putting the president, other elected officials and judges beyond the reach of certain parts of the law.

"I don't remember this being a major issue with members of Congress. It may well have been an important issue to the executive branch," said former Rep. Vic Fazio (D-Calif.), who co-chaired a bipartisan ethics task force along with Rep. Lynn Martin (R-Ill.) "Of course, President Bush signed the bill with gusto."

A former aide to Fazio, Roy Dye, said he remembers the exemption being the topic of some discussion, but no particular contention.

"I do recall this now being raised by my friends on the Senate side near the end of the process. I do recall Senate staff raising that issue," Dye said. "It seemed it was uncontroversial and seemed totally appropriate to do that."

Bush's 1989 drive to tighten ethics standards across the government was a thinly-veiled effort to create some distance with the Reagan years, which many in Washington viewed as marked by ethical scandals, culminating in the Iran-Contra Affair. Bush's move also came as concern was rising about ethical practices in Congress, including the widespread acceptance of speaking fees by lawmakers.

Bush officially called his bill the "Government-wide Ethics Reform Act" and he stressed that it needed to cover all three branches of government.

"The millions of Americans who meet their obligations honestly and teach their kids to do it the same way see nothing extraordinary about asking the same of their government," Bush said at the time. "The American people are troubled when they hear of officials in every branch of government, at whatever level of government, who show a brazen contempt for the letter or spirit of the law. And the American people do not understand why certain behavior is considered criminal when committed by an executive branch official are perfectly legal when committed by someone in another branch of government. Is not a crime a crime? Should there not be an underlying standard of integrity for all?"

One member of the blue-ribbon panel Bush appointed said the commission concluded that elected officials in each branch couldn't be held to the same standards as lower-ranking employees. One problem: there's no one who can step in and cast a vote or sign a bill if a Congressman or a president steps aside.

"We concluded that conflict of interest for members of the House and Senate had to be defined extremely narrowly because they, like the president, may not recuse themselves," said Jan Baran, a GOP campaign finance lawyer. "The president has got to make decisions ...I remember it being discussed in our deliberations, discussed in writing and translated into draft legislation."

Congress didn't initially show much interest in the Bush proposal, but eventually bundled it together with other reforms as a useful vehicle for the politically uncomfortable effort to boost lawmakers' pay.

"The major improvement was doing away with honoraria, which had been a pernicious influence on Congress for a long time," Fazio recalled. "The compromise was to take the pay raise and do away with honoraria for any personal, pecuniary benefit. We also tried to limit people's outside income. We did a number of things I look back on with pride."

While presidents, vice presidents and members of congress were left out of the conflict of interest law, they do remain subject to bans on outright bribery. Drumpf's foreign investments have also led to scrutiny under a Constitutional provision banning foreign "emoulements," essentially gifts from foreign governments. That clause has no obvious out for Drumpf but also no evident enforcement mechanism besides impeachment.

If the 1989 law had not passed, Drumpf would not have had specific statutory language to point to putting his business interests outside the scope of federal conflict-of-interest rules, but he would not have been out of arguments.

When President Gerald Ford nominated former Gov. Nelson Rockefeller to be his vice president in 1974, similar questions were raised about how the Rockefeller family's vast wealth in the oil industry and other investments might impact his duties as VP. At the Senate's request, the Justice Department's Office of Legal Counsel drafted an opinion saying the conflict of interest laws were best read not to apply to the vice president.

"Serious doubt as to constitutionality urges against an interpretation which would render Section 208 [the main conflict-of-interest law] applicable to the President; and it seems almost certain that the President and Vice President were intended to be treated alike," wrote Laurence Silberman, the then the acting attorney general. (Silberman would go on to be a D.C. Circuit judge.)

For more than a decade that followed, the executive branch came to rely on the Rockefeller-related opinion to maintain that the president was immune from the conflict of interest law, even though the words of the statute made it a crime for any "officer or employee" of the executive branch to take any action to benefit their own financial interest.

The federal conflict of interest law itself actually dates back to 1962, and was triggered in part by a New York Bar Association report that urged tighter rules, but also commented on the difficulty of trying to regulate a president's ethics. With the current controversy swirling around Drumpf's foreign holdings, the bar group's observations could be seen as clairvoyant.

"The conflict of interest problems of the President and the Vice President as individual persons must inevitably be treated separately from the rest of the executive branch," the report said. "As chief of State, the President is the inevitable target of a running stream of symbolic gifts pouring in from all over the world for reasons ranging from the best to the worst. The uniqueness of the President's situation is also illustrated by the fact that disqualification of the President from policy decisions because of personal conflicting interest is inconceivable."

In his Times interview, Drumpf reiterated his longstanding plan to have his adult children run his businesses.

"That puts the kids in a terrible position,'' Beran said. "No matter what he does the ethics nannies will never let him go. Maybe Drumpf needs to consider changing his name."