The EconomistJuly 22nd 2017 Business 512 process works is opaque.
Mr Shaub was unimpressed by Mr
Trump’s appearances at his own for-profit
properties, which he has visited more than
40 times as president—most recently to at-
tend the USWomen’s Open, held this
month at one of his golfclubs, in New Jer-
sey. The visitsserve as a form of marketing,
and his firm has not been shy about cash-
ing in. Mar-a-Lago, a Trump resort in Flori-
da where the president hostsother world
leaders, doubled its initial fee for new
members to $200,000 after the election.
The club made a profit of $37m in the latest
reporting period (January 2016-spring
2017), compared with $15.5m in 2014-15.
When Eric Trump opened a golf course
at Turnberry in Scotland in June, he said
his family had “made Turnberry great
again”. Staff wore “Make Turnberry great
again” hats—a reference to Mr Trump’s
campaign slogan and, critics say, an at-
tempt to cash in on his political power. Eric
recently said: “Our brand is the hottest it
has ever been...the stars have all aligned.”
American golf courses have benefited
from at least one of Mr Trump’s policy deci-
sions: his move to scrap a proposed envi-
ronmental rule crafted to protect drinking-
water supplies. The national golf-course
association had long lobbied to have the
regulation ditched, arguing it could have “a
devastating economic impact”.
With some Trump projects, the benefits
could flow the other way, from business to
politics. Take a network of budget hotels,
branded “American Idea”, dreamed up by
the Trump sons on the campaign trail last
year. They have signed letters of intent
with developers in numerous cities, in-
cluding four in Mississippi. Bringing jobs to
Republican-leaning states that are strug-
gling economically could further boost
support for the president in such places.
Mr Trump’s appointments also cause
concern. He has picked Lynne Patton, a for-
mer event-planner for the family, to run the
Department of Housing and Urban Devel-
opment’s regional office covering New
York. In that role Ms Patton will oversee
Starrett City, a housing development that is
part-owned by the Trump Organisation
and that receives federal subsidies.
Foreign deals are no less troubling. The
ethics plan laid out by Mr Trump in Janu-
ary promised no new foreign contracts
during his presidency. But his company
will press ahead with projects already in
the works. There are many: an estimated
159 of the 565 Trump firms do business
abroad. Some license the Trump name for
skyscrapers and hotels, often to politically
connected local partners.
An example of how such deals raise
questions about Mr Trump’s motives is the
current Gulf spat over Qatar’s alleged sup-
port for terrorists. Mr Trump hasfirmly
backed Saudi Arabia, the United Arab
Emirates and others in their boycott of
their neighbour. It is reasonable to ask if it
is a coincidence that he has strong business
ties with the Saudis and Emiratis but few
with Qatar. Saudis are big buyers of Trump
apartments, and the kingdom isinvesting
$20bn in an American infrastructure fund.
A Trump-branded golf course in the UAE
made Mr Trump as much as $10m in
2015-16. By contrast, Mr Trump’s past efforts
to break into Qatar have failed.
Tracking such business relationships is
not easy because of the opacity of Mr
Trump’s holdings. He makes liberal use of
LLCs—anonymous shell companies that
do not have to publish financial informa-
tion—often in complex combinations with
regular corporations. He has refused to
publish his tax returns.
A fog surrounds those doing business
with the Trumps, too. Many have grown
less transparent of late. An investigation by
USA Todayfound that the percentage of
buyers of Trump condos structuring their
purchases through LLCs has jumped from
single digits to two-thirds. Suppliers are
scuttling into the shadows, too. Those ship-
ping goods to Ivanka’s businesses in Amer-
ica typically identified themselves on bills
of lading before the Trump presidency.
Now they usually do not.
The Trumps’ fallback position is that, le-gally speaking, it isimpossible for the presi-
dent to be conflicted because he is exempt
from ethics laws. The thinking when Con-
gress blessed this exemption, in the 1980s,
was that the president’s remit is so broad
that any policy decision could pose a po-
tential conflict. Nevertheless, some see av-
enues of attack. Several lawsuits, including
one from Democratic lawmakers, accuse
Mr Trump of causing harm by violating the
constitution’sEmoluments Clause, which
forbidsAmerican officeholders from ac-
cepting money from foreign governments.
One way he allegedly does so is by accept-
ing payments from diplomats at his hotels.
The lawsuits particularly focus on the
newly refurbished Trump International
Hotel in Washington, DC. Owned by the
federal government, the hotel’s lease
agreement includes a provision barring
elected officials from holding an interest.
But the General Services Administration,
which manages federal property, ruled in
March that Mr Trump’s 60-year lease on
the hotel did not breach that requirement
since the property had been placed in a
trust (as long as he received no proceeds
while president). Having initially said it
would donate all hotel profits from foreign
officials to the Treasury, the Trump Organi-
sation now says requiring such guests to
identify themselves would be “impracti-
cal” and “diminish the guest experience”.Unpresidented
It remains unclear whether controversial
transactions such as these will add greatly
to the Trump empire’s profits. Deals are of-
ten smaller than you might imagine: the
developer behind Trump Tower in Mum-
bai, founded by a member of India’s ruling
party, paid just $5m forthe licence. Some
deals are being scrapped under scruti-
ny—as was the case, in January, with a tow-
er in the Black Sea resort of Batumi.
Moreover, forces beyond Mr Trump’s
control are likely to have a bigger impact
on his businesses’ profits than conflicted
dealmaking. A recent analysis of his prop-
erties by Bloomberg found that his three
flagship office blocks in Manhattan—
Trump Tower, 40 Wall Street and 1290 Ave-
nue of the Americas—are making less mon-
ey than envisaged when loans were is-
sued, because of the softening of the New
York office market. The combined present
value of the three blocks has fallen by an
estimated $380m over the past year.
Mr Shaub believes that Mr Trump has
rejected ethical norms embraced by all
other administrations since the 1970s. He
recommends several changes to federal
law, including greater powers for the over-
sight office and stricter disclosure rules.
Rightly so. Whether or not Mr Trump’s
group benefits materially from his spell in
office, any doubt over whether policies are
crafted with the American people in mind
or his own bottom line is corrosive. 7Pricing powerSource: The EconomistUnited States, average daily room-rate
% change on a year earlierDonald Trump wins
presidential election2016 2017402002040+Trump hotels Other four- to five-star hotelsGolf conflict