Donald Trump's 500 businesses would pose 'unprecedented ethical dilemma'

Donald Trump: 'We make the finest wine'
Donald Trump: 'We make the finest wine'

Donald Trump controls more than 500 companies -- many of which could create conflicts of interest should he become president.

CNNMoney interviewed ethics lawyers who worked for President George W. Bush, presidential candidates Bob Dole, John Kerry, John McCain and Mitt Romney, and New York Mayor Michael Bloomberg. They all said that Trump would have more potential business conflicts than any former president.

Trump has not committed to selling his businesses, and instead he has said many times that his children and executives would manage them.

"This is certainly going to present an unprecedented ethical dilemma if Trump wins," said Kenneth Gross, a partner at Skadden Arps Slate Meagher & Flom, who provided legal assistance to several presidential candidates during their campaigns. "He can't just get amnesia. He's stuck with the knowledge of what he owns."

As president, Trump would not be required to sell any of his investments or businesses. The U.S. Financial Conflict of Interest Statute prohibits unelected officials of the executive branch from holding stakes in assets that would conflict with their ability to properly do their jobs.

For example, former Goldman Sachs CEO Hank Paulson sold off his company stock before he became Treasury Secretary in 2006.

Executive branch officials also are prohibited from earning income from their businesses and must abide by strict impartiality rules.

But Congress decided not to apply those restrictions to the president or vice president. They have to disclose their holdings, but they don't have to disown them.

So Donald Trump could be president without selling his businesses.

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Keeping up with appearances

Still, most candidates try to eliminate conflicts of interest well before Election Day.

Mitt Romney put his assets into a blind trust during the 2012 presidential campaign. So did Ronald Reagan, George W. Bush, Bill Clinton and George H.W. Bush. The late Jack Kemp left his seat on Oracle's board during the 1996 election. And Nelson Rockefeller offered to put his substantial holdings into a trust while being confirmed by the Senate to serve as Gerald Ford's vice president in 1974.

President Obama opted not to put his money into a blind trust, but his holdings are almost entirely made up of bland investments like U.S. Treasuries and mutual funds.

Trump is in a different situation. Investments can be put into a trust that someone else controls. That's harder to do with businesses, especially since he has so many.

To truly eliminate a conflict of interest, Trump would have to sell off his businesses and put his proceeds in what's known as a double blind trust. In that arrangement, Trump would have no communication with his chief financial adviser in order to avoid any suggestion of impropriety.

"You rely on a president taking the advice of ethics lawyers to do everything possible -- including the sale of assets -- to avoid a conflict of interest," said Richard Painter, law professor at the University of Minnesota and former ethics attorney for President George W. Bush. "You want the president to keep up with appearances."

Conflicts of interest

Jimmy Carter, like Donald Trump, was a business owner. He held a peanut farm in Georgia that he relinquished control of in 1977 before he became president. Carter's friend, Atlanta attorney Charles Kirbo, ran the farm during his presidency.

But Trump owns far more than Carter did. He controls real estate, hotels, golf courses across the country and and all over the world. What if President Trump orchestrated a favorable trade deal in one of the countries where he holds property? Or if he set aside national park land near one of his golf courses? Or if Congress passed immigration or worker laws that affected his hotels or other ventures?

A spokeswoman for Trump declined to say whether Trump would consider selling his companies to avoid potential conflicts.

Conflicts of interest aren't just hypothetical scenarios. They can have real consequences.

At the nation's founding, Presidents George Washington and Thomas Jefferson held vast plantations in Virginia and did nothing to stem the growth of slavery in the country.

"The greatest tragedy in our country was caused by plantation owners' conflicts of interest," said Painter. "They did not grapple with the slavery issue, and they clearly exacerbated it."

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Dick Cheney, while serving as vice president, retained the $34 million in Halliburton stock options he was granted during his tenure as the company's CEO. Though he pledged to donate to charity any money he made off the options, they became a major political issue when the United States went to war in Iraq.

Unlike Trump, Cheney never held a controlling interest in any company.

The closest parallel to Trump might be Bloomberg, who maintained control of his company, Bloomberg LP, throughout his three terms as New York's mayor. Mayor Bloomberg never set foot in the company's headquarters, but he continued to make big corporate decisions, including acquisitions and major hirings, according to Gross, who handled Bloomberg's financial disclosures.

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