(Bloomberg)—A U.S. agency ruling affirming President Donald Trump’s right to operate a hotel in a Washington building leased from the government has opened a potential new legal battle over whether the contract grants him benefits in violation of the Constitution.
Under the so-called domestic emoluments clause, the president is prohibited from receiving any compensation from federal or state governments other than his $400,000 salary. It is being invoked by attorneys and legal scholars who say the ban was breached with the March 23 decision by the General Services Administration that the Trump Organization can keep its 60-year lease on the Old Post Office building on Pennsylvania Avenue, transformed through a $212 million renovation into the Trump International Hotel Washington, D.C.
Until last month, controversy around the hotel, which opened in September, centered on the Constitution’s foreign emoluments clause that restricts public officeholders from accepting payments from foreign governments. Some lawyers put hotel patronage by overseas envoys in this category. The GSA decision has been interpreted by some as a benefit in violation of the lesser-known domestic emoluments clause, which experts acknowledge has rarely, if ever, been tested in court.
Read More: A QuickTake on foreign emoluments
“He’s getting a major infusion of value from the General Services Administration,’’ said Laurence Tribe, a professor of constitutional law at Harvard University who represents a watchdog group suing Trump over foreign emoluments. “He can use his hotel in the heart of Washington as a way of attracting still more emoluments, both foreign and domestic.’’
The White House referred questions to the Trump Organization. A spokeswoman for the Trump Organization, now run by the president’s two oldest sons, declined to comment beyond a March 23 statement thanking the GSA for its “diligent review.’’
Trump’s refusal to divest himself of an estimated $3 billion of business holdings since he won the presidency has created an ethical quandary that past presidents avoided by selling assets or putting them in a blind trust. Trump has said he won’t keep his salary and that his company will donate any hotel profits from foreign governments to the U.S. Treasury.
A conference at Trump’s Washington hotel in May, planned by business groups that promote political and economic ties between the U.S. and Turkey, could violate both the domestic and foreign emoluments clauses of the Constitution, according to Tribe.
The three-day conference is a joint effort by the Washington-based American-Turkish Council and the Istanbul-based Turkey-U.S. Business Council. Previous conferences have cost about $400,000, with about one-third of the amount going to the venue, according to Howard Beasey, chief executive officer of the American-Turkish Council.
The Trump hotel was chosen for its location and because the hotel the council had used in the past wasn’t available, Beasey said, adding that sponsors and members pay their own way and no government funding is involved.
Even if there isn’t any direct funding from the Turkish government, the organizing group is effectively an arm of the state, Tribe said.
The Turkey-U.S. Business Council is part of the government-controlled Foreign Economic Relations Board, known by the acronym DEIK. The council is headed by Ekim Alptekin, who’s also chairman of Inovo BV, a Dutch consulting company that paid former national security adviser Michael Flynn’s consulting firm $530,000 last year for work in which a foreign government was the main beneficiary, according to a government filing.
Speakers at last year’s conference included Turkish-born developer Mike Sarimsakci of Alterra International, who signed a letter of intent to build a Scion-branded hotel in Dallas with the Trump Organization, and Burak Talu, CEO of Dogus Construction Co., who has written about his company’s hopes for U.S. infrastructure work.
Talu, a member of the Turkey-U.S. council board, plans to attend the May conference and probably will stay at the Trump hotel, according to a Dogus spokeswoman. Sarimsakci and Talu didn’t respond to calls and emails. A spokeswoman for DEIK said the council operates independently from the government and that Alptekin wouldn’t comment. A spokeswoman for the American council said it has no affiliation with the Turkish government.
Citizens for Responsibility and Ethics in Government, the group that sued Trump in January alleging violations of the foreign emoluments clause, is considering including the alleged GSA breach of the domestic provision in any amended version of its lawsuit, said Tribe.
The GSA said last month that Trump was in full compliance with the lease terms, which say no elected government official “shall be admitted’’ to the lease or to “any benefit that may arise therefrom.’’ In announcing the decision, the agency released documents saying that Trump will receive no payments from the hotel during his term of office.
The lease terms clearly prohibit all elected officials from taking part, including the president, said Ron Fein, legal director of Free Speech for People, a nonprofit group that advocates for democracy and the Constitution.
“The fact the government has chosen to essentially ignore that language and allow him to continue leasing this valuable federal property is a constitutional emolument,’’ Fein said. “He’s making money off federal property that he shouldn’t be able to do at this point, given that he’s president.’’
The Constitution’s domestic emoluments clause says that the president “shall, at stated times, receive for his services, a compensation, which shall neither be increased nor diminished during the period for which he shall have been elected, and he shall not receive within that period any other emolument from the United States, or any of them.’’ An emolument is defined broadly as profit, benefit, power or advantage.
Saikrishna Prakash, a professor of constitutional law at the University of Virginia, said the hotel lease doesn’t represent a violation of the Constitution because the domestic emoluments clause doesn’t apply to all government benefits. If it did, he said, Barack Obama violated the clause.
“President Obama owned U.S. bonds, and no one thought that was an emolument,’’ Prakash said. “If that’s not an emolument, I don’t know why this contract would be an emolument. There’s no doubt that the lease is different from a bond, but they’re both for profit.’’
Prakash said he isn’t aware of the clause ever being litigated. It has been 30 years since it received much attention, when a group representing taxpayers challenged President Ronald Reagan’s right to receive his pension as former governor of California. Reagan’s White House counsel said he acquired a vested right to his pension before he became president, a view supported by the Justice Department.
Even if Trump’s hotel lease violates the Constitution, it’s unlikely the courts would ever rule on it, partly because it’s difficult for a party bringing suit to prove injury, Prakash said. Only Congress could likely take action against the president for constitutional violations, he said, and Congress is currently controlled by Republicans.
Tax abatements or incentives granted by states to Trump’s real estate developments also could now be seen as running afoul of the domestic emoluments clause, said Brianne Gorod, chief counsel of the Constitutional Accountability Center, a public-interest law firm in Washington. Trump has battled authorities to lower his taxes throughout his career. Now that he’s president, any ongoing tax breaks could be seen as emoluments, Gorod said.
“One of the reasons why the Framers adopted this provision is they were concerned about the possibility of self-dealing, and that the president might put his own interests above the interests of the nation,’’ she said.
--With assistance from Bill Allison, Ben Brody and Asli Kandemir.To contact the reporter on this story: Hui-yong Yu in Seattle at [email protected] To contact the editors responsible for this story: Daniel Taub at [email protected] Robert Friedman
COPYRIGHT© 2017 Bloomberg L.P