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Politics

Democrats say Trump must sell his interest in Washington hotel or be in breach of federal lease

Trump International Hotel
The Trump International Hotel is just blocks from the White House.
(Pablo Martinez Monsivais / Associated Press)

Of all his worldwide business ventures, Donald Trump’s new luxury hotel in Washington, just a few blocks from the White House, is among his proudest jewels. During the campaign, he bragged about his work on the hotel and plugged the business at news conferences.

“With the notable exception of 1600 Pennsylvania Avenue, this is the most coveted piece of real estate in Washington, D.C., the best location,” Trump said at the grand opening in October.

But as he prepares to take office, the Trump International Hotel in the historic Old Post Office building has become the most obvious example of the potential conflicts posed by Trump’s worldwide holdings. Trump leases the building from the federal General Services Administration, one of the agencies that will be under his control, meaning that he would be, in effect, his landlord’s boss.

The tricky position the hotel project has created for the GSA became apparent on Wednesday, when congressional Democrats released a letter that quoted a senior agency official as confirming that the GSA believes Trump must sell his interest in the project or be in violation of a clause in the lease that says that no federal elected official can be a part of the deal.

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The ban on ownership by elected officials is a standard part of GSA leases. The agency “reads this provision as we do, which is a categorical ban on the president of the United States or any other elected official having any financial interest in this lease,” the Democrats on the House Oversight Committee wrote.

To fix the conflict, Trump would have to divest himself of his ownership. Turning over the hotel’s management to his children would not be good enough, the Democrats’ letter said, citing a briefing by Michael Gelber, a career GSA employee who’s now deputy commissioner in charge of building services.

But the GSA quickly walked that back Wednesday, saying it would be “premature” to announce that Trump had to divest himself of his holdings.

“In fact, no determination regarding the Old Post Office can be completed until the full circumstances surrounding the president-elect’s business arrangements have been finalized, and he has assumed office,” the agency said in a statement.

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The top Democrat on the Oversight Committee, Rep. Elijah E. Cummings of Maryland, insisted that the GSA’s interpretation of the lease provision was clear — even if it technically won’t be a problem until Trump is sworn in.

“We stand 100% behind our letter,” he said.

Transition officials on Wednesday wouldn’t answer questions about the GSA lease.

Sean Spicer, a spokesman for the Republican National Committee, said that Trump would make sure “there’s a clear split between his business and his ability to focus on the country.” But doing that is not easy, he said.

“The hotel is just a shiny object the Democrats are going after today,” Spicer said on CNN. “But there are several of these highly iconic properties that are around the world that he is going to have to sit down and go through the same process.”

With more than 500 partnerships and corporations and projects in countries including India, Turkey, Scotland and Dubai, Trump’s family business poses an unprecedented nest of potential conflicts between his financial interests and his duties as president.

“Every part of Mr. Trump’s unresolved business conflicts touch on his government role,” said Norm Eisen, a visiting fellow at the Brookings Institution who served as chief ethics lawyer for President Obama. “It affects domestic policy, foreign policy. It’s like nothing I’ve ever seen.”

Eisen and other experts have said Trump should resolve the problems by selling off his businesses and placing the proceeds in a blind trust.

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Trump has not given any indication that he will do that, writing on Twitter this week that he planned to turn the business over to his sons and that they would not do any new deals while he is in office.

“Prior to the election it was well known that I have interests in properties all over the world,” he tweeted on Nov. 21. “Only the crooked media makes this a big deal!”

The Office of Government Ethics has also been weighing the issues presented by Trump’s sprawling interests. In response to questions posed by Senate Democrats, the office this week wrote that Trump could not eliminate conflicts by handing over control of his company to his children. Such an arrangement also wouldn’t qualify as a blind trust, the ethics office said. Trump won’t be required to file another financial disclosure form until May 2018, the agency noted, although other presidents have done so the first May after they took office.

Also on Wednesday, a spokeswoman for the Trump Organization said the company would remove the Trump name from a hotel project in Rio de Janeiro that has run into delays and been caught up in a fraud investigation. The development was first reported by the Washington Post.

“Unfortunately, the developers of the Rio de Janeiro hotel are significantly behind on the completion of the property, and their vision for the hotel no longer aligns with the Trump Hotels brand,” a statement said.

Trump was supposed to have announced his plan to deal with his businesses on Thursday, but earlier this week he put off any announcement until January.

In the briefing to Congress on the hotel lease, Gelber said that the GSA had brought up conflict concerns with the Trump transition team, but so far had not heard back. Trump’s daughter, Ivanka, has been the main contact for the agency, Democrats said in their letter.

The letter also quoted the GSA official as saying that the agency’s contracting officials are independent and “would not change their positions based on political influence.”

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The hotel presents more than one potential conflict for the president-elect. To finance the construction, Trump obtained a $170-million loan from Deutsche Bank, which also holds loans on his Doral golf course in Florida and the Trump International Hotel and Tower in Chicago.

The Justice Department has sought $14 billion from Deutsche to settle a fraud case involving mortgage-backed securities; Deutsche has been fighting to reduce the payment. The Deutsche bank loans are among several of Trump’s debts that involve potential conflicts. 

joseph.tanfani@latimes.com

Twitter: @jtanfani

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