Trump Family Plan for Hotels' Foreign Profits Stirs Critics

(Bloomberg) -- President Donald Trump’s family business will estimate the profit its hotels earn from foreign governments in order to keep the president’s pledge to turn that income over to the U.S. Treasury, according to a pamphlet shared with members of Congress.

And while the company will identify revenue that clearly comes directly from foreign governments, the effort may not capture every dollar spent by foreign officials at Trump’s hotels, according to the pamphlet. To look into all patrons’ backgrounds would invade their privacy and “diminish the guest experience of our brand,” it says.

While Trump has declined to follow the example of previous presidents by divesting from his various business interests, his lawyers promised in January that he would donate profit his hotels received from foreign governments to the U.S. Treasury. The pledge followed weeks of concern that accepting such profits would run afoul of the U.S. constitution’s emoluments clause, which bars officials from receiving gifts and payments from foreign officials.

The pamphlet containing the plan was released Wednesday by Representative Elijah E. Cummings, the ranking Democrat on the House Oversight Committee. Cummings, who has criticized Trump’s retention of his family businesses, panned the organization’s plan, saying it made no effort to capture indirect payments by foreign governments through third parties.

“If President Trump believes that identifying all of the prohibited foreign emoluments he is currently receiving would be too challenging or would harm his business ventures, his options are to divest his ownership or submit a proposal to Congress to ask for our consent,” Cummings said in a statement.

In the plan, the Trump Organization, which serves as a kind of umbrella group for the family’s interests, acknowledged that its planned approach wouldn’t necessarily capture all revenues from foreign governments. For instance, the company may not include business generated from state-owned enterprises “which may not be reasonably identifiable,” it said.

‘Guest Experience’

“To fully and completely identify all patronage at our properties by customer type is impractical in the service industry and putting forth a policy that requires all guests to identify themselves would impede upon personal privacy and diminish the guest experience of our brand,” the company said in the pamphlet.

That could be a significant disclaimer, as the Trump family has had interactions with a number of foreign state-owned enterprises. The Industrial and Commercial Bank of China, a state-owned lender, is among the tenants at Trump Tower, and Anbang Insurance Group Co., another Chinese-owned firm, was in advanced talks to become partners with the family company of Jared Kushner, Trump’s senior adviser and son-in-law.

The Trump Organization deferred a request for comment to the White House, which didn’t immediately respond.

For properties the Trump Organization owns, the plan calls for estimating profit from revenue attributable to foreign governments at the same rate as gross operating profit for the business generally. The company would then subtract a proportional amount of non-operating expenses. 

The plan is similar for properties that Trump Organization manages but doesn’t own. Some of those properties pay the company flat fees, others pay based on their revenue or other performance measures. For the latter, the Trump Organization will estimate how much of the properties’ revenue comes from foreign governments and apply that proportionally to the fees the company receives.

It plans to make its payments to the U.S. treasury in annual lump sums.

Emoluments Lawsuit

The so-called emoluments clause that has concerned Trump’s critics forbids U.S. officials from accepting “any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State” without consent of Congress.

The exact meaning of emoluments in the clause is a subject of intense debate, with interpretations ranging from any payments whatsoever to undue profit. Several Trump opponents and prominent ethics experts have contended the president’s extensive business holdings and partners involved in international government create a violation of the clause.

The Trump Organization’s plan also drew criticism from Citizens for Responsibility and Ethics in Washington, a liberal group that sued Trump over alleged violations of the emoluments clause after he took office. The lawsuit is ongoing.

“The Trump Organization’s plan for dealing with payments from foreign governments is wholly inadequate,” said Noah Bookbinder, CREW executive director, in a statement. “The best way to address President Trump’s constitutional violations is complete divestment from all his businesses.”

“You don’t get to violate the Constitution and then say you’re only going to address some instances and not others because it’s inconvenient to do so,” he added.

Foreign Clientele

Trump’s lawyers have previously said the clause does not apply to everyday arms-length transactions.

The Trump International Hotel Washington, D.C., which is a few blocks from the White House and opened just weeks before Trump’s election, has become a focus of concerns about emoluments.

The Kuwaiti embassy held an annual party there in February, after moving the event from a nearby hotel, and the American–Turkish Council and the Turkey–U.S. Business Council wrapped a three-day conference on relations between the countries at the hotel on Tuesday.

In a motion to dismiss another lawsuit centered on the hotel, his lawyers conceded that Trump, who has resigned from officer positions in his companies, might suffer a loss if he divested from the hotel.

To contact the reporters on this story: Caleb Melby in New York at cmelby@bloomberg.net, Ben Brody in Washington at btenerellabr@bloomberg.net.

To contact the editors responsible for this story: Alicia Ritcey at aritcey@bloomberg.net, Joshua Gallu at jgallu@bloomberg.net, John Voskuhl