The wealth is unprecedented.
The combined net worth of President-elect Donald Trump's nominees for Cabinet posts and appointments to White House jobs is in excess of $10 billion, and that wealth comes with ties to the financial, oil, steel, entertainment, and healthcare industries.
The Cabinet, if confirmed, would be the wealthiest in US history.
"This administration ... they have an awful lot of billionaires," Richard Painter, who served as chief ethics lawyer for President George W. Bush, told Business Insider. "We had a number and Obama had Penny Pritzker and some very rich people, but this is an awful lot of billionaires."
Some of Trump's nominees and appointees have yet to clear up how they will deal with potential conflicts of interest they could carry into office, with only five of the remaining 14 nominees set to go through a Senate confirmation hearing having their ethics paperwork finalized and posted by the Office of Government Ethics as of Tuesday morning.
Their options are fairly limited. They can divest by selling assets or putting them into a blind trust and let others manage the investments without input from the Cabinet official; they can recuse themselves from situations where their financial interests could be seen as creating a conflict of interest; or they can attempt to claim waivers and exemptions allowed by law.
In most scenarios, divestment is the simplest solution, ethics experts said. The waivers and exemptions are few and far between.
And as far as recusals go, "At some point they're recusing so heavily that they're not really suited to do their job," said Norman Eisen, a former ambassador to the Czech Republic and White House special counsel leading on government ethics under President Barack Obama.
"That's why there's such a fuss being made about ... how many of them have not provided their financial disclosures and their ethics memos explaining how they'll deal with conflicts," Eisen told Business Insider.
The statute that governs is Section 18 of US Code 208. It applies to all government employees, except the president and vice president. It states that executive-branch employees cannot participate in matters that will affect their financial interests or those of a family member, partner, or organization they serve. There are exemptions and waivers provided only to financial interests considered "too remote or too inconsequential" to have an effect on the employee or when "the need for services outweighs the potential for conflicts," though the interpretation of that clause is less clear.
"We need to be entrusting our positions of public power and public service to people who are willing to make sure that any of their actions are not immediately under a cloud of doubt," Liz Kennedy, democracy and government-reform director at the left-leaning Center for American Progress, told Business Insider. "Because they may very well be doing things that benefit themselves financially."
For Cabinet positions, nominees are subjected to background checks from the FBI and the OGE, and those nominees must prepare a series of ethics filings and financial disclosures ahead of their confirmation hearings. The New York Times reported in December that Trump's transition had largely avoided doing its own ethics vetting of the candidates, which led to a much quicker naming of Cabinet posts than in past administrations.
With confirmation hearings beginning last week, some nominees announced detailed plans to comply with the law. Others have yet to present their proposals and had their hearings pushed back so their paperwork could be processed. The fate of billions of dollars in assets and stock holdings is in question.
Rex Tillerson, the Exxon Mobil CEO tapped to be Trump's secretary of state, announced in accordance with the company that he would receive a $180 million retirement package if confirmed. In exchange, he'd give up his more than 2 million Exxon shares he'd be set to receive over the next decade, which could have been worth more than the payment, if Exxon's stock appreciates in that time. That cash grant will be overseen by a third party in a trust. Considering Exxon Mobil's worldwide presence, and Tillerson's potential to influence foreign policy, opting for recusals instead of divesting from his shares would have severely limited what he would be able to do.
Steve Mnuchin, the Goldman Sachs banker who is Trump's pick for Treasury secretary, announced his plan for divestiture last week as well. The plan includes divesting from 43 companies and investments to avoid conflicts that would have been nearly impossible to avoid based on the close relationship between the financial industry and the Treasury.
Rep. Tom Price of Georgia, Trump's choice to head the Department of Health and Human Services, announced a plan to divest from 43 companies within 90 days of his confirmation. Those companies include Aetna, Amgen, Eli Lilly, and Pfizer, healthcare-industry heavyweights that could have caused major conflicts while heading HHS.
Then there are the others with equally large, if not larger, conflicts who have yet to declare what they will do to comply with the law.
The nominees to head the departments of commerce, education, and labor all saw their Senate confirmation hearings pushed back so that the Senate could review the financial and ethical paperwork. All three have yet to have their ethics paperwork finalized by the OGE as of Tuesday morning.
As labor secretary, Andrew Puzder, the multimillionaire CEO of CKE Restaurants (well known for Carl's Jr.), would be in charge of enforcing laws that could benefit or harm holdings in the company. CNN reported Monday that a source said the criticism from Democrats and the required paperwork was giving Puzder second thoughts about accepting the post. Puzder said later Sunday on Twitter that he is "looking forward to my hearing."
Betsy DeVos, the nominee for education secretary, hails from a family with billions in holdings and has personally invested in a company that manages public for-profit online charter schools, in addition to another online student-lending firm. Both could create conflicts while she runs the department.
And Wilbur Ross, the nominee for commerce secretary, owes much of his billion-dollar fortune to the steel industry. The Commerce Department has significant oversight of steel and the trade policies favored by the incoming Trump administration.
In a questionnaire released last week, Ross said he is consulting with Commerce Department and OGE ethics officials to resolve his conflicts.
"Traditionally, what has been happening is you have one or two very rich Cabinet members, but then it's the ambassadorships that go to the big-money donors, the billionaires, the multimillionaires," Painter said. "Those ambassadorships can be put on a slower track ... You didn't have to run them through so quickly, whereas this seems to be more of a shift toward the Cabinet."
'Sitting ducks for criminal prosecution'
Legal ramifications for conflicts of interest don't stop at the Cabinet.
Government appointees, even ones who are serving only part-time or forgo a salary, are subject to the same laws that affect Cabinet-level officials, Painter said.
Two of the most dramatic examples include Jared Kushner, Trump's millionaire son-in-law, and Carl Icahn, the multibillionaire New Yorker. Kushner and Icahn were both named to advisory positions by Trump.
Kushner took action almost immediately after being named to the post, resigning as CEO of both his family's real-estate company and Observer Media, in addition to divesting "substantial assets," according to his lawyer. Ivanka Trump, Kushner's wife, announced she would end her executive role at the Trump Organization as well as with her personal fashion brands.
Icahn, who was tapped by Trump to serve as a special adviser on regulatory reform, dismissed the idea that he presented any conflicts.
"I’m not making any policy; I give my opinion,” he told CNBC last month. “It doesn’t mean Donald is going to take my advice.”
One potential conflict involves Icahn's vast energy holdings. Those could feel effects from the regulations that Icahn recommends changing or eliminating.
Painter said non-Cabinet appointees are "an ethics minefield" because of how little they are scrutinized in the lead-up to an administration, as opposed to Cabinet nominees.
Trump's team argues that Icahn is not a federal employee, but that argument is unlikely to stand up in court, Painter said.
"Because [administrations] have plenty of part-time people who aren't compensated and they are subject to the statutes," he said. "So what they're asking is, because we say he's not an employee, he's not. And I don't think that's going to fly.
"And I think there's going to be a very good argument he's in violation of the criminal statutes and he's giving advice to them that could affect the value of [his] assets," he continued. "He's got energy companies he wants deregulated. And he's pushing for deregulation of the energy sector."
Icahn, Painter said, should follow Kushner's lead.
If he chooses not to, Painter suggested the repercussions could be serious.
"These guys like Carl Icahn are sitting ducks for criminal prosecution," he said.
Wealthy officials have navigated ethics before
It's not uncommon for wealthy Americans to serve in administrations. Banking magnate Andrew Mellon served as Treasury secretary in the 1920s. Two recent examples of the post-Nixon ethics era include George W. Bush's Treasury secretary, Hank Paulson, a multimillionaire, and Obama's commerce secretary, Penny Pritzker, a billionaire.
Both had to go through an extensive undertaking to eliminate conflicts.
For Paulson, a former Goldman Sachs CEO, that meant selling roughly $500 million worth of company stock, in addition to severing other foreign investments. Paulson happened to get the benefit of the tax break on capital gains from the certificate of divestiture, which deferred a tax liability of about $200 million for Paulson's sale.
"He sold it all," Painter said. "I worked out a plan with the general counsel of Goldman Sachs so the sale would not disrupt the markets. But he had to leave some value on the table. They all do."
The plan took weeks to pull together. Painter said the arrangement was discussed for roughly 10 days before Paulson's nomination. In the following weeks, Paulson completed ethics documents and financial-disclosure forms so that the Senate would have "the whole package."
"We knew he was going to have to exit Goldman Sachs to be in the Treasury," Painter said.
Pritzker, whose family cofounded Hyatt Hotels, made an arrangement where she divested more than 220 separate holdings and resigned from positions she held with 158 entities before her 2013 confirmation.
"It was an enormous undertaking," Eisen said. "Many, many businesses. She provided them in advance. She was asked about it at her hearing. She answered questions.
"In Penny Pritzker we have an example," he added. It's one that should be followed by her successor, Eisen continued, the similarly wealthy Wilbur Ross, the nominee for commerce secretary.
Eisen asked: "Why hasn't he done what Pritzker did?"
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