Although Trump has the opportunity to lead the country’s economy as its first “Entrepreneur-in-Chief,” persistent questions about his myriad potential conflicts of interest are nightly fodder for cable news outlets and show no signs of abating. Yesterday, President-elect Trump made a historical announcement for how he plans to avoid conflicts. He is putting his assets in to a trust run by his sons and an executive, adding an Ethics and Compliance officer to The Trump Organization, stopping new deals, and donating proceeds from foreign dignitaries to his hotels to the treasury. These are great steps.
Political Fortune and Real Fortune have been intersecting for years. The U.S. Senate has been aptly labeled the “Millionaires Club” with an average member net worth exceeding $2 million. There are millionaires in Congress and in Governor’s mansions across the country. They are mixed bunch: red, blue, male, female, rural, urban and suburban; however, there is one thing they all have in common: they are not billionaires.
If being a billionaire in U.S. politics is the road less traveled, then Ross Perot cleared the path. Despite his impressive 19 percent showing in 1992, Perot was never elected; so in looking for parallels in this era of Trump, there is only one real analogue Americans can examine in trying to understand how a billionaire, someone who is a millionaire several thousand times over, can effectively govern without being swallowed up in untold conflicts of interest: The Mike Bloomberg Era in New York City.
President-elect Trump is the first billionaire President, but not the first billionaire politician. Luckily, America has been here before. New York City business mogul Michael Bloomberg faced these same challenges when he became Mayor of New York. Bloomberg governed the City for 12 years, and Forbes estimates that his net worth upon taking office in 2002 was somewhere north of eight billion dollars.
Here are five lessons from the Mike Bloomberg Era that President-elect Trump can learn from and expand upon to limit his potential conflicts of interest upon taking office:
#1 Build a Chinese Wall. President-elect Trump wants to build a wall. Instead of building a wall with Mexico, he can build a Chinese Wall—not the kind that Matt Damon is defending in movie theaters in “The Great Wall” or the kind of figurative wall that would limit Chinese imports into the USA.
A Chinese Wall is term used in banking to indicate a self-imposed separation of duties where there is potential conflict. This is used by investment banks to distance analysts who publish research that influences stock prices, from traders who trade in those same stocks.
When Mike Bloomberg came into office, he worked with his lawyers and the New York City Conflict of Interests Board (COIB) to erect a volitional Chinese Wall between his company and his powers as Mayor. On one side of the wall were his company, the eponymous Bloomberg LP, and his array of investments and holdings. On the other side was the Mayor, his adult family members, and his top political and communications staff—most of whom moved over to City Hall.
#2 Avoid Double-Dipping. Before taking office, the Mayor-elect turned over the day-to-day control of Bloomberg LP to a senior manager (a British national no less), making him the new CEO, and he stopped frequenting the company’s headquarters. Then, like Queen Elsa, he just let it go. Bloomberg was still the majority owner; and had limited permission to advise on major decisions, though he abdicated day-to-day operational influence. The senior company staff that he wanted to bring over to City Hall resigned from the company and took jobs as civil servants. There was no double dipping. In time, invariably some of his staff went back to the company and others came to City Hall, but it there was always a clear divide.
Bloomberg’s two daughters had no real roles at the company, yet the eldest, Emma Bloomberg, fresh out of Princeton, wanted to work for her dad at City Hall, so she too became a civil servant, working like her father, for one dollar a year. Bloomberg’s sister, Marjorie Tiven, followed suit, also taking home a dollar a year for her brother’s administration. Paying them a symbolic sum and making sure they had no direct role in the family company went a long way to assuaging the public’s concerns when the family business becomes political.
#3 Put Your Money in Good Hands. While Bloomberg LP was being helmed by long-term executives, the Mayor still had many investments and assets outside his company that needed managing. For those holdings, Bloomberg enlisted the services of Steve Rattner, from Quadrangle Group, to manage his personal portfolio. In an arrangement blessed by the COIB, Bloomberg’s assets were eventually placed in a near-blind trust that operated outside of Bloomberg’s purview. It wasn’t an entirely blind trust, though it was a compromise that enabled the Mayor feel safe his assets were protected and the taxpayers know where his priorities were. More importantly, as far as Trump is concerned, the Mayor was able to govern and see his holdings increase. Even by the most conservative estimates, Bloomberg’s fortune grew five-fold during his time in office. (Today Bloomberg’s net worth his estimated at roughly $45 billion dollars.)
#4 Share Some Intimate Details About Your Tax Life. Billionaires’ taxes are complicated and most engage in “tax efficiency strategies” that only CPAs—and the IRS—can comprehend and appreciate. So it is understandable that billionaire pols aren’t too keen on sharing intimate details about their tax life. Bloomberg was no different. Over his twelve years in City Hall, the billionaire mayor opted to invite select members of the media into a data room to review his redacted tax filings. There was no xeroxing, scanning, or photography allowed. Yet he got it out there—in a way.
#5 Cover the Small Stuff Out of Pocket. Bloomberg covered an array of City Hall and business expenses out of his own pocket. From the cost of flying around the globe on his private jets to providing free food and coffee to workers in City hall, Bloomberg made sure that no one was spending “tax payer money” on things the public might think are non-essential or wasteful.
So what can Donald Trump do to create the cleanest administration possible?
Order a Complete Overhaul of the United States Office of Government Ethics. The closest analogue to the New York City Conflicts of Interest Board is the United States Office of Government Ethics (OGE), part of the Executive Branch of government. However well intentioned, the OGE was clearly established with non-billionaire presidents in mind. Advisory tweets indicating the President-elect should divest immediately—in other words hold a fire sale and unload everything in less than month—are clearly not reflective of an institution equipped to deal with the complexities of a billionaire Chief-of-State. Trump can put the OGE on de facto hiatus while consultants like McKinsey and Bain come in and provide pro-bono consulting services about how to modernize the institution in the era of Trump. This will provide sufficient time for the President time to figure out the best long-term solution to managing his conflicts.
Create Clarity in Roles Between Family and State. Having the adult Trump children engaged in the political process could inspire a new generation of millennials to become more civic-minded. By bringing all his adult children over to his side of the Chinese Wall, working in various roles within his Administration, and paying them a symbolic dollar per year, the President-elect can leave the real estate empire in the hands of professional managers. He has taken steps in this direction.
Hire an Asset Manager. Trump should hire third-party professional managers to run his array of investments and holdings outside of the Trump Organization. By having professionals focused only on the business, he should at least perform as well as the market, which, if Trump’s presidency is successful, should post great returns. Trump has announced he is leaving his empire in the hands of his sons and a Trump executive.
Show a Little Paper. Not releasing his tax returns was a brilliant marketing move as it led to Trump owning additional news cycles on the issue. However, now that he has been elected and the results confirmed by Congress, Trump can create another wave of great press by allowing a limited to peek at redacted returns in a data room.
Foot the Bill. Trump is likely accustomed to an array of luxuries above those of most incoming presidents. As such, he should go out of his way to not bill the government directly and reimburse as appropriate. The Secret Service, for example, could receive the space it needs in Trump Tower, gratis, and as a show of generosity that can inspire others to do what they can to help the country.
The Democratic Party would like nothing more than for the Trump Presidency to be all about his conflicts of interest, putting him on defense for the next four years. By taking a proactive approach, and relatively simple steps, Trump can pull the plug on many of these arguments and give him the time and space he needs to formulate his agenda for the next four years.
Richard Hecker is a global entrepreneur, political organizer and investor. He is the CEO of Traction + Scale, an incubator and investment firm that builds businesses to make people’s lives easier. He has lectured at Parsons, Columbia, and NYU on entrepreneurship and technology.
Arick Wierson is a former political and communications adviser to New York City Michael Bloomberg where he was responsible for managing the City’s multiple television, radio and digital platforms. Currently Mr. Wierson is a political and branding consultant to the Government of Angola, advising the country’s efforts to attract foreign investment and promote trade.