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The GSA’s Watchdog Said Officials “Ignored” Constitutional Questions Around The Trump Hotel Project

An inspector general report found agency lawyers recognized there might be constitutional issues with Trump keeping a stake in the hotel, but didn’t pursue the issue.

Posted on January 16, 2019, at 5:40 p.m. ET

Mandel Ngan / AFP / Getty Images

Then-nominee Donald Trump at the grand opening of the Trump International Hotel in Washington, DC, on Oct. 26, 2016.

WASHINGTON — The General Services Administration “ignored” constitutional questions surrounding the lease of government property to the Trump International Hotel in Washington, DC, the agency’s inspector general concluded in a report released Wednesday.

The GSA entered into the lease in 2013, before President Donald Trump was a candidate. But the Inspector General’s Office said his election in 2016 and ongoing financial interest in the hotel after he became president raised constitutional issues that the agency was wrong not to address head-on.

“As an executive agency of the United States, both GSA and its employees have an obligation to ensure that agency actions comply with the law, whether the lease incorporates the Constitution or not,” the Inspector General’s Office wrote. “Using the language some witnesses employed, the Constitution most certainly is in GSA’s purview.”

The inspector general’s report centers on two provisions in the US Constitution, known as the foreign and domestic emoluments clauses. The clauses prohibit elected officials from accepting “emoluments” from foreign or domestic governments. What exactly the term “emolument” means is still the subject of litigation in court, but it’s generally defined as a financial benefit.

The District of Columbia and Maryland attorneys general’s offices have a pending lawsuit against Trump over his interest in the hotel, alleging violations of both clauses. Democrats in Congress also sued under the Foreign Emoluments Clause. Judges in those cases have ruled against Trump so far, agreeing that the challengers had standing to sue and, in the case brought by DC and Maryland, siding with their interpretation of “emoluments.” A third lawsuit filed in New York was dismissed.

The GSA inspector general’s report made clear that the office was not offering an opinion about whether Trump’s interest in the hotel did, in fact, violate the emoluments clauses. But investigators did conclude that Trump’s interest in the hotel raised “potential constitutional issues.” The report found that although GSA lawyers recognized this, they decided not to address it. That was wrong, the Inspector General’s Office said.

“We also found that the decision to exclude the emoluments issues from GSA’s consideration of the lease was improper because GSA, like all government agencies, has an obligation to uphold and enforce the Constitution; and because the lease, itself, requires that consideration,” the report said.

In a response from the GSA’s general counsel Jack St. John, which was included in the report, St. John highlighted the fact that the watchdog office did not find evidence of political interference in contracting officer Kevin Terry’s decision about whether Trump’s interest in the hotel violated the lease. St. John also noted that the decision not to tackle the potential constitutional issues predated the Trump administration.

“Any commentary resulting from the report that suggests the agency took any action in order to protect the President’s business interests is therefore plainly meritless,” St. John wrote.

The GSA entered into a 60-year lease with the corporate entity managing the hotel project, Trump Old Post Office LLC, in August 2013. Trump had a majority interest in the LLC, which agreed to pay $3 million in annual rent to the government.

The hotel opened Oct. 26, 2016. Two weeks later, Trump won the presidential election. Soon after the election, a small group of lawyers in the GSA’s General Counsel Office began talking about possible constitutional issues related to the lease, according to the inspector general’s report.

“In the end, they all agreed early on that there was a possible violation of the Constitution’s Emoluments Clauses,” the Inspector General’s Office said. “Nonetheless, the attorneys decided to ignore the emoluments issues.”

GSA lawyers told the Inspector General’s Office that they didn’t typically deal with constitutional questions, and that the General Counsel’s Office was only responsible for giving an opinion on specific provisions of the lease. One attorney said they didn’t want to “spin their wheels” on an issue that wasn’t squarely before them.

As for the section of the lease prohibiting elected officials from being involved in such deals, known as Section 37.19, Terry told the Inspector General’s Office that he knew Trump had been interested in running for president before, but it didn’t come up during lease negotiations because Terry “thought a Trump presidency unlikely.”

After Trump was elected, he moved his interest in the DC hotel into a trust, and gave up control over it for as long as he is president; he turned over control of his business empire to his adult sons, Donald Jr. and Eric. The Inspector General’s Office noted that Trump did not give up his financial interest in the project, however.

During a meeting Jan. 31, 2017, between GSA lawyers, other officials involved in the lease, and Donald Jr. and Eric and their counsel, Terry told the Inspector General’s Office that he “strongly encouraged” Trump to divest his interests in the project. Ultimately, Terry determined that the Old Post Office project was in compliance with the lease, agreeing with the hotel’s position that the prohibition of elected officials benefitting didn’t apply when the official was “admitted to” the lease before they were elected.

Absent an analysis of the emoluments clause issues in Terry’s review of the agreement, the Inspector General’s Office wrote that there was a “constitutional cloud over the lease.”

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