Rep. Johnson: GSA Trump Hotel Lease Unconstitutional

July 12, 2017
Congressman: A benefit delayed is not a benefit denied.



JULY 12, 2017

Although today’s hearing has the stated topic of the implementation of the Federal Assets and Sales Transfer Act (FASTA), which is a worthy topic, this is not the most pressing issue before this subcommittee, as it relates to the General Services Administration (“GSA”).

Instead, I intend to address President Trump’s lease with the GSA for the Trump International Hotel in the Old Post Office building in Washington, D.C.  

On March 24, 2017, GSA released a letter from a GSA contracting officer asserting that the Trump Old Post, LLC, is in full compliance with its lease agreement.  

I categorically disagree with this conclusion.  

The Trump Old Post Office, LLC, is a corporation completely owned and controlled by President Trump and his three oldest children. The lease agreement explicitly prohibits any elected official of the U.S. Government from serving as a lessee or from obtaining any benefit that may arise from the lease. Specifically, the lease states: 

No member or delegate to Congress, or elected official of the Government of the United States or the Government of the District of Columbia, shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom; 

The last time I checked, the President of the United States is an elected official.  

The GSA contracting officer provided no clear legal rationale for this decision on behalf of the American taxpayer.  

In fact, due to a Freedom of Information Act request we now know that, as early as November 11, 2016, this same key GSA contracting official was casting as “nonsense” news reports detailing the conflict of interest for the Old Post Office building.  This determination was presumably before any legal analysis by the Office of General Counsel of GSA or the Department of Justice occurred.

So we are faced with the situation where GSA is negotiating with President Trump’s two sons, Donald Trump, Jr. and Eric Trump, on the meaning of the plain language of the Old Post Office lease agreement.  

After repeated requests by the Trump Organization GSA is now twisting the word “benefit.”  Forget about the traditional benefit, the Trump-controlled GSA now wants us to believe that as long as the Trump Organization creates layers of corporate shells and reinvests the profits of the lease agreement back into the hotel while President Trump occupies the oval office and delays receiving his profits until after his presidency concludes, then there is no benefit.  

Although GSA and the Trump Old Post Office, LLC have claimed that the President is not benefitting from the lease, he is clearly benefitting from the lease.  

The President has listed the loan he took from Deutsch Bank to renovate the Old Post Office building as a personal liability.  Under the new operating agreement with the Trump Old Post Office LLC, the President may use his share of the profits to pay back the Deutsch Bank loan that he lists as a personal liability in his financial disclosure.

It is clear that, no matter how many Russian nesting dolls President Trump may utilize to attempt to his conceal is improprieties, it remains inescapable that President Trump is still gaining a significant benefit by doing business with the GSA, an agency he controls. An agency that he is supposed to be leading on behalf of the American taxpayer.

A benefit delayed is not a benefit denied.  

It has also become clear that this private business being run by the Trump family in the Old Post Office building has been a profitable business.  Recent financial disclosures from both President Trump and his daughter, Ivanka Trump, a White House aide, show that they have received over $20 million in profits from the Trump International Hotel operating in the Old Post Office building.

Because the Trump Administration has refused to release financial documents related to the Old Post Office we have no assurances that GSA has received percentage of profits that its entitled to in the lease agreement. 

There are no assurances that all the agreements between the Trump Organization and its vendors are arms- length transactions and not designed to depress reportable profits.  All of these unanswered questions fall under a cloud of conflict of interest.

This Committee needs to fulfill its responsibilities and conduct its own bi-partisan independent review of this lease agreement.  

We need to assure taxpayers that President Trump is not enriching himself while serving in the ultimate position of public trust.  As Ranking Member of this Subcommittee, I consider this my top priority and look forward to working with the other Members of the Committee to resolve this issue satisfactorily.   


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