In addition to the Trump administration’s many potential conflicts of interest, at least one top aide may have violated criminal conflict of interest laws within the first two weeks of the presidency. That official, Director of Strategic Initiatives Chris Liddell, participated in at least three meetings with President Trump and various business executives – including executives from seventeen companies in which he held millions of dollars in stock.[i]
On February 9, 2017, OGE issued four Certificates of Divestiture for Mr. Liddell in response to a request from a White House ethics official.[ii] These Certificates of Divestiture were issued to Mr. Liddell, his spouse, and a trust in which he appears to have a beneficial interest.[iii] The Certificates of Divestiture allow Mr. Liddell, his spouse, and the trust the opportunity to defer capital gains treatment for the sale of the stock.[iv]
One certificate listed more than 800 separate stock holdings, including in the following companies that participated in the White House meetings: Arconic, Blackrock Inc., Corning, Dell Technologies, Dow Chemical, Ford Motor Co., General Motors Co., IHS Markit LTD, International Business Machines (IBM), International Paper, Johnson & Johnson, JP Morgan Chase & Co., Lockheed Martin, Pepsico Inc., Tesla Motors Inc., Walmart Stores Inc., and Whirlpool.[v] The fact that OGE issued the certificates on February 9 strongly indicates that Liddell still held stock in the companies on that date and had not divested his financial interests.
On January 23, 2017, Mr. Liddell participated with President Trump in a meeting with business leaders that included representatives from 12 companies including 10 companies in which Liddell appears to have held stock worth approximately $2.1 million: Arconic, Corning, Dell Technologies, Dow Chemical, Ford Motor Co., International Paper, Johnson & Johnson, Lockheed Martin, Tesla Motors, and Whirlpool.[vi] During the meeting, President Trump reportedly told attendees that his “administration would prioritize corporate tax cuts and decrease regulation.”[vii] He also repeated his threat to impose a “border tax” on companies that move production outside the United States, saying: “There will be advantages to companies that do indeed make their products here.”[viii] In that regard, President Trump was making a specific overture to these companies to make their products in the United States so that they could obtain the “advantages” being offered.
On January 24, 2017, Mr. Liddell participated with President Trump in a meeting with General Motors, Ford Motors, Fiat Chrysler Automobiles NV, and the head of the automobile manufacturer trade association.[ix] At the time he participated in the meeting, Mr. Liddell and his spouse apparently held stock in General Motors and Ford Motors worth more than $72,000.[x] Prior to the meeting, President Trump tweeted: “Will be meeting at 9:00 with top automobile executives concerning jobs in America. I want new plants to be built here for cars sold here!”[xi] During the meeting, President Trump reportedly urged the executives to build new factories and promised to change environmental regulations to encourage job creation.[xii] Based on the invitation list, President Trump’s morning tweet about the meeting, and related news reports, this particular meeting appears to have been focused on the automobile industry and included a direct appeal to its representatives to build more plants in the United States.
On February 3, 2017, Mr. Liddell further participated with President Trump in a meeting with members of the Strategic and Policy Forum chaired by Blackstone Group Chairman and CEO Stephen Schwarzman.[xiii] Representatives of approximately 14 other companies also were in attendance, including the following companies in which Mr. Liddell appears to have held a financial interest: BlackRock, General Motors, IHS Markit LTD, International Business Machines, JPMorgan Chase, Pepsico, Tesla Motors Inc., and Walmart Stores.[xiv] At the time he participated in the meetings, Mr. Liddell’s stock holdings in these companies appear to have been worth approximately $2.3 million.[xv] President Trump and the CEOs in attendance reportedly discussed topics “ranging from tax reform to infrastructure,” and some executives presented prepared remarks on specific issues, including the CEO of General Motors who “was expected to talk about the auto industry’s desire for a second look at fuel-economy rules that the Obama administration affirmed just before leaving office.”[xvi]
Federal law prohibits a federal employee from participating personally and substantially in any particular matter in which, to his knowledge, he or any person whose interests are imputed to him under the statute has a financial interest, if the particular matter will have a direct and predictable effect on that interest.[xvii] As defined in OGE regulations, a “particular matter” includes only a matter that involves deliberation, decision, or action that is focused on the interests of either a specific person or a discrete and identifiable class of persons.[xviii]
The January 24 meeting with representatives of the automobile manufacturers seemingly was convened by President Trump to make a direct appeal to the three biggest American automobile manufacturers to build factories in the United States and to discuss changes in environmental regulations to help them in this regard. As a result, this meeting appears to have been a particular matter because it was carried out in furtherance of the government’s stated policy to encourage car companies to build more factories.
The January 23 and February 3 meetings also may have been particular matters under the statute and regulations. At the January 23 meeting, President Trump apparently appealed to the attendees to specifically support his tax and regulatory reform initiatives. Moreover, it is unknown to what extent President Trump and the executives discussed policies focused on the interests of a discrete and identifiable group of companies. Similarly, it appears likely that the fuel-economy rules specifically impacting the auto industry were discussed at the February 3 meeting, and it is unknown whether the participants discussed other policies focused on the interests of a discrete and identifiable group of companies.
The White House meetings also may have constituted particular matters for Mr. Liddell to the extent he was involved in planning and organizing them. Based on his stated responsibility to “focus on priority projects” and to “interface with private sector forums,”[xix] there is a reasonable basis to believe that Mr. Liddell had responsibility to organize the meetings, and to oversee and participate in the selection process for prospective attendees. To the extent that he did so, he may be viewed as having personally and substantially participated in the White House meetings as particular matters involving specific parties that would have a direct and predictable effect on his financial interests.
As a result, it appears that each of the meetings may have constituted particular matters and that at the time of the meetings Mr. Liddell held significant amounts of stock in several of the companies that participated in them.
The conflict of interest statute’s purpose is to ensure that a government employee’s official conduct is directed solely to advancing the public interest and not the employee’s private financial gain. On March 14, CREW filed a complaint with White House Counsel Donald McGahn requesting that he evaluate whether the possible violations should be referred to the Department of Justice for investigation.[xx] The White House claimed that Mr. Liddell was working with them to comply with ethical obligations, but so far, there is no indication that the matter has been addressed.[xxi]
[i] Peter Overby, Ethics Documents Suggest Conflict Of Interest By Trump Adviser, NPR, Mar. 14, 2017, available at http://www.npr.org/sections/thetwo-way/2017/03/14/520121822/ethics-documents-suggest-conflict-of-interest-by-trump-adviser.; Letter from Noah Bookbinder, Executive Director, Citizens for Responsibility and Ethics in Washington to Donald F. McGahn, White House Counsel, Mar. 14, 2017, available at https://s3.amazonaws.com/storage.citizensforethics.org/wp-content/uploads/2017/03/14134927/McGahn-Liddell-3-14-17.pdf.
[ii] Office of Government Ethics, Certificate of Divestiture, Certificate No. OGE-2017-009 (Feb. 9, 2017); Office of Government Ethics, Certificate of Divestiture, Certificate No. OGE-2007-010 (Feb. 9, 2017); Office of Government Ethics, Certificate of Divestiture, Certificate No. OGE-2007-011 (Feb. 9, 2017); and Office of Government Ethics, Certificate of Divestiture, Certificate No. OGE-2017-012 (Feb. 9, 2017).
[iii] The financial interests of his spouse and any trust in which Liddell has a beneficial interest are imputed to him under 18 U.S.C. § 208, and are considered “eligible persons” to receive Certificates of Divestiture under 5 C.F.R. § 2634.1001 and § 2634.1003.
[iv] 5 C.F.R. § 2634.1001; 26 U.S.C. § 1043.
[v] Certificate No. OGE-2017-011.
[vi] See http://www.gettyimages.com/license/633088382 (photo of meeting showing Mr. Liddell); Richard Feloni, Here Are the 12 Business Leaders Trump Hosted For His First Big White House Meeting, Business Insider, Jan. 23, 2017, available at http://www.businessinsider.com/business-leaders-trump-white-house-meeting-2017-1; Certificate No. OGE-2007-011. The amounts of stock holdings were determined by multiplying the number of shares listed in the Certificates of Disclosure by the values of stock on the New York Stock Exchange (“NYSE”) or the Nasdaq Stock Market on the date of each meeting, according to Google Finance. See https://www.google.com/finance.
[vii] Feloni, Business Insider, Jan. 23, 2017.
[ix] See Simon Plumb, First Photos of Kiwi in Trump’s Team, New Zealand Herald, Jan. 29, 2017, available at http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11790581; David Shepardson and Roberta Rampton, Trump Talks to U.S. Automakers, Pushes For New American Plants, Reuters, Jan. 24, 2017, available at http://www.reuters.com/article/us-usa-trump-autos-idUSKBN1581CA.
[x] Certificate Nos. OGE-2007-010, OGE-2007-011. Values of stock on the NYSE on the date of the meeting, according to Google Finance. See https://www.google.com/finance. Mr. Liddell’s stock holdings were worth approximately $65,263 on the day of the meeting and his wife’s holdings were worth approximately $7,400.
[xii] Bill Vlasic, Trump, In Meeting, Urges Automakers to Build in United States, New York Times, Jan. 24, 2017, available at https://www.nytimes.com/2017/01/24/business/trump-us-automakers-meeting.html?_r=0.
[xiii] See http://www.gettyimages.com/license/633692742 (photo of meeting showing Mr. Liddell); Matthew Townsend and Justin Sink, Trump CEO Brain Trust Huddles as Corporate America Splits, Bloomberg, Feb. 3, 2017, available at https://www.bloomberg.com/politics/articles/2017-02-03/trump-ceo-brain-trust-huddles-as-rifts-open-in-corporate-america.
[xiv] In addition, two retired executives, Jim McNerney of Boeing and Jack Welch of General Electric, attended the meeting. Mr. Liddell held stock in these companies as well. Richard Feloni, Here’s Who Sat Where in Trump’s First Big Business Council Meeting – And What The Layout Communicates, Business Insider, Feb. 3, 2017, available at http://www.businessinsider.com/who-sat-where-in-president-trumps-business-advisory-council-and-why-2017-2; Certificate No. OGE-2007-011.
[xv] Certificate No. OGE-2007-011.
[xvi] Townsend and Sink, Bloomberg, Feb. 3, 2017.
[xvii] 5 C.F.R. § 2635.402(a).
[xviii] 5 C.F.R. § 2635,402(b)(3).
[xx] Letter from Noah Bookbinder, Executive Director, Citizens for Responsibility and Ethics in Washington to Donald F. McGahn, White House Counsel, Mar. 14, 2017, available at https://s3.amazonaws.com/storage.citizensforethics.org/wp-content/uploads/2017/03/14134927/McGahn-Liddell-3-14-17.pdf.
[xxi] Overby, Ethics Documents Suggest Conflict Of Interest By Trump Adviser, NPR, Mar. 14, 2017.