This piece was originally shared on Matt Kelly’s Radical Compliance blog and is republished here with permission.
Whatever else we might say about the person who takes the job of compliance counsel at the Trump Organization, we can all agree on one point.
That person will have a lock on speaking gigs at compliance industry conferences for a long, long time.
We can’t say much more about Trump’s compliance counsel, since his press conference last week announcing that job brimmed with ambiguity. Trump first gestured to stacks of paper on a table next to him, saying that they were trust documents to insulate him from his business. Then a lawyer from one of his law firms spoke for 15 minutes, talking about the steps Trump would take to resolve conflicts of interest between his presidency and his business.
The heart of that plan: that Trump will hire a compliance counsel to work at his business and review possible conflicts of interest.
In fact, according to that lawyer, Trump will hire two people to review conflicts of interest: an “ethics adviser,” who will be part of the management team at the Trump Organization, and a compliance counsel, whose role is less clear.
That’s just one vague detail that makes you start to wonder how this whole idea will work. If you watch and listen to Trump’s press conference carefully — which I did, because I am committed to the compliance profession that much — more questions start to emerge. By my count, we have at least six big ones to ask.
What We Don’t Know Yet
First, will these jobs actually be filled at all? Trump has a history of not fulfilling promises. He has not released his tax returns, as he long ago once promised to do. He has not sued the women who say he sexually assaulted him, as he vowed to do. He has reneged on contracts. For better or worse, the first question we have to ask about our president-elect is whether he’ll even do what he promises.
Second, what will the scope of these jobs be? Sheri Dillon, the lawyer who spoke at Trump’s event, outlined two separate roles. First is an “ethics expert,” who will sit on the Trump Organization’s management committee, along with Trump’s sons Don and Eric. Dillon said that expert’s written approval will be required for new deals “that could potentially raise ethics or conflict of interest concerns.”
We don’t know how the Trump Organization will define “ethics expert,” although Dillon did say this person would be a recognized expert in the field. We don’t know who will determine deals that could potentially raise conflict of interest. Will this person only review deals that Don and Eric Trump consider to be potential conflicts? Or will this person get to decide that for him- or herself?
Then there is the job of compliance counsel. Dillon described this job as “to ensure the Trump businesses are operating at the highest levels of integrity and not taking any actions that could be perceived as exploiting the office of the presidency.”
Dillon did not say whether this person will be on the management team, and typically someone with the title of compliance counsel wouldn’t be part of senior management. A chief compliance officer sits on the management team; a compliance counsel gives advice about regulatory compliance to other people who then make the final decisions.
If Trump wants to wiggle out of the promise that Americans heard, hiring a compliance counsel would be one way to do it. He can announce this person with much fanfare, and eventually water down the authority of the role until this person is a Trump Organization lawyer who provides counsel on conflict issues, much the same way that a tax lawyer might provide thoughts on tax, but not be head of tax compliance or strategy.
Third, will these hires have access to all the information they need? Exhibit A is whether these ethics and compliance advisers will be able to see Trump’s tax returns. Without knowing what’s in them, I don’t see how anyone can assess potential conflicts of interest effectively. So these jobs may well be window dressing, because Trump doesn’t want anyone to know how unwealthy and indebted to foreign interests he is.
Fourth, will these compliance advisers issue a public report? Dillon made no mention of that idea, and it runs counter to Trump’s history of evading disclosure. But unless Trump shares the reviews that these people conduct, the public will have no way of knowing whether they are doing their jobs.
Fifth, to whom will these people report? The compliance counsel seems like a lower-level job, so I assume that person will report to Trump Organization general counsel Alan Garten. I’m more curious about the ethics expert sitting on the management team. The levers of power rest with Don and Eric Trump, so does this person answer to them? Or some outside director of the board? As best as I can tell, the Trump empire doesn’t even have any outside directors, at least as public companies understand the term.
And finally, will these hires stay in their jobs? At a large organization, you need at least a year to reach full understanding of how things happen and how to do your job well. Trump does have a history of keeping some executives with him for many years, which is a reassuring sign. He also has a history of burning through employees until he finds the ones that work well with him. That’s not reassuring in this context, where independence is crucial to success.
Counsel Does Not Compliance Make
One person with a great observation about Trump’s news was Roy Snell, chief executive at the Society of Corporate Compliance & Ethics. Snell welcomed the idea that Trump will appoint a compliance counsel — but that’s not the same, he said, as creating a compliance program for your business. As Snell said:
“You have to focus on all elements of a compliance program equally and in a coordinated manner because that is what makes a compliance program work. Working on one element like audit, legal, risk or ethics separately or to the exclusion of others is what we tried in the past. It failed.”
Snell is right. What Trump proposes is a conflicts check, something that comes at the end of whatever new deal the Trump Organization has been cooking up. That’s not at all the same as a company that takes compliance seriously and weaves ethical conduct into every part of its operation. We didn’t hear anything like that in Trump’s announcement last week.
To be fair, I have no doubt that Trump’s heart is in the right place and that he wants to see America succeed. And he has taken a few preliminary steps to reduce the potential for conflicts of interest. He canceled pending deals with foreign interests. He (allegedly) will only see profit-and-loss statements for the whole Trump Organization, not individual operating units or pending deals.
Still, these arrangements do not sever Trump from his business interests. Even if he does fulfill his promise to hire ethics and compliance advisers, the public has no transparency into how conflicts are assessed and decided, or even what those conflicts are.
Published by Conselium Executive Search, the global leader in compliance search.
