“[Impeachment] will seldom fail to agitate the passions of the whole community, and to divide it into parties more or less friendly or inimical to the accused . . . [T]here will always be the greatest danger that the decision will be regulated more by the comparative strength of parties, than by the real demonstrations of innocence or guilt.” – Alexander Hamilton, Federalist No. 65
This essay confronts the topic of impeachment. There is not a natural link between impeachment, a political process, and the domain of this journal, business and entrepreneurship. However, I hope to establish that link by applying a corporate law framework to the potential impeachment of Donald Trump. As discussion about current proceedings devolves into partisan speaking points, I argue that corporate fiduciary duties provide a useful framework for describing and evaluating many of Trump’s actions as breaches that warrant his removal.
The CEO President
In 2016, Donald Trump campaigned to be the first CEO President, one whose business acumen, bare-knuckles communication style, and negotiating prowess would make him uniquely adept at running the world’s largest and most complex economy.
After one of the most contentious and divisive elections in American history, investors and analysts warned against increased volatility as “uncertainty endure[d] over how Trump’s campaign rhetoric [translated] into policies.”1 Still, an appreciable portion of the public retained guarded optimism for the economic outlook of the CEO President’s America.2
Three tumultuous years (and nearly twelve-thousand tweets3) later, the House of Representatives has begun preliminary investigations of an impeachment inquiry in the aftermath of a phone call between Trump and Ukrainian President, Volodymyr Zelensky, where Trump allegedly sought investigation into Joe Biden’s son in exchange for continuance of American security aid.
Impeachment, by nature, is a political process, not a legal one. 4 As Hamilton explained in Federalist 65, the “jurisdiction” of impeachment covers “misconduct of public men, or, in other words, from the abuse or violation of some public trust.”5 The Constitution’s drafters were sharply focused on protecting against foreign influence.6) Naturally, much of the Ukraine scandal has centered around evidence of a quid pro quo arrangement—American aid to Ukraine in exchange for domestic political favor—that would leave Trump exposed to foreign influence and strike at the heart of the impeachment process’s purpose.
I do not intend to evaluate factual record regarding President Trump’s Ukraine scandal.7 Rather, I posit that even without a finding of a quid pro quo with the Ukrainians, Trump’s actions, judged against his preferred rubric as a businessman—specifically corporate law fiduciary duties—invite his removal from office.8
My thesis: First, President Trump assumed fiduciary duties to the American people when he took his oath of office. Second, Trump’s self-dealing and lack of disclosure constitute breaches of these duties, as defined in seminal American corporate law cases, and justify his impeachment.9
Trump’s Fiduciary Duties
There is a growing body of literature describing the historical and textual basis for ascribing fiduciary duties of the President of the United States.10 Fiduciary duties—namely the duties of care and loyalty— serve as cornerstones of corporate law by protecting the trust-bound relationship between shareholders and managers. In a general sense, these duties bind directors and officers to act in good faith and the corporation’s best interests. By one formulation, corporate officers of fiduciary duty of loyalty “not to (1) actively exploit their positions within the corporation for their own personal benefits; or (2) hinder the ability of a corporate to continue the business for which it was developed.”11
Article II of the United States Constitution twice imposes a duty of “faithful execution” on the President, who must “take Care that the Laws be faithfully executed,” and take an oath to “faithfully execute the Office of President.”12 These clauses are often cited in conjunction with Article II’s Vesting Clause in justifying and defining broad executive powers.13
However, a common sense reading of these clauses points us to the conclusion that the President’s powers are in fact bound by duties of good faith and loyalty, much like a director or officer of a corporation. Aside from the obvious linguistic link between “faithful execution” and “fiduciary duties,”14 longstanding traditions of political science describe government as a trust, and officers of government as trustees.15 Thus, public officials—the President chief among them—are trustees and fiduciaries of the public trust.
Trump’s First Breach: Self-Dealing
President Trump’s fiduciary duties to the American polity form a useful analytic framework for evaluating many of his reported and alleged self-dealing transactions.
Fundamental to fiduciary duties in American corporate are protections against self-dealing, or “participation in a transaction that benefits oneself instead of another who is owed a fiduciary duty.”16 These protections are especially pertinent to President Trump given his posture in the hospitality business; Trump’s vast portfolio of hotels, resorts, and golf courses17 —all potential beneficiaries of government spending, foreign or domestic—make the threat of self-dealing unusually prevalent.
It is basic concept of corporate law that directors and officers cannot directly or indirectly acquire a profit for themselves or acquire any other personal advantage in dealings on behalf of the corporation. 18 Where an interested party participates on both sides of a transaction, courts provide protection against self-dealing by reviewing the transaction for entire fairness.19 To pass the entire fairness test, an interested party must demonstrate the transaction mimicked arm’s length bargaining.20 The burden of proof demands two components: (1) fair dealing, how the transaction was initiated, approved, and negotiated; and (2) fair price, the economic and financial considerations of the deal.21
Think of the quintessentially corrupt CEO who uses the company jet to take his family on vacation and awards lucrative contracts to his other businesses. It is easy to understand why these actions pose a problem: The CEO is using corporate resources for his own personal and financial gain. In the language of entire fairness, it’s hard to imagine these deals reflected arm’s length bargaining. At the very least, they would require an affirmative showing by the CEO that the contracts were negotiated fairly, were approved by some other disinterested party, and were executed at an equitable price.
The example appears to be a caricature until one reads the news.22 President Trump has spent 308 days at a Trump property, meaning taxpayer dollars are spent on food, lodging, and other services (for him and the extensive detail of Secret Service members) to the benefit of the Trump Organization.23 And it’s not just personal travel. As of last month, the Department of Defense reported spending “$184,000 at Trump Turnberry resort in Scotland since 2017.”24 This is in addition to $17 million spent on refueling United States government aircraft at the Glasgow Prestwick Airport, a part of an ongoing deal between the Trump Organization and the airport to increase traffic and support the Turnberry resort.25 Vice President Mike Pence, during an official visit with the president of Ireland, commuted over 180 miles to his meeting after choosing to stay at Trump International Golf Links & Hotel in Doonbeg, adding to more than $20 million spent by “various mostly Republican political groups” since 2015.26
It is hard to come up with an explanation for these expenses other than attempts by various public officials to curry favor with Trump. These are not arm’s length transactions; Donald Trump has clear personal interests on both sides of the deals. These are brazen examples of self-dealing directed and facilitated by the President in breach of his fiduciary duty of loyalty.
Trump’s Second Breach: Nondisclosure
Perhaps the most worrisome part of the Trump Organization footprint is what we don’t know. The Trump Organization, as a privately held company, is largely shielded from federal disclosure rules. Without knowledge of the Organization’s investors, partners, and creditors, it’s impossible to tell who has leverage over the President and where he has conflicts of interest.27
The anxiety caused over this type of information asymmetry is exactly why the established corporate law in most states recognize that nondisclosure of conflicts of interest is a per se violation of a fiduciary’s duty of loyalty.28 We don’t know if foreign governments are bankrolling Trump Organization property developments. We don’t know if the Trump Organization is deeply indebted to foreign statesmen. We don’t know, but President Trump’s duty of loyalty says we deserve to.
The above analysis provides only a cursory analysis of Donald Trump’s relatively newsworthy actions constituting breaches of his fiduciary duties as president.29 Nonetheless, I believe this framing provides a useful analytic approach to judge Trump’s actions.
So I’ll ask you: If American CEO’s and directors are expected to uphold duties of good faith and loyalty, shouldn’t America’s “CEO President” do the same?
Katie Allen & Dominic Rushe, Down Hits Record High After Trump Win but Investors Warn of Volatility, The Guardian (Nov. 10, 2016 3:13 PM), https://www.theguardian.com/us-news/2016/nov/10/uncertainty-over-trump-policies-rattles-markets. ↩
Jena McGregor, How CEOs Are Responding to Donald Trump’s Win, Wash. Post (Nov. 16, 2016 5:35 PM),https://www.washingtonpost.com/news/on-leadership/wp/2016/11/16/how-ceos-are-responding-to-donald-trumps-win-2/ (“[Donald Trump] is a negotiator, he’s a dealmaker. So I think let’s just wait and see what he does,” said ex-General Electric Chairman, Jeff Immelt, November 16, 2016). ↩
Trump Twitter Archive, http://www.trumptwitterarchive.com/archive. ↩
The Federalist No. 65 (Alexander Hamilton). ↩
The Federalist No. 68 (Alexander Hamilton) (“Nothing was more to be desired than that every practicable obstacle should be opposed to cabal, intrigue, and corruption. These most deadly adversaries of republican government . . . but chiefly  the desire in foreign powers to gain an improper ascendant in our councils.” ↩
For the White House summary of President Trump’s call with Zelensky, with annotations and additional context, see N.Y. Times, Full Document: Trump’s Call With the Ukrainian President (Sept. 25, 2019 9:23 PM), https://www.nytimes.com/interactive/2019/09/25/us/politics/trump-ukraine-transcript.html. ↩
In fact, by the time this post is published, there will likely have been several new developments in the House’s impeachment proceedings. I do not intend those events to have any bearing on the analysis here. ↩
I am aware that state corporate law, which (for the most part) defines fiduciary duties, does not impose any actual legal liability on President Trump. ↩
See, e.g., Ethan J. Leib & Jed Handelsman Shugerman, Fiduciary Constitutionalism: Implications for Self-Pardons and Non-Delegation, 17 Geo. J.L. & Pub. Pol’y 463 (2019) [hereinafter Fiduciary Constitutionalism]. ↩
Foodcomm Intern. v. Barry, 328 F.3d 300, 303 (7th Cir. 2003). ↩
U.S. Const. art. II, §§ 1, 3. ↩
See, e.g., Morrison v. Olson, 487 U.S. 684, 698–99 (1988) (Scalia, J., dissenting) (describing the vast powers vested in the President, the nation’s singular executive). ↩
Fiduciary Constitutionalism, supra note 10, at 2119. ↩
Katie Louise Roberts, Hoyt’s New Cyclopedia of Practical Quotations, at 817 (Funk & Wagnalls 1923) (citing Henry Clay, Speech at Lexington (May 16, 1829) ) . ↩
Self-dealing, Black’s Law Dictionary (11th ed. 2019). ↩
See Trump Organization, https://www.trump.com/commercial-real-estate-portfolio (follow “Hotels” and “Golf” menus) (last visited Nov. 1, 2019). ↩
See State ex rel. Hayes Oyster Co. v. Keypoint Oyster Co., 391 P.2d 979, 983 (1964). ↩
See Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971). ↩
See Weinberger v. UOP, Inc., 457 A.2d 701, 711 (Del. 1983). ↩
Matters related to the U.S. Constitution’s Emoluments Clauses are not the subject of this post. ↩
Karen Yourish & Troy Griggs, Tracking the President’s Visits to Trump Properties, N.Y. Times (updated Oct. 17, 2019), https://www.nytimes.com/interactive/2017/04/05/us/politics/tracking-trumps-visits-to-his-branded-properties.html. ↩
Eric Lipton, Pentagon Says It Spent $184,000 in 2 Years at Trump’s Scotland Resort, N.Y. Times (Sept. 18, 2019), https://www.nytimes.com/2019/09/18/us/politics/pentagon-trump-turnberry.html?module=inline. ↩
Eric Lipton, Trump Had Deal With Scotland Airport That Sent Flight Crews to His Resort, N.Y. Times (Sept. 9, 2019), https://www.nytimes.com/2019/09/09/us/politics/trump-hotel-turnberry.html. ↩
Maggie Haberman & Eric Lipton, ‘Business as Normal’: Pence’s Stay at Trump Hotel in Ireland Follows a Trend, N.Y. Times (Sept. 3, 2019), https://www.nytimes.com/2019/09/03/us/politics/trump-pence-ireland.html. ↩
These unknowns are strong motivations for the fight over Trump’s tax returns, which would help illuminate some of these unknowns. See Trump v. Vance, 395 F.Supp.3d 283 (S.D.N.Y. 2019); see also Susanne Craig & Jesse Drucker, Donald Trump’s Tax Returns: What We Might Learn, N.Y. Times (April 10, 2019), https://www.nytimes.com/2019/04/10/business/trump-tax-returns.html. ↩
See Hayes Oyster, 391 P.2d at 984. ↩
For a more thorough argument for impeaching Donald Trump in more traditional terms, see Neal Katyal & Sam Koppelman, Impeach: The Case Against Donald Trump (2019). ↩