Donald Trump’s corporate picks raise conflict of interest fears

Donald Trump’s second administration risks being rife with potential conflicts of interests given the sprawling business and financial interests of several cabinet picks and allies, warn ethics watchdogs and experts.

Trump’s cabinet is shaping up to be one of the wealthiest on record after he tapped a number of financiers and business executives, including nominees Scott Bessent as Treasury secretary, Howard Lutnick to lead the commerce department, and Chris Wright as energy secretary. Elon Musk, the world’s richest man, has also become a close adviser and confidant of the president-elect.

It is not unusual for senior figures from corporate America and Wall Street to join the US government. Hank Paulson of Goldman Sachs was Treasury secretary in George W Bush’s administration, and ExxonMobil head Rex Tillerson served as secretary of state during Trump’s first term.

But critics say the intersection of business interests and government policy during Trump’s second term could be more complex and potentially problematic than in previous administrations, increasing the danger that government ethics standards could be flouted or ignored.

“We are looking at potentially the greatest ethics cataclysm in the history of our government,” said Walter Shaub, the former head of the Office of Government Ethics, a federal agency. “There is no reason to believe that these potential conflicts of interest are going to be resolved.”

Brian Hughes, a Trump transition spokesperson, insisted the incoming administration would abide by the rules. “All nominees and appointees will comply with the ethical obligations of their respective agencies,” he told the Financial Times.

Trump’s transition team on Tuesday announced it had signed — several weeks late — an agreement with the Biden White House that included an “ethics plan for those involved, which will meet the requirements for personnel to seamlessly move into the Trump Administration”.

Lutnick has said he would “divest my interests in these companies to comply with government ethics rules and do not expect any arrangement which involves selling shares in the open market”.

Bessent, a hedge fund manager and founder of Key Square Group, and Wright, chief executive of Liberty Energy, did not respond to a request for comment.

Trump’s transition team declined to say whether nominees had submitted a financial disclosure form to the OGE — which is required for all cabinet members and which would start the process of reaching an agreement on any necessary recusals and divestments.

There are fears the business and financial interests of Trump’s nominees are so vast it will be very difficult to disentangle them from government affairs.

These are compounded with concerns the Department of Justice under Trump will choose not to prosecute any violations of conflict of interest laws. The president-elect has called for the prosecution of his political opponents, leaving some legal experts fearing for the department’s independence.

Daniel Weiner, director of the Brennan Center for Justice’s elections and government programme, said: “The concern is not necessarily with people’s backgrounds, I think it’s more with is this administration going to take conflicts of interest and avoiding conflicts of interest seriously.”

If confirmed, Bessent, Lutnick and Wright will have critical roles shepherding the country’s economic, trade and energy policies in areas Trump has pledged to make major changes — including tax cuts, sweeping tariffs, and deregulation — that will have a broad impact on businesses and markets around the world.

Archon Fung, a professor at the Harvard Kennedy School, said the worry with nominees who are businesspeople is that “because of their experience in the industry, they’ll be either beholden to a . . . web of relationships there that will affect their judgment about what the public interests require” or “they’ll have completely absorbed a particular point of view, rather than the diverse points of view about what would be good . . . policy”.

Musk’s role as co-chair of Trump’s proposed “department of government efficiency”, or Doge, is expected to face particular scrutiny. The billionaire owns X, the social media company as well as Tesla, the electric-car maker and SpaceX, the space exploration group.

Trump has tasked him with slashing government spending and increasing the productivity of federal agencies — including some that have multibillion-dollar contracts with the tycoon’s businesses.

He has previously railed against government agencies including the Securities and Exchange Commission and the Federal Aviation Administration, which he sees as having hamstrung his businesses. Tesla, from which Musk derives most of his wealth, has also clashed with the Environmental Protection Agency.

Because Doge would be an independent body, Musk is not subject to the same ethical rules and laws as federal officials, but his heavy involvement in government policy is triggering concern over potential conflicts of interest.

Kathleen Clark, a law professor at Washington University in Missouri, said: “This Musk venture is simply an attempt to do an end run around government ethics laws while also being able to exert a huge amount of governmental power.”

Musk did not immediately respond to a request for comment.

The divestments that may be required for Trump’s nominees to comply with ethics standards will not necessarily be a financial blow — and may even be beneficial. If nominees are forced to sell financial assets, the government gives them a “certificate of divestiture” that allows them to defer capital gains taxes indefinitely.

The deferral can be lucrative if Congress adopts lower taxes — as Trump has considered — and nominees ultimately sell their investments at a lower tax rate in the future. Democrats have attacked this tax provision as a gift to the president-elect’s wealthy nominees.

“Donald Trump is stocking up his cabinet with billionaires again, offering them a special tax break just for signing up,” said senator Elizabeth Warren. “These nominees should commit to not use loopholes to avoid paying taxes as a result of their government service.”

John Paulson, the financier and top Trump donor, appears to have chosen to avoid the issue entirely. Shortly after the election, he said he would not serve in the new administration because of his “complex financial obligations”.

Jordan Libowitz, vice-president of communications at the Citizens for Responsibility and Ethics in Washington, said Paulson’s withdrawal “gives us heart that they are having these conversations, and they are planning on following the rules”.

But he added: “The question I’ve been getting a lot in the last couple of days is what if Trump installs loyalists and tells them not to enforce the law? That is a scary question, up and down line. And the answer is, we don’t know.”