Biden AdministrationUkraine InvasionInflationEnergyCybersecurity

Trump’s Business Ties and the Problem With Emoluments

October 23, 2019, 3:45 PM UTC

America’s founding fathers probably didn’t envision Donald Trump. They did, however, include a sentence in the U.S. Constitution that could weigh on the activities of a businessman-president. Trump’s decision to keep his stakes in his global business, the Trump Organization, raised the question of whether he is continually violating what’s known as the “emoluments clause,” of which there are actually two. Critics of the president have filed lawsuits pressing the case.

1. What does the Constitution say?

The foreign emoluments clause — in Article I, Section 9 — reads, “No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” Historians say the intent of provision was to discourage early American leaders from being influenced by gifts or titles bestowed by European governments or royalty.

2. What does that mean?

Webster’s New World Dictionary says an emolument is a “gain from employment or position,” which can include “salary, wages, fees, etc.” Merriam-Webster defines emoluments as “returns arising from office or employment usually in the form of compensation or perquisites.”

3. Why is this an issue for Trump?

Though he stepped away from day-to-day operations of his businesses, Trump retains ownership in companies that do business with foreign diplomats, state-controlled companies and state-owned television channels. He selected his own Trump National Doral golf resort in Miami to be the site of next year’s Group of Seven summit, which the U.S. is hosting, before bending to public criticism. One of his golf resorts, Turnberry in Scotland, has gotten business from U.S. Air Force crews overnighting while their planes were refueled. The Trump International Hotel Washington, D.C. gets business from foreign governments and their representatives, and it’s housed in a building that Trump’s company leases from the U.S. government. That raises another issue: A second constitutional clause — in Article II, Section 1 — says the president receives a salary while in office but “shall not receive within that Period any other Emolument from the United States, or any of them.”

4. So has Trump accepted an emolument?

Two lawsuits pressing that argument cite trademarks granted to Trump’s company by China’s government; rent paid at Trump Tower in New York by the Industrial & Commercial Bank of China Ltd. and the Abu Dhabi Tourism & Culture Authority; and events booked at Trump’s Washington hotel by the embassy of Kuwait and by a lobbying firm working for Saudi Arabia.

5. Does Trump acknowledge those were emoluments?

No. His lawyers say fair-market transactions, like when a foreign delegation pays the market rate to stay at a Trump hotel, are permitted. The U.S. Justice Department, defending Trump in court, argued that the strict interpretation being applied by Trump’s critics would mean that “presidents from the very beginning of the Republic, including George Washington, would have received prohibited ‘emoluments.’” Trump pledged early in his presidency to donate to the U.S. Treasury “all profits” from foreign government patronage of his hotels. The Trump Organization said it turned over $151,470 in 2018 and $191,538 in 2019 to the U.S. Treasury, representing profits from foreign governments in the prior year.

6. Didn’t Trump put his companies in a trust for this reason?

Yes, but it’s not the kind of blind trust that most recent presidents have used to avoid conflicts. The one Trump created is overseen by an independent ethics officer and managed by Trump’s sons, Eric and Don Jr., and Chief Financial Officer Allen Weisselberg. It holds profits from the business for him and allows him to draw money. A blind trust, by contrast, would be run by a fully independent trustee, who would have no contact with Trump and would be the sole decision-maker on keeping, selling or reinvesting Trump’s assets.

7. Who’s suing, and for what?

A lawsuit brought by the attorneys general of Maryland and the District of Columbia accuses Trump of violating the Constitution by holding a financial interest in the Washington hotel. That suit was dismissed by a three-judge panel of a federal appeals court but will be reconsidered by the full court. Another appeals court reinstated a lawsuit brought by a Washington-area restaurant association, luxury hotel event booker and the watchdog group Citizens for Responsibility and Ethics in Washington, who say Trump’s businesses pose unfair competition. (The split decisions by courts in New York and Virginia increase the likelihood the Supreme Court will weigh in.) In another suit, 215 Democratic members of Congress are seeking “the opportunity to cast a binding vote” on the issue, since the Constitution requires the president to obtain “the consent of Congress” before accepting an emolument. Trump is appealing a pair of Washington federal court rulings denying his request to dismiss that lawsuit.

8. What does legal precedent tell us?

Not much. It’s exceedingly rare for emoluments to be litigated in court, especially as they relate to the president. But the issue does come up occasionally. In 2009, amid political dueling about whether President Barack Obama could keep his Nobel Peace Prize, the Justice Department advised that there was no emoluments violation because the committee that awards the prize isn’t a “King, Prince, or foreign State.” In 1963, President John F. Kennedy declined an offer of honorary Irish citizenship on the advice of the Justice Department.

More must-read stories from Fortune:

—This often-accurate election model predicts Trump will win re-election in a landslide
Five states have already canceled GOP primaries. Here’s what you should know
—As the steel industry falters, will Trump pay a political price?
—Will the Kentucky governor’s race be a harbinger of the 2020 presidential election?
—How Gordon Sondland, ‘a guided missile for getting access,’ landed in the middle of Trump’s Ukrainian mess
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.