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Agency overseeing Trump's D.C. hotel lease failed to examine ethical, constitutional conflicts, report says

The General Services Administration “washed its hands of any responsibility” to review whether the emoluments clauses of the Constitution were being followed, the House committee found.
Image: A thunderstorm builds over the Trump International Hotel in Washington, D.C., on June 5, 2018.
A thunderstorm builds over the Trump International Hotel in Washington on June 5, 2018.George Rose / Getty Images file

WASHINGTON — The federal agency managing the government’s lease of the Trump International Hotel in Washington, D.C., failed to examine ethical conflicts and constitutional issues posed by then-President Donald Trump’s refusal to divest from the property, a new congressional report says.

The House Committee on Transportation and Infrastructure's report, obtained exclusively by NBC News, found that the General Services Administration did not track foreign government payments to the hotel or identify the origins of more than $75 million in loans made by Trump and his family to shore up its troubled finances.

The GSA “washed its hands of any responsibility” to review whether the emoluments clauses of the Constitution were being followed, the report said, including by trying to ensure that profits from foreign governments didn’t benefit Trump. The agency did not take any steps to identify expenditures by foreign or domestic government officials and implemented "zero checks and balances" to make sure the hotel's calculations of such payments were “fair, complete and accurate,” the committee found.

The hotel, located in the Old Post Office Building just down the street from the White House and a favorite hangout for Republican lobbyists and lawmakers, reported more than $350,000 in profits from foreign government officials between 2017 and 2019, the committee said, and a separate congressional report in October found the hotel received about $3.7 million in payments from foreign governments over that rough time frame.

Representatives of at least 22 foreign governments had spent money at various Trump properties, including the hotel, during the first few years of his presidency, NBC News previously reported.

Even though the hotel "consistently profited from" foreign government patronage, it lost more than $71 million overall between its “soft opening” in September 2016 and this past January, when Trump left office, the new report noted. “The hotel operated at a loss in 33 out of the 53 months” during that four-year period, it said.

In order to keep the struggling hotel afloat, Trump and three of his adult children — Don Jr., Eric and Ivanka Trump — loaned it more than $75 million, ultimately forgiving about $72 million of those loans, the report said; the hotel, in contrast, repaid less than $3.5 million of the loans, it said.

Although the loans came from companies created to hold the Trump family's financial interests in the hotel, “GSA never made any effort to identify the origin of these loans and whether the ultimate source of the financing posed any constitutional concerns,” the report said.

In addition, while Trump transferred his ownership of the hotel to a trust controlled by his eldest son, Donald Trump Jr., and longtime Trump Organization chief financial officer Allan Weisselberg after the 2016 election, the report said Trump’s refusal to divest his financial interest in the hotel was “problematic” and “created multiple conflicts of interested during his presidency that both he and GSA refused to properly address.”

For example, the report noted that political appointees at GSA were responsible for making federal real estate decisions “that impacted the president’s personal properties as well as that of his competitors.”

Democrats on the committee prepared the report after receiving 14,000 pages of new records from GSA that they had requested two years earlier but were not handed over during the Trump administration, including previously unreleased financial records from the hotel.

In a statement provided to NBC News, Committee Chairman Peter DeFazio, D-Ore., said the report “brings to light GSA’s flagrant mismanagement of the Old Post Office lease and its attempt to duck its responsibility to support and defend the U.S. Constitution’s emoluments clauses.”

“GSA kept the American people in the dark about the poor financial health of the hotel, and most importantly who was spending money at the hotel and how it might be influencing the Trump administration,” he said.

The report also found that the GSA did not take action to respond to a specific inspector general recommendation that it revise a provision of certain leases that specified government officials could not be party to them by removing ambiguity related to the emoluments clauses of the Constitution. Rather than removing the ambiguity of the provision, the agency “inexplicably expanded the ethical gaps, leaving even fewer guardrails to prevent conflict of interest among senior federally elected officials, including the President of the United States,” the committee said.

Despite the hotel's financial troubles, the Trumps' hotel company recently reached an agreement to sell the rights to the hotel for $375 million, The Wall Street Journal reported last month. The report said that Miami-based investment firm CGI Merchant Group is in contract to acquire the hotel lease and reached a deal to have the Hilton’s Waldorf Astoria Group brand and manage the property. CNN reported Tuesday that the Trump Organization formally notified the GSA about its proposed sale of the property.

The GSA and Trump Organization did not immediately return NBC News' request for comment on the committee's findings and reports on the sale of the hotel. CGI Merchant Group also did not immediately respond to a request for comment.

In October, a House Oversight and Reform Committee report found Trump provided “misleading information about the financial situation” of the hotel, basing the findings on documents obtained from the GSA. The panel found that Trump reported that his hotel generated $150 million in income while he served in the White House despite its incurring more than $70 million in losses — disclosures that “grossly exaggerated the financial health of the Trump Hotel.”

After he was elected, Trump vowed to donate foreign profits from the hotel to the U.S. Treasury as a way to avoid violating the emoluments clauses. In February of 2018, his company said it had given over more than $150,000, also claiming in response to critics in Congress that foreign profits had been overstated.

According to the new House committee report, however, while the Trump Organization "commenced its voluntary initiative to annually donate" the profits, the GSA "made no attempt whatsoever" to oversee efforts to ensure those profits were transparent.

Rep. Dina Titus, D-Nev., chairwoman of the subcommittee that oversees the GSA, said she wants Congress to change how the GSA leases out federal government property to institute “greater accountability and reform” and that she will be “working to bring more transparency to the process.”

The report proposes some legislative remedies for its findings, including requiring that certain leases include audit rights for both the GSA and its inspector general. It also proposes that Congress try to hone any ambiguity in lease language by banning the GSA administrator or designee from entering into a lease that doesn't at a minimum include "a prohibition on any federally elected official or Cabinet member to share, participate in or benefit” from it.