President-elect Trump provides some real world lessons for small business owners when it comes to potential conflicts of interest.
What does it mean to have a president with global business ties? Will these business ties influence government dealings? A recent publication by CNBC delved into the issue, beginning with an example. One of president-elect Trump’s first meetings with a foreign leader was with the Prime Minister of Japan, Shinzo Abe. The meeting included an unusual attendee, his daughter, Ivanka Trump.
Why was Ivanka Trump at the meeting? Ivanka Trump is deep in negotiations with a deal with a Japanese apparel giant known as Sanei International. The company’s largest shareholder is the Development Bank of Japan, a bank owned by the Japanese government.
Just happenstance, or intentional business posturing? There is no doubt that the Trump family is savvy with business, so mere coincidence seems highly unlikely. However, even if the inclusion of Ms. Trump in the meeting was intentional, does it rise to the level of a conflict of interest for the president-elect? That will be the question for this and similar meetings throughout the Trump presidency.
One misstep, or a bigger problem? It is also important to note that this is just one example amongst many potential conflicts of interest.
A publication in The Atlantic attempts to explain the most likely conflicts. Regardless of political affiliation, such legal questions are important. Not only do these issues play a role in government dealings, but they play a prominent role in business dealings of any size – both large and small. As such, entrepreneurs can learn a number of lessons from the analysis of these situations. Two key take away lessons include:
- Choose which companies you work with wisely.
- Avoid complications with family and friends.
A little explanation may help further explain how these two issues can pose big problems for everyone from president-elect Trump to a small business entrepreneur.
Why does it matter which companies we work with? Aside from helping the bottom line, choosing the right companies to hire will impact your business interests.
One example of potential conflict for president-elect Trump that falls into this example involves Secret Service detail. The Secret Service is tasked with keeping the president and his or her family safe. In some cases, the Secret Service has to pay to travel to keep these people safe. Mr. Trump will likely travel on Air Force One, but his family may travel on private jets. If so, the Secret Service may have to pay to be on the flight. If the family flies on one of Mr. Trump’s personal jets this would mean president-elect Trump could make a profit off the Secret Service.
This can be a classic conflict of interest in the form of self dealing. Business owners and shareholders must be careful which companies they hire out to complete work for their business. If they have an interest in a company that is proposed for use, they must disclose this connection.
How can dealings with friends and family lead to a conflict of interest? In addition to disclosing any interest in other companies that your business may do work with, it is also wise to disclose any familial connections.
Mr. Trump has received some criticism for taking on family members as part of his transition team. If not done carefully, hiring family members can be considered a conflict of interest. This is referred to as nepotism. If family members are given unfair benefits, it can result in claims of discrimination.
How serious are allegations of conflict of interest? These allegations can be crippling for businesses. They can ruin a business’ reputation and result in a lawsuit for a breach of fiduciary duty. As a result, it is important to take such allegations seriously. Contact an experienced shareholder litigation lawyer to discuss your situation and better ensure your business interests and legal rights are protected.