GAO, GSA Inspector General Open Probes Into Trump Hotel Lease

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By Sam Skolnik

Two federal watchdog agencies are taking an active look at the controversial General Services Administration lease for the Trump International Hotel in Washington, Bloomberg BNA has learned.

Both the Government Accountability Office and GSA’s Office of Inspector General have opened probes into the lease, officials with both groups confirmed.

The GAO since June has been looking into GSA’s “outleasing” program — the path through which the Trump Organization leased the hotel — in response to a request from two Democratic congressmen who have persistently raised questions about the Trump hotel lease, a GAO spokeswoman confirmed.

Reps. Peter DeFazio (D-Ore.) and Hank Johnson (D-Ga.), on June 6, asked Comptroller General of the United States Gene Dodaro, who heads the GAO, to look into how the GSA determines which types of terms and conditions to seek in a particular outlease, “including provisions prohibiting public officials from being admitted to a share of the lease or benefit, and what actions has GSA taken in the past to enforce these terms and conditions,” according to a copy of the letter.

“We will be looking at the GSA outleasing program writ large,” GAO spokeswoman Jennifer Ashley told Bloomberg BNA in an email when asked whether the GAO is reviewing the March 23 decision by GSA officials, including contracting officer Kevin Terry, who concluded that the Trump hotel lease is in “full compliance.”

“We are just getting started, so the detailed scope has yet to be determined,” Ashley said.

Critics of the GSA’s handling of the lease, including DeFazio, said they were grateful that more information should soon be coming to light.

“The unique nature of this lease requires greater transparency by GSA, which to date has been woefully lacking,” DeFazio told Bloomberg BNA in a written statement.

“I hope the GAO and IG reviews of the Trump Hotel will bring to light information needed to assure the public that the Trump Administration is administering the lease of the Trump International Hotel to the benefit of U.S. taxpayers and not to the benefit of President Trump and his family,” wrote DeFazio, ranking member of the House Committee on Transportation and Infrastructure.

‘Evaluating GSA’s Management’

Terry declined to comment, referring questions to a GSA spokeswoman.

When asked whether the Inspector General had interviewed any GSA officials about the lease, including Terry, the spokeswoman told Bloomberg BNA in a written statement that the IG “is evaluating GSA’s management and administration of the ground lease for the Old Post Office Building. GSA will continue to work with the OIG on its evaluation.”

A spokesman for the GSA Inspector General likewise confirmed that his office was conducting a probe into the GSA’s handling of the Trump hotel lease, though he declined to add specifics. Subsequently, a spokeswoman for that office, led by GSA Inspector General Carol Ochoa, told Bloomberg BNA that officials from an IG unit called the Office of Inspections were responsible for that probe.

Probes from the Office of Inspections and Forensic Auditing can include evaluations “that do not constitute an audit or a criminal investigation,” according to a GSA document defining the Inspector General’s role, including its offices and units.

At the same time, probes from that IG branch can assess allegations of fraud, waste, abuse, and mismanagement within the GSA, and also has authority to determine compliance with applicable laws and regulations.

Pressure Ramps Up

Government watchdog groups haven’t let the matter rest since President Donald Trump’s Jan. 20 inauguration — including increasing their pressure on Ochoa to commit to a full-fledged investigation.

Citizens for Responsibility and Ethics in Washington filed a complaint Jan. 23 in the U.S. District Court for the Southern District of New York alleging that, in his capacity as president, Trump’s continued ownership of the hotel was in violation of the foreign emoluments clause of the U.S. Constitution, which prevents public officials from accepting presents and other benefits from foreign governments that may be perceived to yield undue influence. Such presents could come in the form of hotel stays by foreign government officials, the suit alleged.

About a week before Terry signed off on the Trump hotel lease, Ochoa wrote in a March 17 letter to DeFazio and Johnson — who previously had urged her to launch a formal probe — that her office was weighing whether to investigate the GSA’s management of the lease — but did not commit to a full investigation. “[M]y office will continue to monitor GSA’s management of the lease as it works toward a resolution of the issues,” she wrote.

The pressure ramped up in a March 29 letter to Ochoa from 22 individuals and nonprofit groups such as the Project on Government Oversight and the Brennan Center for Justice at the New York University School of Law, urging her to review the GSA’s determination that the lease was in “full compliance.”

“(W)e are concerned that the significant financial interest that the President has in this matter raises the possibility of undue influence in GSA’s determination regarding the provisions of this lease,” they wrote.

Moot Point?

The lease presents a clear conflict of interest for Trump, who, because he oversees the GSA, effectively serves both as the hotel’s landlord and tenant, independent government ethics professionals and congressional Democrats have said.

The lease also includes language that bars elected U.S. officials from gaining “any benefit” from the hotel’s operations.

Trump and his attorneys have denied the conflicts of interest, and after the election, agreed to a new lease structure in which he would still be able to profit from the hotel, on the grounds of the Old Post Office Pavilion just blocks from the White House — but only would be able to receive profits after he left office.

Trump has said alleged conflicts of interest are moot because he was the property’s tenant before he took office. What’s more, paying for a hotel room isn’t the same as giving a gift, Trump attorney Sheri Dillon, a partner with Morgan, Lewis & Bockius in Washington, said at a Jan. 11 White House press conference.

Neither Dillon, nor representatives of the Trump Organization, responded to requests for comment. The White House’s press office also did not respond to emailed questions.

‘Glimmer of Hope'

The president’s plan to try to extricate himself from ethical entanglements over his Washington hotel didn’t go nearly far enough, Walter Shaub Jr. said Jan. 11, while serving as director of the Office of Government Ethics.

But the issue has largely dropped from Washington’s radar since March, when the GSA made its decision.

Shaub, now the senior director of ethics for the nonpartisan Campaign Legal Center, told Bloomberg BNA that it was difficult to know, with so few details readily available from the watchdog agencies, which direction either investigation might take.

With that said, the investigations by the GAO and GSA Inspector General are “very interesting news,” Shaub said. “At least there’s a glimmer of hope that someone is looking into this.”

To contact the reporter on this story: Sam Skolnik in Washington at sskolnik@bna.com

To contact the editor responsible for this story: Daniel Ennis at dennis@bna.com

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