Emolument

DEFINITION of 'Emolument'

An emolument is compensation for employment, services or holding office. The term is generally used in a legal context. 

Article I, section 9 of the U.S. Constitution is often referred to as the "Emoluments Clause," since it forbids U.S. officeholders from accepting "any present, emolument, office, or title" from a foreign country. On Sunday, January 22, the New York Times reported that a team of lawyers and Constitutional scholars planned to file a suit the following Monday accusing President Donald Trump of violating the clause.

BREAKING DOWN 'Emolument'

Emolument is derived from the Latin term "emolumentum," which had a dual meaning: effort or labor, on the one hand; and benefit, gain or profit, on the other. It originally meant the sum paid to a miller for grinding a customer's wheat. The word is archaic and little used today, except in legal contexts.

The Emoluments Clause

One context in which the term is commonly used is constitutional law, where it refers to article I, section 9 of the U.S. Constitution:

"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."

The clause is fairly obscure; according to University of St. Thomas School of Law professor Robert Delahunty, writing for the Heritage Foundation in 2012, it has "apparently never been litigated." Even so, the clause has attracted attention from politicians and media in the wake of Trump's election, since his businesses operate abroad and – at the time of his inauguration – have outstanding loans from at least one foreign, government-owned lender.

History of the Emoluments Clause

St. George Tucker, a late 18th- and early 19th-century historian, traces the rationale behind the Emoluments Clause to the aftermath of the English Civil War (1642-1651), when "almost all [Charles II's] officers of state were either actual pensioners of the court of France, or supposed to be under its influence, directly, or indirectly, from that cause." Alexander Hamilton expressed concern that the same situation could occur in the newly formed United States: "One of the weak sides of republics, among their numerous advantages, is that they afford too easy an inlet to foreign corruption."

A portion of the original text of article I, section 9. Courtesy of the National Archives.

Prior to the drafting of the Constitution, the Articles of Confederation contained a version of the Emoluments Clause (Article VI). But when the monarchs of Spain and France made lavish gifts to American diplomats, Congress waived the law. For example, Louis XVI gave a diamond-encrusted portrait of himself to Benjamin Franklin in 1785. Three years later, the emoluments explicitly mentioned Congress' ability to approve gifts, which the Articles of Confederation had not addressed. During World War II, Congress passed a law permitting members of the military to accept foreign decorations; Denmark's King Christian X, for example, knighted Dwight D. Eisenhower and inducted him into the 600-year-old Order of the Elephant.

While courts have not hashed out the specifics of the clause, the Department of Justice's Office of Legal Counsel has issued opinions on it. For example, ater receiving criticism for accepting the Collar of the King Abdul Aziz Order of Merit from Saudi Arabia in 2009, then-President Obama sought approval to receive the Nobel Prize in 2009. The DOJ said that the prize did not present a problem because the Nobel Committee is a private entity.

Trump and the Emoluments Clause

A group of "prominent constitutional scholars, Supreme Court litigators and former White House ethics lawyers" announced their intention on January 22 to file a lawsuit the following day, in which they allege that Trump has violated the Emoluments Clause.

Trump's businesses have outstanding loans with Bank of China, which is controlled by the Chinese government. They also lease space to the Abu Dhabi government's tourism office. His businesses owe money to foreign lenders such as Deutsche Bank AG (DB), which is not government-owned and therefore unlikely to be applicable under the Emoluments Clause. Trump's hotel in Washington, which opened in September 2016, will cater to foreign leaders and diplomats who might see staying at the president's hotel as politically advantageous. 

The exact nature of the Trump's business relationships is not clear, because he has broken with recent precedent and refused to release his tax returns.  

Some have argued that the Emoluments Clause does not apply to the president. Despite lapses such as Obama's, however, U.S. presidents have in recent decades acted under the assumption that the clause does apply to them, even though they are explicitly exempted from federal conflict of interest laws.

They have therefore placed their assets into blind trusts, a precedent Trump has not followed (Obama did not either, given that his assets were in Treasuries and index funds). It would probably not be possible to set up a blind trust for Trump's assets, since he cannot simply forget about the nature of his businesses. That dilemma has led to calls for Trump to divest from his businesses, which he has not done.

In a press conference shortly before his inauguration, Trump's attorney Sheri Dillon explained a number of steps the president would take to separate himself from the day-to-day operations of his businesses – collectively referred to as the Trump Organization – and to avoid the potential for foreign or other influence.

These include placing the Organization's assets into a trust managed by Trump's adult sons, Donald Jr. and Eric, and Trump Organization executive Alan Weisselberg. His daughter Ivanka will not be involved in the trust. She does not hold an official position within the administration, but her husband Jared Kushner has been appointed senior adviser to the president, and she was deeply involved in Trump's campaign. Along with Kushner (who had not yet been given his official role), she sat in on a November 18 meeting between Trump and Japanese Prime Minister Shinzo Abe. Ivanka does business in Japan.

Dillon also addressed the Emoluments Clause at the January press conference, saying it does not apply to payments to Trump's Washington hotel because is it "has never been interpreted … to apply to fair value exchanges that have absolutely nothing to do with an office holder." She added that payments to the hotel are "arm's-length transactions that the president-elect has absolutely nothing to do with and isn't even aware of." Dillon said that any profits from foreign government's payments would be donated to the Treasury.

Trump will probably be aware of a number of cases in which foreign leaders stay at his hotel, if for no other reason than that such details are likely to make their way into the press.