I not too long ago wrote in regards to the purportedly “blind” belief created for President Jimmy Carter’s peanut enterprise. President Lyndon B. Johnson additionally had a “blind” belief created for his tv station.
In 1943, Woman Chook Johnson bought a small radio station in Austin, Texas for $17,500. Robert A. Caro, The Passage of Energy: The Years of Lyndon Johnson, Vol. IV at 286 (2013). On the time, her husband, Lyndon B. Johnson, served within the Home of Representatives. The longer term President would typically boast that he had little interest in the enterprise. Caro at 286. Nonetheless, underneath Texas’s group marital property legislation, the husband had a half-interest in his spouse’s enterprise. Caro at 286. Mrs. Johnson’s enterprise would later additionally embrace a tv station underneath the decision signal KTBC. As Mr. Johnson rose via the ranks within the Home, and later the Senate, Robert Caro noticed, there was a “twenty-year-long string of strikingly favorable rulings by the Federal Communications Fee” for KTBC. Caro at 286. Coincidentally, Austin was “one of many few metropolitan areas with solely a single business tv station.” Caro at 286. And Robert Dallek wrote that Johnson’s “involvement in a enterprise that largely relied on the actions of a Federal company for its success created a transparent battle between his personal pursuits and public place.” Robert Dallek, Lyndon B. Johnson: Portrait of a President 52 (2004). Over the a long time, KTBC would generate tens of millions of {dollars} of revenue for the Johnsons.
When Johnson turned Vice President in 1963, his employees “urged him to promote the station” to keep away from potential conflicts of curiosity. Len Costa, A Wink And A Nod, Authorized Affairs (January 2006), https://perma.cc/5CVT-JS5P. However the Johnsons refused to divest the enterprise. As an alternative, tax lawyer Sheldon Cohen arrange a belief. Cohen was a accomplice at Arnold, Fortas, & Porter, the agency co-founded by Johnson’s shut affiliate, Abe Fortas. (Johnson stored his pals shut; he would later appoint Fortas to the Supreme Court docket and appoint Cohen as Commissioner of the Inner Income Service.) Underneath the phrases of the belief, Mrs. Johnson would nonetheless personal the enterprise, however she “quickly transferred management of her shares of KTCB to 2 Texas attorneys who have been previous household pals.” Costa. They have been Donald S. Thomas, an Austin legal professional, and Jesse Kellam, who was the manager director of KTBC. Dallek at 365. The trustees had full discretion over easy methods to handle the shares, and had the precise to promote them. Cohen insisted that there was no “unspoken settlement by the attorneys to not promote the shares.” Costa.
Nonetheless, it’s questionable whether or not this association may very well be characterised as a blind belief. One of many trustees, Jesse Kellam, was additionally the manager director of KTCB. Robert Dallek, Flawed Big: Lyndon Johnson and His Occasions, 1961-1973, at 611 (1998). The opposite trustee, Donald S. Thomas, had identified Johnson for twenty years. Thomas began “dealing with the affairs of radio station KTBC” in 1944 after he graduated from legislation faculty. Oral History at 2. Whereas Vice President, Johnson employed Thomas to acquire land for him in Austin. There have been longstanding and ongoing connections between Johnson and the trustees. Dallek wrote that “[i]t is troublesome to consider, regardless of the blind belief, that Johnson didn’t maintain tabs on his monetary holdings whereas President.” Dallek, Portrait at 365. And Professor Megan J. Ballard noticed, “[g]iven that one in all his trustees was the manager director of the Johnsons’ broadcasting stations, Johnson will need to have had a point of consolation that the trustees wouldn’t promote his pursuits.” See Megan J. Ballard, The Shortsightedness of Blind Trusts, 56 U. Kan. L. Rev. 43, 55 (2007). To be a qualified blind trust, “A professional trustee should be an impartial, disinterested and non-familial monetary establishment or different fiduciary.” It isn’t clear that both trustee was solely impartial and disinterested. Nonetheless, Dallek wrote, the trustees asserted that Johnson was “very cautious to not violate any conflicts-of-interest legal guidelines as President.” I’m not sure what particular conflicts-of-interest legislation Dallek was addressing.
After Johnson left workplace in 1969, his spouse continued to personal KTCB. The callsign was later modified to KLBJ, the initials of each the President and First Woman. Dallek at 611.
The tales from the Carter and Johnson presidencies educate a number of classes. First, it is extremely troublesome for a profitable enterprise individual, who’s elected to the presidency, to disentangle himself solely from a enterprise related to him and his household. Woman Chook Johnson and her husband, Lyndon B. Johnson, owned the one tv station in Austin, and had managed it for many years. And the peanut farms had been within the Carter household for generations. Even when the possession of those companies was positioned in a totally blind belief, the general public would nonetheless know who was deriving the income from the belief. Due to the high-profile nature of the presidency, public scrutiny of the president’s enterprise will make a “blind” belief just about unimaginable.
Second, presidents are hesitant to entrust their enterprise with a very impartial and disinterested trustee–a requirement for a blind belief. Fairly, presidents need somebody accustomed to the enterprise to handle the entity. The Johnsons appointed as trustees two shut associates, one in all whom was nonetheless a private legal professional for the President. Carter chosen his shut pal, who suggested him within the White Home.
Third, the Presidents weren’t prepared to divest their interests–especially in a compressed time-frame. President Carter didn’t promote his agricultural considerations. The Johnsons didn’t promote their media enterprise.
There are not any good options when a profitable enterprise individual turns into President, and has solely two months between election day and inauguration day to settle his affairs. And to demand {that a} president dump his enterprise holdings is to in impact create a brand new qualification outdoors the textual content of the Structure.
