A handout photo of Trump SoHo New York (Courtesy: Trump Hotel Collection)
The handling of the president's expansive business interests could be unconstitutional. Trump Hotel Collection

Judge hints at taking up Trump foreign payments case



A federal judge in Maryland hinted Thursday that he may take up a case questioning whether president Donald Trump’s business empire violates the ‘emoluments’ clause of the Constitution.

US District Judge Peter Messitte expressed scepticism about the government’s defence of the president’s handling of his expansive business interests. If the case is allowed to proceed, it could reveal much about Mr Trump’s business and personal finances, possibly forcing him to reveal tax and other financial information in the course of legal discovery.

Thursday’s five-hour hearing in a DC suburban courthouse dealt with the Trump administration’s motion to dismiss a case brought by the attorneys general of the District of Columbia and Maryland. The lawsuit is one of several recent cases challenging Trump’s ties to his business ventures, and his refusal to divest from them.

The legal cases have alleged that foreign governments’ use of the Trump International Hotel in Washington and other Trump Organization properties violates the Constitution’s emoluments clause, which bans the president’s acceptance of foreign gifts and money without Congress’ permission. The clause has never been fully tested in federal court and Mr Trump’s justice department attorneys have argued that hotel room stays do not represent “foreign gifts”.

Last month, Judge George Daniels of the southern district of New York dismissed a case brought by the left-leaning public policy group Citizens for Responsibility and Ethics in Washington, representing competing restaurateurs, hotel owners and others in the industry. Mr Daniels said the plaintiffs could not show they were specifically harmed by the president’s businesses and the issue needed to first be taken up by Congress. CREW is also co-counsel on the Maryland-DC case.

Mr Messitte said he had carefully read the prior ruling, but found “there’s very little analysis in his opinion.” Mr Messitte added: “I’m not really bound by the logic of his opinion at all at this point, with all respect to Judge Daniels.”

The Maryland and DC case, however, also adds a slightly different twist on another section of the emoluments clause that ensures that no US state is given extra favour by the president.

District of Columbia deputy solicitor general Loren AliKhan cited The Federalist Papers: No 73 by Alexander Hamilton, a document that addresses the domestic emoluments clause, which was created “to prevent states from corrupting the president’s integrity by appealing to his avarice.” Ms AliKahn cited the use of Mr Trump’s Washington hotel last year by representatives of the governments of Saudi Arabia, Bahrain and Kuwait as examples of possible emoluments.

In both the New York case and this one, Justice Department lawyers have argued that the plaintiffs did not suffer ‘certain’ or ‘imminent’ injury and therefore had no standing to sue, and that it is unconstitutional to sue the president in his official capacity.

Given the early stage of the case, Mr Messitte said, the plaintiffs weren't expected to have all the evidence of injury that might come with discovery, and the burden to get the case dismissed was on the government.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

MATCH INFO

Manchester United 1 (Greenwood 77')

Everton 1 (Lindelof 36' og)

Scoreline:

Cardiff City 0

Liverpool 2

Wijnaldum 57', Milner 81' (pen)

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Stars: Keanu Reeves, Carrie-Anne Moss, Jessica Henwick 

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TWISTERS

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Our legal columnist

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