I just lately wrote concerning 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 Fowl 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 no real interest in the enterprise. Caro at 286. Nevertheless, beneath Texas’s neighborhood marital property regulation, the husband had a half-interest in his spouse’s enterprise. Caro at 286. Mrs. Johnson’s enterprise would later additionally embody a tv station beneath the decision signal KTBC. As Mr. Johnson rose by 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 trusted 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 many years, KTBC would generate hundreds of thousands of {dollars} of revenue for the Johnsons.
When Johnson turned Vice President in 1963, his workers “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 buddies 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 had been previous household buddies.” Costa. They had been Donald S. Thomas, an Austin lawyer, and Jesse Kellam, who was the chief director of KTBC. Dallek at 365. The trustees had full discretion over how one can handle the shares, and had the suitable 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 chief director of KTCB. Robert Dallek, Flawed Big: Lyndon Johnson and His Instances, 1961-1973, at 611 (1998). The opposite trustee, Donald S. Thomas, had identified Johnson for 20 years. Thomas began “dealing with the affairs of radio station KTBC” in 1944 after he graduated from regulation faculty. Oral Historical past at 2. Whereas Vice President, Johnson employed Thomas to purchase 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 imagine, regardless of the blind belief, that Johnson didn’t preserve tabs on his monetary holdings whereas President.” Dallek, Portrait at 365. And Professor Megan J. Ballard noticed, “[g]iven that certainly one of his trustees was the chief director of the Johnsons’ broadcasting stations, Johnson should have had some extent 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 certified blind belief, “A certified trustee have to be an impartial, disinterested and non-familial monetary establishment or different fiduciary.” It’s not 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 regulation 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 Fowl 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 completely blind belief, the general public would nonetheless know who was deriving the earnings 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. Relatively, presidents need somebody aware of the enterprise to handle the entity. The Johnsons appointed as trustees two shut associates, certainly one of whom was nonetheless a private lawyer for the President. Carter chosen his shut buddy, who suggested him within the White Home.
Third, the Presidents weren’t prepared to divest their interests–especially in a compressed timeframe. President Carter didn’t promote his agricultural issues. 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.
