A $6 billion nuclear deal has Trump’s name all over it. It’s raising serious ethics concerns
By Matt Egan, CNN
New York (CNN) — The Trump business empire’s expansion into nuclear fusion is alarming ethics experts, who warn it poses glaring conflicts of interest and risks the federal government playing favorites in what could be the holy grail of clean energy.
Trump Media & Technology Group (DJT) shocked Wall Street last week by arranging a $6 billion marriage with TAE Technologies, a Google-backed company at the leading edge of fusion energy.
The merger means that soon, President Donald Trump will simultaneously have a major financial interest in a company whose fortunes will be influenced by the actions of a government that Trump himself presides over.
Nuclear fusion companies are regulated by the federal government and will likely need Uncle Sam’s deep research and even deeper pockets to become commercially viable. The merger needs to be approved by federal regulators – some of whom were nominated by Trump.
“There is a clear conflict of interest here,” Richard Painter, the top ethics official under former President George W. Bush, told CNN in a phone interview. “Every other president since the Civil War has divested from business interests that would conflict with official duties. President Trump has done the opposite.”
Painter, who is now a professor at the University of Minnesota Law School, said anyone other than the president or the vice president could be committing a crime if they participated in a US government matter that they knew they had a financial interest in.
For instance, he said the secretary of energy would have to recuse him or herself from any matter linked to fusion if they simultaneously had a significant stake in a fusion company.
“It’s only legal because the criminal conflict of interest statute does not apply to the president,” Painter said, adding that while it is “technically legal” he doesn’t believe presidents should be excluded from the law.
An instant $500 million boost to Trump’s fortune
The fusion deal caused an immediate boost to Trump’s net worth.
Trump Media’s share price skyrocketed 42% when the merger was announced on Thursday. That increased the value of the stake Trump owns through a trust, by $500 million to $1.7 billion. Trump Media’s share price continued to climb Friday, increasing the value of that stake to above $1.8 billion.
Some on Wall Street are betting the deal will create a halo effect for TAE.
TAE will “clearly have major political support from President Trump in our view and this importantly will create a major nuclear fusion US energy domestic bet over the coming years,” Dan Ives, a veteran tech analyst at Wedbush Securities, told clients in a note last week.
Harnessing the power of the stars
Fusion is a futuristic form of energy that aims to replicate the same process that powers the sun and other stars. It has long been viewed as a potential game-changer because it would provide almost limitless clean energy.
However, fusion is not yet commercially viable, and to get it off the ground it may need support from the federal government in the form of loans, subsidies, contracts and research.
That’s why the public interest could be harmed if the merger creates an unfair advantage for Trump-backed TAE, worries Kathleen Clark, a law professor at Washington University in St. Louis, who studies government ethics.
“The risk is that one company will end up being a government favorite, not because of objective scientistic evaluation, but because they paid off the president,” Clark said. “It reminds me of the Soviet Union appointing scientists based on their claimed ideology, not their actual achievement.”
‘Bad for humanity’
Rep. Don Beyer, a Democrat from Virginia who co-chairs the House Fusion Energy Caucus, told CNN in a phone interview that he was “stunned” by the Trump Media deal.
“I hate the thought of a president who puts his name on the Kennedy Center putting his foot on the scale of who the winners and losers are in fusion energy,” Beyer said.
Beyer said he has been “encouraged” by the Energy Department’s support for fusion energy and is pleased to have a president supportive of the industry.
The Trump administration in October released a Fusion Science and Technology Roadmap that “aims to usher a burgeoning fusion private sector industry in the US toward maturity on the most rapid timeline.”
But Beyer noted there are more than two dozen fusion companies operating in the United States, some of which are further along in development than TAE.
“If the Trump engagement means the whole industry proceeds more quickly, that’s a win for humanity,” Beyer said. “But if it means everyone else is going to be disadvantaged and the government’s largesse will focus on one company, that is bad for humanity and bad for America.”
Fusion CEO: Not looking for ‘special’ treatment
The White House rejected concerns about a conflict of interest.
“The media’s continued attempts to fabricate conflicts of interest are irresponsible and reinforce the public’s distrust in what they read. Neither the President nor his family have ever engaged, or will ever engage, in conflicts of interest,” Karoline Leavitt, the White House press secretary, said in a statement to CNN.
Neither the Energy Department nor the Trump Organization responded to requests for comment.
Michl Binderbauer, the CEO of TAE, told CNN that he decided to merge with Trump Media because it offered the “last piece of the puzzle” in their quest to build a power plant: capital.
“Sometimes you get lucky and you meet the right people,” he said.
Binderbauer said he isn’t concerned that any government support his company needs or receives will become politically controversial because he’s joined forces with Trump.
“I’m not looking for anything special,” he said.
Donald J. Trump Revocable Trust
After winning the election last fall, Trump transferred his dominant stake in Trump Media to the Donald J. Trump Revocable Trust.
Trump is the sole beneficiary of that trust, which is controlled by his eldest son, Donald Trump Jr., who also plans to sit on the combined company’s board of directors.
Clark said the transfer to a trust is irrelevant when it comes to a conflict of interest.
“It’s utterly meaningless. As a matter of ethics, it’s BS,” she said.
Painter, the former Bush ethics official, agrees the transfer to a trust doesn’t matter because Trump still has a financial interest.
“That’s like saying, ‘I don’t own a piece of property just because I hired a property manager to take care of it,’” Painter said.
Painter said there is a simple way for Trump to avoid the appearance of a conflict of interest.
“He should divest. Divest from nuclear fusion, social media and cryptocurrency,” Painter said.
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