REUTERS/Andrew Kelly/File Photo
Businessman Vincent Viola enters Trump Tower in Manhattan, New York City, U.S., December 16, 2016.

Why Vincent Viola turned down Trump's nomination for Army Secretary

The billionaire investor's decision represents one possible solution to a dilemma faced by many of Trump's picks: conflicts of interest spawned by their business holdings.

“Everybody likes Vincent,” President Trump remarked as he signed a nomination for investor Vincent Viola to serve as Secretary of the Army last month. In a rare show of bipartisanship, Senate majority leader Chuck Schumer (D) of New York, agreed. “I like Vinnie.”

But their approval wasn’t enough. On Friday, Mr. Viola, a West Point alum whose business activities have raised his net worth to $1.8 billion, withdrew his name from consideration, the Military Times reported.

Having held the rank of major in the Army Reserves and financially supported counterterrorism research at West Point after 9/11, Viola would have brought no small amount of experience to the post. But by stepping down, he avoided the kind of ethical conflicts faced by several of Trump's nominees shifting from the private to the government sector. 

“While wealthy individuals have helmed federal agencies in the past, the vast holdings of Trump’s nominees presents a challenge for the [federal government’s] small ethics agency,” wrote The Hill’s Megan R. Wilson last month. “Worth upwards of $11 billion, Trump's Cabinet would be the richest in history.”

Viola’s nomination process demonstrated how massive assets can create tough-to-resolve conflicts of interest. He owns a majority stake in Eastern Air Lines, a once-mighty carrier that now handles mostly charter flights. After his nomination, he tried to trade that stake for a smaller one in Swift Air, another charter company.

“Such a transaction would certainly reduce his exposure to the airline industry, which is heavily regulated by the federal government,” explained The New York Times. ”But in exchange, Mr. Viola, a retired Army major, may find himself in the precarious position of being a government official who benefits from federal contracts.” Swift Air takes in at least $15 million of taxpayer dollars annually, mostly by flying undocumented immigrants back to their home countries.

Viola also attempted to transfer his ownership and management of the NHL’s Florida Panthers hockey team, but “that arrangement did not meet Pentagon requirements,” wrote the Military Times’s Leo Shane III.

It’s unclear whether Viola’s efforts to separate himself from his investments would have passed ethical muster at a different agency. Legal experts have given Trump’s nominees different marks on their resolving conflicts of interest. Matthew Sanderson, former General Counsel to Kentucky Sen. Rand Paul’s presidential campaign, told the New York Times that White House advisor Jared Kushner’s plan to sell his assets to family members “sounds like a shell game to me.”

By contrast, Secretary of State Rex Tillerson decided to cut all ties with Exxon Mobil, where he served as CEO. Robert Weissman, CEO of Public Citizen, worries that Tillerson’s corporate past will still cloud his decision-making. “The chances that he will view Russia with Exxon Mobil DNA are close to 100 percent,” he remarked in December.

Even so, William Shaub, director of the Office of Government Ethics, says that Tillerson did all a wealthy businessman reasonably could to prevent conflicts of interest. “Mr. Tillerson is making a clean break from Exxon,” he told the Brookings Institution.

“His ethics agreement serves as a sterling model for what we’d like to see with other nominees. He clearly recognizes that public service sometimes comes at a cost.”

For other nominees, that cost proves too high. “In the past, prospective nominees have quietly walked away from nominations after learning what effect the ethics rules will have on their personal finances,” Mr. Shaub wrote in an email to President Trump’s transition team in November.

He didn’t specify which nominees have done so. But Mr. Viola appears to be following in their footsteps.

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