Blind Trusts: Not Illegal but potential National Security Risk

Salome with the Head of the Baptist by Caravaggio

Blind Trust: “A trust in which the executors have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust. Blind trusts are generally used when a trustor wishes to keep the beneficiary unaware of the specific assets in the trust, such as to avoid conflict of interest between the beneficiary and the investments.” (Source: investopedia)

What are the implications of this sort of Trust and, should a politician and, above all, a presidential candidate invest in a blind trust?
A blind trust can have two implications:
  1. The executors of the trust take the beneficiary’s money and invest it in a pool of investment used to laundry money belonging to Hezbollah, Hamas, Al-Qaeda or even Iran. This would basically mean that a politician/presidential candidate could be, in fact, sponsoring terror activities against the nation it serves/runs to serve and protect.
  2. Since the beneficiary of a blind trust cannot be held accountable for the manner in which his investment grows (e.g. if one day the authorities find out that the beneficiary’s investment served the purpose of laundering money for drug cartels or terrorist groups, he will not be liable and will avoid being accused of jeopardising National Security), what could be the sense of ethics of the individual who seeks to avoid being held responsible for his own investments?
Presidential candidate Mitt Romney has been under fire because of his offshore accounts and the reluctance to publish his tax returns (even though, in the American case, it is not required by law). Everything has been said about the offshore accounts and if I were Mitt Romney’s team I’d do something about those tax returns because, politically speaking, the situation does suggest lack of transparency. However, Mitt Romney may have committed political suicide when he stated that his assets are held in a blind trust and that he doesn't “even know where they are”…
Why may he have committed political suicide? Because,among many things, it suggests a behavioural pattern: behave in Politics as you behave in Business – if Mitt Romney would be elected and, one of the members of his administration would mess up he would not take full responsibility, as the commander-in-chief, since he could simply defend himself by saying “I didn’t even know what he/she was doing”…
Furthermore, candidate Romney may have served his head on a silver platter to his opponent: imagine if someone traces his investments and discovers that his money was injected in investment pools used to circumvent financial sanctions against Iran (for instance)?

Mitt Romney’s Blind Trust could very well go from betting against the dollar to betting against America…

Comments

  1. I am no Romney fan, but am not quite sure that this is fatal. President Johnson, for example, had a blind trust and a direct phone line to the man in charge of it. This subject never came up with former mega-rich candidates, while both the Clintons and Obamas became rich during their stay at the White House. Of course, I no longer think it matters who gets elected, since America has already voted to change our economy and government to a third world one. It would take a sustained 2/3 majority in congress of sensible politicians to reverse course, but this hasn't happened during my life time.

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    1. Hi Looney :D!

      "I am no Romney fan, but am not quite sure that this is fatal."

      I am not either (although I admire his business shrewdness). It isn't fatal for a regular business person; but for a politician it is quite fatal because this kind of trusts jeopardise the principles of transparence and accountability. Furthermore, there is the danger of directly/indirectly (depending on the sort of investment pool he invests his money in) sponsoring terrorist activity against America (and against the West) - and for him to tell the electorate that he doesn't know where his assets are makes it all worse, since it multiplies into many other political and ethical implications.

      "President Johnson, for example, had a blind trust and a direct phone line to the man in charge of it."

      The 60's are not quite the 10's of the 21st century, is it? The conjecture is different, the way of doing business surely is much more different and the security challenges today are much higher than back in those days. So, I am not sure we can compare the two examples.

      America is hardly a third world economy and government...but risks having third world infrastructures if it doesn't do something about it though.
      I hear you on "It would take a sustained 2/3 majority in congress of sensible politicians to reverse course".

      Looney, outstanding comment for which I thank you ever so much. It is good to be back :D

      Cheers

      Delete
  2. Max, I am a trust fund beneficiary and I have other type of investments and I can tell you that I know exactly where my money is and how it is invested. I make sure I know it because I don't want my wealth to be mixed with drug, terrorist and laundry money - and trust me, many investments do fall in such pools (ask HSBC)!
    Private citizens can do whatever they wish with their money (my conscience doesn't allow me to invest unethically) but people running for public offices is a whole other issue: they must be like Caesar's wife!
    I am not American but if I was I would never vote for Mitt Romney because there are red flags all around him which hint at corruption (more than the one existent in Washington, from what I hear).

    It's my first time here (one of your fans referred you to me) but after reading this piece I will definitely be back!
    You are quite brazen...

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    1. Hi Yolanda :D!

      Welcome!

      "I am a trust fund beneficiary and I have other type of investments and I can tell you that I know exactly where my money is and how it is invested. I make sure I know it because I don't want my wealth to be mixed with drug, terrorist and laundry money - and trust me, many investments do fall in such pools (ask HSBC)!"

      You do well to keep track of your investments. Oh yeah, the HSBC case was quite a scandal.

      "Private citizens can do whatever they wish with their money (my conscience doesn't allow me to invest unethically) but people running for public offices is a whole other issue: they must be like Caesar's wife!"

      I agree.

      "I am not American but if I was I would never vote for Mitt Romney because there are red flags all around him which hint at corruption (more than the one existent in Washington, from what I hear)."

      Corruption, you say; how so?

      "It's my first time here (one of your fans referred you to me) but after reading this piece I will definitely be back! You are quite brazen..."

      Please tell that fan that I thank him/her for having suggested this blog to you *bowing*.
      You are most welcome here, I loved having you here, and I hope to see more of you here with us. Thanks ;).

      Yolanda, thank you so much for your fabulous comment :D.

      Cheers

      Delete
  3. Max, welcome back!
    Being a trust fund beneficiary myself, I obviously cannot have anything against Mitt Romney's wealth - au contraire, I salute him for having committed to enrich himself (believe me, it takes a lot of sleepless hours and personal investment to be a millionaire).
    Nevertheless I take issues with Mitt Romney as a political candidate (no, I am not American but, like many, I do hold American interests) cause he is not crystal clear and he contradicts himself all the time...what does this say about his political behaviour and whom will he benefit?

    Plus, he disrespected Israel: he intended to raise funds on Tisha b'Av (a major Holiday, meaning no business can be conducted on that day) - who advises this guy? The choice of staff is also very relevant...it tells a lot about a candidate and his prospective work in office.

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    1. Hi Ana :D!

      "Max, welcome back!"

      Thank you so much, darling *bowing*.

      "Being a trust fund beneficiary myself, I obviously cannot have anything against Mitt Romney's wealth - au contraire, I salute him for having committed to enrich himself (believe me, it takes a lot of sleepless hours and personal investment to be a millionaire)."

      I hear you.

      "Nevertheless I take issues with Mitt Romney as a political candidate (no, I am not American but, like many, I do hold American interests) cause he is not crystal clear and he contradicts himself all the time...what does this say about his political behaviour and whom will he benefit?"

      I understand your concerns and relate to them. It says a lot, Ana.

      "Plus, he disrespected Israel: he intended to raise funds on Tisha b'Av (a major Holiday, meaning no business can be conducted on that day) - who advises this guy? The choice of staff is also very relevant...it tells a lot about a candidate and his prospective work in office."

      Yeah, but his staff altered the fundraising to Monday morning. Nevertheless, the initial schedule was a grave gaffe without any doubt. You are absolutely right about what kind of message the choice of staff imparts...

      Ana, thank you ever so much for this fabulous comment; I missed you :D.

      Cheers

      Delete
  4. Hi Max, welcome back, lass! That is why Europe is suspicious of blind trusts, mainly in politics. Blind trusts foment corruption of all sorts; not to mention that they go against the principles of openness and accountability!
    As a Tory I am against charging high taxes to the rich. And because society is so obsessed with making the rich pay for their social eccentricities, the rich must find ways to protect what they (and/or their ancestors) worked hard for.

    I worry America's conservatives are getting out of touch with reality...it's a bloody shame!

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    1. Hi Joe :D!

      "Max, welcome back, lass!"

      Why, thank you, Joe. It is good to be back *bowing*!

      "That is why Europe is suspicious of blind trusts, mainly in politics. Blind trusts foment corruption of all sorts; not to mention that they go against the principles of openness and accountability!"

      True, true. Right? That's what I told Looney...

      "As a Tory I am against charging high taxes to the rich. And because society is so obsessed with making the rich pay for their social eccentricities, the rich must find ways to protect what they (and/or their ancestors) worked hard for."

      I am too. Society is obsessed with making the rich sponsor state-dependence: it's shameful.

      "I worry America's conservatives are getting out of touch with reality...it's a bloody shame!"

      I understand your concerns...

      Joe, thank you ever so much for your outstanding comment :D.

      Cheers

      Delete
  5. I doubt very much that it would make any difference. In any case, I am in agreement with Looney. Neither option promises to get the USA back on rail any time soon.

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    1. Hi Rummy :D!

      "I doubt very much that it would make any difference. In any case, I am in agreement with Looney. Neither option promises to get the USA back on rail any time soon."

      Why would you think that? Well, I am more positive than you and Looney: I think that the US will be back on rail soon.

      Rummy, thank you ever so much for your great comment - I missed you :D.

      Cheers

      Delete
  6. Mitt Romney is a business man and he should continue being one. Politics is for politicians and by what we are seeing in London, he is not a politician at all.

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    1. Hi Anonymous :D!

      "Mitt Romney is a business man and he should continue being one. Politics is for politicians and by what we are seeing in London, he is not a politician at all."

      And a good business man too; so yeah, he should keep being one. True. LOL poor chap: his trip to London was a complete disaster...

      Anonymous, thank you ever so much for your comment :D.

      Cheers

      Delete
  7. The electorate is ignorant and now when most of it is broke, they dont care whether this Romney guy poses a national security risk or not! They dont care if this guy ruined the lives of workers, he claims he'll create jobs...who is he kidding? He made a fortune killing jobs!
    No, the electorate doesnt care and that is why you have people in here saying that it isnt fatal and it wont make a difference.

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    1. Hi Mike :D!

      Welcome!

      "The electorate is ignorant and now when most of it is broke, they dont care whether this Romney guy poses a national security risk or not!"

      You may have a point.

      "They dont care if this guy ruined the lives of workers, he claims he'll create jobs...who is he kidding? He made a fortune killing jobs!"

      He claims that he wasn't working in his former firm when it made money off killing jobs...although the SEC says something else.

      "No, the electorate doesnt care and that is why you have people in here saying that it isnt fatal and it wont make a difference."

      People are entitled to their own opinion, Mike; don't you think so?

      Mike, thank you so much for your comment and I hope to see more of you here :D.

      Cheers

      Delete
  8. From what I can work out, one party is just as bad as the other. What tips the scales is the hope for something better in the other party when it comes to election time.

    Take Care,
    Peter

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    1. Hi Peter :D!

      "From what I can work out, one party is just as bad as the other. What tips the scales is the hope for something better in the other party when it comes to election time."

      It is about the same everywhere, I suppose. It is even worse when there is only two parties to vote for and, that is my only criticism regarding the American system.
      In this case, the other party (Republican) doesn't have anything to offer...not a party whose task as the opposition has been to sabotage every single attempt to make things better. They shouldn't be given a chance.

      Peter, thank you so much for your great comment :D. Missed you.

      Cheers

      Delete
    2. I don't know what the problem is with Blogger. I tried replying via Firefox, but it failed, so I'm now using Google Chrome. As for IE I've given up! Now, as far as the American system goes, it appears the more money you pour into an election the better chance you have on getting on top of things. As always, take care - Peter

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    3. Peter,

      I only worked with Firefox very briefly: I didn't like it much. As for IE: I have given it up for more than three years now. Perhaps, we are in the middle of a cyber-war between Google and the rest of the lot who knows.

      I hear you on the American system. On my side of the world their system doesn't work (although they tried); I suspect the same goes on in Australia?

      Cheers

      Delete

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