She has a White House job and a global business empire modeled on her image. But experts warn Ivanka Trump is deep in an ethical danger zone

The jeers and boos that rang in the ears of Ivanka Trump in Berlin last week made it clear that her high-profile presence at her father’s side comes at a cost.

It was her description of Donald Trump as a “tremendous champion of supporting families” that earned the audience’s derision. But her own complicated position as first daughter, assistant to the president, and businesswoman was also called into question at the W20 summit, where she appeared alongside Angela Merkel and the IMF director, Christine Lagarde.

Who exactly was she representing at the event, Trump was asked: “your father, the American people or your business?”

“Certainly not the latter,” she replied quickly, before admitting: “I am rather unfamiliar with this role as well, as it is quite new to me.”

On Tuesday the real estate and fashion executive turned political adviser will have another platform for her views on women and business as she launches her second book, Women Who Work: Rewriting the Rules for Success, which aims to show women how they can “lead meetings and train for marathons … learn how to cook and how to code … inspire our employees and our children”.

Her own balancing act between business, politics and her family is different.

Ethics experts are increasingly concerned that despite removing herself from the management of her eponymous Ivanka Trump fashion company and becoming an unpaid government employee in March, her political and business interests are still so closely linked that she is deep in an ethical “danger zone” over conflict of interest laws.

And as she prepares to release a volume of business advice, sources familiar with her company have suggested that working for Ivanka Trump was not a happy experience for some staff, amid hints about an autocratic corporate culture, and claimed that her brand is falling short of its original grand vision.

The Guardian spoke to a former executive at Ivanka Trump’s brand and two others close to staff who have worked at the company. A number of others who had worked at the fashion brand declined to comment, some having signed non-disclosure agreements.

“I can’t talk,” said one former executive. “They are the most litigious family out there.”
Conflicts of interest

“The answer to avoiding conflicts of interest would be for Ivanka Trump to sell off her fashion business,” Richard Painter, chief White House ethics adviser to President George W Bush and a professor of corporate law at the University of Minnesota, told the Guardian.

“You would just shut it down and say ‘I’m not selling clothes and shoes with my name on them any more’ – that’s what I would advise her to do if I was in the White House now,” said Painter, who has become an outspoken critic of the Trump family’s ethics and has been alarmed by images of Ivanka Trump meeting repeatedly with world leaders while advising her father as president and continuing to own and receive payments from a fashion business which imports all its products and would be affected by international trade deals and tax policies.
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Last month it emerged that her applications to register trademarks in China, a tough market for foreigners to break into, for her handbags, jewelry and, reportedly, spa services, were suddenly approved on the same day she and her father dined with the Chinese president, Xi Jinping.

“She’s in a danger zone with these trademarks,” said Painter. “When she has dinner with a leader she can’t prove she didn’t talk business and people will speculate; it’s a problem.”

So far, Trump appears confident she can remain above the fray. A White House official told the Guardian: “The ethics rules require officials to recuse from particular matters where they have a financial conflict of interest or in some cases where their impartiality could reasonably be questioned.

“Jared [Kushner, Ivanka Trump’s husband] and Ivanka are working closely with White House lawyers and their personal counsel to ensure they remain in full compliance with all laws and ethical standards.”

Corporate culture
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Ivanka Trump’s first book The Trump Card – Playing to Win in Work and Life (2009), portrays her in some ways as a chip off the old block. In it she mentions a passive-aggressive boss tactic she picked up from media mogul Rupert Murdoch, about turning up in the office on the weekend – in this case, at the Trump Organization, not her then fledgling style brand.

“You’d be surprised by how quickly your employees will fall in line behind you when you set this kind of example,” she wrote.

Friends of those who have worked at the fashion brand said working for Ivanka Trump also meant feeling the constant influence of the rest of the family, especially Donald Trump. There would be weekend invitations to meals with the Trump family and early morning and late night work obligations in ways that meant the boundaries between an employee’s home and work life were often blurred.

“I don’t think they even realized they were doing it sometimes,” one friend said of the Trumps; “they are so privileged and they have a lot of help, and they live in a world where family is business and business is family, and they just absorb people into that.”
State of the brand

Trump and her husband Kushner, also a senior Trump adviser, stepped away from their real estate businesses in January, and Trump then gave up day-to-day control of her fashion brand, which sells clothing, shoes, handbags, jewelry, sunglasses and perfume, although she has kept her financial interest and ability to veto certain deals.

Management has been transferred to Abigail Klem, who made her name running ready-to-wear merchandising for Diane von Furstenberg, and was Trump’s first hire after she expanded from fine jewelry into clothing in 2012 and launched the brand website in 2014 aimed at selling “the everyday Ivanka” to women between 25 and 40 who earn $60,000–$100,000.

Aside from Klem, the other four members of Trump’s early group of five most senior executives have all now left the brand. Fine jewelry expert Andrea Hansen, who was a protege of gemstone guru Hans Stern; Suzanne Bryant, who had designed at Michael Kors and Lands End for lengthy stints; Johanna Murphy, who came to Trump as an e-commerce whizz from Kate Spade; and Marissa Kraxberger, who had worked at Oscar de la Renta, Kate Spade and Diane von Furstenberg and is now creative vice-president at Rag & Bone; have all parted ways with Ivanka, three of them in the first eight months of 2015 after staying less than two years.

The same year the short-lived Ivanka Trump flagship boutique in New York’s SoHo neighborhood and her fine jewelry store in Beijing closed, with no sign of further plans for national and international expansion of branded stores.

“Each [of the four key executives] left for their own reasons but it’s telling that they’ve all gone … You don’t leave somewhere if things are great,” a former senior figure, who declined to be identified because Trump employees sign non-disclosure agreements, told the Guardian.

The source suggested that the brand was falling short of its early ambitions to open many of its own boutiques in the US and overseas and dominate e-commerce in its niche of “affordable luxury”. The ex-employee also appeared troubled that many products are being sold at heavy discounts while some others are priced cheaply.

“All the plans they set out … all the stores they were going to have; I would not have left a great job to go there if I hadn’t thought that was going to be what it was,” the source said. “Now, I mean, if it’s a $50 dress, what can you expect?” Ivanka Trump label dresses typically retail at department stores such as Macy’s and Lord & Taylor for between $120 and $150, but various styles are widely available on discount websites for as low as $30.

Recently a report emerged that clothing items were being sold in discount stores under a different brand name, Adrienne Vittadini Studio – usually a sign of a wholesaler offloading surplus stock, according to one fashion brand expert who insisted on anonymity because his firm has involvement with some Trump family business.

New York-based G-III Apparel Group (known as Gee Three), a large wholesaler that holds the license to design and produce Ivanka Trump clothes and also supplies brands such as Calvin Klein and Cole Haan, admitted it had re-labelled the items without permission from the Ivanka Trump corporate leadership.

On Monday an audit of a factory in China used by G-III found workers worked nearly 60 hours a week and earned little more than $62 a week. The report did not say whether the factory was working on Ivanka Trump clothing at the time of the inspection.

An earlier report found that some of Ivanka Trump’s company’s clothes appeared to have shoddy workmanship and stated that it was not possible to trace her entire fashion supply chain in order to verify working conditions at the Asian factories that make almost all her products.

A spokesman for the brand said the company had a policy regarding acceptable standards for product quality and working conditions, though it was not made public.

“There aren’t sweat shops or anything like that,” he said. When asked how the brand could be sure of that, if it did not know exactly where all the garments were made, the spokesman said that was a question for G-III. G-III did not return a request for comment.

Spokespeople for Ivanka Trump the company declined to comment on other aspects of this article.
Move downmarket

In March 2017, Ivanka’s company decided to phase out the fine jewelry business that had originally kicked off her eponymous style label, a development revealed by Vanity Fair. The firm would switch to focus on more affordable, everyday jewelry.

Her fine jewelry bangles and necklaces were usually $2,000 or $3,000, but the collection also included a “mixed diamond cuff” at $47,000 and the $10,800 bracelet she wore during a family interview on CBS on 13 November, which caused a storm when her brand then sent out a “style alert” to media about it.

Now, Ivanka Trump jewels sell for a fraction of those prices. A turquoise “reconstituted stone” and gold-plated necklace sells for $148, and there are plenty of earrings under $50 – including faux pearl, gold-plated studs for $28.
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The brand website, ivankatrump.com, does not process sales but instead links customers to other retail platforms.

This move downmarket on jewelry also follows the unceremonious dumping of her brand by the upmarket department store Nordstrom earlier this year, which had been the most upscale retailer selling her range, causing another ethics storm as the president and other White House staffers then criticised the store. Several other retailers have also dropped or scaled back their sales and marketing of her products, although mainstream names such as Macy’s and Lord & Taylor are sticking by her, as well as luxury department store Neiman Marcus.

Nordstrom blamed falling sales. But the decline coincided with the Grab Your Wallet campaign to boycott retailers stocking Ivanka Trump because of her unwavering support for her father’s campaign even as he boasted of sexual assault.
Financial figures

As a private company, the Ivanka Trump brand does not release financial figures and there is limited information disclosed by the various companies that hold the licenses to produce her products.

A spokeswoman for the Ivanka Trump brand said the company was profitable, but would not go into any details.

The best available figures, though sparse and indirect, come from G-III, which designs and produces all her clothing.

G-III’s latest annual report stated that net sales of Ivanka Trump clothing rose by $17.9m in the year to 31 January 2017. The company’s reports disclose increases and decreases but not the net sales total itself.

But Sammy Aaron, vice-chairman of G-III, which has produced Ivanka Trump clothing since 2012, told Forbes last summer that the licensee recorded $100m in wholesale sales of Ivanka Trump clothing in the year to 31 January 2016. The relevant annual report later stated that sales had risen $29.4m in the 2015-2016 fiscal year, but without giving a total sales figure.

Few hard figures from the past exist, but a 2013 New York Times article predicted retail revenues for that year, excluding jewelry, would be $250m. Retail revenues are higher than wholesale to reflect store mark-up.

It is not known how sales are going since Ivanka Trump walked away from her brand earlier this year to move to Washington, putting her company into a trust, and the overall unavailability of figures make it impossible to assess the detailed financial health of the brand.

Michael Stone, president of the branding experts Beanstalk, said he had information from inside G-III and Marc Fisher that “things are going pretty well” with the Ivanka Trump lines but “they are bringing the price points down”.

“That’s a bit of a danger because there comes a point where she is not going to wear her own brand’s clothing” because it is too cheap, he said.

In addition, the brand now has to decide its future looks and sensibility without its founder’s direct input. Ivanka Trump was closely involved in the fashion business before the election – she was consulted on design and “everything was inspired by her”, although she did not actually design the products, a spokeswoman said. That was a role undertaken in-house at the licensees, such as G-III for apparel, Marc Fisher for shoes or Mondani for handbags.
Women Who Work

The title of Ivanka Trump’s new book comes from the online motivation and advice platform on her brand’s website. But even before the release of the new book, her use of the Women Who Work slogan had upset former executives.

In an explosive Facebook post written during the heat of the presidential campaign by Marissa Kraxberger, formerly creative director at Ivanka Trump – which effectively accused Trump of hypocrisy because she had been championing the cause of paid maternity leave on the campaign trail with her father but had not initially supported it at her own company – Kraxberger railed against the theme.

“The company and the #WomenWhoWork platform we created was meant to inspire and encourage women to work at all aspects of their lives and live the lives they wanted to live, but before our eyes she took the platform and made it all about herself,” Kraxberger wrote. “And now it’s being dragged alongside of this man who could potentially be the face of our country. A man who puts down women and makes lewd comments …”

Whether or not her business record qualifies her to advise women on how to organize their working lives, it is clear that there is an appetite in some quarters for Ivanka Trump to act as a counterweight to her father’s hardline stance on immigration, the environment, criminal justice and women’s reproductive rights. Yet so far they have had to settle for only a vague mention of a childcare proposal in last week’s tax plan and a comment that admitting Syrian refugees to the United States had to be “part of the discussion”.

Even ethics campaigner Richard Painter gives this as one of the reasons why he wants Ivanka Trump to close down her fashion business and avoid risking a congressional investigation into conflicts of interest.

“We need her to counteract Steve Bannon,” he said, referring to Donald Trump’s rightwing chief strategist.

She may have her work cut out.

Source: theguardian.com