by Virginia Canter and Gabe Lezra
August 26, 2022
Jared Kushner’s new “soulless and very selective” (New York Times) memoir, released this week, reveals deep problems with the U.S. government’s ethics laws that go far beyond his “self-aggrandiz[ing]” spin. The U.S. ethics system allows politicians to use their government positions for self-serving profit, continuing to reap benefits – financial, professional, and social – long after they have left office.
Kushner is the example par excellence of this legal failing. Throughout former President Donald Trump’s term, Kushner cultivated a strategic and personal alliance with Saudi Crown Prince Mohammed bin Salman, or MBS (a relationship he defended in his book), which erupted back into the public eye in April, when MBS overruled the Saudi Public Investment Fund’s (PIF) expert investment panel’s decision not to invest $2 billion in Kushner’s private equity fund. MBS’s involvement in the deal, and particularly his rejection of the panel’s scathing review of Kushner’s fund and the risk it was asking the Kingdom to take on, is a stunning reminder that Saudi Arabia views Kushner as a strategic ally worth cultivating, seemingly both as payback for his work during the Trump administration, and as a potential bid for future favor should Trump be elected to a second term.
The PIF’s panel, which is charged with overseeing Saudi Arabia’s $620 billion sovereign wealth fund, left no doubt that an investment in Affinity Partners had no business justification, the New York Times reported. The panel panned the fund’s leadership for having little to no experience in private equity and were rightfully concerned that the structure of the proposed deal would leave the PIF holding “the bulk of the investment and risk,” while paying an “excessive” asset management fee. And, importantly, they underscored the potential “public relations risks” should they agree to enter a substantial business deal with Kushner due to his prior role in the Trump White House. Ultimately, they said, Kushner’s fund was “unsatisfactory in all respects.” That was an unacceptable conclusion for MBS, whom Kushner had befriended, protected, and aided throughout his time overseeing Middle East policy for his father-in-law.
This incident highlights the extent to which the U.S. legal system allows former high ranking government officials to engage in shady business dealings once they leave office, in part because MBS’s reported reasons for rejecting the panel’s advice appear so thoroughly corrupt. MBS justified the fund’s decision to ultimately invest, arguing that an investment in Kushner’s firm would help the Saudis capitalize on their “deep understanding of different government policies and geopolitical systems.” That sounds a lot like a decision based on outside political interests rather than a decision motivated by legitimate business considerations. And that’s why it’s not at all surprising that the House Oversight Committee has opened an investigation into Kushner’s dealings with the Kingdom and MBS.
MBS’s statements leave little doubt: the investment is due to the relationship Kushner cultivated with MBS when Kushner served as a senior White House advisor to President Trump a role he used to shelter the Kingdom from criticism and sanction. For example, Kushner reportedly played a key role in guiding the Trump administration’s response to MBS’s role in the assassination of Washington Post columnist Jamal Khashoggi, protecting the Crown Prince from United States government sanctions, condemnation, and investigation. And, Kushner also reportedly encouraged Trump and Congress to forge ahead with weapons sales to the Kingdom, including an immense $110 billion deal that Kushner personally negotiated, despite the conclusion of international observers that Saudi Arabia likely had committed war crimes during its illegal war in Yemen, violations that humanitarian watchdogs believe are ongoing today. Former President Obama had previously refused to sell the Kingdom some of the weapons included in the $110 billion 2017 package out of now-realized fear that the Saudis would use them on civilians in Yemen.
For those who followed the Trump administration’s ethics entanglements from the earliest days, Kushner’s problematic relationship with Saudi Arabia and MBS comes as no surprise. Kushner’s foreign business entanglements were so deep that he was initially denied a security clearance – until his presidential father-in-law stepped in and overruled that decision. That intervention was also no surprise, as Trump has embraced corruption and foreign business entanglements and accepted political favors that help his business empire in violation of the Constitution.
These actions set the stage for Kushner’s own foreign business dealings. Ultimately, the fact that Kushner is legally allowed to operate with this level of barely-disguised corruption is a window into the United States’ own deficient government ethics regime.
Congress has enacted little, if any, legislation that effectively deters former senior government officials from exploiting foreign relationships they cultivated while in office for personal profit, even though a fear of corruption, particularly from foreign influence, lies at the foundation of the United States’ Constitutional framework.
Under the current ethics regime, former officials’ business dealings with foreign governments are largely unregulated by Congress, except for certain lobbying-related activities after leaving office. For example, the primary post-employment statute that pertains to dealings with foreign entities includes a one-year prohibition on former senior and very senior officials engaging in representational activities before the United States on behalf of a foreign government, or aiding and advising foreign governments behind the scenes, when these actions are knowingly undertaken with intent to influence a decision of any U.S. federal government officer or employee.
While these types of prohibitions may prevent a former government official from appearing to “switch sides,” that framework is woefully unable to address more sinister threats arising from longer-lasting conflicts of interest. Not only has the Department of Justice never reported prosecuting a single individual under that statute, the law does not address circumstances where senior White House officials seemingly undermine U.S. foreign policy and national security by adopting stances at odds with U.S. interests while in government to enhance their opportunities for personal financial profit after leaving office.
Additionally, unless it is proven that a government official had an actual or imputed financial interest, the primary conflict-of-interest statute would not bar them from participating in a particular matter involving a particular country while in office.
The $2 billion deal Jared secured from MBS may be a “bid for future favor.” In funding Kushner, the Saudis are taking steps to ensure they maintain close ties and access to his father-in-law, who is reportedly considering another run for the Republican presidential nomination in 2024. Kushner could soon become subject to the Foreign Agent Registration Act’s (FARA)’s registration requirements applicable to agents of foreign principals who engage in political activities, public relations, and other specified activities. If he were to become a backdoor channel for the Saudis seeking to influence a future Trump presidential campaign or administration on U.S. domestic or foreign policy issues, Kushner would likely be required to register as a foreign lobbyist under FARA.
At the outset of his administration, Trump barred FARA covered activities on the part of his political appointees after they left office. However, just before he left office, former Trump revoked his Ethics Pledge. If the Trump Ethics Pledge had not been rescinded, Kushner, as a political appointee, would have been barred permanently from engaging in FARA covered activities on behalf of a foreign government or foreign political party.
Kushner, of course, is not the only former government official to obtain monies from the Saudis. Both Trump and former Treasury Secretary Steve Mnuchin are also now in business with the Saudis. And other former government officials have been criticized for much, much less: former President Bill Clinton and former Secretary of State Hillary Clinton were criticized after they disclosed in 2008 that Saudi Arabia donated between $10 million and $25 million to their charitable foundation. While a charitable donation undoubtedly seems more benign than a $2 billion cornerstone investment, critics, including many Republicans, nevertheless expressed concern that the donations “[gave] foreign donors a way to potentially gain favor outside the traditional political limits.”
Given the serious allegations against Kushner of “payback” for supporting MBS, and the real possibility that the Saudis’ entered into the $2 billion deal as a “bid for future favor,” it is in the United States’ best interest for Congress to expand and tighten the post-employment statute. In addition to exploring more expansive reforms to the Foreign Agent Registration Act and other statutes regulating how private citizens are allowed to interact with foreign powers, Congress should, at a minimum, prohibit former senior and very senior government officials from directly or indirectly soliciting or accepting funding for any purpose from sovereign wealth funds, foreign governments, or political parties of countries that fell under such officials’ official responsibility, for at least two years after they leave office. This two-year ban would be easy to implement, would deter powerful U.S. officials from engaging in corrupt foreign business deals, and would bolster confidence in the integrity of services being provided by senior government officials before they leave office.
IMAGE: White House Advisor Jared Kushner, watches alongside a member of the Saudi Delegation during a meeting between President Donald Trump and Crown Prince Mohammed bin Salman of the Kingdom of Saudi Arabia in the Oval Office at the White House on March 20, 2018 in Washington, D.C. (Photo by Kevin Dietsch-Pool/Getty Images)
About the Author(s)
Virginia Canter
Virgina Canter (@VirginiaRCanter) joined CREW as its Chief Ethics Counsel following a career in public service. Her prior experience includes serving as Ethics Advisor to the International Monetary Fund, White House Associate Counsel to Presidents Obama and Clinton, Senior Ethics Counsel for the Department of the Treasury and Assistant Ethics Counsel for the Securities and Exchange Commission.
Gabe Lezra
Gabe Lezra (@GabeLezra) is the Federal Policy Manager and a Senior Counsel at Citizens for Responsibility and Ethics in Washington (CREW), where he specializes in anti-corruption, democracy reform, and government ethics law.
No comments:
Post a Comment