Wednesday, February 28

Analysis | How Did Jared Kushner Get $2 Billion From the Saudis?


Jared Kushner’s new private equity firm got $2 billion from Saudi Arabia because maybe that’s how you can cash in when your investing experience is slender but your father-in-law may wind up back in the White House. It’s also possible that you can get billions for a firm with no track record because the White House did favors for the Saudis when your father-in-law still occupied the Oval Office.

It’s probably a mix of both. Regardless, it’s certainly not a reflection of Kushner’s investing prowess. Before entering the White House as an adviser to former President Donald Trump, Kushner, 41, inherited wealth and his first adult job from his father, then botched his biggest gambit: vastly overpaying for a Fifth Avenue skyscraper soon before financial and real estate markets tanked.

The Saudis’ stake in Kushner is also a reminder of the gargantuan financial conflicts of interest that plagued the Trump clan throughout their White House stay and continue to seep into their post-Washington dealmaking. And, of course, national security hazards run through all of this. Is it that easy to secure the allegiance and foreign policy mindshare of an influential White House adviser?

Yes, it is. At least in the Trump era.

“It’s just a complete free-for-all,” said Walter Shaub, who was an outspoken critic of financial conflicts in the Trump White House before resigning as director of the U.S. Office of Government Ethics. “The real concern here is that the public has no way of knowing exactly what favors someone like Kushner may have done for the Saudis.”

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While the federal government has taken steps in recent years to rein in the ability of former government officials to monetize their service in Washington, lucrative loopholes abound. The only professional restrictions Kushner faces, for example, involve him speaking to the federal government. He can still speak to and work with any foreign government he desires — such as the Saudis.

Kushner has company. Former Treasury Secretary Steven Mnuchin has also raised money for his investment fund from the Saudis and other Middle Eastern countries he courted closely when he was a powerful financial regulator.

Are those investments payoffs? It’s impossible to get into the heads of all of the participants, but the fact pattern surrounding how the Trump White House intersected with the Saudis is telling.The Trump administration coddled Saudi Arabia even after ample evidence surfaced that the country had orchestrated the murder of journalist Jamal Khashoggi. Mnuchin met personally with Saudi Crown Prince Mohammed bin Salman after the killing. The prince is chairman of the Saudi fund backing Mnuchin’s new venture. The Trump White House also engineered arms deals with the Saudis and the United Arab Emirates, despite congressional opposition, and it backed both countries in their controversial interventions in Yemen’s civil war.During his White House years, Kushner personally cultivated close ties with Prince Mohammed, offering him advice on how to handle fallout from Khashoggi’s murder. The two men communicated with each other outside of formal government channels, using the text messaging platform WhatsApp to stay in touch. The relationship set off alarms among career national security staff members, but it apparently never cooled. A panel that vets how the Saudi sovereign wealth fund invests its money raised concerns about backing Kushner’s new venture, Affinity Partners, according to the New York Times. It was overruled by the fund’s board — which Prince Mohammed sits on.The panel had ample reasons to worry about Kushner, according to documents the Times uncovered. It cited the “inexperience” of Kushner’s team and the risk of losing a lot of money. The panel’s due diligence examination of Affinity found it “unsatisfactory in all aspects.” It thought Kushner was charging excessive fees and that a partnership with his fund posed “public relations risks.”Yet the Saudis still gave Kushner $2 billion — probably because he represents an insurance policy for them. It’s a wager on retaining future access, not on securing investment expertise in the present.

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Shaub thinks deals like this show how necessary it is to have an emoluments policy governing the business practices of former government officials. “It’s extremely dangerous,” he told me. “But our ethics laws are in terrible shape overall. They’re weak across all branches of our government.”

Shaub says that the Biden administration hasn’t done enough to tighten ethics standards, largely because the financial gravy train is often irresistible to many who pass through Washington, regardless of their party.When Trump came to Washington, he famously campaigned on the promise he would “drain the swamp” of lobbyists and other kindred spirits. But Trump was so financially conflicted himself that was always going to be unlikely. Soon before he left the White House, Trump revoked his own requirement that former federal employees refrain for five years from lobbying agencies in which they once worked.

Trump didn’t drain the swamp. He just filled it with bigger alligators — with guys like Kushner.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Timothy L. O’Brien is a senior columnist for Bloomberg Opinion.

More stories like this are available on bloomberg.com/opinion

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