The Flynn Edge Of The Wedge

So National Security Adviser Michael Flynn has become the first casualty of the Russian connection. Not counting Paul Manafort and Carter Page, thrown off the Trump Train during the presidential campaign. Not counting two Russian intelligence agents arrested for treason, who may or may not have been involved in hacking the U.S. election, who may or may not have been assisting the CIA. Not counting Christopher Steele, the former MI-6 agent and author of the notorious Russian dossier, currently in hiding.

So call Mike Flynn the first high-level casualty of the Russian connection. He’s likely the thin edge of the wedge. His Monday night resignation—ostensibly for misleading the vice president about conversations he had with a Russian official before Mr. Trump took office—has revved up the investigative axis in Washington. What did Mr. Trump and his aides know and when did they know it? Did Mike Flynn just take a bullet for the president?

Before the circus moves on from the spectacle of Flynn fallen in the arena, it’s worth noting that he served his country with honor and distinction for thirty-three years in the United States Army, rising to the rank of lieutenant general. He led dangerous intelligence missions in Afghanistan and Iraq. Later, apparently the same qualities that made him a successful battlefield intelligence leader got him in trouble as head of the Defense Intelligence Agency.

In the wake of the Flynn resignation, Democrats are calling for an “independent investigation” of the Russian connection. What they mean by that is not entirely clear, probably a specially charted commission, a special select committee or a special prosecutor. In any case, none of that is going to happen, at least not anytime soon.

First, the institutional probes will play out. The FBI, CIA, NSA and Treasury are up to something, according to the New York Times—an inter-agency task force, a “working group,” whatever. President Trump owns the executive branch for the moment and you can be sure this FBI-led effort is under tremendous pressure. John Schindler reports that the intelligence community is “starting to push back” against the president, a move with enormous implications.

In Congress, the Senate Select Committee on Intelligence and the House Intelligence Committee have opened broad investigations. The Senate Armed Services Committee, led by John McCain, will take a run at cyber-threats and Russia, before handing off the matter to a new cyber-security subcommittee. Elsewhere, major media groups are tasking reporting teams on the issue and the internet is alive with freelancers and interested parties—cue the usual carnival of conspiracy theories, dangerous craziness and occasional wisdom.

The essential investigative question for all these inquiries is the same. How deep? How deep into the U.S. electoral system did Moscow penetrate? And how deep is the Kremlin into Donald Trump?

Getting answers won’t be easy. Kremlin-linked hacking activities and related intelligence activities are a wilderness of mirrors. Mr. Trump has a long history of dealings in Russia and with Russians, and so far has resisted detailed disclosure. Cynics will say that Jim Comey will roll over one more time for Team Trump, but I don’t buy that. The inter-agency investigation led by the FBI, in my view, is the one to watch.

For the media and the internet gang, the temptation to chase rabbits down holes will be irresistible. The Trump Administration has decided to make the media the enemy, so expect relentless attacks on “fake news” and the like. But as the Flynn episode demonstrates, the media have an ally in the U.S. intelligence community. If you’re keeping score at home, Mr. Flynn’s resignation was forced not so much by his speaking with the Russians, but by public disclosure of those conversations, most likely through IC leaks. Look for the media and leaks to drive story. More evidence of that came last night with a New York Times disclosure that Trump associates “had repeated contacts with senior Russian intelligence officials” in 2016. President Trump fired back this morning, tweeting that the “real scandal” was the leaking of intelligence information.

Congress will struggle with its investigations, mainly because it’s a Republican-led institution investigating a Republican president. The institutional pressures to back off will be intense. The executive branch will slow-roll document production and balk at providing witnesses. Congressional subpoenas are basically useless and anyway the Republicans won’t go there. The minority Democrats have limited options. Kicking and screaming only gets you so far.

Congressional investigations often are tripped up by their dual mandate. They’re supposed to get to the bottom of something—Benghazi, Fast & Furious, Lois Lerner and the IRS, Whitewater, Iran-Contra, etc.—but they also have a public information role. Tell us what happened. The most successful congressional investigations have focused on telling the story. Based on what we already know—a tumultuous election, foreign intelligence hacking, sensational charges and presidential politics—the Russian connection reports should read like thrillers.

In the public information role, Congress should be hearing from Messrs. Flynn, Manafort and Page, along with top Trump aides Stephen Miller and Steve Bannon, on what they knew about the Russian connection and when they knew it. And what, if anything, they told Mr. Trump. As I noted in December, unusual Russia-connected episodes unfolded through the presidential campaign and mark Mr. Trump’s business history. Mr. Trump’s tax records are a Rosetta Stone to the Russian connection, at least as it relates to the president’s financial ties to the country. IRS Commissioner John Koskinen would handle any congressional directive to produce the records for confidential intelligence committee reviews. Or not. Mr. Koskinen cut a private-sector business deal with Mr. Trump back in 1975 and they have been friends ever since.


Micah Morrison is chief investigative reporter for Judicial Watch. Follow him on Twitter @micah_morrison. Tips:

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Putin’s Poisons

As America sets out on its long strange trip with President Trump, nothing seems stranger than his repeated defense of Russian strongman Vladimir Putin. “But he’s a killer,” Bill O’Reilly reminded the president in a weekend interview. “Putin’s a killer.”

“We’ve got a lot of killers,” the president responded. “What do you think—our country’s so innocent. You think our country’s so innocent?”

Meanwhile in Russia, real killers appear to have made another move to silence a critic of the Putin regime. Last week, the Russian dissident Vladimir Kara-Murza collapsed in Moscow and was placed in a medically induced coma. His wife said doctors had diagnosed “acute poisoning by an undetermined substance.”

It’s a diagnosis that has FSB—the Russian intelligence service—written all over it. And it’s not the first time someone tried to whack Mr. Kara-Murza. In May 2015, he suffered multiple organ failure, fell into a coma and was hospitalized for two months. Mr. Kara-Murza believed he was deliberately poisoned for his political activities. His Moscow doctors thought maybe he took the wrong anti-depressant. Oh.

Mr. Kara-Murza was a close associate of Boris Nemtsov, the Russian opposition leader gunned down on a bridge near the Kremlin in February, 2015. In an amazing coincidence, all the security cameras on the bridge had been turned off for maintenance. At the time of his murder, Mr. Nemtsov was battling Putin regime corruption and organizing resistance to the war in Ukraine.

Russian intelligence uses the full tool kit against its opponents, but it has a particularly long association with poisons.

In 2004, the Ukraine opposition leader Viktor Yuschenko was slipped a near-fatal amount of TCDD, a contaminant found in Agent Orange, at a dinner with Ukrainian officials, including the deputy director of the intelligence services. Mr. Yuschenko survived the poisoning with substantial facial disfigurement. The Ukrainian intelligence official fled to Moscow.

The same year, crusading investigative reporter Anna Politkovskaya became violently ill after drinking poisoned tea aboard a Russian airline flight. She survived. Two years later, assassins caught up with her and shot her dead in the elevator of her apartment building. Thirty-four journalists have been murdered in Russia since 2000 in cases linked to political corruption and crime. The number for the same time frame in the U.S.? Three.

In a sensational case seen as telegraphing a warning to Kremlin critics, former FSB officer Alexander Litvinenko died a gruesome death in London in 2006, poisoned by highly radioactive polonium-210, most likely slipped into his tea during a meeting with two Russian agents. Mr. Litvinenko had charged that Mr. Putin rose to power through a series of brutal bombings and murders. From his deathbed, he blamed the Russian president for his poisoning. Scotland Yard later concluded that evidence in the case suggested that “the only credible explanation” for the Litvinenko murder is “one way or another the Russian state is involved.”

Several mysterious deaths swirl around the Magnitsky Act, a U.S. law sanctioning corrupt Russian officials. The law was named for Sergei Magnitsky, a Russian lawyer who died in prison in 2009 while investigating an alleged $230 million tax fraud connected to public officials and the Russian mafia. Andrew Kramer of the New York Times has noted that five people linked to inside information in the case “have died under mysterious circumstances that, in their sophistication, suggest state-sponsored killings.”

Two of them, men in early middle age, died of organ failure. Another plunged from a balcony. Mr. Magnitsky’s death has been attributed to an abdominal rupture or heart attack. And then there is banker Alexander Perepilichny, who fled to London and passed wire-transfer records to Swiss investigators. At age 44, he suffered an apparent heart attack while jogging. Three years later, Mr. Kramer reports, a botanist identified traces of Gelsemium in the banker’s stomach. It’s a rare plant grown in the Himalayas and used by Chinese assassins.

Yes, yes, none of these deaths can be directly linked to Vladimir Putin, etc. But no serious observer of Russian society believes that he has clean hands. He set the tone, gave the green light for the gangster economy, empowered his old FSB allies and now sits atop an unsteady throne. As for President Trump, he seems unwilling or unable to explain how the United States has “a lot of killers” like Mr. Putin. So chalk it up as a remark cut from the same cloth as his attacks on the dishonest media, so-called judges, rigged elections, fake news and the like. But he too is setting a tone, giving a green light, and the road ahead is uncertain.


Micah Morrison is chief investigative reporter for Judicial Watch. Follow him on Twitter @micah_morrison. Tips:

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Rex & The Resource Curse

The Trump Presidency has opened with a bang. Death to ObamaCare, a new SCOTUS nominee, a Muslim ban, a Mexican wall, various conspiracies—the Russians and the dossier, the electoral tally, the inauguration crowd size—attacks on the media, on Boeing, Lockheed Martin, General Motors, Toyota, Hollywood actors, John Lewis, John Brennan, alternative facts, the global gag rule, the death of the Trans-Pacific Partnership, the rebirth of the Keystone and Dakota Access pipelines. The president is tweeting. The president has kept his campaign promises. The president has lost his mind. The town is in tumult. The opposition is aghast. Critics have assigned the president his own Robespierre. Grievances mount. “I haven’t slept in a month,” Kellyanne Conway tells Fox News Sunday. “If you are part of Team Trump, you walk around with these gaping, seeping wounds every single day, and that’s fine.”

Thirteen days into the new administration, the spectacle continues, delicious and appalling and mesmerizing. But in Congress real business is starting to get done. Follow the money. Cui bono? Who benefits? The answers to that timeless investigative question will tell us a lot about Mr. Trump’s Washington.

Last week, we flagged rule changes coming before Congress to reform the controversial EB-5 visa program. Critics of EB-5 say it’s a magnet for fraud, a national security risk and a vehicle for rich foreigners to purchase U.S. citizenship. The Trump and Kushner families, among others, have profited from the EB-5 cash flow. The powerful real estate industry opposes the reform measures. President Trump could swing the vote any way he wants.

This week, Congress put another anti-corruption measure into play. House Republicans introduced a resolution to repeal an SEC rule known as the Cardin-Lugar provision. It requires that extractive industries—oil, gas and minerals—listed on U.S. stock exchanges disclose payments to foreign governments. Such payments might include consulting fees, royalties, bonuses, and taxes. It’s a well-greased avenue for payoffs and bribes and Cardin-Lugar is a classic “follow the money” transparency measure.

House Majority Leader Kevin McCarthy wrote in the Wall Street Journal that Congress will “take the ax” to the rule because it places an “unreasonable compliance burden on American energy companies that isn’t applied to their foreign competitors.” Mr. McCarthy added that the regulation puts “American businesses at a competitive disadvantage.” He neglected to mention that those foreign competitors are already complying with similar disclosure laws introduced in Europe and Canada.

President Trump can work his will with this one too. He wants to give American business a competitive advantage. He also wants to “drain the swamp” of corruption. One tweet, and Cardin-Lugar remains law.

Cardin-Lugar and similar measures are aimed at the so-called “resource curse.” The resource curse has been observed in many countries and is the subject of a lot of esoteric studies, but it’s not rocket science. Resource-rich developing countries are often “cursed” with failing economies. Corruption is one culprit. Wealth generated from extractive resources—oil, gas, timber, minerals, etc.—flows to the ruling class. The powerful, often abetted by large corporations, pillage the resources and throw crumbs to the hoi polloi.

Nigeria is a casebook example. Nigeria is the sixth largest oil producing country in the world and has vast mineral wealth. Yet its people live in crushing poverty. According to the activist group Global Witness, more than $400 billion in oil revenues have been lost to corruption and mismanagement since 1960. Last week, oil giants Dutch-British Shell and the Italian Eni company ceded control of a lucrative oil tract back to the Nigerian government after a $1.2 billion bribe to a former Nigerian oil minister and cronies was revealed. It’s precisely the sort of corrupt transaction that Cardin-Lugar is designed to counter.

One of the strongest opponents of Cardin-Lugar has been ExxonMobil CEO Rex Tillerson, President Trump’s secretary of state-designate. Mr. Tillerson is scheduled for a confirmation vote today. As CEO of ExxonMobil and head of the industry’s trade group, the American Petroleum Institute, Mr. Tillerson lobbied against Cardin-Lugar. Later, API successfully sued to overturn the provision—a newly crafted version is now before Congress. Sources on Capitol Hill say that Mr. Tillerson, lobbying against the bill in 2010, personally made the case to senators that successful passage of the measure would doom ExxonMobil’s chances to do business in Russia.

At his confirmation hearings, Mr. Tillerson offered up a whole lot of nothing when questioned about the resource curse and Cardin-Lugar. He said there would be “a lot of opportunity” through U.S. programs to “strengthen the institutional capacities and set standards of expectation in the developing part of the world, including those that have resource wealth.”

Former Senator Richard Lugar takes a particular interest in the issue and his Lugar Center in Washington closely followed the Tillerson hearings. Reporting for the Lugar Center, senior fellow Jay Branegan made it clear that Mr. Tillerson was not going to be an apostle of transparency and accountability.

ExxonMobil, by the way, reportedly is under investigation in Nigeria. The country’s Economic and Financial Crimes Commission is examining ExxonMobil’s successful $1.5 billion bid for oil rights to four lucrative Nigerian fields. According to an investigative report in the Guardian, based on documents provided by Global Witness, ExxonMobil beat out the Chinese oil company CNOOC in 2009 in the deal. The only trouble? China bid $3.75 billion for the same oil rights.

How did ExxonMobil win Nigerian oil rights despite bidding $2.25 billion less than its rival? Golly, no one seems to know. But one former Nigerian oil minister is under investigation in London and Lagos for corruption involving billions in missing oil funds, and the inquiry is expanding. The minister denies any wrongdoing. So does ExxonMobil.


Micah Morrison is chief investigative reporter for Judicial Watch. Follow him on Twitter @micah_morrison. Tips:

Investigative Bulletin is published weekly by Judicial Watch. Reprints and media inquiries:

The EB-5 Test

In 2008, the director of the Zhoukou Municipal Grain Reserve in China’s agricultural Henan Province began moving money overseas. Qiao Jianjun sent $4 million to U.S. banks. $2 million went to Canada. Another $6 million went elsewhere: Singapore, Switzerland, St. Kitts. Mr. Qiao’s wife obtained a U.S. visa and moved to Seattle and bought a four-bedroom home. In 2011, Mr. Qiao skipped town, flying out of Zhoukou City and joining his wife in the United States. The law caught up with Mrs. Qiao in 2015, arresting her for fraud and money laundering. She’ll do five years. Mr. Qiao is in the wind.

The story of the Qiaos should be of some interest to the new Trump Administration because they arrived in the United States thanks to the controversial EB-5 visa program, which is up for renewal in April. The Obama Administration proposed changes to the program on its way out the door. How the Trump Administration handles the proposed changes will provide an early test of its approach to real-world corruption issues.

Powerful forces are arrayed on both sides of the program. Currently under EB-5, foreigners—they are mostly Chinese citizens—gain a green card and a path to U.S. citizenship by putting up $500,000 to be used for job creation in the U.S. in a high unemployment district. Development projects financed by EB-5 are supposed to be centered in economically distressed “targeted employment areas,” but usually they’re not. Marketing for the program is hot, gaudy and largely unregulated. The program is beloved by the real estate industry because of the cheap financing it provides, bringing in $15 billion to $20 billion in easy money in the last decade and financing development projects in such distressed areas as Manhattan, Brooklyn, Las Vegas, Miami and Beverly Hills. Mr. Trump himself is loosely connected to the program through a $40 million EB-5 play by a Trump-branded luxury hotel in Austin. His son-in-law and senior adviser, Jared Kushner, raised $50 million in EB-5 funds for a luxury tower in New Jersey.

Critics say EB-5 is a magnet for fraud and a vehicle for rich foreigners to purchase U.S. citizenship. Senator Charles Grassley denounced it on the floor of the Senate in December, saying the program “poses significant national security risks” and may be “facilitating terrorist travel, economic espionage, money laundering and investment fraud.” A Government Accountability Office report said international funds for EB-5 visas could come through the “drug trade, human trafficking, or other criminal activities.”

And those “targeted employment areas” intended to serve economically hard-hit regions? These days, critics charge, they’re often nothing more than a byzantine gerrymandering of pockets of high-unemployment mapped from census tracts to create a qualifying district.

The proposed regulatory changes go some distance to addressing reform concerns. The minimum qualifying amount for an EB-5 visa would be raised from $500,000 to $1.35 million for projects located in targeted unemployment areas. The power to designate such areas would be taken away from the states and given a consistent national standard. Transparency and accountability would be improved. Truly needy regions would be given a better shot at the money.

The real estate industry has reacted to the proposals with fear and loathing. “You can legislate all you want,” one EB-5 attorney told the Commercial Observer, “but if the bill went through as is, it would kill the program.” EB-5 proponents are looking to President Trump as a kindred spirit. “If you put aside his politics and just understand him as a real estate owner and investor,” John Banks, president of the influential Real Estate Board of New York told the Observer, “Trump understands that EB-5 is a good thing for the real estate industry.”

As for the case of the corrupt Chinese grain official and his wife, it turns out that Mrs. Qiao in fact was not Mrs. Qiao. Her name is Zhao Shilan. The couple had divorced in 2001 but claimed they were married on their EB-5 visa application. Riding EB-5, Ms. Zhao established U.S. residency, bought property and created shell companies with the stolen millions while waiting for her “husband,” who continued to loot Chinese government coffers until the scheme started to crumble. Then he got on a plane to the U.S. Then he disappeared.

Zhao Shilan went to jail for immigration fraud, money laundering, and international transport of stolen money. Mr. Qiao was last spotted in Switzerland. His run of great good luck will continue if it is the Americans and not the Chinese who catch up with him. In China, the sentence for official corruption is often a bullet to the head.


Micah Morrison is chief investigative reporter for Judicial Watch. Follow him on Twitter @micah_morrison. Tips:

Investigative Bulletin is published weekly by Judicial Watch. Reprints and media inquiries:

First published January 25, 2017.

The Curtain Goes Up

UnknownAs the curtain goes up on the Trump Era, here’s what I’m looking at as some of the major investigative stories of 2017:

Age of the Oligarchs? Is Mr. Trump a passing historical hiccup or does he signal something bigger? Around the globe, influential oligarchies appear to be entering an assertive new era. Vladimir Putin’s Russia is Exhibit #1. In Saudi Arabia, the longstanding oligarchy remains a forceful player in world oil markets and increasingly militant in its own neighborhood. In China, elements of the leadership are engaged in a pitched battle against oligarchic corruption while making bold military moves in the region. Iran, Turkey and North Korea are all on the oligarchic path. Meanwhile, international structures—NATO, the EU, global trade agreements, the Clinton Global Initiative (kidding)—are under threat. In the U.S., the Trump White House has arrived on the scene with oligarchic atmospherics: the swaggering leader with little patience for traditional politics, close relatives installed as key advisers, a cabinet of ultra-rich financiers and generals, etc. A terrific recent New York Times deep-dive, “Jared Kushner, a Trump In-Law and Adviser, Chases a Chinese Deal,” demonstrated the mutual interests of the Trump family and Chinese oligarchs. Comrade, all this is no accident, as the Marxists used to say. Or is it? Is Mr. Trump ushering in a new oligarchic era? Merely bringing some conservative creative destruction to Washington? Or mostly just huffing and puffing? We’ll know a lot more in a year.

The Russian Connection. Meanwhile, Mr. Trump’s alleged Russian connections have emerged as the first scandal of the new era. As I noted back in December, it may all turn out to be much ado about nothing, but the path forward is strewn with dangers. The coming months will bring Congressional and media investigations and new revelations. A key question: what did Mr. Trump and his advisers know about Russian activities during the U.S. election and when did they know it? Mr. Trump’s damage control team should have tattooed on their foreheads: “it ain’t the crime, it’s the cover-up.”

The Clinton Emails & The FBI. The Trump Administration will soon face important decisions concerning Hillary Clinton’s emails and the FBI. On December 27, a federal appeals court breathed new life into a Judicial Watch lawsuit seeking to compel Secretary of State John Kerry to comply with the law. A federal appeals panel ruled that Mr. Kerry had dodged a “statutory mandate to seek action by the Attorney General” in recovering thousands of never-disclosed emails. Decisions on compliance will now rest with Secretary of State Rex Tillerson and Attorney General Jeff Sessions, should they be confirmed by the Senate. Mr. Sessions, in particular, is looking at some tough calls. The Justice Department’s inspector general is investigating FBI Director James Comey’s handling of the Clinton email case. There has been intense turmoil within the FBI over the 2016 election, the Clinton cases and the Russia-related allegations against the Trump campaign. Reliable sources tell me that many FBI agents believe there is a prosecutable corruption case against the Clintons and their foundation. But I’ve also found a pro-Trump tilt among FBI personnel. And as for the rumors that the bureau is investigating Mr. Trump’s Russia connections, I’ve found no one in the know who can confirm it, although it seems likely. In any case, Mr. Sessions, with jurisdiction over the FBI, will have to sort all this out. He’ll need to see that justice is done, that the storms shaking the FBI are calmed, and that a proper decision about Mr. Comey’s future is reached. Good luck with that.

Emoluments, Shmoluments? Put this one in the slow cooker for 2017. Mr. Trump seems to have calmed the political waters with his announcement that he will turn over “complete and total control” of his vast business holdings to his sons, appoint an ethics adviser and do no new foreign deals while in office. Judicial Watch called for a transparency revolution from the Trump Administration within twenty-four hours of his election and we have not let up the pressure. See our New York Times op-ed on the issue here. But while it seems unfair to insist that Mr. Trump totally divest in order to comply with the Emoluments Clause of the Constitution—a move that would essentially destroy the business he has spent a lifetime building—it’s true that keeping his nose out of the family business will severely test the president. There are certain to be unscrupulous characters seeking to curry favor. One timeless practice is to enrich not the king, but his children. Look for Constitutional challenges as well—likely heading toward the Supreme Court just in time for the 2018 midterm elections.


Micah Morrison is chief investigative reporter for Judicial Watch. Follow him on Twitter @micah_morrison. Tips:

Investigative Bulletin is published weekly by Judicial Watch. Reprints and media inquiries:

The Gathering Storm

micahs-mastheadIt’s all over but the shouting and the presidency of Donald J. Trump is upon us. In nine days, Mr. Trump will be sworn in as the 45th president of the United States. Billionaire businessman, celebrity, tweetmaster, Mr. Trump has changed American politics even before taking office, rewriting the political playbook and sending shock waves through Washington.

Fasten seat belts, it’s looking like a rough ride. On the Russian front, in particular, several recent developments point to a gathering storm for the Trump presidency.

The blockbuster was last week’s “Assessing Russian Activities and Intentions in the Recent U.S. Elections,” from the Office of the Director of National Intelligence. It is short and you should read it here, but in case you’ve been living in a cave, the main conclusion was that Russian President Vladimir Putin executed a sweeping “influence campaign” aimed at the 2016 election, which morphed from an effort to “denigrate” Hillary Clinton into an aspiration to “help” Mr. Trump. Russian military intelligence was a key player in the effort, which “reflected years of investment” by the Kremlin. The Russians stole emails and other data from “both major U.S. political parties” and passed it on to WikiLeaks and other sources.

Mr. Trump’s team has been swinging hard against any notion that the Russians tilted the election. (The IC report did not go there, stating that it “did not make an assessment of the impact that Russian activities had on the outcome of the 2016 election.”) After a classified briefing on the Russian activities, Mr. Trump released a statement saying “there was absolutely no effect on the outcome of the election, including the fact that there was no tampering whatsoever with voting machines.”

From London, WikiLeaks founder Julian Assange echoed the Trump pushback. He denied the leaked documents came from “a state party” (Russia) and called the IC report “a political attack” against Mr. Trump and an effort to “delegitimize the election.”

Mr. Assange has a starring role in an important new book just out from legendary investigative writer Edward Jay Epstein, “How America Lost Its Secrets: Edward Snowden, The Man and the Theft.” A sweeping chronicle of espionage and betrayal in the Putin era, Mr. Epstein’s book should be required reading at the Trump White House.

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Rex & The Russian Swamp

micahs-mastheadAmid controversy over the extent of Kremlin penetration into the American electoral system (detailed last week in Investigative Bulletin), Donald Trump has doubled down on the Russian connection with his nomination of ExxonMobil CEO Rex Tillerson to become the next secretary of state.

Mr. Trump has been signaling a new Russia tilt for months and Mr. Tillerson seems an excellent candidate to carry it out. Whether this is sound policy or sheer folly remains to be seen, but from an anti-corruption perspective—taking Mr. Trump at his pledge to “drain the swamp”—the Tillerson nomination is strange indeed.

Mr. Tillerson is up to his eyeballs in Russian oil deals with Vladimir Putin, whose kleptocratic regime makes the Washington swamp look like the pool at Mar-a-Lago. Last week, U.S. intelligence leaked a new estimate of Mr. Putin’s personal wealth: $85 billion.

His Kremlin salary: $144,444.

You lie down with dogs, you get up with fleas. Mr. Tillerson’s role in the Rosneft oil deal is a case in point. Rosneft is a Russian energy giant closely allied with Mr. Putin. Mr. Tillerson negotiated a deal with Rosneft giving ExxonMobil access to vast Russian oil reserves in the Arctic and Black Sea. ExxonMobil pledged millions to provide the technology and expertise for exploration and drilling. In return, it received a one-third stake in the venture. Successful exploitation of the oil fields could bring more than $100 billion into ExxonMobil coffers.

Rosneft was formerly known as the Yukos Oil Company, Russia’s largest energy enterprise. In 2003, Mr. Putin decided he wanted it.

Yukos’s founder, the oligarch Mikhail Khodorkovsky, was becoming a threat to Mr. Putin. He jailed Mr. Khodorkovsky on bogus fraud charges, seized Yukos assets and bankrupted the company. Mr. Khodorkovsky served ten years behind bars. Other Yukos officials were jailed or fled the country. American and Russian investors were robbed. The Permanent Court of Arbitration at The Hague awarded investors $50 billion in damages, but the decision was later overturned.

Some might say Mr. Khodorkovsky got off easy. Here’s a list of Putin critics who ended up dead.

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The Russian Connection

unknownA bombshell Washington Post report Friday cast new light on the 2016 presidential campaign. According to the Post, the CIA in a secret assessment has concluded that “Russia intervened in the 2016 election to help Donald Trump win the presidency.”

Intelligence agencies identified “individuals with connections to the Russian government” who gave thousands of hacked Democratic National Committee emails to Wikileaks as part of “a wider Russian operation to boost Trump and hurt Clinton’s chances,” the paper reported. The next day, the New York Times added another piece to the puzzle, reporting that the Russians had also hacked into the Republican National Committee’s computer system, “but did not release whatever information they gleaned.” In other words, Moscow released only information that would help, not hurt, Mr. Trump.

The RNC denied its system was hacked and the president-elect’s transition office issued a blistering Trumpian attack on the CIA findings: “These are the same people that said Saddam Hussein had weapons of mass destruction. The election ended a long time ago in one of the biggest electoral victories in American history. It’s now time to move on and ‘Make America Great Again.’” Later, Mr. Trump told Fox News that the CIA assessment was “ridiculous” and an “excuse” by Democrats for losing to him.

And while my friends at the Wall Street Journal editorial page are right that the “new information in these latest stories is less about new intelligence than it is a judgment about Russian motives,” this latest shock wave rolling out of Trump Tower has a different feel to it. The case of the Russian connection could spell real trouble for Mr. Trump. That’s largely because Congress is not going to roll over and play dead. Several influential Republicans are pushing for an investigation. There will be hearings. There will be new details. There will be leaks. The intelligence community now has its back against the wall, thanks to Mr. Trump’s attacks.

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Swamp EB-5


We’re hearing a lot these days about “draining the swamp” of Washington corruption but as every serious student of crime and punishment knows, the swamp is not one, but many. The swamp contains multitudes. It is Washington. It is New York. It is San Bernardino County. It is the “high places before Jerusalem”—meaning the worship of idols, meaning corruption is not a place but a practice, the lesser angels of our nature brought low by vanity and ambition, greed and delusion. Today, we look at one corner of that vast ecosystem: the federal EB-5 program.

Congress will give EB-5 a new lease on life this week by slipping renewal of the controversial program into a continuing resolution. Administered by the Department of Homeland Security, it is formally known as the Employment-Based Fifth Preference Immigrant Investor Program. In plain language, it’s a green card fire sale for rich foreigners.

Under EB-5, a foreigner pays $500,000 and is granted a green card, placing the purchaser and immediate family on a road to permanent residency in the United States. Silken middlemen on two continents speed the process. The stated purpose of the EB-5 program is job creation. Each $500,000 fee is supposed to be directed to projects in economically distressed “targeted employment areas” in the U.S. to create ten full-time jobs.

Estimates of the funds generated by EB-5 in the last decade range from $15 billion to $21 billion. The cheap financing has attracted big time commercial developers and an industry to support them. But rather than flowing to hard-hit economic zones (Detroit, anyone?) EB-5 dollars have mostly gone to support glitzy projects in places such as Beverly Hills, Las Vegas, Miami, Manhattan, Atlantic Yards in Brooklyn and Nassau Coliseum on Long Island.

As the New York Times recently noted, EB-5 “is increasingly supporting large luxury real estate projects, not the development in the rural and downtrodden districts that some say were the original targets of the program.”

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Trump & Preet

micahs-mastheadPresident-elect Trump’s creative destruction of the established order in Washington continues to transfix the chattering classes and only a charlatan would claim to know where it all will end. Anti-corruption aficionados across the political spectrum are mesmerized by the spectacle of Mr. Trump’s vast business empire on a collision course with the presidency. In a series of dawn bulletins issued today via Twitter, Mr. Trump announced that “legal documents are being crafted which take me completely out of business operations.” Details to follow. How Mr. Trump resolves the issue will send up an important signal about the nature of the Trump Presidency. Another sign will come with his selection for the critical position of U.S. Attorney for the Southern District of New York.

The SDNY appointment is off the radar but should be watched closely. The office is one of the most important crime-fighting posts in the country. It’s been home to such law-enforcement legends as the trust-busting Henry Stimson, Tammany Hall foe Thomas E. Dewey, the visionary Robert M. Morgenthau and Mafia antagonist Rudy Giuliani. Its size, Manhattan location, jurisdiction over Wall Street and distance from the capital’s intrigues makes the SDNY a critical player in the U.S. justice system.

Today the SDNY is led by the crusading Preet Bharara, scourge of political corruption in seemingly every corner of New York state. And make no mistake: New York is in the midst of a corruption epidemic. Over the past decade, more than thirty lawmakers have been convicted or charged with wrongdoing. You can view the wall of shame here, courtesy of the New York Times. According to a recent Quinnipiac University poll, 87 percent of New Yorkers say government corruption is a serious problem. 87 percent! Among those sent to jail by Mr. Bharara are the former Speaker of the New York State Assembly, Sheldon Silver, a Democrat, and the former majority leader of the New York State Senate, Dean Skelos, a Republican. Corruption in New York is a bipartisan affair.

Silver and Skelos were two of the infamous “three men in a room” that control Albany. The third man is the governor of the state, currently Andrew Cuomo. Mr. Cuomo has not been charged with any wrongdoing, but earlier this month Mr. Bharara indicted eight men, including two former top aides to Cuomo, in a sweeping bribery and fraud scheme. A third former Cuomo aide has pleaded guilty and is cooperating with the investigation.

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