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.

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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

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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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Drowning In The Swamp

micahs-mastheadThe Trump transition is picking up steam and it’s clear we’re in for some interesting times in Washington. This is not going to be business as usual. But already there are danger signals flashing for the president-elect.

Mr. Trump famously campaigned on “draining the swamp of corruption in Washington,” a call that resonated that across the country. “We must fix a rigged system in which political insiders can break the law without consequence and where government officials put special interests above the national interest,” he wrote in USA Today on the eve of the election that changed his world—and ours.

Mr. Trump now faces some painful choices. The multi-billion-dollar Trump Organization, his life’s work, threatens to throw a shadow of corruption over the Trump Presidency before it even gets started. “Life is unfair,” another president said. There might not be a shred of truth to corruption concerns about the Trump holdings, but perceptions matter. Political insiders, government officials and special interests all will be drawn into the Trump Organization scandal vortex unless the president-elect moves fast.

The Trump Organization is a sprawling enterprise with complex business dealings across the globe. According to a Washington Post analysis of Trump financial filings, more than one hundred Trump companies had done business in South America, Asia and the Middle East. The New York Times reported that Mr. Trump’s fortunes “depend deeply on a wide array of financial backers” and his companies “have at least $650 million in debt.” As president, the Times noted, Mr. Trump would have “substantial sway” over fiscal policy, appointments directly affecting his financial interests, legislative issues impacting his net worth, and official dealings in foreign countries where the Trump Organization does business.

Numerous examples of potential Trump conflicts have already surfaced:

In China, a frequent Trump target on the campaign trail, the government-controlled Bank of China is part of a group that loaned a Trump affiliated office building in Manhattan $950 million.

In India, Trump business partners are building luxury apartment complexes. Three Indian developers flew to New York last week and met with the president-elect.

In Argentina, news reports say President Mauricio Macri fielded a request from the president-elect for help with an office building project in Buenos Aires during a congratulatory phone call. Spokesman for both men denied the account. Mr. Trump’s daughter, Ivanka, joined the men for a portion of the call.

In Saudi Arabia, the Trump Organization is exploring hotel deals in the Red Sea port of Jeddah.

In Germany, troubled Deutsche Bank has been involved in $3.5 billion in loans to Trump entities since 1998. Loans of more than $350 million from the bank are tied to Trump properties in Miami, Chicago and Washington.

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Who Was Mike Rogers?

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It’s a chaotic week over at the Trump transition. Former House Intelligence Committee Chairman Mike Rogers, a Chris Christie ally, is out as senior national security adviser. Only days ago, the Great Mentioners were mentioning Rogers as the next CIA chief or Director of National Intelligence. So it goes at the court of the Sun King. Rogers has been on Judicial Watch’s radar for years. His House committee gave an early whitewash to the Benghazi affair and he opposed the formation of Trey Gowdy’s special select committee. As I noted in a June 2014 investigative report, Rogers and his wife, Kristi Rogers, are quintessential Washington insiders, with deep ties to the corporate shadow armies operating at the fringes of government control. We’re reprinting that report, first published at the Daily Caller, below. Rogers may not be running the CIA anytime soon, but he remains a cautionary tale about the insider game in Washington.

Unraveling Benghazi: Is Mike Rogers Part of the Problem?

Daily Caller

June 17, 2014

With the curtain soon to go up on select committee hearings on Benghazi, a key question remains unanswered: what on earth were we doing there? What policies were being pursued in that violent outpost of the Libyan revolution?

The White House would rather not say. In an email obtained by Judicial Watch and released in April, senior White House communications advisor Ben Rhodes instructed administration media spinners in the aftermath of the attack to “underscore that these protests are rooted in an Internet video, and not a broader failure of policy.” For all the sound and fury over hearings, Congress also has not shown much interest in precisely what Ambassador Christopher Stevens, the State Department and the CIA were doing in Benghazi.

Last month, Daily Beast national security correspondent Eli Lake reported that House Intelligence Committee Chairman Mike Rogers had “warned his colleagues about the upcoming select committee to investigate Benghazi.” In interviews Rogers “downplayed” the testimony CIA contractors gave in closed session, Lake noted, and has said he did not believe the CIA had stonewalled his committee. Lake reported that “the chairmen of the House Intelligence, Armed Services, and Government Reform committees — Reps. Rogers, Buck McKeon, and Darrell Issa, respectively — all opposed the formation of a select committee on Benghazi.”

Sussing out the White House’s response to Benghazi is a critical step in clearing the shadows from the incident, but there are other players in the drama as well, including Rep. Rogers, and possibly also including a private military contracting firm that until recently was run by his wife, Kristi Rogers. Mike and Kristi Rogers are quintessential Washington insiders. A seven-term Republican from Michigan, Mike Rogers climbed the political ladder to become chairman of the Intelligence Committee in January 2011. Kristi Rogers, after years of government service in mid-level administrative positions, moved to the private sector, joining the British-based security contractor Aegis Defense Services to help open its U.S. subsidiary. The newsletter Intelligence Online noted that thanks to Ms. Rogers’ efforts, “Aegis won several major contracts with the U.S. administration.”

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Entering The Trump Era, A Changing Investigative Landscape

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Congratulations to President-elect Donald Trump. Presidents come and go, but scandal and crime are timeless. Here are three epic investigations that will reach an endgame in the new world of Trump.

The Emailiad. Homeric in scope, the saga of HRC’s emails is one for the history books, with a major impact on the presidential race. Seemingly every important player in Clinton World appeared in the emails. They are the thread connecting many controversies—the Clinton Foundation and it satellites, Teneo Holdings, cybersecurity and penetration of servers, relations with foreign governments, payments to various Clintons and Clinton entities, suspicions of quid pro quos, big money players, Wikileaks mischief, the Russians.

The Republican Congress is likely not finished with email investigations, though the media will soon lose interest, dazzled by all the bright shiny objects of the new Trump Administration. The courts will continue to play an important role in the fight for transparency in the emails case. Lawsuits from Judicial Watch and others will continue to produce documents.

Thousands, possibly tens of thousands, of emails may yet emerge—recall that the FBI recovered about 15,000 pages of records related to Mrs. Clinton’s “deleted, personal” emails and turned them over to the State Department, which has yet to release them. (Read about Judicial Watch’s latest legal moves in the case here.) Recall, too, that Mrs. Clinton said there were about 30,000 of those deleted, personal emails. Plus thousands of possibly relevant emails from the Anthony Weiner computer. Plus a flow of illicitly obtained emails from Wikileaks.

How will the nascent Trump White House handle the email caper? Its actions will say a lot about whether the administration will continue the smash mouth tactics of the campaign or adopt a new approach.

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Transparency Failures; NY State of Corruption; Bill & Loretta

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Greatest Transparency Failures Ever? In one week, thank God, the presidential election will be over. But on one issue there is not a whit of difference between Hillary Clinton and Donald Trump. Both represent the greatest transparency failures in the history of presidential politics.

To Clinton watchers, Mrs. Clinton has followed a familiar pattern of denial, delay and destruction of records in the email saga that now threatens to sink her presidential campaign. As I noted recently in the Wall Street Journal, the email imbroglio is part of a long history of the Clintons’ war on transparency. In 1993, for example, as the Whitewater investigation in Arkansas heated up, top White House aides argued for full disclosure of documents. The Clintons rejected that advice—Mrs. Clinton was vehemently opposed—and Whitewater documents dribbled out for years. The documents repeatedly embarrassed the president and first lady, but failed to provide evidence of any criminal acts.

Mr. Trump has followed a similar path with his refusal to release his tax returns, his seemingly endless lawsuits and threats of lawsuits, and his rhetorical assaults on the First Amendment. He recently got a taste of the Whitewater treatment when three pages of his 1995 tax returns were leaked to the New York Times, resulting in a fire storm of bad publicity. But as with the Whitewater documents, on close examination the three pages of Trump tax returns showed no criminal wrongdoing.

The lesson here? Full disclosure can be good politics as well as good policy. Both candidates would have benefited from getting out in front of withheld documents. The next president could transform Washington with smart Freedom of Information Act reform. It’s not brain surgery: tighten FOIA loopholes; penalties for delays by repeat offenders; and triple the number of FOIA officers at agencies. FOIA gets no respect. More power and money—the two things Washington respects most—would change that.

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