The Trump family's conflicts of interest with their businesses and investments had got the vast majority of media attention... so this completely flew under the radar, at least for me. A very long but interesting report on Icahn's short-lived and problematic "advisory" role with the Trump administration, with a good background on who this man is for those who are not familiar with the name:
http://www.newyorker.com/magazine/2017/08/28/carl-icahns-failed-raid-on-washington
It's worth the whole read... not familiar with the details of this subject matter of the wheelings and dealings in D.C., it was pretty fascinating to me.
Edit: Aw crap, please move this to Off-Topic
http://www.newyorker.com/magazine/2017/08/28/carl-icahns-failed-raid-on-washington
It's worth the whole read... not familiar with the details of this subject matter of the wheelings and dealings in D.C., it was pretty fascinating to me.
Icahn works from a suite of offices, atop the General Motors Building, in midtown, that are decorated in the oak-and-leather fashion of a tycoon's lair in a nineteen-eighties film. During that decade, Icahn made his reputation as one of the original corporate raiders, pioneering the art of the hostile takeover and establishing himself as a human juggernaut—a pugnacious deal machine, all avarice and swagger. By the time he called the E.P.A., he was eighty, and long since unburdened of any personal or dynastic need to make money; according to Forbes, he is worth approximately seventeen billion dollars. Plenty of titans who are not as old and not as rich as Icahn have opted to devote their remaining years to spending their money, or to giving it away. Not Icahn.
Icahn's role was novel. He would be an adviser with a formal title, but he would not receive a salary, and he would not be required to divest himself of any of his holdings, or to make any disclosures about potential conflicts of interest. ”Carl Icahn will be advising the President in his individual capacity," Trump's transition team asserted.
In the months after the election, the stock price of CVR, Icahn's refiner, nearly doubled—a surge that is difficult to explain without acknowledging the appointment of the company's lead shareholder to a White House position. The rally meant a personal benefit for Icahn, at least on paper, of half a billion dollars. There was an expectation in the market—an expectation created, in part, by Icahn's own remarks—that, with Trump in the White House and Icahn playing consigliere, the rules were about to change, and not just at the E.P.A. Icahn's empire ranges across many economic sectors, from energy to pharmaceuticals to auto supplies to mining, and all of them are governed by the types of regulations about which he would now potentially be advising Trump.
Within days of the victory, according to people familiar with the situation, Trump had enlisted Icahn to help him staff major government agencies. Icahn employees began reviewing the references and résumés of potential Cabinet appointees. It has frequently been remarked that Trump has stacked his Administration with plutocrats. Less often acknowledged is the degree to which many of these appointments bear Icahn's fingerprints. On November 15th, Icahn tweeted, ”Spoke to @realDonaldTrump. Steve Mnuchin and Wilbur Ross are being considered for Treasury and Commerce. Both would be great choices." He added, ”Both are good friends of mine but, more importantly, they are two of the smartest people I know." Two days later, Icahn told the Fox Business Channel that he had just had dinner with Mnuchin, and had ”urged Donald to consider him." He continued, ”I'm not going to be the one to announce it, but I do believe he will get the job." On November 30th, Mnuchin did.
When potential Cabinet secretaries visited Trump Tower to meet with the President-elect, they were sometimes sent for a second interview—with Icahn. On the day that Jay Clayton was announced as Trump's choice to head the Securities and Exchange Commission, he stopped by Icahn's office for a meeting. Appearing on CNBC in December, Icahn defended his role as a talent spotter for the Trump Administration. ”Over the years, you develop instincts for picking the right C.E.O.," he said. ”Is there anything wrong with me saying, ‘This guy is the right guy for this job at this time'? It doesn't mean Donald is going to take my advice, necessarily."
When Scott Pruitt visited Trump Tower to discuss the top job at the E.P.A., the President-elect concluded the interview by instructing him to walk two blocks uptown to meet with Icahn. Trump, according to a Bloomberg News account, told him, ”He has some questions for you." Pruitt was precisely the sort of candidate that Icahn might favor. A fierce opponent of environmental regulation, Pruitt had spent years, as the attorney general of Oklahoma, suing the agency that he was now in talks to oversee. Even so, Pruitt knew that Icahn would likely want to discuss one particular issue—rin credits—and as Pruitt and an aide headed up Fifth Avenue they searched the Internet for information on the credits system and its impact on Icahn's refiner.
Pruitt was nominated on December 8th. The next day, Icahn said in an interview with Bloomberg News, ”I've spoken to Scott Pruitt four or five times. I told Donald that he is somebody who will do away with many of the problems at the E.P.A." He continued, ”I do think he feels pretty strongly about the absurdity of these obligations, and I feel that this should be done immediately." One reason that the rin market is so unstable is that the price of the credits is extremely sensitive to developments in the news that might affect their future value. On the day that Pruitt was appointed, the price of rins plunged—a welcome outcome for Icahn, because it would cost CVR less to purchase the credits that it needed to fulfill its regulatory obligation.
But Icahn's first foray as a Presidential adviser was by no means a complete failure. Icahn had spent the second half of 2016 complaining bitterly about CVR's obligation to buy rins. But, when CVR released an earnings report in April, 2017, it emerged that the company had actually been selling them. Reuters subsequently reported that, when the price of rins was high, CVR sold millions of the credits. The company would eventually need to turn over its quota of credits to the E.P.A., yet in the months before its annual deadline it was quietly selling them off. This was extremely unusual. ”To my knowledge, this is the first time you had someone taking a short position in the rin market," Tristan Brown, the suny professor, told me.
...
In the near term, at least, Icahn's bet paid off. As soon as the news broke that an executive order on the point of obligation was imminent—and that Icahn and Dinneen had reached a deal—prices of rins plummeted. Jim Stock, a professor at Harvard who studies the energy sector, pointed out that ”if an individual has influence over expectations in this market, he can end up moving prices." When rin prices dropped, it afforded CVR an opportunity to cover its short, buying back the rins it needed to meet its regulatory obligation at a steep discount.
Because CVR will not comment on the trades, it is impossible to know how many credits were bought during this period. Normally, the refiner posted a loss for the sum that it spent on rins each quarter, and those losses had lately amounted to as much as sixty million dollars. But, on a shareholder call in April, a CVR representative said that in the first quarter of the Trump Administration the company had experienced a ”negative" loss of six million dollars—that is, a profit. Tristan Brown told me that the notion of a profit resulting from compliance with the Renewable Fuel Standard was unheard of for a merchant refiner like CVR. When I asked a longtime rin trader about this gambit, he said, ”Either Icahn was extremely lucky or he knew something that other people didn't."
I asked several people who know Icahn whether he even has policy interests beyond his own investments. They noted Icahn's commitment to education—he has built eight charter schools in the Bronx—but struggled to offer other examples. Someone who used to work for Icahn told me, ”Carl has zero interest in the details of regulation. He has a general feeling that he doesn't want regulations to affect him, but it's not like he's going to be consulting the Federal Register and making policy recommendations. It's ludicrous." When a Bloomberg reporter pressed Icahn about sectors beyond oil refining where he felt that regulation was excessive, he spoke of railcars and liquid natural gas—two heavily regulated industries in which Icahn has extensive holdings.
The White House official who would, in theory, police Icahn's status is Stefan Passantino, the deputy counsel to the President for compliance and ethics. Passantino was responsible for ”counselling" Kellyanne Conway, the Presidential adviser, after she sparked an outcry by promoting Ivanka Trump's apparel line during a Fox News interview. In the view of Trump Administration officials, Passantino laid to rest the Icahn controversy with his February declaration that Icahn was ”simply a private citizen." Kelly Love, the White House spokeswoman, said, ”Mr. Icahn does not have a position with the Administration, nor a policymaking role."
It is ironic for Passantino to rule on the controversy surrounding Icahn's conflicts of interest—because Passantino has a conflict of his own. On June 28th, Walter Shaub, the head of the Office of Government Ethics, wrote a letter pointing out that Passantino, in his mandatory disclosures as a full-time White House employee, noted that before joining the Administration he had been a corporate lawyer. He listed the clients for whom he had done work in the two years prior to joining the government. One of them was Icahn. At the time that Passantino was initially queried about the propriety of Icahn's position, he made no mention of this relationship.
Two weeks after Shaub sent his letter, he resigned, saying that he could no longer meaningfully perform the function for which the Office of Government Ethics was designed. Shaub warned that the United States was facing a ”historic ethics crisis." The White House released a statement lashing out at Shaub, dismissing his concerns as ”grandstanding."
...
For all of President Trump's fulminations about the danger of leaks, his White House has a bizarre habit of authorizing spokespeople to talk with the press on the condition that their names not be mentioned. When I asked the White House for an interview with Passantino, to discuss how he had vetted Icahn's position, a spokeswoman replied that Passantino had been ”recused on any matters related to Carl Icahn," because Icahn was a former client. This was the first I had heard of any recusal, and I asked when it had happened. On the first day of the Administration, the spokeswoman replied.
If the White House spokeswoman was correct, then at the time that Passantino issued the Administration's judgment that Icahn's role posed no ethical conflicts he was already recused from offering legal advice on precisely that question. ”That's not how recusal works," Shaub told me. ”Recusing yourself means not delivering the White House's legal theories about whether Icahn is an employee." The spokeswoman maintained that, when Passantino made his declaration, he wasn't making a legal judgment, but ”merely reiterating a fact." Richard Painter, who used to hold Passantino's job, told me that the White House's repeated assertion that Icahn is simply a private citizen is ”bogus," adding, ”The ethics shop in this White House is not very good."
On August 14th, I asked the White House to confirm that Icahn was still a special adviser to the President. The spokeswoman e-mailed me back: ”Icahn is NOT ‘a special adviser to the president for regulatory reform.' " This was certainly news. In my conversations with Icahn and his lawyer, I had not developed any impression that his status had changed. Was the Administration cutting him loose?
I wrote back to the spokeswoman, asking when Icahn had been let go. She replied, ”There was no ‘effective' end date, because there was never a formal appointment or title after January 20." This was transparently false; Icahn had been named a special adviser to ”the President," not to ”the President-elect." On March 1st, Icahn's company told the S.E.C. that he was ”currently" a Trump adviser. And why had the White House lawyer, Stefan Passantino, recused himself on January 20th from ”any matters related to Carl Icahn" if, as of that very day, Icahn had no role in the Administration?
Instead of simply breaking off a questionable liaison, the White House seems intent on going further, insisting that the liaison never happened in the first place. But, in the event that state or federal investigators do examine the legality of Icahn's role in the early days of the Trump Administration, this heedless revisionism is unlikely to withstand scrutiny. After all, if Icahn had really been dismissed on the first day of the Administration, it might have behooved the White House to tell Bob Dinneen, or the senators who wrote all those letters. Or Icahn.
Edit: Aw crap, please move this to Off-Topic