Mnuchin business dealings reveal gap in conflict-of-interest laws

Former Treasury Secretary Steven Mnuchin and former U.S. ambassador to Israel Daniel Friedman’s reported pursuit of foreign business opportunities in the Middle East within months of leaving the administration reveals a significant gap in criminal conflict-of-interest laws. 

The law that governs former administration employees has no restrictions barring former senior officials from seeking funding from sovereign wealth funds or business opportunities in foreign countries where they had significant official responsibilities. This leaves officials like Mnuchin and Friedman free to cozy up to foreign government officials and business while in office in order to take advantage of those relationships after leaving the government.

In February, the Washington Post reported Mnuchin was launching an investment fund with funds from sovereign wealth funds in the Gulf States. More recently, Mnuchin and Friedman visited Israel seeking investments while apparently raising billions of dollars, including from Gulf nationals. There are reports that former senior White House adviser Jared Kushner, who was the architect behind the Trump administration’s Middle East peace initiative known as The Abraham Accords, is also launching an investment fund in the coming months and will establish an office in Israel. 

Mnuchin and Friedman’s foreign business dealings raise significant questions about whether they were motivated by their personal post-administration business interests rather than U.S. foreign policy and national security interests while in government. This includes a controversial licensing decision that released Israeli billionaire, Dan Gertler, from U.S. sanctions in the final days of the Trump administration. Sanctions against Gertler were originally imposed in December 2017 due to Gertler’s “opaque and corrupt mining and oil deals in the Democratic Republic of Congo,” but were inexplicably lifted at Mnuchin’s direction when Treasury’s Office of Foreign Assets Control issued a special license on January 15, 2021, unblocking Gertler’s assets and permitting Americans to re-engage in transactions with him and his network.

Pressure to lift Gertler’s sanctions reportedly came from Israel, which Mnuchin visited on January 6 and 7, just a few days before sanctions were lifted. The full extent of Friedman’s involvement is not known, but Friedman reportedly “supported” Mnuchin’s decision, along with then-Secretary of State Mike Pompeo. These three officials apparently arranged for the sanctions to be quietly lifted, while keeping State Department officials in charge of United States relations with Africa in the dark. The New York Times reports that these State Department officials were reportedly “unaware that such a move was about to be taken” and would have opposed it. With “no public documentation justifying the move,” the decision by Mnuchin to grant Gertler a special license not only “defied Treasury Department norms,” but “stunned and angered American diplomats in Washington and Africa and government officials and human rights activists” in the DRC. 

Even though the Biden administration reimposed sanctions against Gertler on March 8, their effectiveness was significantly reduced as a result of Mnuchin’s interference. Gertler likely arranged for most, if not all, of his previously blocked assets to be transferred to places outside U.S. jurisdiction. Once unblocked assets are removed from U.S. jurisdiction, they are unlikely to be returned. To shed light on the value of Gertler’s blocked assets and the basis for the license, CREW launched an investigation, which is the subject of pending litigation. 

By reimposing sanctions on Gertler, the Biden administration attempted to restore U.S. foreign policy interests. In doing so, the State Department issued a highly unusual statement that “the license previously granted to Mr. Gertler is inconsistent with America’s strong foreign policy interests in combating corruption around the world, specifically including U.S. efforts to counter corruption and promote stability in the DRC.” 

In addition to visiting Israel in January 2021, Mnuchin also visited Qatar, Saudi Arabia, Egypt and Sudan, but had to cut short his planned visit to Kuwait after the January 6 attack on the U.S. Capitol. Mnuchin visited the Middle East in October 2020 as part of a delegation which included trips to Bahrain, the UAE and Israel. In February 2020, Mnuchin met with government officials and business leaders in the UAE and Qatar after traveling to the G20 Finance Ministers Conference in Saudi Arabia. In November 2019, Mnuchin traveled to Qatar for an official visit. 

Treasury travel records show that Mnuchin regularly met with government officials and business leaders on official travel to Israel and other Middle Eastern countries. In order to obtain more details about whether Mnuchin’s foreign government interactions and travel to countries in the Middle East were influenced by his post-administration plans to launch an investment fund, CREW is seeking records pursuant to a FOIA request, which is also the subject of pending litigation. 

A one-year cooling-off period prohibiting foreign business activity by former senior officials like Mnuchin and Friedman would help mitigate concerns that, as government officials, they could act against U.S. foreign policy and national security interests to further their own personal post-administration business interests. The proposed cooling-off period would cover efforts to seek funding from sovereign wealth funds and business dealings in foreign countries where they had official responsibility in the one-year period prior to their departure from government. 

Given that the Biden transition was well underway in January 2021 and continuity of government concerns were paramount, the timing of Mnuchin’s trip to Israel and the Middle East in the last days of the Trump administration was highly questionable. The trip served no discernible purpose other than to strengthen Mnuchin’s own personal ties to the region. Mnuchin’s repetitive travel to Israel and other Middle East countries prior to his departure and his post-administration foreign business activities highlight the serious gap in our criminal conflict-of-interest laws, which can only be addressed by legislative action.