Kushner and Corruption
The circumstantial case for corruption by Kushner is growing.
NY Magazine has a round-up of some of the concerns over Jared Kushner: Qatar Refused to Invest in Kushner’s Firm. Weeks Later, Jared Backed a Blockade of Qatar.
What might be motivating Kushner to leverage his current position in the White House to his own personal gain? Well,
In 2007, Jared Kushner decided that the real-estate market had nowhere to go but up. And so the 26-year-old mogul decided to plow $500 million of his family’s money — and $1.3 billion in borrowed capital — into purchasing 666 Fifth Avenue for twice the price it had previously sold for. Even if we’d somehow avoided a global financial crisis, this would have been a bad bet: Before the crash, when the building was almost fully occupied, it generated only about two-thirds of the revenue the Kushners needed to keep up with their debt payments.
After the crisis, however, things got really hairy. The Kushners were forced to sell off the building’s retail space to pay their non-mortgage debt on the building — and then to hand over nearly half of the office space to Vornado as part of a refinancing agreement with the real-estate giant.
The office space that the Kushners retained is worth less than its $1.2 billion mortgage — which is due early in 2019. If their company can’t find some new scheme for refinancing and redeveloping the property by then, Kushner will have cost his family a fortune.
And, hence:
In the months between his father-in-law’s election and inauguration, Kushner divided his time between organizing the transition, and seeking capital from (suddenly quite interested) investors aligned with foreign governments: During that period, Kushner attempted to secure a $400 million loan from the Chinese insurance firm Anbang, and a $500 million one from former Qatari prime minister and billionaire investor Sheikh Hamad bin Jassim al-Thani, also known as “HBJ.” Anbang pulled out once the deal attracted critical media scrutiny, and HBJ jumped ship when the Kushners failed to find a second major source of capital.
In those same weeks, Kushner met with Sergey Gorkov, head of the Kremlin-affiliated Vnesheconombank. The senior White House adviser has insisted that this meeting was strictly political; Gorkov maintains it was strictly business.
All of these interactions are currently being scrutinized by Special Counsel Robert Mueller.
They have also, apparently, been studied by top government officials in the United Arab Emirates, China, Israel, and Mexico — all of whom have privately discussed strategies for exploiting Jared Kushner’s business interests for geopolitical gain, according to a report from the Washington Post on Wednesday.
All of this underscores why Kushner does not have a security clearance and should easily demonstrate why he should not be working in the White House. He clearly and unequivocally has conflicts of interest given his personal and family business needed. This is an excellent illustration of two related facts. First, just because one is wealthy does not mean one is immune from corruption in public life (indeed, the stakes of one’s corruptibility may simply be higher). Second, there is a reason we want those serving in government to build as big a wall as possible between their time in public life and their private businesses.
And if America’s allies and adversaries are looking for further (circumstantial) evidence that U.S. foreign policy might be for sale, the New York Times provided some this week, when it revealed that Kushner’s family company had won $500 million in financing last year from a pair of American firms right after their top executives had White House meetings with one Jared Kushner.
I am fairly confident in saying that if we in the US were seeing this kind of behavior from the in-law of the president or prime minister of another country, we would not have a hard time coming to the conclusion that the dealings in question were corrupt.
Kushner’s portfolio in this White House is absurd on its face (Middle East Peace, modernizing the bureaucracy, criminal justice reform, to name only three tasks assigned to him), even if he was a well-trained wunderkind. It is beyond belief when one considers that he is a real estate developer whose main qualification is being born into the right family.
As the NY Mag piece aks:
Even if this is appearance is deceiving, why isn’t the mere semblance of such high corruption enough to bounce Kushner from the White House? Are Kushner’s personal skills really more valuable than his conflicts of interest are toxic? Is a real-estate heir who has no policy-making experience, background in geopolitics, or security clearance — but does have significant business interests in Israel — really such an ideal choice for brokering peace in the Middle East?
Indeed, although not surprising for a White House that clearly does not understand government or governing and wishes to run the executive branch as much like a family business as is possible.
This should be obvious: someone who is in a compromised position financially, and who could easily benefit from a high government position, should not be in a high government position.
Now THIS is an actual scandal. That’s because it involves specific allegations about specific people doing specific things, the impact and importance of which can be described in specific terms.
Hopefully, all the hysterical paranoid screaming about “Collusion!” hasn’t poisoned the well.
Mike
It is beyond belief that he is still allowed anywhere near the White House. He cannot fulfill the dictates of his policy portfolio without a high security clearance, and this scandal clearly shows why he shouldn’t have a security clearance. Frankly he’d be better off in New York, focusing on fixing this mess he got his family into.
Collusion has always been a tough item to prove, but being indebted to the Russian mob and money laundering might not be.
It’s unclear how much control Jared Kushner has ever had over the company. But whoever decided to make the big jump from New Jersey developer to NYC real estate king really f—ed the whole thing up.
Of course Kushner is corrupt. That’s been obvious from Day 1 to anyone who could read a newspaper. And of course Trump knew how dirty his son-in-law was, and yet gave him a portfolio encompassing pretty much the entire world.
So, let’s see if we can get @MBunge to connect the dots. He admits Kushner is a problem, insists Trump is not. Yet Trump hired Kushner. Trump allowed him access to Top Secret information while knowing that Kushner was compromised. Trump keeps him on, even now.
Can the Bung do it? Can he add 2 + 2 and come up with the right answer? Oooh, the suspense!
He’s not even smart enough to meet the people he’s asking bribes from somewhere other than the White House. He may as well carry a sandwich board saying “INFLUENCE FOR SALE.”
@Kathy:
He takes bribes in the White House, apparently unaware that every intelligence agency on earth is watching him. That’s desperate, stupid or both. Then again, Kushner knows he’s Christofuh to Trump’s Tony Soprano, he knows he’s in a crime family, and silly boy, he thinks he’s safe because he’s a made man. The entire administration is engaged in looting because that’s the essential Trump grift from Trump steaks to Trump times to Trump university to Trump casino to Trump Panama: grab the money, stiff everyone, declare bankruptcy and skip away.
It is being established in several places I have visited this weekend that much of this story corroborates the Steele dossier and that those verifying details involve Carter Page. Has anyone noticed that Mr Page seems to have a strange immunity from charges by the Mueller team? Isn’t that funny?
tic tock tic tock tic tock
It’s almost as bad as when someone asked Hilary’s state department for passports and didn’t get them.
Of course he is corrupt. Of course Trump is corrupt. Why does the Republican Party keep being “shocked that this type of thing” is going on, where “thing” is corruption, nazi-level racism, misogyny, etc? One huge reason is that for decades the average Republican voter has been trained to believe that when a Republican does something corrupt, racist, etc, they are obligated to imagine some innocent explanation, no matter how ridiculous, and accept that. And each incident must be taken separately. There can be no accumulation of evidence.
@MarkedMan:
I don’t think Republicans, as general rule, are shocked by this at all. They are, rather, in denial/rationalizing it all.
Thank you for making the point that being rich doesn’t make you immune from corruption. So many Trumpers seem to believe otherwise. I would argue that the stakes don’t even have to be high. Some people are corrupt out of habit or the thrill of it.
@MBunge:
Trump poisons the well every day.
As you know, Mike, if it turns out that Trump and his people knew when the Russians were going to release hacked emails, the case for ‘collusion!’ (or conspiracy!) to engage with a foreign government to influence our election is really on. Me? I’ve always thought that perhaps Trump’s possible Russian money laundering activities will take him down.
@michael reynolds:
To put things into perspective:
Kushner Cos. is mortgaged to the hilt. 666 has a $1.2 billion lump sum mortgage due in February, 2019. Nothing – not one dime – has been paid on the principal, and the Kushners are on the hook for $600 million of that payment (Vornado is on the hook for the rest).
Vornado is cash rich, has a healthy income stream and can afford its end of the situation. The Kushners can not, and barring their obtaining sufficient financing (which is unlikely with a half interest in a property that currently has a 30% vacancy rate, a market value for the whole building which is less than what the Kushner’s owe for a 49.5% ownership interest, and which is hemorrhaging increasing losses) the likely outcome of this situation is Vornado stepping in to swing a deal which forces the Kushners to cede ownership of their half of the property, thereby gaining control of the property in the entirety, and shortly thereafter refinancing on much more favorable terms.
The short version of that is: Vornado will gain a flagship property at a discount, Kushner & Friends will pay some sort of ugly cashout as partial repayment and cede their portion of the property in lieu of the rest of the debt. Speaking frankly, it is likely to torpedo Kushner Cos. altogether and cost the family several hundred million in lost net worth. From their perspective, it’s the Apocalypse.
This is why the kid is running around looking under every rock he can find, no matter how dirty. The alternative is financial ruin. He’s willing to risk this sort of stupidity because it’s the only choice left open to him other than sitting back and waiting for the axe to fall.
The sad thing is that it’s pointless – the axe is going to fall on them anyway. That’s been coming since the day he paid double what the building was worth at the height of its market and borrowed every dime of it.
@HarvardLaw92:
Did you see this? Someone is saying that Kushner wants to buy out Vornado. Sounds dubious to me.
Note: as much as I personally loathe Steve Bannon (and that’s quite a lot), the guy 1) isn’t stupid and 2) is one of us (the Street). Add to that having been positioned at the center of these people and their drama for quite a while, and he’s in an exceptionally informed position to comment on what it portends. What he had to say to Michael Wolff is, in my opinion, prescient:
If it’s even possible, Little Kushner is a worse businessman than his father-in-law. He has single-handedly managed to destroy his family business. Stay tuned – it will get a great deal more interesting.
@Modulo Myself:
Fantasy. Few lenders would even be willing to look at the deal under normal circumstances, and the kid has managed to put himself into a position where the added scrutiny will repel even the lenders of last resort. They’re desperate, and desperate people will try anything – no matter how far fetched – to avoid disaster.
The outcome for that property, IMO, leads through Vornado. Kushner Cos. can’t (even remotely) afford to exit Vornado on its own, and the necessary financing just isn’t available to it now. Bannon did get one thing right – the refinancing in 2011 essentially cross-collateralized everything they own. If they don’t resolve this one – and I see no way that they’ll be able to accomplish that – once the existing lenders are through raping its assets post February, Kushner Cos. will essentially be out of business.
comment in moderation 😐
Hiring relatives, alone, is a huge problem. Even in Latin America that’s something that most politicians don’t do.
@HarvardLaw92:
Any idea whether Ivanka is hip to all this corruption around her husband?
@Andre Kenji de Sousa:
I think this is less caudillo-ism (is that a word?) than Gambino-ism. In the world of crime there’s a synonym for ‘outsider’: witness. Everyone around Trump is dirty because only the dirty are seen as safe, as inside rather than outside.
One of the reasons Trump is panicking is that he’s being forced to shed knowing co-conspirators – Panagopolous, Page, Manafort, Gates, Stone, Flynn, Little Flynn, Omarosa, Hope Hicks, potentially even Jared and Ivanka – and he can only replace them with non-conspirators, outsiders: witnesses. He’s in a real bind. No one with an ounce of sense or integrity (or concern about legal bills) will work in this White House, and Trump is just about out of faithful minions. It’s one thing to run a con with a handful of people, it’s a whole ‘nother level running a country with no one but dregs to call upon. Which leaves Kelly as acting president, slowly insinuating his own people and building his Cask of Amontillado wall around the Mad Man-Child. We are watching a slo-mo coup, probably motivated by patriotism, but a coup nevertheless. Kelly is the new Edith Wilson.
@michael reynolds:
Difficult to say. She converted to Orthodox, which is highly patriarchal. On the other hand, she’s not stupid. Nobody who grew up in New York is unaware of just how slimy Charlie Kushner is, and she married his son anyway. Maybe she subconsciously married her father …
IMO she either knows and doesn’t care, or chooses “not to know” because it’s easier to pretend.
@Andre Kenji de Sousa:
Agreed.
@HarvardLaw92:
Something along these lines seems likely. It seems improbable that she doesn’t know to some degree.
One thing to keep in mind is that Kushner believes his dad (who served 14 months in prison) was given a bad rap:
Charles Kushner, for the record, was convicted of illegal campaign contributions, tax evasion, and witness tampering–the latter specifically referring to his hiring a prostitute in order to blackmail a witness.
@Kylopod:
It was his own brother-n-law, and Charles Kushner sent the tape of the sexual encounter to his own sister.
I’ve often wondered how Jared rationalizes that.
@Modulo Myself:
Note: they have some fantasy plan of knocking down the building and replacing it – which honestly is by far the best course of action for it. It has an extremely dated 1950s floor plan, with close spaced columns and the generally dreary, dark internal feel of buildings which remain from that era. Speaking frankly, it was an ancient dinosaur when Little Kushner grossly overpaid for it, and that has only gotten worse with time. Between the building’s horrible aesthetics and the general trend in the NYC commercial real estate market towards shiny new open floor plan developments on the west side, they’re stuck with a white elephant that doesn’t generate enough rental income to even cover the interest payments on its mortgage, much less service the debt.
Knocking it down is the way to go. Realistically speaking, it’s worth more as dirt than it is as it currently stands. Unfortunately, there is no way that option can be made to work within the confines of the financial disaster the Kushners would be trying to resolve by doing it. It’s an option which offers no short-term (or, frankly, medium-term) cash flow, meaning nobody in NYC would touch it even if Kushner was financially sound and its public face wasn’t mired up in the legal morass he’s currently in. That sort of deal requires players willing to go for the long game – essentially sovereign wealth funds controlled by entities looking to get a foothold in Manhattan real estate who are either flush enough or insulated enough to weather the short-term hits to the balance sheet it would require. That short list is almost entirely comprised of foreign governments and people you don’t want to be seen having lunch with (lest you find yourself being subpoenaed). Jared’s Mueller mess is garlic for both of those, so it just doesn’t work for them.
The sad thing is that it was a white elephant when they bought it. Tishman had been carrying it for years, primarily I suspect out of some sort of sentimental attachment to its past, but they saw they light and finally rid themselves of it. As I understand it, Charlie Kushner’s accountants told him flat out that the numbers didn’t work – could never work – but they bought it anyway at a ridiculous price. It was such a shitty deal that even Barclays, the perpetual second-tier of lenders who’ll agree to finance almost anything, demanded – and received – some $535 million of the $1.8 billion purchase price in short-term mezzanine, at a rate that would stop a bulldozer in its tracks. Kushner & Friends cheerfully signed anyway.
Rich and Jerry saw these clowns coming from a mile away, and financially gang-raped them. Worse, Kushner & Friends willingly bent over for it. It doesn’t say anything positive about Kushner business acumen …
@CSK:
He’s gone on record defending it. According to him, they tried to screw his father, so his father screwed them back. In terms of morality anyway (not acumen …), these people make the Borgias look like the Cleavers.
@HarvardLaw92:
I’ve never been in it, but I’ve been in similar. Dreary is one way to put it. JP Morgan’s building, on the other hand, I happen to like, at least from the outside.
Funny that they didn’t even see the west side coming. I mean, the High Line went up a couple years later.
@Modulo Myself:
I assume that you’re talking about 270 Park (their current HQ, used to be Union Carbide). You know that JPMorgan Chase just announced a few weeks ago that they plan to tear it down and replace it with a 70 story showpiece of a building starting early next year, right? Very exciting.
I can’t entirely blame the Kushners for not intuitively knowing that Manhattan was heading west. Their entire experience up to that time had been outlying areas (mostly Jersey) and apartment complexes all along the East Coast. Manhattan real estate is unique, and they weren’t players in that arena, so I can (sort of) give them a pass for not knowing where it was headed.
I can’t, however, give them any sympathy for not listening to the advice of people who did know better. They were warned, and they did it anyway. Too bad, so sad. Let me know when they’ll be auctioning your Bentley.
Kushner as always struck me as eerily robotic as well as totally lacking in morals and ethics. And not…quite…human. Humanoid, yes.
@Steven L. Taylor: She’s allegedly the smart one in the family.
Who knew entrenched family-based corruption practices could be so complicated?
And in terms of intelligence and guile, they make the Cleavers look like the Borgias…
@michael reynolds: Nepotism is common in countries where people don’t trust state institutions – you rely on relatives doing what the State should be doing. Politicians also hire relatives when they think that they should be serving themselves, not the public. It’s also common in countries where the economy is not competitive, so, companies, insulated from competition, can hire relatives.
It’s not a good idea. It’s difficult to fire a relative, and it’s hard to believe in the coincidence that the most qualified person happens to be your relative.
The sole fact that Trump is hiring relatives is completely pathetic and absurd.
@HarvardLaw92: Sounds like lil Kushner is running around looking for a nouveau-riche Chinese with more money than sense who wants to get a piece of NYC real estate.
Unfortunately, by comparison to the Japanese buying up real estate in the 1990s (where their money they dished out with abandon really was generated by a massive property bubble back in Japan), nouveau-riche Chinese aren’t a) clueless about money or b) stupid about NYC real estate. So I expect that this will be a fail as well.
(Why was Kushner so dumb to buy something at twice what anyone else would pay for it? Was he wanting to play Big Cheese to impress his father? Or impress Trump?)
@Steven L. Taylor: Also don’t forget this is the woman who claims to be in charge of her business but then suddenly doesn’t have a clue as to what is going on when her company comes out with shoes that look suspiciously like copies of a well-known Italian brand.
I suspect that Ivanka will bat her eyes and claim “plausible deniability” for everything she can get away with.
@grumpy realist:
What is the likelihood that Ivanka’s business suddenly saw new investors from Ukraine and Kazakhstan in mid 2016?
@grumpy realist:
Little Kushner is looking for anybody with a pile of money who would be willing to lend into a hole in order to bail his family out of the consequences of a bad decision. Important distinction there: they want a solution that cashes them out and preserves the mountain of collateral they pledged back in the 2011 refinance to buy themselves time. They want to come out of Armageddon whole, which is a fantasy. That’s the scenario that I spoke of above when I said their only options in that regard are foreign government sovereign wealth funds (note the stupidity with Qatar) or shady operators (Anbang, anybody?). No legitimate lender is going to come within a mile of the stinky deal they’re trying to sell. I suspect that Little Kushner thought he’d be able to use his current position to help facilitate a solution to his family’s problems, but he’s finding that the added scrutiny is actually further limiting (if not entirely eliminating) the few options they had left. If he had had any sense, he would have declined an official position and just used the implied association with Trump to grease the deal, but as were seeing, he’s a nimrod.
Little Kushner pushed the deal because Charlie Kushner’s ego wanted to be a player in Manhattan. Sycophant son tries to impress gangster father, creates disaster. LK would not have done what he did without Charlie’s sign off, so maybe they’re all just idiots. That said, Jared’s signature is on the paperwork, so it’s his baby.
Trump is laughed at. Charlie Kushner wanted to swim with the Tishmans and Speyers and Solows and Zuckermans – the true sharks – and, predictably, they ate him alive. This current drama is just the family trying to delay the funeral.
@HarvardLaw92: I think I’ll take the “They are all idiots” for 50$.
@HarvardLaw92:
That’s a really intriguing story idea. Someone could build a whole movie out of that. But we would need a character that the audience could relate to. Maybe a younger brother who is aware of the moral implications of his family’s business. It could be a five act Shakespearean tragedy only set in a post- WW2 America. And the family should be Italian not Jewish – it’s more relatable. We have to sell seats west of the Hudson, you know, in order for this idea to make any financial sense.
@HarvardLaw92:
Wow, that sounds exactly like a guy I remember from the 80s in NY real estate, but I can’t remember his name. [eye roll emoji didn’t take–insert here]
@grumpy realist:
@HarvardLaw92:
I will give Trump a sliver of credit for convincing people – who generally have no idea what it is to be a ‘successful businessman’ or create a ‘brand’ that people come to associate with excellent quality – that he, Trump, is a successful businessman, and his properties and products are of the highest quality. It is a remarkable achievement especially in consideration of his multiple bankruptcies and the flimsy ‘lifestyles of the rich and famous’ quality of his brand.
What’s the saying? Trump is the working man’s idea of a very successful person.
He’s certainly all of that.
I think Trump is going to find, if he hasn’t already, that his ‘brand’ is now damaged because figuratively, the curtain is pulled aside, and everyone, at home and abroad, now sees Trump unfiltered, such as he is, and quality is nowhere in sight, and he evidences nothing that suggests that he knows how to lead, to govern.
@HarvardLaw92: Just wondering — where do the Kalikows fit into this ecosystem? I only ask because I walk past their building on my way to Grand Central…
@al-Ameda: I think a lot of street-smart working-class men knew exactly how much of a Potemkin village Trump was and is….”All hat, no cattle” is the comment I’ve heard from more than a few of them.
It’s the people who would otherwise be believing Nigerian spam email who are taken in by Trump. And that is a category of stupidity which stretches across all classes, lower and upper.
@al-Ameda: “I think Trump is going to find…that his brand is now damaged…”
Vanity Fair has a video of a workman in Panama taking the Trump name off the formerly Trump managed hotel in that country. The T-Organization has been evicted by Panamanian police.
@Just ‘nutha ig’nint cracker:
Touches finger to nose 🙂
@JohnMcC:
Indeed. I’ll have to read the VF account. This Sunday’s NYT had an interesting article about the fight with the Trump management team that runs the Panama City operation. Sounds like the Trump team is bleeding the operation.
I’m at the point where I wonder why any hotel-resort company would license the Trump people for anything?
@Just ‘nutha ig’nint cracker:
Both third generation in the family business. There’s a rule about that.
@HarvardLaw92:
This is one of my favorite examples of how pop culture can create instant etymology.
Nimrod (or Nimrud, or Nimruth, or…) was a semi-legendary King of Mesopotamia, one of the first powerful kings to have a historical record. In the bible, Nimrod is referred to explicitly as “a mighty hunter by the favor of the Lord”. To refer to someone as a Nimrod, in the 16th century, was to call them a mighty ruler. By the early 18th century, it was more likely to imply a great sportsman or hunter, in the same way that calling someone an Einstein today is to call them a genius.
Then came Bugs Bunny, and Elmer Fudd.
In one of the earlier cartoons to feature Elmer Fudd, we see the Fudd in his hunting gear, stalking through the forest seeking game. Bugs, gnawing on a carrot and observing from afar, looks at the audiences and says (in his famous NY accent) something like “Look at the Nimrod.”
The majority of the audience had never heard the word before, but they could read context. From which point, in the US at least, “Nimrod” has been a synonym for numbskull, idiot, loser.
(And yes, I’m aware of the unconvincing and occasionally just plain silly alternative explanations for the shift in meaning that have been proposed by various dictionaries and other authorities.)
@michael reynolds:
Ivanka’s been involved in some shady real estate dealings of her own: to wit, a charge of felony fraud with respect to selling units at the Trump Soho.