The equity firm magnate that advised the Trump administration on infrastructure and whose company gave a $184 million loan to Kushner Companies also benefited from three rule changes relaxing pipeline safety regulations.
Last year, Joshua Harris, founder of equity firm giant Apollo Global Management, advised the Trump administration on infrastructure policy and discussed a possible White House job that never materialized, the New York Times reported Wednesday. During that time, Harris also met several times with White House advisor Jared Kushner. Shortly after those meetings, Apollo gave Kushner’s family real estate firm the nine-figure loan to refinance the mortgage on a Chicago skyscraper, according to the New York Times report.
Harris’ company also has a number of large investments in energy companies that stand to gain from three Trump administration rule changes, including EP Energy and Northwoods Energy. Those ties were first revealed in a January 30 report published by the progressive think tank Democracy Forward.
“It is a very serious conflict of interest when you have the president and other officials who work for him who are indebted to any business or any entity that wants something out of the United States government,” said Richard Painter, a former White House ethics lawyer under the Bush administration. “The whole thing stinks to high heaven.”
Painter added that Kushner should leave the White House due to, among a host of other concerns, his financial conflicts. Painter says the law should be amended to limit incoming high-ranking government officials’ ownership of businesses with large amounts of debt.
Representatives from the White House, Kushner Companies, or Apollo Global Management did not immediately respond to questions regarding Harris’ potential influence on the three regulations, Thursday afternoon.
The Department of Transportation implemented a new gas pipeline safety rule in 2016 after Congress passed the Pipeline Safety, Regulatory Certainty, and Job Creation Act in 2010, following a deadly gas pipeline explosion in California. DOT estimated the pipeline safety rule would prevent about 40 pipeline accidents per year.
But last June, the Trump administration delayed for a year a gas pipeline safety rule that would implement new assessment, inspection, and repair requirements for existing and future gas transmission pipelines.
Just days after the 2017 inauguration, the Trump administration also withheld the implementation of a similar safety monitoring rule for hazardous liquid pipelines that had been in the works for six years. And in December, the Department of the Interior delayed the implementation of a 2016 rule that implements new natural gas transportation and production safety requirements until 2019.
In its 2016 SEC filings, EP claimed the three rules could expose the company “to significant costs and liabilities.” It also outlined how Apollo Global Management agreed to invest $450 million towards the company’s future oil and natural gas development program called Wolfcamp. The investment covered about 60 percent of the company’s drilling, completion, and equipping costs in exchange for a 50 percent ownership of the project. Apollo also had previous investments with EP projects, according to the filings.
Northwoods Energy LLC is a Denver-based portfolio company of funds managed by affiliates of Apollo Global Management. Its CEO is prominent Denver-based oilman Tom Tyree, according to the Denver Business Journal. Northwoods purchased 112,200 net acres of leased property in Wyoming’s Powder River Basin for $500 million — land which houses about 140 miles of transmission oil and gas pipeline.
“It shows how much Joshua Harris has at stake in these companies given the safety rules have now been put on ice by the Trump administration,” said Stephen Spaulding, the chief of strategy at the government watchdog group, Common Cause. “If you follow the money, you can see how the investment is paying off now that the rules are on hold… They are getting a great return on their investment.”
Kushner, whose White House role is so broad it encompasses both securing peace in the Middle East and solving the domestic opioid crisis, has been at the center of several Trump administration conflict of interest scandals as his family’s company conducts deals with investors abroad. He maintains a large stake in Kushner Companies and has real estate holdings and investments worth as much as $761 million, according to the New York Times.
After it was revealed that federal officials were concerned that foreign governments were considering trying to influence the White House by conducting business with the company, Kushner had his top-secret security clearance removed. Kushner’s conversations with potential investors abroad has also been the subject of questions by investigators working for Special Counsel Robert Mueller, who is charged with looking into Russia’s influence over the 2016 election, according to the Times.
Apollo Global Management also has large investments in energy, steel, transportation, and other industries that stand to benefit from Trump’s proposed $1.5 trillion infrastructure plan that is currently in jeopardy of not passing through Congress, according to Democracy Forward’s report. During earnings calls in August and November of 2017, Harris said Apollo was putting together a team that would take advantage of “the tremendous need for capital in the infrastructure,” the report said.
Kushner Companies, which purchased the Chicago tower in 2007, received the nine-figure loan from Apollo’s commercial real estate finance company on Nov. 1, 2017, the New York Times reported. Apollo also benefited from Trump’s tax law that left intact a loophole allowing private equity managers to pay income taxes at a lower rate.