In the week’s roundup of Trump-related conflicts: The push is on for private money to get in on the president’s infrastructure projects, plus Scott Pruitt’s industry connections and The Trump Organization’s plans for Soviet states.
A group of Australian pension fund managers recently met with President Donald Trump’s infrastructure czar Richard LeFrak, as part of a lobbying push to open the administration’s plans to Australian investment.
That lobbying effort will continue next month as Mike Baird, ex-premier of the Australian state New South Wales, is joined by an executive with the Australian investment firm IFM Investors to boast about Australia’s record of privatizing facilities such as ports and roads.
“As they bring forward their trillion-dollar infrastructure plan to Congress, the Americans are going to need to flesh out how they are going to implement it and it wouldn’t surprise me to see us as part of that implementation program,” an Australian Financial Review story quoted an Australian pension fund official as saying.
It turns out some of the same Australians seeking new U.S. infrastructure deals already have had their hands in a privatization project that was once a bane of former Indiana Gov. and current Vice President Mike Pence.
In 2015, IFM bought into a privatized U.S. roadway that has been such a functional and financial disaster that it’s been dubbed privatization’s “highway to hell.”
A Spanish firm was supposed to build and manage an Indiana roadway extension. But the project ran years behind schedule, and the delays increased collisions, lengthened commute times and cost the state millions of overrun dollars. IFM scooped the project out of bankruptcy in 2015.
The bankruptcy affected about 5,000 businesses and agencies that had done business with the Spanish firm, according to federal court records obtained by Reveal.
Last month, Indiana essentially admitted the project was a complete failure by announcing the state government would take over the project. Indianapolis Star investigative reporters Mark Alesia and Kaitlin L. Lange later published “Mike Pence’s infrastructure mess.” They said state officials missed red flags surrounding the Spanish company, Isolux Corsan.
Early in his administration, Trump announced what was to be a trillion-dollar U.S. infrastructure rebuild, offering vague indications that it would be financed largely with private capital rather than taxpayer funds.
He appointed an infrastructure council, led by New York energy and real estate tycoon LeFrak, who had previously obliged Trump as a Miss Universe judge, an “Apprentice” guest and a frequenter of Mar-A-Lago. The council also includes longtime Trump business partner Steven Roth.
LeFrak said at an April investment seminar that “political courage is needed right now” to raise either tolls, taxes or both to pay for infrastructure. Roth, for his part, said the key is private capital and “an enormous amount of leverage and debt.”
Although controversial, private infrastructure doesn’t have to fail, with roads in Israel and Australia touted as success stories. But infrastructure privatization schemes are vulnerable to political corruption.
That’s because by definition, they involve politicians transferring billions of dollars’ worth of assets to private hands. Former California Gov. Arnold Schwarzenegger was poised to sell the state’s most prized government buildings to secretive companies set up by his cronies – until he was outed in the press. The oligarch fortunes of the former Soviet Union tend to be ascribed to corrupt asset privatization schemes.
Even without overt corruption, privatization policies are vulnerable to cronyism and revolving doors.
Which brings us back to Baird, the Australian privatization guru. He resigned in January, reportedly to spend more time with his family, after gaining fame, and detractors, for inking multibillion-dollar privatization deals for Australian port and electricity facilities. Press reports said his government was down in the polls just as opponents claimed privatizations failed to produce economic results.
A month after Baird stepped down, he joined National Australia Bank, which last year pledged $100 billion in Australian infrastructure financing during the next seven years. Next month, Baird will be in the U.S. with an IFM executive touting Australian deals in which the sale of government assets would be used to finance future infrastructure.
Scott Pruitt’s energy connections run deep
Last week, a top science adviser at the U.S. Environmental Protection Agency contended that the agency had “bullied” her in an effort to get her to alter congressional testimony about the administration’s attempts to make the EPA more industry-friendly.
At issue, environmental chemist Deborah Swackhamer said, was the administration’s decision to dismiss half of the 18 executive members of the EPA’s science advisory panel, which was set up to ensure that the EPA follows scientific best practices.
Trump once tweeted that global warming is a hoax created by the Chinese. His EPA administrator, Scott Pruitt, forged strong connections to the energy industry when he became – in his own words – a “leading advocate against the EPA’s activist agenda” as attorney general of Oklahoma.
The dismissed scientists might be replaced with representatives of industries regulated by the EPA, an agency spokesman said.
Swackhamer, a retired University of Minnesota professor and leader of the panel, prepared written testimony before appearing before the House Committee on Science, Space and Technology on May 23.
She noted the dismissals, commenting that they could “lead to the perception that science is being politicized and marginalized within EPA.” Appointees to the science panel “must be esteemed scientists with no conflict of interest,” she wrote.
But the day before the hearing, Swackhamer said she received emails from Ryan Jackson, Pruitt’s chief of staff, claiming that “a decision has not been made” about whether to replace the scientists, even though some already had received letters saying they had been dismissed. Jackson sent her administration talking points and urged her to use them to rework her testimony.
“I was stunned that he was pushing me to ‘correct’ something in my testimony,” she told The New York Times. “I was factual, and he was not. I felt bullied.”
Democrats on the committee accused Jackson of attempting to interfere with the scientist’s testimony. Committee Chairman Lamar Smith, R-Texas, said the EPA was merely trying to ensure that Swackhamer’s testimony was accurate and accused Democrats of trying to politicize the matter.
This underscored Pruitt’s ties to the industries the EPA regulates. As Oklahoma’s attorney general, Pruitt repeatedly sued the EPA to blunt its regulation of the energy industry, which gave him political contributions.
Pruitt maintained two federal political action committees, suggesting he planned to run for federal office at some point.
From 2014 to 2016, his Liberty 2.0 PAC raised $450,000. Its biggest donation was $50,000 from Murray Energy Corp., the nation’s biggest coal mining concern, records show. The company’s combative CEO, Robert Murray, has derided efforts to curb global warming as an “economic suicide note” for the nation’s coal miners.
Other big donors were JMA Energy Co. ($25,000), an Oklahoma natural gas concern, and Continental Resources Inc. ($15,000), an Oklahoma oil company that says it is the largest leaseholder in North Dakota’s Bakken oil fields.
Pruitt’s Oklahoma Strong Leadership PAC raised about $400,000, with hefty donations from employees of Alliance Resource Partners ($15,000), the second-biggest U.S. coal company, as well as Warren Oil Co., Medallion Petroleum Inc. and Devon Energy Corp. ($5,000 apiece), all Oklahoma energy companies.
Both PACs were run by Pruitt’s political consultant, Millan Hupp. She now works for the EPA.
Trump had big plans for former Soviet territory
McClatchy’s Kevin Hall of the Pulitzer Prize-winning Panama Papers team has released a new deep dive, this time into Trump’s extensive venturing into former Soviet territory, where he had hoped to build a business empire.
Trump sought to have his name atop a glass tower in the capital of Kazakhstan, wanted a trademark in Iran for possible hotels and, until a deal was nixed in January, was poised to build a 47-story tower in the former Soviet republic of Georgia. The company would have presented conflicts for a sitting president, the story said.
His erstwhile partner, Silk Road Group, “had oil trading and transport deals with companies in both Russia and Iran, countries currently facing varying degrees of U.S. and European financial sanctions.”
Matt Smith can be reached at msmith@revealnews.org, and Lance Williams can be reached at lwilliams@revealnews.org. Follow them on Twitter: @SFMattSmith and @LanceWCIR.
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