[Marxism] Icahn Raises Ethics Flags With Dual Roles as Investor and Trump Adviser

Louis Proyect lnp3 at panix.com
Mon Mar 27 09:19:43 MDT 2017

(Can't we finally put to rest the comparisons of Trump to Hitler, et al? 
The real historical parallel is Warren Harding and the Teapot Dome Scandal.)

NY Times, Mar. 27 2017
Icahn Raises Ethics Flags With Dual Roles as Investor and Trump Adviser

WASHINGTON — Since Carl Icahn, the billionaire investor, was named by 
President Trump as a special adviser on regulatory matters, he has been 
busy working behind the scenes to try to revamp an obscure Environmental 
Protection Agency rule that governs the way corn-based ethanol is mixed 
into gasoline nationwide.

It is a campaign that fits into the charge Mr. Trump gave Mr. Icahn, to 
help the nation “break free of excessive regulation.” But there is an 
additional detail that is raising eyebrows in Washington: Mr. Icahn is a 
majority investor in CVR Energy, an oil refiner based in Sugar Land, 
Tex., that would have saved $205.9 million last year had the regulatory 
fix he is pushing been in place.

Mr. Icahn, known internationally for his pugnacious and persistent 
approach to activist investing, has brought that same technique to his 
new role. He quizzed Scott Pruitt, a former Oklahoma attorney general, 
about the ethanol rule when Mr. Icahn helped interview Mr. Pruitt for 
the E.P.A. job. Mr. Icahn later reached out to Gary D. Cohn, Mr. Trump’s 
top economic adviser, to raise the issue. Mr. Icahn said he even had a 
telephone conversation in February with Mr. Trump himself.

The blitz has already generated at least one clear outcome: Since Mr. 
Trump was elected president with Mr. Icahn’s very vocal support and 
nearly $200,000 in political contributions to Republican causes — the 
stock price of CVR Energy has soared. By late December, it had doubled. 
It is still up 50 percent from the pre-election level, generating a 
windfall, at least on paper, of $455 million as of Friday.

The merging of private business interest with government affairs — 
aspects of which have previously been reported by Bloomberg, but which 
The New York Times has found further evidence of — has generated 
protests from ethics experts in Washington, as well as certain Senate 
Democrats. They consider Mr. Icahn’s dual roles perhaps the most 
troubling conflict of interest to emerge so far in the new administration.

“This is a mile out of bounds by any standard,” said Senator Sheldon 
Whitehouse, Democrat of Rhode Island, who, along with other Democrats, 
is sending a letter Monday to Mr. Icahn, the Office of Government Ethics 
and the Department of Justice to object to Mr. Icahn’s dual roles, and 
to ask new questions. “Were the shoe on the other foot, Republicans 
would be having fits about any Obama relationship like this.”

Mr. Icahn, 81, in a series of interviews in the last week, was 
unapologetic. He said he was not subject to conflict of interest rules 
because he is an informal, unpaid adviser to Mr. Trump, not an official 
government employee.

“I’m not making any policy,” Mr. Icahn said. “I am only giving my opinion.”

Kelly Love, a White House spokeswoman, also dismissed the criticism. She 
pointed to the December news release when Mr. Trump first named Mr. 
Icahn “special adviser to the president” on regulatory matters. “He is 
simply a private citizen whose opinion the president respects and whom 
the president speaks with from time to time,” Ms. Love said in a written 
statement. “Mr. Icahn does not have a position with the administration 
nor a policy-making role.”

Both compared Mr. Icahn’s role to corporate executives serving on 
federal advisory commissions, who are expected to argue for changes in 
federal policies while remaining corporate officers. But CVR Energy, of 
which Mr. Icahn owns 82 percent, is just one entry on a growing list of 
potential conflicts that have surfaced since his December appointment.

Mr. Icahn has provided input to the White House on the selection of the 
new head of the Securities and Exchange Commission. He is a major 
investor in companies that have recently been targeted for enforcement 
action or investigation by the S.E.C., including CVR Energy and 
Herbalife, the nutritional beverage company, of which he owned about 24 
percent at the end of last year.

Mr. Icahn has also pressed Freeport-McMoRan, the global mining company 
he helps run as a result of his large investment, to more aggressively 
fight back against the government of Indonesia, the company’s chief 
executive, Richard Adkerson, said in an interview Friday. Indonesia is 
challenging Freeport’s contract to extract gold and copper from one of 
the world’s largest mines.

The company, as that pressure from Mr. Icahn and other investors has 
intensified, has been asking for help from the State Department, 
Commerce Department and White House, Mr. Adkerson said.

Mr. Icahn is “very concerned about what is happening in Indonesia,” Mr. 
Adkerson told reporters in Indonesia last month, adding that he was 
“confident the U.S. government will want to see Freeport treated 
fairly.” (Both Mr. Adkerson and Mr. Icahn said that Mr. Icahn, who 
controls two of eight seats on the company’s board, had not directly 
intervened with the Trump administration on this matter.)

And while the Trump administration imposed a broad freeze on the 
adoption of new regulations — holding up dozens of new rules affecting 
everything from hybrid cars to furniture manufacturing — it surprised 
industry officials by allowing one Internal Revenue Service rule to go 
into effect in late January. The rule expands a special kind of oil and 
gas business organization with tax advantages, known as a master limited 
partnership, that Mr. Icahn cited as a primary reason he first made his 
big investment in CVR Energy back in 2012.

What is clear is that Mr. Icahn has an unusual position in the Trump 
administration. During his campaign, Mr. Trump repeatedly boasted of his 
ties to Mr. Icahn — calling him “my very dear friend” and citing Mr. 
Icahn’s support as a sign that “many of the great businesspeople are 
endorsing me.”

His fortune, $16.6 billion, according to a Forbes estimate, is greater 
than those of all the other members of Mr. Trump’s cabinet combined, 
with investments in companies as diverse as Hertz, Xerox and PayPal, as 
well as A.I.G., the multinational insurance company, and most recently 
Bristol-Myers Squibb, the global biopharmaceutical company.

Mr. Trump’s cabinet appointees, many of whom are very rich, had to 
undergo stringent reviews by the Office of Government Ethics that 
negotiated personalized asset sales agreements for each of them to help 
them avoid conflicts of interest. But Mr. Icahn is not required to take 
any such steps, given that he is an unpaid adviser rather than a formal 
government employee.

Mr. Icahn has long fought against the ethanol rule, known more formally 
as the Renewable Fuel Standard. In August he wrote an unusually personal 
11-page letter to Gina McCarthy, who served as President Barack Obama’s 
head of the Environmental Protection Agency, and one of Ms. McCarthy’s 
top deputies, with an all-capital-letter headline: “PROGRAM IS BROKEN 

He pushed the federal government, in this letter and other appeals, to 
eliminate the requirement that refiners be held responsible for ensuring 
that ethanol is blended into gasoline, given that the actual blending is 
often done by gas station owners, closer to the point of sale. Other 
merchant refiners like the San Antonio-based Valero Energy joined Mr. 
Icahn in pressing the E.P.A.

“This is a terrible, flawed rule,” said LeAnn Johnson Koch, a lawyer 
representing a group of smaller refiners, who joined the effort.

Major oil companies, like Exxon Mobil, own both the refineries and 
service stations, so they can handle this requirement. But CVR Energy 
and other so-called merchant refiners no longer handle the gasoline once 
it leaves their refineries. So they must buy renewable fuel credits — 
nicknamed RINs — to prove to the E.P.A. that they have complied with the 
blending of the ethanol and gasoline, a requirement that cost CVR $637.5 
million over the last four years.

“You are robbing refineries so that gas station owners and other players 
can make windfall profits,” Mr. Icahn said in an interview Friday, 
barely able to contain his anger at the arrangement.

But the Obama administration, in November, moved to reject the request 
to revamp the system.

“We were not persuaded that the program would be appreciably better at 
accomplishing its goals, with the approach that he was advocating,” said 
Janet McCabe, the E.P.A. administrator who oversaw the program.

So after Mr. Trump won, Mr. Icahn took up the campaign again, this time 
gaining much higher access. First, Mr. Trump asked Mr. Icahn to help him 
screen candidates for the E.P.A. job, so when Mr. Icahn interviewed Mr. 
Pruitt, he asked him specifically about his position on the ethanol rule.

“The E.P.A., in my opinion, has gone way too far, has sort of run amok 
with these crazy regulations,” Mr. Icahn said in an interview with 
Bloomberg television in early December, explaining why he supported Mr. 
Pruitt for the job. Mr. Icahn then added that Mr. Pruitt had made clear 
to him that “he feels pretty strongly about the absurdity of these 
obligations, and I feel that this should be done immediately,” referring 
to the ethanol rule.

In February, Mr. Icahn set up a telephone call with Mr. Trump. The 
conversation, which took place in the lobby of Mr. Icahn’s New York 
apartment building as he was returning from walking his dog, involved a 
plan he had hatched to force the E.P.A. to revamp the rule, details of 
which were confirmed by Mr. Icahn, after being first reported by Bloomberg.

Mr. Icahn confirmed in an interview Friday that he had follow-up 
conversations with Mr. Cohn, Mr. Trump’s top economic adviser, and Mike 
Catanzaro, a top Trump White House aide on energy policy (and a former 
oil industry lobbyist).

But Mr. Icahn’s plan has run into intense opposition from other industry 
players, including the powerful American Petroleum Institute, and a 
trade association that represents major ethanol producers like 
Iowa-based Poet. In an interview last week, Poet’s chief executive, Jeff 
Broin, called the plan a “back-room” deal. “It seems like self-dealing 
to me and a clear conflict of interest,” he said.

The White House, in a statement, said no policy change was imminent.

But Mr. Icahn’s actions have already generated calls for investigations, 
including a complaint filed this month with congressional officials by 
Public Citizen, a liberal nonprofit group.

Not uncharacteristically for Mr. Icahn, he shows no sign that he intends 
to back down in his push for the policy change.

“All my life I have fought the establishment — from U.S. Steel, to eBay, 
to Apple,” he said last week, listing some of his famous battles to 
force management changes at companies in which he has invested. “I have 
never shied away from it. I am not going to now.”

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