Wilbur Ross And The Russian Roots Of Trump's New Kleptocracy/Kakistocracy

You may have come to expect cowardly conservative careerists in the Senate like Joe Manchin (D-WV), Joe Donnelly (D-IN), Heidi Heitkamp (D-ND) and Claire McCaskill (D-MO) to cross the aisle and rubber-stamp virtually all of Trump's horrendous nominees for high public office. But the vote Monday on billionaire Trump crony and murderer Wilbur Ross didn't follow the regular pattern. Ross was confirmed as Secretary of Commerce-- no one really questioning him on the Sago Mining disaster or on his financial connections to Putin's kleptocracy-- 72-27. Every Republican, of course, voted yes. But so did 21 Democrats (not including Manchin, who, presumably out of deference to the families of the dead miners Ross killed, broke with the Trump Regime on this one). These are the Democrats who voted to confirm Ross:

• Michael Bennet (CO)
• Sherrod Brown (OH)
• Tom Carper (DE)
• Bob Casey (PA)
• Chris Coons (DE)
• Catherine Cortez Masto (NV)
• Joe Donnelly (IN)
• Tammy Duckworth (IL)
• Dianne Feinstein (CA)
• Maggie Hassan (NH)
• Heidi Heitkamp (ND)
• Tim Kaine (VA)
• Angus King (I-ME)
• Amy Klobuchar (MN)
• Claire McCaskill (MO)
• Bill Nelson (FL)
• Gary Peters (MI)
• Brian Schatz (HI)
• Jeanne Shaheen (NH)
• Jon Tester (MT)
• Mark Warner (VA)

I just watched Señor Trumpanzee signing a couple of executive orders on TV while I was putting on my shoes and socks. He thanked a gaggle of right-wing hacks in the room to witness it-- Joni Ernst (R-IA), John Barrasso (R-WY), Lamar Smith (R-TX), Nan Fischer (R-NE) and Heidi Heitkamp (D-ND). These are all members from states and districts that went for Trump in November and all of them see themselves-- for whatever reason-- as rubber stamps for his horrific agenda, You may have noticed that one is a Democrat, Heitkamp. She has the single worst voting record in the Senate of any Democrat-- a 57.87 lifetime crucial vote score (obviously, an "F"). Few people realize she's actually been a worse voter than Joe Manchin, albeit not by much. She has to face North Dakota voters in 2018. I don't know who she expects to support her. Democrats are sickened by her acquiescence to all things Trump and Republicans will have their own even worse right-wing nut to vote for. Trump beat Hillary in North Dakota 216,784 (63.0%)-93,758 (27.2%), one of Clinton's worst performances. She only won 2 tiny counties in the state, Rolette and Sioux (both of which had been won by Obama in 2012, although he won 6 counties and 124,827 votes (39%). On that same day in 2012 that Obama was taking 124,827 votes, Heitkamp was winning her first Senate term with 161,163 votes, less than 3,000 more votes than Congressman Rick Berg. Many North Dakotans were prepared to split their tickets.

Just over half the Democrats who voted for confirm Ross are up for reelection in 2018. Like Heitkamp, their names are bolded above. Why do these senators always appear to be frightened of Trump and his voters instead of being frightened by Democratic voters who may be angry that they are rubber-stamps for Trump? For example, Feinstein-- if she decides to run again; she'd be nearly 86 wen her next term begins-- might want to consider that a mainstream California Democrat could primary her. Trump lost California 8,753,788 to 4,483,810 and she doesn't have to worry about his 31.5% of the voters and kiss his ass for political reasons. Trump lost the 13 biggest counties in the state-- including GOP-leaning areas like Orange, Riverside and Fresno counties.

Who's going to be held responsible when Wilbur Ross, a top Russian money laundering asset, swings into action? Are people going to wonder why Ross wasn't properly vetted by Democrats like Feinstein-- not to mention Sherrod Brown, Brian Schatz, Bill Nelson, Amy Klobuchar and Tim Kaine? Isn't that their job? Recall when the Mafia congressman from Staten Island (since arrested and imprisoned and released), Michael "Mikey Suits" Grimm, disappeared while on a trip too Israel with a bunch of GOP skinny-dippers? He wasn't skinny-dipping with Kevin Yoder in the Sea of Galilee because he was working on a deal for the Russian Mafia in Nicosia. (And yes, he was dating Bannon crony Tulsi Gabbard at the time.) And who's on the board of that money laundering bank, Trumpy-the-Clown's new Commerce Secretary, Wilbur the murderer (along with some Russian mobsters) one of whom helped arrange a $60 million payoff to Trump (watch the video at the top of the page).

James Henry wrote the story up for DCReport.org Tuesday morning. Even though over 24 hours have passed, it's a must-read if you want to understand Trump's carefully constructed kakistocracy. "Wilbur J. Ross, Jr., the billionaire investor who is one of Donald Trump’s closest advisors on trade and economics," he wrote, "has extensive Russian financial ties that the Senate should thoroughly explore before voting on his nomination as Commerce Secretary." Oops... too late; wrong tense. Thanks Sherrod, Ranking Dem on the Senate Banking Committee.

Central to this inquiry is the question of Ross’s  role as Vice Chair and a leading investor in the Bank of Cyprus, the largest bank in Cyprus, one of the key offshore havens for illicit Russian finance. Ross has been Vice Chairman of this bank and a  major investor in it since 2014. His fellow bank co-chair evidently was appointed by none other than Vladimir Putin.

The Bank of Cyprus is just one of more than 100 direct and indirect investments that Ross listed on his U.S. Office of Government Ethics financial disclosure form last month. He recently promised to resign as Vice Chairman of the Bank and disinvest from it within the next 90 days if his nomination is approved.

Mere divestiture will not suffice here, even if it was immediate. Exiting a brothel in a hurry doesn’t explain what you were doing there in the first place.

Ross’ involvement in the Bank of Cyprus raises many questions about his judgment, but also about the Trump Administration’s seemingly endless direct and indirect connections with friends and associates of Vladimir Putin, who all 17 U.S. intelligence agencies say conspired to interfere in the November 2016 U.S. election on behalf of Donald Trump.

Whether or not these connections involve any criminality, these are the kind of relationships that most American business people would not tolerate for 30 seconds.

After all, as discussed below, since the 1990s Cyprus has served as one the top three offshore destinations for Russian and former Soviet Union flight capital, most of it motivated by tax dodging, kleptocracy, and money laundering. As of 2013, just before the banking crisis, Russian deposits accounted for at least a third of all bank deposits in Cyprus. As one leading newspaper put it, “Russian money is in fact at the heart of the island’s economy.”

Nor is Ross’ Bank of Cyprus in particular-- now probably at least half owned by Russians, as we‘ll see-- any stranger to money laundering, tax dodging, or odious finance. With a market share of 30 percent,  Bank of Cyprus has long been the market leader in Cypriot financial chicanery:

• As of 2013, for example, more than 81 percent of the bank’s deposits were accounted for by 21,000 mainly foreign depositors, up to half of them Russians, who each had at least €100,000 on deposit.
• By 2013, after a decade of rampant inflows of offshore capital and irresponsible lending, Bank of Cyprus alone had €11.5 billion of delinquent loans on its books-- 60 percent of the country’s entire gross domestic product. At that point, it required €11.3 billion of Emergency Liquidity Finance from the Central Bank of Cyprus to survive.
• The top 20 Bank of Cyprus borrowers reportedly accounted for €3 billion of these non-performing loans. This is consistent with the patterns found in other recent credit booms-- dodgy real estate projects, bust-out loans to insiders, and rampant control fraud.
• In March 2015, it was discovered that 19 of the Cyprus Parliament’s 56 Members of Parliament, owed BOC €51.2mm, including 13 MPs whose non-performing loans totalled €35.3m. The following month, the Parliament adopted a new pro-bank law to accelerate foreclosures. Evidently the revelations increased the pressures to act.
• In a series of recent criminal trials in Nicosia, five former CEOs, Board Chairmen, and managers of Bank of Cyprus have been charged with a wide variety of financial misconduct pertaining to the pre-2013 period. The charges include conspiracy to defraud investors, forgery, and market manipulation.
• No one has yet been convicted.

There are also disturbing reports of several recent high-profile money laundering cases in Cyprus.[There are also reports that attempts to clean up money laundering and improve financial transparency stalled, and that as of 2016 Geldwasching may be back, not only in Cyrus as a whole, but also at the Bank of Cyprus.]

So this is the fundamental question:

How did a prospective U.S. Commerce Secretary come to play a lead role in what turns out to be one of the world’s leading haven banks for laundering Russian money, precisely at a time when the U.S. Government and the EU have been trying so hard to enforce economic sanctions against Russia and Putin’s wealthy allies?

Before the U.S. Senate approves Ross’s  nomination, it is essential to get to the bottom of these curious relationships.  Unfortunately, no one bothered to ask Ross even a single question about them, the Bank of Cyprus, or dirty Russian money at his January 18 confirmation hearing before the Senate Commerce Committee, where he received unanimous approval along with a ringing endorsement from his Florida Senator.

In “TrumpLand,” however, as we have recently come to appreciate, that was eons ago.  And there are now signs that the U.S. Senate may finally be waking up.

In July 2014, Ross became Vice Chairman of the Bank of Cyprus. At that point the bank was in deep financial trouble, having nearly failed in 2013.

Ross, who specializes in buying troubled firms cheap and then reselling them, organized a group of U.S. and European-based investors to spend €1 billion (U.S. $1.3 billion then) to acquire 17 percent of the common stock of this deeply troubled bank, including Ross’ own 1.6 percent stake.

Since then, Ross has played an active role in recruiting and nominating its senior management team, especially its board chairman, Josef Ackermann, the long-time former Chairman of Deutsche Bank-- one of the few banks in the world that would make loans to Donald Trump.

As we have recently explored elsewhere, from the mid-1990s on, this massive reconcentration of wealth gave way to an extraordinary outflow of flight capital, and the proliferation of tax dodging and criminal enterprises.

Among the key beneficiaries of this economic crisis was Vladimir Putin, who rode it to power. But the tsunami of illicit Russian money also greatly benefited Donald Trump, who, as discussed in more detail in a previous article, simply could not have financed his bankrupt business empire in the early 2000s without it.

Of course, Trump has reiterated time and again—most recently at his White House press conference on Feb. 17-- that he has no business deals with Russia. Significantly, Trump said nothing about Russians, investors from other former Soviet Union states like the Ukraine or Kazakhstan, or ventures with Russians outside of Russia and the former Soviet Union.

In the past, even Trump has boasted repeatedly about raking in many millions from Russian oligarchs who bought luxury Trump apartments and joined his golf clubs. Nor has he denied that he was paid $13 million to hold the 2013 Miss Universe pageant in Moscow. His three oldest children also made 13 trips to Moscow over 18 months, in what the Trump Organization described at the time as business trips intended to recruit Russian investors.

Furthermore, as noted below, one Russian oligarch shelled out at least $95 million to Trump in one Florida real estate deal. This allowed Trump to more than double his $41 million investment in that property in four years. This profit were earned at a time,  when by Trump’s own account, the U.S. real estate market was a “disaster”-- so dead that he actually sued Deutsche Bank, his one remaining global creditor, in a failed effort to avoid repaying a $40 million real estate loan.

...According to money laundering experts, the Bank of Cyprus also has a long history of being up to its ears in Russian flight capital. Indeed, Like Trump and Putin, Cyprus in general-- and the Bank of Cyprus in particular-- have been huge beneficiaries of Russia’s 1990s economic crisis and the extraordinary deluge of dirty money that it produced. Especially since Cyprus was admitted to the EU in 2004 and the Eurozone in 2008, the island has captured the bronze medal, just behind more venerable havens like the Switzerland and the UK. And,  as noted, the Bank of Cyprus was the market leader, as the island’s largest single financial institution, which for a time also had branches in Moscow, the Ukraine, Greece, and Rumania.

...For Wilbur Ross and his fellow private vulture capitalists, this Russian-flight induced crisis presented an irresistible investment opportunity. (Exactly who introduced Wilbur’s group to the island is an interesting question that the Senate should explore.)

The bank’s management and board spent the first year after the March 2013 crisis staving off bankruptcy with the help of €10 billion in ECB and IMF emergency assistance-- including €6.5 billion for the Bank of Cyprus alone. In 2014  it decided to raise new capital. In July 2014, in exchange for €1 billion, Ross and his group were able to acquire 17 percent of the bank’s stock, the largest single ownership block, plus the Vice Chairmanship and significant management influence.

The only trouble was that Ross and his group could not afford to be too discriminating about who their co-investors were. To this day, as noted, not only is Bank of Cyprus at least half owned by Russian investors, but several of the largest ones are “super-garchs” who have business and personal histories that are, to be polite, colorful.

Nor could Wilbur’s investment group afford to be too particular about the uses these co-investors made of the bank, or the fact that Bank of Cyprus’s new business model-- apart from financial chicanery and more MP loans-- requires an awful lot of hard work trying to collect money they don’t have from thousands of recalcitrant borrowers.

Under the terms of  Cyprus’ 2013 agreement with the ECB and the IMF, to qualify for for their €10 billion bailout-- fully €7.3 billion of which went to bail out the Bank of Cyprus and other private banks-- the country was compelled to agree to “bail-in” “large depositors”-- those with over €100,000 on deposit.

In return for seizing 47.5 percent of their deposits, 21,000 of depositors-- and especially a core group of about 560-- initially received 81.5 percent percent of the bank’s stock. When the Ross group arrived this was slashed. The Bank’s financial disclosures don’t permit us to say precisely how this ownership is distributed. But at least a third to fifty percent accrued to wealthy Russians who received stock in proportion their confiscated deposits. In addition, our three leading identified Russian ‘garchs also ended up owning at least 14.3 percent of the bank.

The Russian Connections

Vladimir Strzhalkovsky: Vice Chair, Bank of Cyprus, October 2013- June 2015

For a year after Wilbur Ross arrived on the scene at the Bank of Cyprus in July 2014, until June 2015, his fellow Co-Chair and leading co-investor was none other than Vladimir Strzhalkovsky, described by the New York Times and the FT as “a former KGB agent” and as a “long-time associate of Putin’s.”

Strzhalkovsky reportedly owned 2.5 percent of the Bank of Cyprus from  October 2013 until June 2015. He told an interviewer that his family would retain at least 1.8 percent of the Bank-- more than Ross owns.

How did Strzhalkovsky become the Bank of Cyprus’ Vice Chair in October 2013?[52] It is most likely that he was appointed by Putin, his “long time associate” and fellow former KGB agent, to represent the estimated 33-50 percent of the bank’s 2013 “large depositors” who were Russian, and who had had nearly half of their deposits confiscated and converted into stock.

Strzhalkovsky continued to serve as Bank of Cyprus’s Vice Chair until he sold part of his stake-- 0.7 percentBank of Cyrpus-- to Viktor Vekelsberg. (See below.)

Before joining Bank of Cyprus, from 2008 to 2012, Strzhalkovsky had served as Chairman/ CEO of the Russian mining giant Norilsk Nickel. In 2010, the Polish business community reportedly lobbied him to appeal directly to Putin to adopt a softer line toward Poland-- more evidence that he have a direct line to the Russian President. In 2012 Strzhalkovsky gained the distinction of receiving the largest management buyout in Russian corporate history-- a $100 million payment for leaving his post at Norilsk. It was described by the New York Times as follows:

“…(A)nother data point in the shift of corporate wealth and influence away from the first generation of former Soviet businessmen-- known as the oligarchs-- and toward a coterie of well-connected former security service agents who made their mark under President Vladimir V. Putin…”

Before that, from 2004 to 2008 Vladimir Strzhalkovsky had run Rostourism, the Russian equivalent of the FSU’s Intourist tourism agency—long a source of invaluable “kompromat” for the Russian secret service. He had also served on the boards of several leading Russian companies, including Aeroflot and the giant energy company Inter RAO UES.

Interestingly, even while Vice Chair of the Bank of Cyprus from 2013 to 2015, Strzhalkovsky had also served on the board of  Olympstroy, a corruption-ridden state company that in 2014 grew to be notorious for mismanaging the construction of sports facilities at the 2014 Winter Olympics in Sochi, Russia. The Sochi Olympics cost a record $51 billion-- four times the cost of the 2010 Vancouver Winter Olympics... Here are a few questions that Senators should ask Ross, under oath, in public hearings about Strzhalkovsky:

• Have you ever visited Cyprus? Have you ever met with Vladimir Strzhalkovsky? When, where, how many times and for what purposes? What records of those meetings do you or the bank have, and will you produce them? Did you or your associates have email, messaging, mail or phone contacts with Strzhalkovsky and his associates? Can you provide records of those communications?
• During the year that you and Strzhalkovsky were co-chairs and co-investors in the Bank of Cyprus, were you aware of Strzhalkovsky’s KGB background? Of his extensive connections with Putin? If not. how do you explain this lack of diligence?
• As a “turn-around king” with a special focus on banking, how would you assess Vladimir’s Strzhalkovsky special bank management expertise? What other special skills does he have?
• To you knowledge, did any of the Russian intelligence services ever make use of the Bank of Cyprus? Which ones? What efforts did you make to learn of Russian intelligence services regarding Bank of Cyprus activities?
• What conversations, if any, did you have directly or through associates with Putin or his associates? Did you keep records of such contacts and, if so, will you provide them?
• What inquiries did you make about the money flowing into Bank of Cyprus?
Did you ask for reports about criminal proceeds? Tax evasion? Russian interference in the affairs of other countries, including especially Cyprus and the United States?
• It is true that Vladimir Putin selected Strzhalkovsky to be Vice Chair of the Bank? If so, given the fact that Putin appointed Strzhalkovsky, did you see any indications that Putin, his family of entities he controls did business with the Bank of Cyprus? Did it occur to you to make such inquiries?
• What reports, if any, did you make to U.S. banking, money laundering, terrorist finance and intelligence agencies about Bank of Cyprus and its customers? Please describe the Bank’s activities with respect to controlling flight capital, money laundering, and tax dodging during your tenure.
• Are you aware that Strzhalkovsky’s family is still an investor in The Bank of Cyprus?
• Did you discuss the Sochi project and its huge costs with Strzhalkovsky? Were you aware of published reports that the Sochi Olympics contracts were riddled with fraud? That Strzhalkovsky was one of Olympstroy‘s directors?
• What, if any, conversations did you have with Russians, including Strzhalkovsky, Putin and their associates concerning Donald Trump, the Trump Organization or the Trump family? To your knowledge, has Strzhalkovsky ever met Donald Trump or any members of his family?

Viktor Vekselberg: Bank of Cyprus board member and largest single shareholder (9.3 percent stake); Russian aluminum tsar, reportedly worth $11-$17 billion; long-time business partner of Ukrainian-born billionaire Len Blavatnik, the UK’s wealthiest citizen; reportedly enjoys good relations with Vladimir Putin.

As of now, Ross maintains a joint Co-Chairmanship in Bank of Cyprus with Maksim Goldman, who represents Lamesa Holding S.A., a part of the Renova Group, an aluminum and oil conglomerate that is majority-owned by Vekselberg.

As of 2014, Lamesa’s stake in the Bank was 5.5 percent; in 2015 it was increased to 6.2 percent  with the purchase of the 0.7 percent stake from Strzhalkovsky. In January 2017, it increased again to 9.3 percent, making Renova Group the bank’s largest single shareholder.

Together with his long-time business partner Leo Blavatnik, Vekselberg is a major aluminum and oil industries investor through Renova Group, their corporate umbrella group.  He also reportedly owns the world’s largest collection of Faberge eggs, and a yacht, the Odessa II, that is valued at $150 million.

Vekselberg is the 7th wealthiest Russian, according to the Russian edition of Forbes magazine. He is reportedly also on reasonably good terms with President Putin. In fact, he reportedly delighted the “new Tsar” by spending millions to buy up the Faberge eggs and return them to a special museum he has created for them in Moscow. Vekselberg has denied reports of some tension between him and Putin. There have been some recent reports of tensions in the relationship, but VV has denied it.

Here are a few questions that Senators should ask Ross in public hearings about Viktor Vekelsberg:
 

• When, where and under what circumstances have you ever met or communicated with Viktor Vekelsberg or his business partners? How frequently do you communicate directly or through Maksim Goldman or anyone else associated with Renova Group?
• What business dealings, if any, have you had directly or indirectly with Vekelsberg and his various business enterprises? With his partner Len Blavatnik, directly or indirectly? What role has he and his family played in the bank? Do other members of his family do business with the Bank?  Do other members of his affiliated companies do business with the Bank or with other investors in the Bank? To your knowledge, has he or his business partners done any business with the Trump Organization?
• What has been Renova’s role at the Bank of Cyprus? How does Vekelsberg use the bank, as a depositor, investor or borrower? What loans or advances were extended to him or at his direction to others? Has Vekelsberg brought any new clients to the bank?  If so, who?
• What can you tell us about business dealings between Vekelsberg and others associated with the Bank of Cyprus and Renova Group and Donald Trump, his organization and his family?
• Were you aware that Vekselberg’s long time business partner is Len Blavatnik? Were you aware that on October 25 2016, AI ALTEP Holdings Inc., a company reportedly based in New York City and owned directly or indirectly by Vekselberg’s business partner Len Blavatnik, made a $1 million contribution to Senator Mitch McConnell’s “Senate Leadership Fund?”

Dmitry Rybolovlev: Reportedly owned the largest stake in the Bank of Cyprus as of 2010 (9.7%); bought Donald Trump’s Palm Beach house in 2008 for $95 million, at the time the most expensive property in the U.S., more than doubling what Trump paid four years earlier; his personal jet’s flight pattern shows an odd coincidence of airports with Trump’s appearances on the fall campaign trail. (See the discussion below.)

Wilbur Ross also has a direct link through the Bank of Cyprus to a third leading Russian oligarch who, as of 2010, was the bank’s largest single investor and appears to still own a significant position in the Bank.

This is Dmitry Rybolovlev, a 50-year old Russian once known as the country’s “potash king.” During the “Wild West” days of Russian privatization back in the mid-1990s, “Rybo” had acquired a two-thirds stake in a critical fertilizer company, Uralkali, which eventually supplied up to 30 percent of global potash sales. Beginning in June 2010, however, shortly before Rybolovlev invested €233 million in the Bank of Cyprus,  he rather wisely started to dispose of his 66% stake in UralKali, completing the divestiture in 2011. Since then potash prices have slumped, so in hindsight, this was an adroit move.

Even after an expensive divorce, in recent years Rybolovlev’s net worth has variously estimated at $5 to $13.8 billion, depending on the year and source, with $7.8 billion being the most popular guesstimate. According to published reports, he has a very impressive €500 million art collection, although some of it was recently the subject of nasty litigation concerning provenance. He has also reportedly acquired xCitbank CEO Sandy Weill’s $88 million penthouse in New York, a $20 million mansion in Hawaii that used to belong to the actor Will Smith, a waterfront property in Palm Beach that he purchased from Donald Trump,(see below), two luxury villas in Gstaad, two personal jets that are reportedly worth over $100 million, including a private Airbus A319 (see below), a mansion on the Rue de l’Elysée in Paris that overlooks the Presidential Palace, the  entire island of Scorpios, a $68 million 67-meter yacht, and the football club in Monaco.

If this fellow had invented fertilizer, it is hard to believe that this collection of toys and lucre or his collection of invoices from divorce attorneys would be any more elaborate.

In addition to just being yet another fabulously rich Russian natural resources billionaire-- for our purposes Rybolovlev is interesting for at least three other reasons.

First, as noted, in 2010 Rybolovlev bought 9.7% of the Bank of Cyprus, becoming at that point by far its largest single investor. By 2013, just before the crash, he had reportedly increased that to 9.9 percent. Even after the 2013 crash and refinancing that produced a “haircut” for existing Bank of Cyprus investors, he appears to have retained at least a 3.3% stake. Although this stake is larger than Ross’s 1.6 percent, Rybolovlev does not have a seat on the board of directors.

Second, like many other hypertense members of the Russian elite, since the early 2000s Rybolovlev has been on of a crusade to diversify his wealth internationally. The potash mines were hard to relocate physically, so he sold off some his stake in it, and has focused since 2007 on purchasing foreign properties, joining the Russian émigré flood abroad.

In particular, in addition to all the other foreign properties described earlier, in June 2008 he purchased a Palm Beach waterfront property from Donald Trump for $95 million plus a sales commission, one that Trump had reportedly purchased himself in July 2004 for just $41 million. The unusual nature of this transaction is only underscored by the fact that the property had been valued at just $59.8 million on Palm Beach County’s tax rolls as of 2013. Eight years later, in 2016, Rybolovlev had the 60,000 square foot mansion that Trump built torn down, subdivided the property in three, and sold off a 2.74-acre plot for $34 million-- nearly $3 million per acre less than he had paid for it.

This price gain is also especially interesting because in mid-2008, Trump was complaining loudly the American real estate market was “dead” and that many of his projects were cratering. Indeed, as we noted earlier, that same year he fought tooth and nail to avoid repaying a $40 million real estate loan to Deutsche Bank.

Now precisely at that crucial point in mid-2008, just as the Great Recession was unfolding, this extraordinary $50 million Russian cash injection into Donald Trump’s balance sheet may well have saved him from personal bankruptcy. On top of his six other corporate bankruptcies, that one, in turn, might well have been the beginning of the end for Donald Trump’s political ambitions.

Third, according to flight logs from FlightRadar24 and PlaneFinder, as well as photos of planes on the ground taken from Jetphotos.co and amateur photos taken at airports by amateur Twitter journalists, an Airbus A319-133X(CJ) with the registration M-KATE that very much appears to belong to Dmitry Rybolovlev appears to have followed some very unusual flight patterns during the fall 2016 American presidential campaign.

When Rybolovlev still owned his potash company, he reportedly maintained an Airbus A319 that was outfitted for personal use. This plane, with the registration M-KATE, is registered to Sophar Property Limited, a British Virgin Islands company. While this company was originally registered to UralKali, the potash company that he disposed of by 2011, apparently Rybo, as he is known, enjoyed this plane and another, a Falcon, so much that he retained ownership or at least use rights to the two planes, this Airbus and, a Falcon jet. The Airbus A319’s registration is reportedly named after one of his two daughters, Ekaterina.

For our purposes, the intriguing thing is that this plane, normally based in Moscow and Switzerland, can be tracked. According the flight logs available from FlightRadar24, it made numerous flights all over the U.S. from August 2016 through November 2016, the peak season for the U.S. 2016 Presidential campaign-- of course right at the moment when Moscow was supposedly trying to jack the election on Trump’s behalf.

Moreover, in at least three cases, Airbus A319M-KATE showed up at very same airports, where candidate Trump was-- in the North Carolina cities of Charlotte and Concord and in Las Vegas, for example. Indeed, in the case of Charlotte, local photographers took pictures of M-KATE and the Trump campaign jet at the very same airport on November 3, 2016. During a presidential campaign close aides often arrive before and after the candidate, times that overlap with the Rybolovlev jet in several cities.

Local photographers took pictures of M-KATE and Trump’s Boeing 757 the Trump campaign jet at the same airport on November 3, 2016.

Indeed, earlier this month-- on Friday, Feb. 10 2017-- Rybolovlev‘s Airbus A319 M-KATE flew all the way from Switzerland to Miami. That airport is near where the White House said that the president was partying with hedge fund mogul Steven Schwartzman in Palm Beach on Saturday night. Rybolovlev’s jet returned to Switzerland on February 12, flight records show.

There were also M-KATE flights to Westhampton, New York and Los Angeles in early August 2016 and October-November, 2016, but the intersections with Trump’s travels are less clear.

Why would Rybolovlev’s plane scurry back and forth from Moscow to odd destinations like Charlotte and Concord, as well as to Las Vegas, New York, Burbank, and Miami, to arrive there precisely when Trump was there? The obvious question: was Rybolovlev a Putin emissary?

These flight patterns that were first noted by observant ‘Twitter journalists” like @Observer14 and @AceInCharlotte back on Nov. 3, 2016, just as they were occurring.

But what could Rybolovlev possibly have been carrying that couldn’t have been ported more efficiently and discretely by other methods? Furthermore, are we sure that relations between Putin and Rybolovev are all that good?  After all, in 2008,  Igor Sechin, Putin’s Deputy Prime Minister at the time-- and now the Executive Chairman of the fabled Rosneft, the world’s largest publicly-traded oil producer-- reportedly threatened to prosecute Dmitry Rybolovlev’s potash company over a mine disaster, exposing it to huge fines. Soon after this threat, Rybolovlev’s potash company, UralKali, reportedly paid $250 million of “voluntary” compensation to the government. After that Rybolovlevalso accelerated his efforts to diversify abroad. The Financial Times does say that relations between Putin and Rybolovlev are now fine. But this pattern also fits the standard Putin stratagem whereby oligarchs are pressured into becoming semi-feudal servants of the de facto modern Tsar.

In any case, these flights remain a genuine enigma. We do yet not have any eyewitness reports or photos that show that Rybolovlev was actually on the planes or actually met with Trump or any of his staff. But these coincidences, combined with everything else we know about Rybolovlev’s connections to Trump and Ross, certainly deserves further scrutiny.

This prompts still  more questions for Wilbur Ross, this time regarding Dmitry Rybolovlev:

• How long have you known Dmitry Rybolovlev? How much of the Bank of Cyprus does he currently own? What role has he and his family played in the bank?  Do other members of his family do business with the Bank?  Do other members of his affiliated companies do business with the Bank or with other investors in the Bank?  What contacts have you or associates had with Dmitry Rybolovlev?
• What attention did you and your team pay to Rybolovlev because of his 3.3 % (and at one time nearly 10%) stake in the Bank of Cyprus? What due diligence did you or your associates perform regarding Rybolovlev and Trump? What did you find?
• When and how did you learn of the lucrative deal Trump made with Rybolovlev in 2008 to sell his Florida property at a huge profit? As a long-time Trump friend and associate, were you involved in that deal?  Did you meet Rybolovlev at the time? To your knowledge, has Donald Trump had any other business dealings with Rybolovlev or his associates? 
• Have you or your businesses done any business with Rybolovlev or entities associated with him?
• When and when if ever, have you or your team met or communicated by telephone mail, email or through intermediaries with Rybolovlev? Are you aware of any occasions where Dmitry Rybolovlev may have met with Donald Trump or other members of his staff?  Were you present at any occasions in the last year in the U.S. or elsewhere where Dmitry was present?  How do you account for the unusual flight patterns listed above?  Do you know who recently bought one-third of Rybolovlev’s Palm Beach property?  Did you attend the Schwartzman party in Palm Beach on February 11? Was Dmitry there? Did you meet Donald Trump or other members of his staff that weekend? If so, what was discussed?

Josef Ackermann: Chairman of the Board, The Bank of Cyprus since 2014; former Chairman of Deutsche Bank (2002-12) during period when it engaged in a wide range of corporate misbehavior, including laundering $10 billion of Russian money, incurred fines that nearly bankrupted the bank, which is the largest single lender to the Trump Organization; “Friend of Vlad” who reportedly knows Putin well.

When Wilbur Ross became Vice Chairman of The Bank of Cyprus in July 2014, one of his first acts was to nominate Josef Ackermann, who had headed Deutsche Bank from 2002 to 2012, to become Bank of Cyprus’s new board chairman. He assumed that role in November 2014 and still holds it.

Even back in July 2014, it was difficult to make Ackermann’s decade running Deutsche Bank look like an achievement, to say the least. Since then, it has become even clearer that he presided over a period of spectacular chicanery at Germany’s largest bank. Given this, his nomination by Ross to head the Bank of Cyprus in 2014  seems peculiar, to say the least.

Wilbur und Josef

One possible explanation is that Wilbur Ross is a long-time financial ally of Donald Trump, dating back to an effort to restructure his casinos in 1990. From 2002 to 2012, under Ackerman, Deutsche Bank had become Trump’s largest bank creditor by far, with more than $650 million of loans to the Trump Organization and even more to other Trump partnerships, as of 2008. Trump’s 2016 financial disclosures show that out of $650 million owed by him and his organization, $364 million was owed to Deutsche Bank.

Meanwhile, ever since Trump failed to repay more than $900 million of bank loans in the early 1990s, other major U.S. and European banks had largely rejected him. He did not help his own cause by bragging in print that he had borrowed from the banks knowing full well that he would never repay.

To this day, why Deutsche Bank has continued lending to Trump and his organization remains a mystery.

Indeed, according to recent press reports, Deutsche Bank has recently been looking into allegations that the Russian Government may have guaranteed some of the bank’s  more generous loans to Trump during the Ackerman period, either directly, or through offshore banks and companies.

This would resemble a similar approach that was used by Putin in France. In 2014  he helped secure €11 million for Marine Le Pen’s cash-starved National Front from the “First Czech-Russian Bank,” a Moscow-based bank, as a reward for her support for Russia’s March 2014 invasion of Crimea and other Putin policies.

In any case, as noted, during Ackermann’s tenure at Deutsche Bank, Deutsche Bank had indulged in an incredible range of financial misconduct, from sanctions-busting, interest rate rigging, and mortgage fraud to facilitating tax dodging, illicit trading, illegal foreclosures, rigging energy markets, and money laundering. By no means were any of these full-blooded “white collar crimes” that were prosecuted to conviction and sentence; in most cases, they were disposed of by settlements and, at worst, deferred prosecution agreements. But in many ways that is the point-- leniency may explain why they kept recurring.

Since 2010 all this misconduct has finally caught up with the bank, if not its former senior executive. Although no one has gone to jail, Deutsche Bank has already had to pay nearly $20 billion in fines and settlement costs.

Those already booked include a  recent $7.2 billion U.S. Justice Department settlement for issuing fraudulent mortgage-backed securities in the 2008 financial crisis-- the largest penalty of its kind to date. This was also coupled with a $5.3 billion fine against Ackermann’s previous employer, Credit Suisse, for the same exact kind of toxic RMBSs. Another case led to a $650 million fine for laundering $10 billion of Russian money, by way of Deutsche Bank’s  offices in Moscow, New York, and Cyprus.

All these penalties were announced in January 2017. They all pertain to behavior that took root on Ackermann’s watch.  As a New York State financial regulator remarked when he announced the Russian money-laundering fine for Deutsche Bank in January, “This Russian mirror-trading scheme occurred while the bank was on clear notice of serious and widespread compliance issues dating back a decade.”

Since 2016, all this misbehavior has finally caught up with Deutsche Bank’s stock price. DB’s stock price has sharply underperformed other bank stocks because of the billions of litigation expense and penalties, to a large extent for offenses that originated during the Ackerman years. This, in turn, has led to huge job cuts, and even some serious concerns about whether Germany’s largest bank may soon require a bailout of its own.

Meanwhile, Ackermann has moved on, bonuses and all, despite recent demands from shareholders to claw them back.

As the saying goes, however, “A shoemaker does not just make one shoe.” There are some reports from investigative journalists that Cyprus is still up to its old tricks, albeit on a smaller scale. As a German ZDF TV investigative program concluded last year after succeeding in laundering €15 million through the Bank of Cyprus and other Cyprus banks, “Money laundering in Cyprus is still possible.” If so, the mere force of competitive pressures mean that Bank of Cyprus cannot stay far behind.

This is especially irritating to money laundering experts. After all, one of the key conditions for the €7.3 billion bailout that Cyprus received from the ECB and IMF in 2013-2016 was that Cyprus banks would commit to much tougher programs for monitoring compliance with “anti-money laundering” rules and statutes. As Ackermann acknowledged in a June 2016 interview, however, “There may still be individual cases… Money laundering had been the business model of Cyprus, and it is a difficult struggle.”

Evidently, it is not a struggle for everyone. In addition to becoming Chairman of the Board of the Bank of Cyprus, Ackerman has also joined the board of directors of Viktor Vekselberg’s Renova Group. This is consistent with the fact that Ackermann also reportedly enjoys a long-standing, warm relationship with Vladimir Putin. While at Deutsche Bank, he met with Putin  and other senior Russian officials frequently, served on Russia’s Foreign Investment Advisory Council and its “consultative committee” to form an “International Financial Center” in Moscow, and strongly endorsed Putin’s peculiar idea of a “free trade zone” between Russia and the EU. In Putin’s own words, “It would take ages to describe everything that Deutsche Bank is doing in Russia.”

Indeed I fear that it may.

So we also have a  few more questions that Senators should ask Ross, under oath, in public hearings, with respect to Josef Ackermann:

• How long have you known Josef Ackerman? What loans or other business dealings have you had with Credit Suisse or Deutsche Bank? Do you have a private banking relationship with Deutsche Bank? With Credit Suisse?
• Are you aware of Deutsche Bank’s history with respect to Donald Trump? To your knowledge, does Josef Ackerman know Donald Trump? To your knowledge, was he involved  in the lending relationship between Deutsche Bank and the Trump Organization or between the private banking side of Deutsche Bank and Donald Trump or is family? Was this a factor in your decision to hire him?
• What due diligence did you do with respect to Josef Ackermann? What questions did you ask Ackermann about his connections to Trump, Putin and Russian oligarchs? Are you aware that Josef Ackerman has a very cordial relationship with Vladimir Putin? Was that a factor in your decision to nominate him? Does Vladimir Putin ever any banking relationships with The Bank of Cyprus? 
• Given Ackerman’s track record, and in light of your own reputation for bank turn-around management, why did you hire Josef Ackerman to be Chairman of the Board of The Bank of Cyprus?  How confident should its shareholders be in his leadership?

WILBUR ROSS-- SUMMARY

At 79, Wilbur Ross’s energy level and sheer capacity to take on new challenges are impressive. If approved, he would be by far the oldest U.S. Commerce Secretary ever. But his nomination is actually not that surprising.

To begin with, Ross’ relationship with Trump goes back at least to the early 1990s, when he helped to finance one of Trump’s first Atlantic City casino deals. Ross has also been one of the most generous donors to Trump’s 2016 campaign. And he is widely reported to be one Trump’s most trusted advisors-- in so far as Trump listens to anything other than the voices in his head.

Ross fits right in with the ruling financier elite, way more easily than the President. Of course, Trump campaigned against all these folks when he was courting the lumpen proletariat back in the fall, but when he realized for the first time on Election Eve that he might actually have to govern, he immediately began to invite the hard-working Ivy elite in to do a reverse takeover.

Most important, while Ross’ investment funds have had trouble raising money lately, reportedly out of concern about his age, he does provide Trump with a certain degree of respectability in the investment community. While Trump falsely claims a degree from the Wharton School (he actually attended Penn’s undergraduate real estate economics program), Ross has a degree from Yale and earned a Harvard MBA. While Trump has no record of public or community service of any kind, Ross serves on the boards of a dozen prominent non-profits, including the Japan Society (Chair), Brookings, and the Dean’s Advisory Board at the Harvard Business School. He also holds seats on the boards of 70 for-profit firms, including 7 banks and 19 offshore haven companies.

The January 15 “Ethics Agreement” Ross signed with federal Office of Government Ethics promises that he will divest up to 80 of these investments within 90 to 180 days and that he will resign from most of his board seats as well.

Unfortunately, however, this does not put an end to potential conflicts of interest, especially in the Ross case.

First, from the standpoint of potential conflicts, as the Wall Street Journal recently reported, Ross still insists on retaining tens of millions of dollars in investments in non-transparent offshore entities.

These include a major co-investment with the Chinese government, a stake in a shipping company that will probably be subject to Commerce Department regulations, and a Cayman Islands “fund of funds” whose underlying assets and co-investors are completely invisible-- for all we know they include “friends of Putin.” Ross hasn’t been asked.

Second, the proposed terms of disinvestment are pretty slack. Three months is an eternity on Wall Street-- plenty of time to alter their value if Ross were so inclined.

Third, there are no limits on Ross’ partners’ investments in the Bank of Cyprus or any other enterprises. They might decide to reward him in Heaven for favors done now.

Fourth, Ross is not required to unwind his extensive loan portfolio, including the very large sums that he and his group owe to big banks like JP Morgan. These banks may well be within the range of various federal government regulations that official actions by Ross could impact.

Fifth, If Mr. Ross were so inclined, an endless variety of murky dis-invest and buy-back deals might be constructed to offset his formal disinvestments. This is the essence of the problem with trying to enforce conflict of interest rules against extremely rich business people who have built up global networks of other rich business people over decades. Favors are discretely provided and reciprocated. Just ask Vladimir Putin.

Just for the sake of argument, however, let’s assume for the moment that Wilbur is too long in the tooth to take advantage of such loopholes or be motivated by selfish considerations. Let’s also stipulate that he really does believe that what he is serving the public good, as he sees it.

Even then,  there is still another valid concern-- the most important. From this angle, classic “conflicts of interest” analysis and Ross’s pledges to discontinue his investments and board seats both miss the point.

For just as with the President, the stench of dodgy associations lingers on. In other words, even if  Ross divested everything down to his garters, there would still be this annoying puzzle:

Why, at the ripe old age of 77, way back in 2014,  did Wilbur  Ross step in with a lot of his and his associates’ money to save this feral bank in Cyprus? Why did he  pursue all these associations with dodgy  Russian “investors,” including “close associates of Putin?”

Before it confirms Mr. Wilbur Ross, the U.S. Senate needs to conduct a full investigation and demand public testimony to help us understand this glaring puzzle.

So... if you run into Sherrod Brown or Amy Klobuchar or Brian Schatz, ask them why they voted to confirm Wilbur.

The Road To Impeachment Is Long And Arduous-- But You Have To Start Somewhere

You remember when Darrell Issa was on Bill Maher's show last Friday? We covered it here, ran a video of the segment that shows how Maher and his audience pressured the gutless Issa into agreeing that any real investigation into Trump's relations with Putin requires a special prosecutor rather than a Republican white wash effort led by Richard Burr or Devin Nunes.

Issa told the audience that "You’re going to need to use the special prosecutor’s statute and office to take, not just to recuse. You can’t just give it to your deputy. That’s another political appointee." People who have followed Issa's singularly sleazy political career were gob-smacked that he would ever break with his beloved Trump so blatantly. The Regime is well aware that an independent special prosecutor can only lead to one thing-- impeachment (well... or resignation to avoid impeachment). By Monday, not even 3 days later, CBS News was already reporting that Issa was backing away from his call for a special prosecutor. Alan He reported that "Issa backtracked his call for a special prosecutor to look into Russian involvement in the 2016 Presidential election. 'I certainly could see where if there is an allegation of a crime at some point, the call for a special prosecutor makes sense. I think it’s very important to realize there’s been no allegation by any part of this administration or by anyone who’s been to the hearings about any crimes. So one of the challenges we have is a special prosecutor exists when you have an individual under suspicion. Currently we don’t have that.' A spokesman for Congressman Issa argues that he did not walk back his previous comments and rather was 'adding detail' and 'still supports an independent review of Russia-- not one led by political appointees or others who could create a conflict of interest.'" In other words, Issa hasn't changed his stripes one bit: he wants it both ways.

 

Issa: "What we do know is that the Putin government is a bad actor who should be carefully scrutinized-- and regardless of what side of the aisle you sit on-- our country has a vested interest in fully understanding exactly what happened, outside the fog of accusation and political jostling."

"The downfall," Dick Durbin told Bloomberg News on Monday, "does not come from the crime, it comes from the cover-up, and that’s what we’re dealing with now. We need to know if anyone in the Trump campaign had any direct conversations with someone from Russia. It’s hard to imagine how some of these leaks could have been so conveniently timed if there wasn’t coordination. It has to reach a point where we have public sentiment strong enough that we launch an independent, transparent investigation of what the Russians did to us. Think 9/11 [commission]." This is so not what the Trumpist Regime and Putin want to hear. I wonder if they watched the opening of Rachel Maddow's show Monday night. Now that is reporting! It's up top; if you missed it, please watch it. It's pretty amazing and ties together a lot of the kakistocracy's loose threads-- like the newly confirmed Secretary of Commerce, murder and Trump crony Wilbur Ross.

At no time should anyone expect anything better from anyone who would take a job working for Trump, people who, if Justice prevails at some time in the future, will likely face Nuremberg-style trials for what Bannon and Trump have in store for us. But what about members of Congress? Are they all going to make themselves complicit the way Issa has? Not just Issa-- no one is worse than the heads of the Senate and House Intelligence Committees, respectively Richard Burr (R-NC) and Devin Nunes (R-CA). Both were told by the Regime to "leak" bullshit to journalists about Trumpanzee being innocent and both dutifully did just that-- just as their committees were beginning the process of "investigating" the Trump-Putin ties. Nunes admitted he contacted journalists at the request of a White House communications aide," probably Spicer. Burr made similar admissions. They are both compromised and unfit to have any involvement in any investigation of Trump and Russia.

Steve Benen was thinking the same way Durbin was-- the cover-up only makes these scandals worse. "While Burr and Nunes were supposed to be overseeing investigations into the Russia scandal, they were also cooperating with the White House, telling reporters not to take the Russia scandal seriously. In other words, the investigators were undermining their own investigation-- at the behest of those being investigated. There’s no shortage of questions about the developments, but there’s an obvious one near the top of the list: what happens now?

There was a push several weeks ago for a special, independent commission to uncover the facts, but Republican leaders refused, insisting the matter belonged in the hands of the House and Senate Intelligence Committees. Now, however, we know that those committees’ chairmen volunteered to serve as part of Team Trump’s public-relations operation, destroying any credible claims to independence they have on the matter.

Indeed, even after these developments came to light, Devin Nunes, a Trump cheerleader and member of the president’s executive transition committee, continued to carry water for the White House.

...The total of congressional Republicans who support a special investigative committee is, at this point, quite small. The club includes Sen. Lindsey Graham (R-S.C.), Sen. John McCain (R-Ariz.), Rep. Walter Jones (R-N.C.), and now Darrell Issa. Sen. Bob Corker (R-Tenn.) didn’t fully endorse the idea, but he “left the door open to supporting an independent commission” following Michael Flynn’s resignation two weeks ago.

Meanwhile, nearly every relevant congressional Democrat has insisted that a separate investigation is entirely necessary under the circumstances. By their actions, Republicans have made the Democrats’ case far stronger.

Nunes: "The way it sounds like to me is, it’s been looked into and there’s no evidence of anything there... What I’ve been told by many folks is that there’s nothing there." Note the Trumpain "told by many folks" ruse. Nunes then tried conflated any serious investigation into Trump's shenanigans with Putin as-- wait for it-- McCarthyism "This is almost like McCarthyism revisited. We’re going to go on a witch hunt against, against innocent Americans …?”

At a press conference this morning, just before the House Judiciary Committee's markup of his Resolution of Inquiry (H.Res. 111), which will be the first legislative item Members of Congress will have to vote on concerning an investigation of Donald Trump's conflicts and Russia tie, Jerry Nadler called on Republican members to join over 130 Democrats in cosponsoring the Resolution. "The American people have many, many questions about Donald Trump," he asserted, "about his connections with Russia, about his business ties, and about his potential conflicts of interest. Is Donald Trump already violating the Constitution?  Is he accepting payments from foreign powers-- so-called emoluments-- without the consent of Congress? Did Donald Trump’s campaign collude with Russia to intervene in our elections or to hack the DNC? We know the Russians broke our law to intervene in our election to try and rig the election in favor of Donald Trump. We are told that Trump campaign officials were in contact with Russian intelligence officials during the campaign. What were they talking about? Was the Trump campaign colluding with the Russians to illegally intervene in our elections? Did the candidate know or approve of working with the Russians to rig an American election? We must know the answers to these questions."

Now, many of these questions are not new. We have been asking them for months. But so far we have heard nothing. Nothing from the Trump Administration. Nothing from the Attorney General.  And nothing from the Republicans in Congress. Despite our repeated efforts to seek out the truth, our calls have fallen on deaf ears.

“Well, not anymore. They can’t avoid us any longer. Today, we will have a debate and a vote.Today, we will find out who wants to know the truth and who wants to bury their heads in the sand. That is why this resolution is so important. It will finally put Members of the House Judiciary Committee on the record.

“A Resolution of Inquiry is a simple, but important, tool to obtain information from the Executive Branch. In this case, it directs the Department of Justice to provide the House of Representatives with any and all information it possesses related to any conflicts of interest, any ethical violations, and any improper ties to Russia by President Trump or his associates. That is it.  A simple request for information.

“The information we request is absolutely necessary for us to be able to conduct proper oversight of this Administration. We need it so that we can do our jobs. This should not be a partisan issue. Members of the House should not object to a simple request for information. In addition, since Attorney General Sessions, who was in the Trump campaign, has refused to recuse himself from any investigation, it is not clear that he could be impartial, or that he will even conduct an investigation at all. Therefore, we must ensure that we in the House get access to any information the Department of Justice has so that we can do our own investigation.

“More than 130 Members have cosponsored this resolution. We have gotten phone calls from tens of thousands of our constituents who support it, and I have received more than 837,000 signed petitions calling on us to pass it. The American people want answers.  They want the truth.  The Judiciary Committee has a chance to help them get it. I look forward to the debate and the vote.

Voting along party lines today, the House Judiciary Committee rejected Nadler's resolution. The idea was to keep it from the floor, where every Republican would have go on record voting for or against requesting information on Trump's conflicts of interest and ties to Russia. After the vote, Ted Lieu, a member of the Judiciary Committee sent out a statement saying he is "disheartened that House Republicans would oppose efforts to bring transparency to the Trump Administration’s ties to Russia and business conflicts. In the past few weeks, we’ve heard of questionable interactions between Administration officials and Russian agents, yet congressional Republicans have refused to take any concrete effort to learn more about the connections. Moreover, the President has failed to adequately remove himself from his business, going so far as to host official events at his hotel. Still, Republicans have turned a blind eye to these clear conflicts of interest. The American people deserve to know the truth. We also deserve elected officials who don't shrink from their responsibilities as the people’s representatives, but do everything they can to put the interests of Americans first.  Today’s debate-- or lack thereof-- suggests the contrary from my Republican colleagues."

Let me just say again-- the DCCC has never fielded a candidate to challenge Nunes in his Central Valley district. Never. CA-22-- the eastern part of Fresno, plus Clovis to the north and Visalia and Tulare to the south-- is 46% Hispanic and 10% Asian and African-American. Whites are now a 40% minority and the DCCC should have been cultivating this changing district for years. They haven't. If there were to start in this cycle-- they would be starting fresh. if not now, though, when? One of the worst aspects of the DCCC is that there is now one there capable of thinking beyond the current cycle. They have-- at least since Pelosi brought Emanuel in to run/ruin it-- lacked strategic thinkers capable of even understanding that long term plans are just as important as immediate campaigns.

The Question Remains … Whose Interests Would Kathleen Matthews Represent If Elected?

-by Jeffrey Hearn

I finished writing the following post when there was about a week left in the 2016 Democratic primary campaign in Maryland’s Eighth congressional district. I was then working for Jamie Raskin, the progressive front-runner for the nomination whose chief rival throughout the primary had been Beltway insider Kathleen Matthews.

But the race had become more complicated when billionaire businessman David Trone entered late and spent over $13 million during the final ninety days of the primary. Some of that money was spent on an ad that aggressively, and many would say unfairly, attacked Raskin and Matthews, and the Raskin campaign pushed back against the Trone ad by criticizing him for going negative. That response effectively rendered this piece unpublishable, so it never saw the light of day. Until now.

A couple of weeks ago, Kathleen Matthews announced that she was throwing her hat into the ring for Maryland Democratic State Chair, after having been recruited to run by establishment Democrats Steny Hoyer, Ben Cardin, and Chris Van Hollen. The piece that follows suddenly seemed relevant again as the question became: Whose interests will Kathleen Matthews represent if she is chosen state party chair? Because the DNC Chair race is not the only place where the future of the Democratic Party will be decided.

The fact that Kathleen Matthews, candidate for Congress in Maryland's Eighth District, is also the wife of Chris Matthews, host of Hardball on MSNBC, has been a touchy subject since her campaign's earliest days, when some of the press coverage of her entrance into the race seemed to suggest that "wife of" was the most newsworthy line on her resume. Offense was quite reasonably taken by some when the candidate's own professional accomplishments couldn't find their way into the headline, but "wife of" could.

That said, the worst offenders on this score tended to be publications for whom the Chris Matthews hook truly was the only thing that made the story newsworthy, either because their focus was the national media beat (Mediaite, the "On Media" column at Politico) or because they were right-wingers obsessed with the MSNBC pundit (Breitbart, NewsBusters.org). It was also true that the "wife of" characterizations provided Matthews with the kind of publicity—favorable publicity, as often as not—that money just can't buy. And even when you're a candidate who can easily self-fund an expensive political campaign if you want to, as Kathleen Matthews can, (see her Financial Disclosure Statement here [pdf]) "earned media" is almost always a nice thing to receive.

Almost always, but not always.

Last month the Chris Matthews factor earned Kathleen Matthews some unwelcome media coverage when David Dayen of The Intercept reported that

48 frequent guests of Matthews’s program … have made donations to the Kathleen Matthews for Congress campaign. These individuals, their spouses, or their political action committees donated $79,050 as of December 31, 2015 — about 5 percent of the $1.5 million Matthews had raised as of that time.

Initially, everyone seemed to see it as a story about Chris Matthews. The entertainment columnist at the Philadelphia Daily News thought the central issue was whether the Hardball host could "fairly interview those contributors on his program and what's the minimum amount of disclosure he needs to provide viewers." Right-wing critics, however, tried to spin the story as a pay-for-play scandal; suggesting Hardball was booking guests in exchange for campaign contributions to the host's wife. This overreaching by the right, in turn, handed the Matthews camp the opening it needed to play the sexism card and attempt to spin the story to it's own advantage.

But the original piece at The Intercept had raised another issue that was lost on the media critics and right-wingers.

"What the donations do reflect are the many political friendships [Chris] Matthews has cultivated as a longtime Washington pundit, whether he personally solicited them or not. In Washington, political friends often help each other out."

The Washington Post, reporting on the reaction of other candidates in the race to the Hardball guest/donor story, then brought the focus back around to the campaign and Kathleen Matthews.

Three candidates in the 8th … say the donations from Washington A-listers raise questions about whose interests Matthews will represent if she wins

Kathleen Matthews began her campaign by seeking to demonstrate her connections to the community she would nominally represent if elected. At her official campaign launch, she started by introducing family, friends, and staff by way of their ties to Montgomery County, or, at least, to "the area." For her part, here is how she put it on the Kojo Nnamdi Show's Politics Hour early in the campaign:

[M]y ties to the area are really deep, not only as a working mom who raised her family here, but also those 25 years on the air [as a local television reporter and news anchor]… so I really know the area, I love the people here, and I share a lot of their concerns and frustration right now with government.

But questions regarding her roots in the community she was presumably running to represent were raised from the beginning, too.

At that Kojo Nnamdi Show appearance, veteran D.C. political reporter Tom Sherwood made reference to hearing her described as "Mile High Matthews," serving on the Boards of D.C. institutions such as the Shakespeare Theater and Ford's Theater and such, but wondered about her ties, not simply to "the area," but to the congressional district she was now running in.

Whose interests … ?

What are your ties … ?

Which community … ?


* * *

It has been known by many names. A generation ago, Lewis Lapham called it "Versailles on the Potomac."

"Like the notables assembled under the king's roof at Versailles, official Washington divides the known world into only two parts. First there is Washington, then there is everyplace else"

More recently, Mark Leibovich of the New York Times profiled "The Club" in its present form in his book This Town. "Washington has become … a permanent feudal class of insiders.," said Leibovich in an appearance on the PBS Newshour. "These are people who are in office, people who were formerly in office, staffers, journalists, hangers-on, and you have this insider class that becomes self-perpetuating."

On an episode of Moyers and Company devoted to the book, Bill Moyers laid out a key observation Leibovich makes regarding the way the Washington establishment works.

[M]any American's see Washington today as a polarized, dysfunctional city. One that is not sufficiently bipartisan. But you describe it as a place that becomes a determinately bipartisan team when there is money to be made.

Then, as Moyers called the names on a "roll call of influence peddlers" for the next twenty minutes, inviting Leibovich to provide examples to illustrate his point about bipartisan team spirit in The Club, one after another, after another, after another of the names called turned out to be contributors to the Kathleen Matthews for Congress campaign.

• Ken Duberstein (former Chief of Staff, Reagan White House, and current Chairman and CEO, The Duberstein Group, gave $1000 to Kathleen Matthews for Congress), Tony Podesta (Founder and Chairman, The Podesta Gorup, gave $500), Steve McMahon (CEO and Founding Partner, Purple Strategies, gave $2700), and Hillary Rosen (Managing Director, SKDKnickerbocker, gave $500), of BP's Gulf oil spill crisis management "Beltway Dream Team"



• Jack Quinn (former Clinton White House Counsel, Chief of Staff, to Vice President Gore, and current Chairman and Co-Founder, QGA Public Affairs, gave $1000)



• John Breaux (former U.S. Senator and current Co-Chair, Public Policy Practice, Squire Patton Boggs, gave $1000), and the late Tommy Boggs (was Senior Partner, Squire Patton Boggs. Widow Barbara Boggs, Treasurer of Kathleen Matthews for Congress, gave $2700)



• Richard Gephardt (former Majority Leader, U.S. House of Representatives, and current President and CEO, Gephardt Government Affairs. Thomas O'Donnell, Managing Partner, Gephardt Government Affairs, gave $2700)



• Evan Bayh (former U.S. Senator and current Senior Advisor, Federal Public Affairs, McGuireWoods Consulting, gave $2000)



• Chris Dodd (former U.S. Senator and current Chairman and CEO, Motion Picture Association of America. Wife Jackie Clegg-Dodd gave $500)



• Byron Dorgan (former U.S. Senator and current Senior Policy Advisor, Arent Fox. Wife Kimberly Dorgan gave $250)



• Anita Dunn (former Director of Communications, Obama White House, current campaign strategist and advisor for Kathleen Matthews for Congress, and, as a Managing Director at SKDKnickerbocker, a partner of the aforementioned Hilary Rosen, gave $2700)

Kathleen Matthews thinks the problem with Washington is that it is a polarized, dysfunctional city, too. As she said on the Politics Hour:

I also think one of the frustrations people have right now is they believe we have gridlock in Washington, and we don't see bipartisan efforts to get to good things on behalf of all the people

As Leibovich has shown, the Beltway establishment stands for nothing if not bipartisanship. For them, it is the hyper-partisanship of the Tea Party and other movement conservatives that is the problem. And, for them, the solution to this problem is clear: a restoration of the ancien regime. A return to power of Versailles on the Potomac, a return to the status quo ante, a return to business as usual.

But, to be fair, it's not as if the Kathleen Matthews campaign slogan is "Let them eat cake!" Far from it.

Enter Digby.

Taking her cue from a classic Sally Quinn article in the Washington Post about the Washington establishment's "let down feeling" in the wake of the Monica Lewinsky scandal, the progressive blogger Digby coined a term which can help us find Kathleen Matthews' true place in the political landscape: The Village.

It's shorthand for the permanent DC ruling class who have managed to convince themselves that they are simple, puritanical, bourgeois burghers and farmers, even though they are actually celebrity millionaires influencing the most powerful government on earth.

It's about their phoniness, their pretense of speaking for "average Americans" when it's clear they haven't the vaguest clue even about the average Americans who work in their local Starbucks or drive their cabs. (Think Tim Russert, good old boy from Buffalo, lately of Nantucket.)

… a metaphor for the faux "middle class values" that the wealthy, insular, privileged, hypocritical political celebrities (and their hangers-on and wannabes) present to the nation.

Is Kathleen Matthews a Villager? You decide.

Here's the story she tells:

"I'm the product of the middle-class."

“Our dad worked hard for a medical device company and our mom knew how to stretch a middle class salary to support a family of seven. She was frugal, prioritized education, and encouraged us to give back. I worked during high school and college to help pay for school …”

“In Washington, I found a kindred political spirit in my husband, who had also grown up in a middle class family of 5 children. We started in entry-level jobs in Congress and journalism and have been lucky to move up in careers we love.”

“But you know, [journalism is] not a glamorous life. I mean, you work your butt off in journalism. I worked weekends. I worked nights. … for many years, when I had three kids, I would commute from my home in Chevy Chase, Maryland down to work, do the five o'clock news, go home, pick up dinner at the Safeway, feed my kids, work on their homework, come back and do the eleven o'clock news, and I did that for years.”

"I think people know that I'm just a regular working mom."

“It's very difficult to put together day care scenarios that work on your different shifts. For me, working five, six, and eleven o'clock news, really challenging to find day care on those kinds of shifts.”

“I'm a working mom that raised her kids in Montgomery County, and I bring that experience, which I think relates to a lot of families, working families, in the area.”

“… all the while being a working mom, raising my own kids, struggling, working nights, weekends, trying to get day care, helping my mother, who was dying, getting treatment at NIH, so I know the struggles of working families, I've lived those struggles with you , all of you here in the room.”

“Like many on the panel here, my husband came to Washington, him out of the Peace Corps, me out of college, with college loans and college debt. We got married, we raised three kids, and over eighty years of combined salaries, we're in a position now where I can quit my job and run for Congress full time.”

“So, that's really kind of the thread of my campaign. It's a working mom's campaign, who wants to help more working families in America …”

And here are parts of the story that get left out:

Her father didn't exactly toil in obscurity at some anonymous medical device company, struggling to put food on the table. He was educated at the University of Illinois, and later at the Illinois Institute of Technology, where he was a student of the renowned architect Mies van der Rohe. He went on to become a faculty member at IIT before going to work for the seminal Silicon Valley biotech firm Beckmann Instruments as an HR executive, not only in southern and northern California, but also in Geneva, Switzerland.

By the time Kathleen and Chris Matthews married, Chris had already served as a speech writer in the Carter White House and would spend the next eight years as a top aide to the Speaker of the U.S. House of Representatives, Tip O'Neill. And with Kathleen working in local television as a producer (soon to be reporter), it was, from the start, a two-career household as well, so one might reasonably speculate that their student loan payments were nowhere near the burden they have become for so many today.

With Chris rapidly rising through the ranks of the punditocracy after leaving Capitol Hill in 1987, and Kathleen being promoted to anchor at D.C.'s ABC affiliate in 1991, the couple was able to afford a $950,000 home in Chevy Chase, Maryland by 1993. Mark Leibovich would later describe it as "sun-lit, art-filled and cozy, with three Mercedes of various sizes and degrees of wear in the driveway."

Later that same year, Chris and Kathleen Matthews decided they could afford a nanny, too. Hired through the White House Nannies agency (which was doing land office business at the time as a result of the Nannygate scandal that had sunk the nomination of Zoe Baird as U.S. Attorney General earlier that year), the nanny stayed with the Matthews family for three years, from 1993-96.

Kathleen and Chris Matthews had much better luck with the Mount Holyoke graduate I sent them that same month. Gianna cared for their three children while Kathleen anchored the local news and Chris was making his national mark with Hardball. (Barbara Kline, White House Nannies, 2005)

And then there's Nantucket.

In summer, Nantucket is a remarkable re-creation of Washington politics, fundraisers, and restaurant life, confined to a 3.5-by-14-mile resort island. (Sally Brady, "See You at the Shore," Washingtonian, August 2003)

Like many elite Washingtonians, Chris and Kathleen have a summer home on Nantucket, purchased in 2004 for $4.35 million. Five bedrooms, four baths. Inground pool. Five acres leading down to the beach.

When asked about an upcoming Nantucket fundraiser last July, Kathleen made a point of stressing that it would be "hosted by my friends from the Washington area who happen not to be here. I'm here." What she didn't stress was that she had been on Nantucket for the better part of a week the month before to attend the Nantucket Film Festival, and would be back not just for her own campaign fundraiser but for the American Ireland Fund event the next week.

And then there's one other part of the story that doesn't get said: Kathleen Matthews' Financial Disclosure Statement [pdf] reveals that she and Chris are worth, at a minimum, $22.5 million. Wealthier than all but about 20 current members of Congress. Wealthier, in fact, than all but three members of the U.S. Senate, AKA the "Millionaire's Club."

Again, Digby: " [I]t is an extremely common trait among the DC courtiers. They truly seem to believe they are just regular guys --- and therefore, their concerns are the same as regular Americans. Only, you know, they aren't."


* * *

Yes, Kathleen Matthews has lived in Chevy Chase, in Montgomery County, in Maryland's Eighth congressional district, for well over twenty years now. But where, really, has she been putting down roots all this time? Where are her deepest ties? Where has she really been living her life all these years?

Call it Versailles on the Potomac, call it The Club, call it The Village. Whatever you call that place, there can be no denying that Kathleen Matthews is at home there. And as the Hardball guest/donor story and the roll call of the usual suspects Bill Moyers elicited from Mark Leibovich both make clear, that community knows who it thinks would best represent its interests.

So, whose interests will Kathleen Matthews represent if she is elected? The interests of her community, no doubt.

It's just a matter of figuring out which one.

RELATED:

"The Non-Denial Denial: Kathleen Matthews and Marriott's Government Affairs"

"Kathleen Matthews: AKA Kathy Cunningham, Republican Political Operative"

Jeffrey Hearn is an historian by training. He is also a longtime movement progressive a longtime resident of Maryland’s Eighth District, and a Jamie Raskin supporter, something he has previously blogged about here.