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      Fox-Dominion Trial Delayed: What to Know About the Company Behind the Lawsuit

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      Dominion, which is owned by a New York private equity firm, has accused the news network of spreading false narratives about its election technology.If not for the 2020 election, most people would not have heard of Dominion Voting Systems, an elections technology company that John Poulos started out of his basement in Canada more than two decades ago.But in the days and weeks after the election, former President Donald J. Trump and many of his allies accused the company of perpetrating election fraud. Dominion then filed a slew of defamation lawsuits against public figures and news networks, accusing them of spreading the false narratives and exposing its employees to harassment. The company’s case against Fox News is scheduled to go to trial this week. Judge Eric M. Davis, who is presiding over the case, said in a statement late on Sunday that he was delaying the trial by a day, until Tuesday. He did not cite a reason but said he would make an announcement Monday at 9 a.m.Here is what we know about the company, from its private equity owner in New York to its powerful perch in the nation’s elections industry.Dominion’s Early DaysDominion became one of the largest providers of election technology in the United States by selling, licensing and maintaining products such as its Democracy Suite software and ImageCast voting and tabulation machines. During the 2020 election, the company served 28 states, including many swing states, as well as Puerto Rico. Mr. Poulos, who has degrees in electrical engineering and business, incorporated Dominion in Toronto in 2003 with some friends after a stint in Silicon Valley. His sister was his first investor, followed by his parents and his friends’ parents. (Dominion declined to comment for this article.)The company is named after Canada’s 1920 Dominion Elections Act, which removed barriers to voting that had excluded women and voters of certain racial, religious or economic groups. Mr. Poulos’s business idea was to help people with disabilities, such as paralysis or blindness, cast their ballots as independently as possible while still leaving an auditable paper trail. Dominion incorporated accessible technology like audio readouts and large screens into election machines.The company scored its first American contract in 2009, providing voting technology to dozens of counties in New York. The next year, it moved its headquarters to Denver, where it now has several hundred employees.Private Equity OwnersStaple Street Capital, a private equity firm in New York, is the majority owner of Dominion. Mr. Poulos, Dominion’s chief executive, retains a roughly 12 percent stake. PennantPark Investment, a financial firm based in Miami, is another investor.Fox said in a legal filing that Staple Street paid $38.3 million in 2018 to acquire 76.2 percent of Dominion. At the time, the private equity firm valued the technology vendor at $80 million, or one-twentieth of the $1.6 billion in damages that Dominion had sought from Fox, according to Fox’s filing.Staple Street’s owners, Stephen D. Owens and Hootan Yaghoobzadeh, first worked together in 1998 on buyouts for the Carlyle Group, a private equity giant. (Their résumés also feature stints at Lehman Brothers and Cerberus Capital Management.) The firm’s board of directors includes a former chief executive of Dunkin’ Brands as well as a former chairman of the Federal Communications Commission and ambassador to the European Union.Staple Street declined to comment.On its website, Staple Street says it has $900 million of assets under management — mostly midsize companies such as a flower bulb distributor in New Jersey, an accounting and payroll reporting service popular with restaurant chains, a support organization for dental clinics and, at one point, the theme park operator Six Flags.Fox said in its filing that Mr. Yaghoobzadeh had authorized Dominion’s lawsuit against the network. The lawsuit, Fox said, is meant to generate publicity, deter negative reporting and “unjustly enrich” Staple Street.Fox cited discovery documents that it said showed Dominion “in a solid financial position, maintaining substantial cash, carrying no debt and producing a steady return on investment” to Staple Street. In 2021, Dominion paid full bonuses to its employees and executives and projected $98 million in revenue for 2022, Fox said.Last year, when asked whether he believed that Dominion was a “toxic” company after the 2020 election, Mr. Owens answered, “That’s correct.”A Business in FluxIn its complaint, which it filed in 2021, Dominion accused Fox of broadcasting lies that “deeply damaged” its “once-thriving” business, “one of the fastest-growing technology companies in North America” with a potential value of more than $1 billion.Shasta County, a rural area in Northern California that has become a hotbed for election denial, terminated its Dominion contract in January. Lawmakers in Montgomery County in Pennsylvania renewed a deal with Dominion for $518,052 in February, the same month that officials in Kern County, north of Los Angeles, narrowly approved a three-year, $672,948 contract after hours of heated debate.Dominion’s contracts with local and state governments typically last for several years and range from tens of thousands of dollars to more than $100 million, the company said in its complaint against Fox. The company estimated that misinformation about the company had cost it more than $600 million in profits.In an expert witness report submitted in the case late last year, Mark J. Hosfield, a managing director of the investment bank and advisory firm Stout, wrote that the false narratives had led Dominion to lose $88 million in profits from current and future opportunities. He also wrote that Fox’s coverage had caused the value of Dominion’s equity and debt to drop $920.8 million. Dominion’s renewal rate with clients had historically been 90 percent, he said.Fox has said the $1.6 billion that Dominion is seeking is “a staggering figure that has no factual support” and was “pulled out of thin air.” There has been no evidence of Dominion’s laying off employees, closing offices, defaulting on credit obligations or suffering canceled contracts as a result of Fox’s coverage, the network said.Fox said in other court filings last year that “Dominion’s calculations are riddled with mathematical overstatements” and losses misattributed to damaging news coverage, and that the company had beaten revenue forecasts that it set before the election.“Dominion’s lawsuit is a political crusade in search of a financial windfall, but the real cost would be cherished First Amendment rights,” Fox said in a statement.Dominion, in a statement said: “In the coming weeks, we will prove Fox spread lies causing enormous damage to Dominion. We look forward to trial.”An Important but Mysterious IndustryThe elections technology industry has few major players and offers little public information about its finances. Dominion is most likely the second-largest company of its kind operating in the United States, behind Election Systems & Software in Nebraska, according to Verified Voting, an election security nonprofit.Both companies, along with Hart InterCivic in Texas, have acquired smaller competitors over the past two decades. As of 2016, the three vendors served more than 90 percent of eligible voters in the country, according to a report from the Wharton School at the University of Pennsylvania.Wharton researchers at that point described the election technology business as having “all the aspects of an industry that new investors would want to avoid — a costly regulatory environment, constrained market size, cost-conscious customers, and concentrated and entrenched vendors.”The Brennan Center for Justice estimated last year that replacing outdated voting equipment over the next five years could cost more than $580 million. A group of Democratic lawmakers, including Senator Elizabeth Warren of Massachusetts, sent letters in 2019 to Staple Street and other private equity firms that had invested in election technology companies, voicing concern about industry consolidation and the maintenance of voting machines. In response, Staple Street wrote to Ms. Warren that it spent roughly 10 to 20 percent of its revenue on research and development.Susan C. Beachy More

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      US pension funds are on the brink of implosion – and Wall Street is ignoring it | David Sirota

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      US pension funds are on the brink of implosion – and Wall Street is ignoring itDavid SirotaPrivate equity firms managing millions of Americans’ retirement savings may be inflating their investments As public officials across America prepare to funnel even more of government workers’ savings to private equity moguls, an alarm just sounded for anyone bothering to listen. It is a warning that Wall Street executives, busy skimming fees off retirement nest eggs, want you to ignore. The longer the warning goes unheeded, however, the bigger the financial time bomb may be for workers, retirees and the governments that pay them.The world economy faces a huge stress test in 2023 | Kenneth RogoffRead moreEarlier this month, PitchBook – the go-to news outlet of the private equity industry – declared that “private equity returns are a major threat to pension plans’ ability to pay retirees in 2023”.With more than one in 10 public pension dollars invested in private equity assets – and with states continuing to keep their private equity contracts secret – PitchBook cited a new study finding that losses from the investments may be on the horizon for retirement systems that support millions of teachers, firefighters, first responders and other government employees.“Private equity returns get reported on a lag of up to six months, and with each update in 2022 values were coming down – which means 2022 numbers were including overstated private equity asset valuations and 2023 numbers are going to incorporate those losses,” noted the study from the Equable Institute.To comprehend this timebomb, you have to understand private equity’s business model.In general, private equity firms use pension money to buy up and restructure companies to then sell them at a higher price than they were purchased. In between buying and selling, there are no transparent metrics for valuing the purchased asset – private equity firms can manufacture an alleged value to tell pension investors (and there’s evidence they inflate valuations when seeking new investments).In a story about an investor receiving two different valuations for the same company, Institutional Investor underscored the absurdity: “Everyone Wants to Know What Private Assets Are Really Worth. The Truth: It’s Complicated.”Meanwhile, valuation and fee terms in contracts between private equity firms and public pensions are kept secret, exempt from open records laws.With that in mind, the new warnings are simple: private equity firms may have told their pension officials that their assets were worth much more than they actually are, all while the firms were skimming billions of dollars of fees off retirees’ money.If write-downs now happen, it could mean that when it’s time to sell the assets to pay promised retiree benefits, pension funds would have far less money available than private equity firms led them to believe. At that point, there are three painful choices: cut retirement benefits, slash social programs to fund the benefits, or raise taxes to recoup the losses.Signs of a doomsday scenario are already evident: some of the world’s largest private equity firms have been reporting big declines in earnings, and federal regulators are reportedly intensifying their scrutiny of the industry’s write-downs of asset valuations. Meanwhile, one investment bank reported that in its 2021 transactions, private equity assets sold for just 86% of their stated value last year.How to fight inflation? (Spoiler alert: not with interest rate rises) | Joseph StiglitzRead moreBut while pensioners may be imperiled, Wall Street executives are protected thanks to their heads-we-win-tails-you-lose business model. While reporting asset losses for investors, some of the firms managing pensioners’ money are raking in even more fees from investors and continuing to raise executives’ pay.Meanwhile, even as some sophisticated private investors rush to get out of private equity, the world’s largest private equity firm, Blackstone, recently reassured Wall Street analysts that state pension officials will continue using retirees’ savings to boost revenues for private equity firms, hedge funds, real estate funds and other so-called “alternative investments”.“The desire for alternatives remains very strong,” the president of Blackstone, Jon Gray, said in an investor call last week. “New York’s state legislature actually increased the allocation for the big three pension funds here by roughly a third.”Gray was referring to New York Democratic lawmakers passing legislation significantly increasing the amount of retiree money that pension officials can deliver to Wall Street. The bill was championed by the New York City comptroller, Brad Lander, just weeks after the Democrat won office promising he would be “reviewing the funds’ positions with risky and speculative assets including hedge funds, private equity, and private real estate funds”.The New York governor, Kathy Hochul, quietly signed the legislation on the Saturday before Christmas, just weeks after the Wall Street Journal reported that analysts have started warning pension funds of looming private equity losses. New York lawmakers simultaneously rejected separate legislation that would have allowed workers and retirees to see the contracts signed between state pension officials and Wall Street firms managing their money.The Empire State is hardly alone in continuing to use retirees’ money to enrich the planet’s wealthiest financial speculators – from California to Texas to Iowa, pension funds controlling hundreds of billions of dollars of workers’ retirement savings are planning to dump more money into private equity, while keeping the terms of the investments secret.While globetrotting to elite conferences in exotic locales, pension officials have defended the high-fee investments by parroting Wall Street executives’ claim that private equity reliably outperforms low-fee stock index funds. At the same time, those officials continue to conceal the terms of the investments, raising the question: if the investments are so great, why are the details being hidden?Perhaps because the investments aren’t as wonderful as advertised. In a landmark study entitled An Inconvenient Fact: Private Equity Returns & the Billionaire Factory, Oxford University’s Ludovic Phalippou documented that private equity funds “have returned about the same as public equity indices since at least 2006”, while extracting nearly a quarter-trillion dollars in fees from public pension systems.A 2018 Yahoo News analysis found that US pension systems had paid more than $600bn in fees for hedge fund, private equity, real estate and other alternative investments over a decade.“The big picture is that they’re getting a lot of money for what they’re doing, and they’re not delivering what they have promised or what they pretend they’re delivering,” Phalippou told the New York Times in 2021.Even some on Wall Street admit the truth: a JP Morgan study in 2021 found that private equity has barely outperformed the stock market, but it remains unclear whether that “very thin” outperformance is worth the risk of opaque and illiquid investments whose actual value is often impossible to determine – investments that could crater when the money is most needed.While the warnings have not halted the flood of pension cash to private equity, they have broken through in at least some corners of American politics.The Securities and Exchange Commission is considering new rules to require private equity firms to better disclose the fees they charge.The US should break up monopolies – not punish working Americans for rising prices | Robert ReichRead moreSimilarly, Ohio’s state auditor, Keith Faber, just issued a report sounding an alarm about state pension officials keeping private equity contracts secret – a practice replicated in states across the country.And following a pension corruption scandal in Pennsylvania – whose state government oversees nearly $100bn in pension money – there’s a potential financial earthquake: during his first week in office, Governor Josh Shapiro promised to shift pensioners’ money out of the hands of Wall Street firms.“We need to get rid of these risky investments,” Shapiro told his state’s largest newspaper. “We need to move away from relying on Wall Street money managers.”Shapiro could face opposition not only from private equity moguls and their lobbyists but also from the pension boards’ union-affiliated trustees. As the Philadelphia Inquirer reported: “Union members [on the boards] have mostly favored the old strategy of private investments, even when challenged by governors’ reps and the last couple of state treasurers.”When investment returns were somewhat better, the unholy alliance between some unions and Wall Street firms flew under the radar, even as pension funds were ravaged by fees. But with warnings of write-downs and losses getting louder, the dynamic could change.Better late than never – though the later it gets, the bigger the risk for millions of workers and retirees.
      David Sirota is a Guardian US columnist and an award-winning investigative journalist. He is an editor at large at Jacobin, and the founder of The Lever, where this article also appeared. He served as Bernie Sanders’ presidential campaign speechwriter
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      Kushner’s and Mnuchin’s Quick Pivots to Business With the Gulf

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      Weeks before the Trump administration ended, Jared Kushner and Steven Mnuchin met with future investors on official trips to the Middle East.Shortly before the 2020 election, Trump administration officials unveiled a U.S. government-sponsored program called the Abraham Fund that they said would raise $3 billion for projects around the Middle East.Spearheaded by President Donald J. Trump’s son-in-law and adviser Jared Kushner, the fund promised to capitalize on diplomatic agreements he had championed between Israel and some Arab states — pacts known as the Abraham Accords. Steven Mnuchin, then Treasury secretary, helped inaugurate the fund on a trip to the United Arab Emirates and Israel, hailing the accords as “a tremendous foundation for economic growth.”It was little more than talk: With no accounts, employees, income or projects, the fund vanished when Mr. Trump left office. Yet after Mr. Kushner and Mr. Mnuchin crisscrossed the Middle East in the final months of the administration on trips that included trying to raise money for the project, each quickly launched a private fund that in some ways picked up where the Abraham Fund had ended.Mr. Kushner and Mr. Mnuchin brought along top aides who had helped court Gulf rulers while promoting the Abraham Fund, and soon, both were back in the same royal courts asking for investments, although for purely commercial endeavors.Within three months, Mr. Mnuchin’s new firm had circulated detailed investment plans and received $500 million commitments from the Emiratis, Kuwaitis and Qataris, according to previously unreported documents prepared by the main Saudi sovereign wealth fund, which itself soon committed $1 billion. Mr. Kushner’s new firm reached an agreement for a $2 billion investment from the Saudis six months after he left government.A New York Times report last month revealing the Saudi investments in the Kushner and Mnuchin funds raised alarms from ethics experts and Democratic lawmakers about the appearance of potential payoffs for official acts during the Trump administration.But an examination of the two men’s travels toward the end of the Trump presidency raises other questions about whether they sought to exploit official relationships with foreign leaders for private business interests.In the weeks after the election, Mr. Kushner made three trips to the Middle East, the last for a Jan. 5 summit in Saudi Arabia with leaders of the Gulf monarchies. Mr. Mnuchin that day began a tour through the region that was planned to include private meetings with the heads of the sovereign wealth funds of Saudi Arabia, the Emirates, Qatar and Kuwait — all future investors. (He cut it short after the Capitol riot, dropping the Kuwait stop and, in Saudi Arabia, meeting only with the finance minister.)Mr. Kushner and his aides have sometimes cast his private firm, Affinity Partners, as something like a continuation of the Abraham Fund. On a four-day trip to Israel in March to meet companies seeking investments, Mr. Kushner’s team portrayed the firm as a chance to invest in the peacemaking potential of the Abraham Accords, people who heard the pitch said, speaking on the condition of anonymity.Both Mr. Kushner and Mr. Mnuchin hired several aides who were deeply involved in the accords: A top executive at Affinity, retired Maj. Gen. Miguel Correa, is a former military attaché in the Emirates who later worked in the White House. Top executives at Mr. Mnuchin’s fund, Liberty Strategic Capital, include a former ambassador to Israel and a former Treasury aide who helped arrange meetings with Gulf leaders.The transition from government work for one Liberty Strategic executive was so fast that his jobs appeared to overlap. A roster of 11 top executives and advisers provided to the Saudis by April 2021 included the managing director Michael D’Ambrosio, even though he was still an assistant director at the Secret Service through the end of May. (A Secret Service spokesman said that Mr. D’Ambrosio had disclosed his new employment to the agency and spent his last weeks there on paid leave.)An organizational chart for Liberty Strategic Capital, Mr. Mnuchin’s new investment fund, that the Saudis were reviewing by April.A former Treasury aide known as a close confidant had resigned in 2019 and was waiting for Mr. Mnuchin in the private sector. That confidant, Eli Miller, had been working with Persian Gulf sovereign wealth funds at Blackstone, another investment firm, and immediately rejoined the secretary at his new firm’s founding.The path from public service to private investing is well trod by members of both parties. The two Treasury secretaries under President Barack Obama later went to Wall Street.But Mr. Kushner and Mr. Mnuchin stand out, ethics experts said, for the speed of their pivots and for the sums they raised from foreign rulers they had recently dealt with on behalf of the United States.The Saudi investment with Mr. Kushner was made despite an advisory panel’s objections about his lack of relevant experience, the absence of other big investors, a high fee and the “public relations risk” of his ties to the former president, according to the minutes of a Saudi Public Investment Fund meeting last June that were obtained by The Times. Ethics experts suggested that the payment could be seen as a bid for influence if his father-in-law returned to office.Senator Elizabeth Warren, a Massachusetts Democrat, has urged the Justice Department to “take a really hard look” at whether Mr. Kushner violated any criminal laws.Kathleen Clark, a law professor at Washington University in St. Louis who studies government ethics, said each fund raised different issues. For Mr. Kushner, she said, “the reason this smells so bad is that there is all sorts of evidence he did not receive this on the merits.”But for Mr. Mnuchin, who was a successful investor before entering government, the biggest question is whether he was burnishing relationships as Treasury secretary that he knew would be useful to him in the near future, Ms. Clark said.“If he was, that is an abuse of his office,” she said. “I don’t know if it is criminal, but it is certainly corrupt.”Through a spokesman, Mr. Kushner declined to comment.In a statement, a spokesman for Mr. Mnuchin denied that he had sought investments while in office and said without providing specifics that some of the details in the Saudi documents were inaccurate. The former secretary was returning to a decades-long career as a professional investor, the spokesman added, and the firm has diverse backers, “including U.S. insurance companies, sovereign wealth funds, family offices and other institutional investors.”The Adviser and the SecretaryBefore vying for Persian Gulf investments, Mr. Kushner and Mr. Mnuchin sometimes competed for influence in the White House. During the transition to the Trump administration, Mr. Kushner sought to install his own candidates as Treasury secretary, until Mr. Mnuchin caught wind of it and launched a countercampaign, recalled several people familiar with the efforts.The two men had come from very different business backgrounds. Mr. Kushner had previously run his family’s real estate empire and owned a weekly newspaper, both with mixed results; Mr. Mnuchin had followed his father into a career at Goldman Sachs and made a fortune investing in Hollywood films and a California bank. They kept a cordial distance in the administration. But both took strong and sometimes overlapping interests in the Persian Gulf.President Donald J. Trump with Jared Kushner, his son-in-law, and Mr. Mnuchin at a diplomatic meeting involving Israel and the United Arab Emirates.Doug Mills/The New York TimesMr. Mnuchin had few business dealings in the region before the Trump administration. Yet he spent far more time there as Treasury secretary — and met far more often with the heads of sovereign wealth funds — than his immediate predecessors: He made at least 18 visits over four years to the Persian Gulf monarchies, compared with a total of eight made by his three predecessors over the previous decade.Former Treasury officials who worked with Mr. Mnuchin said that his time there reflected the priorities of the White House, including Iran sanctions, combating terrorist financing and the Abraham Accords. They noted that fund chiefs could be useful conduits to the rulers of the region.“He was a business guy who really knew how to do personal diplomacy, and they liked him,” said Michael Greenwald, a former Treasury attaché in Kuwait and Qatar who served in the Obama and Trump administrations. “So that was an effective tool.”Many of Mr. Mnuchin’s contacts appear to have been informal. One of his first meetings with Yasir al-Rumayyan, chief of the Saudi fund, was a September 2017 breakfast at the home of Stephen A. Schwarzman, Blackstone’s chief executive and Mr. Mnuchin’s neighbor. Mr. Miller, the secretary’s chief of staff at the time and now a senior managing director at Liberty Strategic, also attended.Mr. Mnuchin met with Mr. al-Rumayyan at least nine more times during the Trump presidency, including in Bahrain, Switzerland and a Treasury conference room, according to department emails that the group Citizens for Responsibility and Ethics in Washington obtained through the Freedom of Information Act and shared with The Times.In addition to multiple meetings with the Qatari emir and other officials, Mr. Mnuchin met at least 10 times with the head of the Qatar Investment Authority.“I will just do one-on-one with Mansoor,” he emailed an aide in 2019, referring to Mansoor bin Ibrahim al-Mahmoud, the fund’s chief executive. “We have communicated direct.”Mr. Mnuchin also met five times with the heads of the two main Emirati funds, once at a Washington dinner hosted by the co-founder of the Carlyle investment group.And he met repeatedly with the rulers of the Emirates and Saudi Arabia. That included a private meeting with the Saudi crown prince in Riyadh in 2018 shortly after the kingdom’s agents killed Jamal Khashoggi, a dissident and columnist for The Washington Post. And the documents suggest Mr. Mnuchin built a rapport with Sheikh Mohammed bin Zayed, known by the initials M.B.Z., who recently became the Emirates’ president.Sheikh Mohammed bin Zayed, president of the United Arab Emirates.Frank Augstein/Associated Press“I am available anytime to see you and His royal highness M.B.Z.,” Mr. Mnuchin wrote to an unidentified recipient in February 2020, planning a visit. “If possible it would be great for us to have a bike ride and dinner as we had discussed.”Suggesting a blurring of the lines between government and business, he wrote to a top Treasury aide in December 2020, apparently about a meeting with Saudi Arabia’s Public Investment Fund scheduled to take place after he stepped down.“Do we have any more info on PIF late January?” he wrote to the aide, Zachary McEntee, who accompanied him on Gulf trips that involved the Abraham Fund and later joined Mr. Mnuchin’s firm. A spokesman said Mr. Mnuchin was asking about a conference sponsored by the Saudi fund that he attended as a private citizen.Two weeks before he left office, Mr. Mnuchin flew to the region for official meetings with leaders across the Persian Gulf, with the stated purpose of discussing sanctions, terrorist financing and other national security matters. The visit included a private lunch on Jan. 8 at the National Museum of Qatar with the head of the country’s main investment fund.As for Mr. Kushner, he had made his highest goal in the White House the brokering of a Middle East peace plan centered on funding from Saudi Arabia and its neighbors. The core of the plan was to solicit investments from the Gulf that might persuade Palestinians to relinquish some of their demands for a future state. As the culmination of those efforts, he and Mr. Mnuchin organized a “Peace to Prosperity” conference in Bahrain that no Palestinian officials attended.To court Gulf rulers, Mr. Kushner helped persuade Mr. Trump to make the first foreign trip of his administration a 2017 visit to Saudi Arabia. Shortly after a meeting there with Mr. Kushner, the rulers of Saudi Arabia and the United Arab Emirates led a blockade of Qatar, accusing it of supporting extremism. Qatar hosts a major American military base, and the secretaries of defense and state pushed for an end to the blockade, but Mr. Trump initially backed it.Mr. Kushner returned repeatedly to the Persian Gulf — making at least 10 trips during the Trump administration, often to visit multiple countries — and formed a close alliance with Saudi Crown Prince Mohammed bin Salman. After American intelligence agencies concluded that the Saudi leader had approved the brutal murder of Mr. Khashoggi, Mr. Kushner defended the prince in the White House.Mr. Kushner at a meeting in September 2020 with Saudi Crown Prince Mohammed bin Salman.SPA handout/AFP, via Getty ImagesIn December 2020, Mr. Kushner visited Saudi Arabia and Qatar on a trip billed as an effort to end their three-year feud, returning to the kingdom on Jan. 5 for a Gulf summit where they formally reopened relations.“Jared led the diplomatic effort to heal the Gulf rift,” Mr. Kushner’s firm declared in a recent investor presentation.Allies of Mr. Mnuchin, though, said he also played a leading role, in part by working closely with Qatar to police terrorist financing and improve relations with Mr. Trump.In reality, diplomats said, the resolution was driven by the Saudis’ desire to end the rift before the start of a new American administration. But credit for ending the blockade may be valuable in courting investments.Exit StrategiesMr. Mnuchin wasted no time getting back to business. Three weeks after the Trump administration ended, he said in an interview that he had a plan but wasn’t ready to discuss it.By April 2021, his firm was showing potential investors a detailed list of target industries, according to documents obtained from the Saudi fund. The firm had arranged a legal structure that enabled foreign sovereign wealth funds to invest in strategically sensitive American industries, the documents show, and had already hired several former Treasury and State Department officials as top executives.Mr. Kushner got off to a slower start. Even by the time he reached his $2 billion agreement with the Saudi fund last July, he had not hired any executives with relevant investing experience.From left: Maj. Gen. Miguel Correa, Rabbi Aryeh Lightstone and Avi Berkowitz, whom Mr. Kushner hired for his fund.From Left: Bob Collet/Alamy Stock Photo; Steve Mack/Alamy Stock Photo; Mark Lennihan/Associated PressHe brought on his closest aide, Avi Berkowitz, and General Correa, the former military attaché. The general had left the U.S. embassy in the Emirates after clashing with senior diplomats who believed he had held unauthorized private meetings with the country’s leaders about arms sales and other matters. He had nonetheless been elevated to the White House, where he worked closely with Mr. Kushner. Career diplomats said that by the end of the administration, General Correa and Mr. Berkowitz were sometimes the only Americans accompanying Mr. Kushner to meet with Persian Gulf officials.Mr. Kushner also hired Rabbi Aryeh Lightstone, a former diplomat in Jerusalem who had worked on the Abraham Accords and been named a director of the Abraham Fund.A December 2021 presentation Mr. Kushner’s firm shared with potential investors, reported last month by The Intercept, suggests his firm’s focus may be blurring. As investment targets, the presentation listed a grab bag of high-growth industries including media, technology, health care, finance, consumer services and sustainable energy.But the presentation also touted Mr. Kushner’s “geopolitical experience” and role in Middle Eastern diplomacy.Mr. Kushner has continued to link his private firm to the Abraham Accords. “If we can get Israelis and Muslims in the region to do business together it will focus people on shared interests and shared values,” he recently told The Wall Street Journal, apparently referring to Muslims in neighboring countries (though about 20 percent of Israeli citizens are Muslim). The fund has so far invested in two Israeli companies.Adam Boehler, a finance official and Mr. Kushner’s college roommate, oversaw the Abraham Fund.Ali Haider/EPA, via ShutterstockThe Abraham Fund was overseen by Adam Boehler, at the time the head of a newly formed development finance agency and a college roommate of Mr. Kushner’s. Mr. Boehler joined Mr. Mnuchin on his Gulf visit in October and accompanied Mr. Kushner to Qatar and Saudi Arabia in December.Officials said the fund would invest in poorer countries that joined the accords, and its first projects were said to include upgrading checkpoints into Israel from the Palestinian territories and building a gas pipeline between the Red Sea and the Mediterranean.Neither project went anywhere. Nor did the efforts to enlist Gulf money.In January last year, Mr. Boehler announced the only publicly disclosed investment in the Abraham Fund: a “commitment of up to $50 million” from Uzbekistan, a relatively low-income country. Uzbek officials said at the time that they sought to reduce poverty and foster regional cooperation. Long criticized for human rights abuses, Uzbekistan had begun a lobbying push in Washington to improve its image after a leadership change; its new president also gave Mr. Trump a $2,950 silver replica of a historic building and his wife a $4,200 bed cover.But no money for the short-lived Abraham Fund was ever delivered.Ben Hubbard More

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      After Capitol Riots, Billionaire’s ‘Scholars’ Confront Their Benefactor

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      AdvertisementContinue reading the main storySupported byContinue reading the main storyAfter Capitol Riots, Billionaire’s ‘Scholars’ Confront Their BenefactorMore than 160 participants in a master’s program funded by the Blackstone founder Stephen Schwarzman have urged him to stop donating to election objectors. He has declined.Stephen Schwarzman opened his namesake program at Tsinghua University in Beijing in 2016.Credit…Getty ImagesFeb. 18, 2021Updated 1:33 p.m. ETThe private equity billionaire Stephen A. Schwarzman has spent many years financing educational programs, from his old high school to the Ivy League.But the Blackstone chief executive’s largess hasn’t always bought good will: There was swift opposition to his proposal to put his name on Abington Senior High School in Pennsylvania, and his close ties to former President Donald J. Trump contributed to opposition to having his name on a campus center he funded at Yale.And now, some participants in the Schwarzman Scholars program — a master’s course he established at Tsinghua University in Beijing to be a Chinese analogue to the Rhodes Scholarships — are speaking out against their benefactor.They say Mr. Schwarzman is failing to live up to his own values and harming the program’s reputation by not cutting off money to lawmakers who opposed certifying President Biden’s electoral victory.In a letter emailed to Mr. Schwarzman on Feb. 10, 161 current and past Schwarzman Scholars and two program professors urged Mr. Schwarzman to cut off those politicians and groups. “You espoused integrity, honesty and courage,” they wrote. “Now, we ask that you demonstrate those values by refusing to financially support those who would overturn the results of a free and fair election for their own political gain.”About an hour later, Mr. Schwarzman — who with his wife was the third-largest donor to the objecting lawmakers, according to an analysis by the Center for Responsive Politics — refused.Although the election certification vote would be “one of the major factors” in determining whom he supported in the future, Mr. Schwarzman wrote, “I value my constitutional right to carefully determine who I vote for and support.”The rift centers on one of Mr. Schwarzman’s fondest achievements, a one-year graduate program started with a $100 million donation from him and augmented with $450 million he raised from others. Up to 200 students take part each year, living and learning in a building designed by Robert A.M. Stern Architects — called Schwarzman College — with coursework focused on Chinese history, leadership and global affairs.Mr. Schwarzman and his wife, Christine, at the Metropolitan Museum of Art in 2018 for the Met Gala.Credit…Justin Lane/EPA, via ShutterstockBut some of the letter’s signers have begun to question whether having “Schwarzman Scholar” on their résumé is as much a risk as it is a benefit.“I feel like I cannot in good conscience allow my name to be associated with someone who refuses to commit not to donate to such people,” said Alistair Kitchen, a program alumnus who helped organize support for the letter.Mr. Kitchen, 29, an Australian who works in New York for Collective Impact, a strategy firm that focuses on progressive causes, said some scholars felt their association with the program could taint them, even as it burnished Mr. Schwarzman’s legacy, which Mr. Kitchen called a form a “reputation laundering.”For Ashlie Koehn, who had worked her way through the University of Kansas and joined the Kansas Air National Guard before becoming a Schwarzman Scholar, the program was a revelation — the first time she’d been able to focus on academics and not cost. But she said Mr. Schwarzman seemed not to understand the extent of his influence.“He has this self-perception of himself as an average American citizen, which he is in some ways,” said Ms. Koehn, 30, who works in state government. “But I think it disregards the fact that he has this outsized capital, and his donations give him an outsize impact.”A quarter of the more than 600 students who have participated in the program since 2016 signed the letter, including 18 anonymously. Some scholars supported the letter, organizers said, but feared repercussions in their professional lives if they signed.Others had different reasons for declining. Charles Vitry, a London-based alumnus of the program’s 2018 class, did not sign, although he said he “respected and appreciated the principles” of those who did. He said he also saw a need for “a broader community space to discuss challenging issues.”A spokesman for Mr. Schwarzman noted that the program had started in 2013 — “long before the 2016 election” — and that Mr. Schwarzman had supported congressional Republicans across the board in 2019 at the recommendation of G.O.P. leader, Representative Kevin McCarthy of California. “The majority of candidates Steve donated to voted to certify the results — as Steve had repeatedly called for,” said the spokesman, Matt Anderson.A spokeswoman for the Schwarzman Scholars program, Ellie Gottdenker, said in a statement that the program “remains true to its global mission and reputation as a world-class bridge for mutual understanding between China and the rest of the world.”The Schwarzman Scholars building at Tsinghua University.Credit…Getty ImagesThis is not the first time that Mr. Schwarzman has made a foray into educational philanthropy and faced opposition from those who benefit. Nor is it the first time that the opposition stemmed from his political positions.After Mr. Schwarzman donated $150 million to Yale, his alma mater, in 2015 to construct a building for events and informal gatherings to be named the Schwarzman Center, some professors and students complained about Blackstone’s business practices and his ties to Mr. Trump.In 2018, he pledged $350 million to build a new computer science center at the Massachusetts Institute of Technology, also to be named after him, which drew opposition on similar grounds.The same year, he pledged $25 million to help upgrade the high school he attended in suburban Philadelphia, which agreed to add his name to its own. The proposal set off an immediate backlash, and Mr. Schwarzman and the school quickly shifted course to name only a new science and technology building after him.The friction with the Schwarzman Scholars started almost immediately after the program welcomed its first class in 2016.A portrait of Mr. Schwarzman in the program’s facilities in Beijing.Credit…Getty ImagesSoon after the election, Mr. Schwarzman agreed to lead a business advisory council that made him one of Mr. Trump’s most prominent associates. After Mr. Trump introduced a travel and immigration prohibition aimed at people from predominantly Muslim countries, Mr. Schwarzman received sharp questions from the scholars on a video chat, according to one attendee. He argued that it was important to take a broad view and focus on common ground rather than on differences, the person recalled.Then came the 2020 election, and Mr. Schwarzman’s reaction to the outcome felt like equivocation to some members of the program.On a call with business leaders as votes in battleground states were still being counted, Mr. Schwarzman said he was sympathetic to voters who were skeptical of the counts. Later in the month, he said that the outcome was “very certain” and that Mr. Biden had his full support.When rioters stormed the Capitol, Mr. Schwarzman condemned their actions as an “insurrection” and “an affront to the democratic values we hold dear” in a statement to Blackstone employees and Schwarzman Scholars.But as a number of businesses and trade organizations were announcing that they would withdraw financial support from those who opposed certification of the election, at least two alumni wrote to Mr. Schwarzman raising concerns about his financial support of the objectors; they said he did not reply.Frustrated scholars began discussing a group letter. Mr. Kitchen and his former classmate Ricky Altieri, a 28-year-old Yale law student, circulated drafts over WeChat, text and Signal and eventually settled on a five-paragraph note. It asked that Mr. Schwarzman commit never to donate to any politician or political group that “supported Mr. Trump’s bid to overturn the results of the 2020 U.S. presidential election.”“We believe that donations to such candidates would violate the most basic principles of Schwarzman Scholars and harm its reputation,” the letter said.In his reply, which immediately made its way among current and former scholars, Mr. Schwarzman pushed back, writing that he had publicly supported the certification of Mr. Biden’s victory. Although the large number of objectors left him disappointed and confused, he said, they were “acting legally under the Constitution.”He added, “It is important in a democracy to continue to rely on our constitutional system and not voluntarily agree to be silenced.”Some of the scholars seemed to agree — and cited the program’s influence as one reason.Jacko Walz, 25, a New York-based strategy consultant focused on international development in Latin America, said the program had enhanced his awareness of the world around him and taught him about leadership and moral courage.“I think those topics are really authentically taught there,” Mr. Walz said. “And now that I’ve graduated I hope to practice them all the time.”AdvertisementContinue reading the main story More