Carl Icahn Resigns From Trump Administration After Exposé Details Corruption
JAISAL NOOR: Welcome to The Real News. I’m Jaisal Noor in Baltimore. In a story buried in last Friday’s news dump, mega-billionaire investor Carl Icahn quit his advisory role in the Trump administration just before The New Yorker released a devastating article that details possible conflict of interest involving ethanol regulation that Icahn likely profited from. Now joining us to discuss this is James Henry. He’s an investigative economist and lawyer, global justice fellow at Yale University and a senior advisor at the Tax Justice Network.
James, we’re going to go into who Carl Icahn is, but before we start on the background, Carl has defended his actions as Trump advisor. He wrote that he chose to end this agreement with your blessing, he’s writing to Trump here, because he did not want partisan bickering about his role in any way to cloud the administration. This was just before the New Yorker published Carl Icahn’s fail rate on Washington. He’s a man of unimaginable wealth, worth over $17 billion. He received no salary, was not required to divest from or disclose any potential conflict of interest for this position in the administration and the New Yorker argues he profited from the policies he advocated for, changes in how ethanol is regulated.
The New Yorker spoke to a Bush administration ethics lawyer who noted it is illegal for executive branch members besides the president and vice president to work on any matter they have any financial interest in. Carl Icahn says he was not an official member of the Trump administration so therefore this does not apply to him, but it seems like he’s in some, he could be in some trouble, legal grounds now. Can you give us your reaction to this story?
JAMES HENRY: Well, I think it’s a powerful kind of example of the conflicts of interests that have permeated this administration. If you go back just 10 months, you find in November Donald Trump describing Carl Icahn as a potential Secretary of the Treasury. He’s 81 years old and he didn’t want to take on that role, but he certainly was influential in helping Trump pick leading members of his administration.
Then he assumed this role of being a special advisor to the president. He made lots of noise about it. As of January, February, he was talking a lot about how he was going to be influencing policy. In fact in this particular case, where Carl Icahn has a refinery that was involved in the so-called biodiesel market, the market that’s at stake here, that he simply didn’t want to be regulated by the EPA under the program refineries like this one, CVR, would be required to purchase so-called RINs. They’re an incentive to get refiners to use more bio-diesel as alternatives to fossil fuels. The program has worked pretty well since it was first put into place in 2010.
Icahn seemed to have targeted this program because it is costing him money. He put out the word that there’s going to be a repeal of the policy by the EPA, that refineries like the one he owned would no longer be required to purchase so many of these incentive based incentives for using bio-diesel. What happens was the basic price of RINs collapsed. That allowed his company to engage at a lot of profitable short-selling.
This is a classic case I think of kind of insider trading. It looks like someone knew about what the policy was going to be an actually had an impact on it because he could pick up the telephone and call the president and then put out the word that the executive order was coming down, caused the price of these incentive based certificates to fall dramatically and his company to profit, at least temporarily. The whole story really does have a strong odor.
JAISAL NOOR: What’s fascinating is that the article is called Icahn’s Failed Raid on Washington because news of this executive order leaked and he was going up against … It’s important to say this wasn’t an Obama or Clinton era law. This was a George W. Bush era law. It was supported by Republican Senators. It’s supported by the oil and gas industry, so he’s going up against some powerful figures even in the corporate world. It was because news of this leaked, that it ultimately backfired on him and it did not go through, but he was still able to profit mightily on jus the speculation and the noise that ensured.
JAMES HENRY: Well it looks like his company certainly profited, at least in the short run. In the last two or three months, the price of RINs has gone back up. Incentives have been restored, and I think Carl Icahn and his investments have, at least in this area, have lost some money, although you know, he’s pretty quick to protect himself. That’s what hedge fund players like him do.
He goes back to the days of Michael Milken in the late eighties. He invented green mailing, the practice of buying a significant stake in a company and then kind of extracting surplus from the board. He is, as you said, worth an extraordinary amount of money. The issue is, why does he keep playing these games? I would have thought that this is enough already. You’re already successful. He says basically he likes to do it because it’s the only way he can keep score, but at this point I think we should just tell Carl, be satisfied with the marbles you have. Let’s make this the last hurrah.
JAISAL NOOR: I wanted to talk about a little bit of his legacy here because yeah, as you said, he has more money than he could possibly ever spend. The article details how Icahn had a major role in picking the plutocrats that run the Trump administration. Mnuchin, Ross, J. Clayton who’s the head of the SEC commission and EPA head Scott Pruitt. His mark is certainly going to remain on the Trump administration.
JAMES HENRY: Well in each one of these cases, he had, we think, Donald Trump’s ear directly. Certainly in the case of Scott Pruitt, the head of the EPA, he, that he interviewed him four to five times. They must have gone over many more policies than just this one. In the case of Mnuchin, he said that Mnuchin is one of the smartest people that he’s ever met and he also agrees with him on all of the deregulation that the Treasury is engaged in now.
You know, Carl has had a tremendous impact on this administration from the inside, and I think, unfortunately in this case, he seems to have gone a step too far toward that of serving his own interests. They say the problem with winning a rat race is even if you win, you’re still a rate.
JAISAL NOOR: What’s different about the influence that Carl had I guess on President Trump directly? Because that was his title, Advisor to the President. Explain what’s different about this than the normal lobbying that CEOs and Wall Street Bankers are able to do on a day to day basis to any administration, including the Obama administration but especially a Trump administration?
JAMES HENRY: Well this crosses the bridge toward being able to actually write the policies or design the policies yourself. That’s what’s missing from just the lobbyist. The ordinary lobbyist comes in and calls on Congress or on the administration and makes the case for their policy changes. There’s no question that lobbying in Washington has exorbitant influence, but in this case you take the next step. It’s almost as if the lobbyist had in this case, the power to really write drafts of executive orders and get them implemented or at least supported at a high level by the president of the United States and his underlings just implemented those policies, at least temporarily.
Before, you know there’s an enormous range of interests on the other side of this and it’s kind of extraordinary that Icahn was able to get as far as he did. I suppose he would say that the interests of the ethanol lobby in Iowa and the oil industry and the other refiners in this area as well as the Green lobby, they’re all overwhelming aligned against him and it was never going to be the case that he could just write this policy, but here we have, this just smacks of insider dealing.
JAISAL NOOR: Who’s going to hold him accountable for this? I don’t think anyone’s going to hold their breath for the Department of Justice under Jeff Sessions to do something about this but is it possible that the Attorney General of New York or another figure could look into this or take some action?
JAMES HENRY: I think it’s very unlikely. The court of public opinion is going to have to hold Mr. Icahn responsible here. We’ve gotten kind of used to this unfortunately in the case of the Trump administration. There’s a lot of questionable activities involving Trump and Russia that’s being investigated at the moment. That investigation is taking an extraordinary amount of time. There is, there are other cases of leading business people in the Trump administration having untoward influence on policies.
This isn’t … This is kind of an extreme example, but I still don’t see the Trump Justice Department or even any of the state attorneys being able to investigate this and bring it to court. We’ll just have to be satisfied with holding the Trump administration accountable for clearly one of the most heavily lobbied and insider influenced administrations in US history.
JAISAL NOOR: Finally, throughout this interview we’ve been showing photos of Trump and Icahn together. They go back a long time. Can you detail a little bit of their previous relationship? It was more of a business relationship than a friendship.
JAMES HENRY: I think so. They’re both Manhattanites and they’ve … I think Icahn was very successful already in the late eighties and he was in options trading department in Grunthal, which is a major commodity firm. But in the early nineties, when Trump got into trouble with his casinos, Icahn at that point probably with some funding from perhaps investors like Michael Milken, who were having legal problems at that point but were still providing finance, or other investors, was able to step into the casino situation in Atlantic City and help to maintain Trump’s position there at a time when he was under acute pressure from the banks.
I think Trump has taken a long time to pay him back for that, but clearly he has maintained a relationship with him ever since. Icahn, certainly in the 2016 election was one of the few business luminaries to come forward and join the Trump campaign. There is a long standing relationship, but I think that relationship is now probably under a lot of strain. I doubt that he’ll be attending the U.S. Open and sitting in Donald Trump’s box, as he has so many times in the past.
JAISAL NOOR: All right James Henry. Thank you so much for joining us. James Henry is an investigative economist, lawyer, global justice fellow at Yale University and Senior Advisor at the Tax Justice Network. We appreciate it.
JAMES HENRY: Good to be with you.
JAISAL NOOR: Thank you for joining us at The Real News Network.