Peter Schweizer is the author of the bestselling Clinton Cash, a book that ultimately fueled an FBI investigation into the Clinton Foundation.
Peter joined Dan Proft and Amy Jacobson to talk about his new book Secret Empires: How the American Political Class Hides Corruption and Enriches Family and Friends, which takes aim at the families of Senate Majority Leader Mitch McConnell and former Vice President Joe Biden:
DAN: Let’s get right to it because we’ve got a guy whose book in 2016 really changed the nature of the 2016 presidential election. Of course, the New York Times bestseller Clinton Cash is the book I’m referring to. We’re still litigating and talking about the cases, the business dealings that Peter Schweizer documented in Clinton Cash. I think, for example, Uranium One. Still asking questions … the American people still asking questions about whether federal law enforcement will start getting answers to some of the questions that were raised in Peter Schweizer’s book. He’s got a new book out that’s equally compelling, and it’s bipartisan in nature, the political ruling class. It’s called Secret Empires: How the American Political Class Hides Corruption and Enriches Family and Friends, and there are some particularly interesting stories of business dealings from some household names in politics. You go in with a certain amount of cash, and you come out of office with exponentially more, or even you continue to accrue it while in office, and it goes largely unreported. But not by Peter Schweizer. Also, he’s got a very interesting case study that’s particularly relevant to Illinois, and we’ll start there. Peter Peter Schweizer, thanks so much for joining us. Appreciate it .
PETER: Hey, it’s great to be back on with you. Thanks for having me.
DAN: Really fascinated by your book. This is some really good reporting, investigating, and then reporting and translating it into a format that’s very accessible. I want to start with a “real estate mogul goes to Washington”, and we’re not talking about Trump. We’re talking about Penny Pritzker. And as you undoubtedly know, Peter, we’ve got a other heir to the Hyatt fortune running for office in Illinois named J.B. Pritzker. And so Penny’s experience as Secretary of Commerce and her relationship with Barack Obama couldn’t be more timely for our gubernatorial election this year. But help us distill how Penny Pritzker advanced her family’s financial interests and her financial interests throughout the rise of Barack Obama, and then including when she was Secretary of Commerce.
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PETER: Well, I tell you it’s a massive confluence of interests, and the sort of things that I think you know if Trump were to engage in, there would be massive outrage. That’s not to say that we shouldn’t watch what Trump’s doing, but in the case of Pritzker it was so overt and obvious. I’ll just take a very simple one. She started a real estate investment firm PSP while she was in Washington, D.C., in the Obama administration. And one of their key business fixtures was leasing office properties to the federal government, including the Commerce Department when she was Commerce Secretary. So that’s a huge conflict of interest. Some of the real estate investments buildings that she purchased while she was Secretary of Commerce were then leased by entities like the National League of Cities, National League of Counties who are actively lobbying the Commerce Department, and who are also receiving grants from the Commerce Department. So you know this is Ethics 101, and you know you have these tentacles of financial ties and government power that overlapped that really went largely undetected during her during her tenure as Commerce Secretary.
They don’t do it because the money. They do because they feel entitled. They do it because they think they can get away with it, and they do it because they think the rules shouldn’t apply to them. Just because somebody has money doesn’t mean that they’re not going to do things to cut corners and violate ethics rules.
DAN: The other thing about this, too, is this whole big show that politicians, particularly those that come to the table with a lot of wealth like Penny Pritzker did, make of divesting themselves from their financial interests. You report that really it was a little bit of, kind of, “press release politics”. It was a show of divesting from some companies that were not as material to her financial interests as the big ones.
PETER: That’s exactly right. I mean then there were just really simple, you know, breaches of what I would regard as the ethical code. I mean, for example, one of the things that was claimed in her ethics filings was that she was not going to be involved at all with her business. She was going to have an arm’s length relationship and not manage it. And yet there are accounts of her as Commerce Secretary going in having random bag lunches at the companies that she was supposed to be having nothing to do with. And, you know, conducting meetings and seminars ant things actually at those companies, you know. Another overt thing that was very troubling while she was Commerce Secretary, her company PSP actually gets the head of the real estate arm of the federal government’s General Services Administration to quit his job to come work for her. Again, raising all kinds of questions. So you know this is this is a prominent issue certainly in the era of Trump, but it didn’t start with Trump. And the bottom line is we have to sort of get rid of the notion that people that are very wealthy are not going to be interested in cutting corners while they are in office …
DAN: Absolutely.
PETER: … It’s ultimately not an issue of money. They don’t do it because the money. They do because they feel entitled. They do it because they think they can get away with it, and they do it because they think the rules shouldn’t apply to them. Just because somebody has money doesn’t mean that they’re not going to do things to cut corners and violate ethics rules.
DAN: Such a great point. It’s such a great point.
AMY: And J.B. Pritzker was jealous at his sister Penny rose to the level of, you know, Secretary of Commerce, but what other friends did President Barack Obama help out?
DAN: Well, that’s a great question. I mean there’s a friend that a lot of people in the country don’t know. He’s a little bit better known in Chicago named Marty Nesbitt. And so when, you know, when Barack Obama is re-elected in 2012, Marty Nesbitt starts an investment fund called Vistria. And it says in the corporate documents the purpose of Vistria is to invest in, “highly regulated industries.” Now, you know, that’s a great business model if you happen to be best friends with the regulator-in-chief, which would be the President of the United States. And what you find with Vistria, you find it with other entities as well with people that are close to Barack Obama, that they engage in what I call “smash and grab.” Barack Obama would go in and smash the company. Declare that for one reason or another he didn’t think it’s a good company that’s serving customers well. Smash it with regulation. That would drive down the valuation of that company to pennies on the dollar. And then a friend would swoop in and buy it on the cheap, only to then have the regulatory weight lifted. In the case of Marty Nesbitt and Vistria, the classic example here is the University of Phoenix, which is you know for-profit college. The Obama administration said we don’t like this school. So we’re going to not allow the Pentagon to use GI bill money to let soldiers attend that school. You can imagine what happened to the stock price. It went from something like a $100 a share down to about $3 a share. At which point Marty Nesbitt swooped in and bought it bought it for pennies on the dollar. Only after that the Obama administration say, you know what, we think that we will allow GI dollars to flow back to that school
AMY: That’s criminal.
PETER: You see that pattern over and over again.
Where was Joe Biden? He wasn’t in Washington D.C. He wasn’t in Scranton, Pennsylvania. He was in the Ukraine, and he was working to eliminate an investigation of Kolomoisky, who of course is an oligarch that was paying his son.
DAN: And even when they don’t come in and swoop in to buy it outright, they come in as consultants to, you know, to help fix it to get regulatory relief from .. I mean so it’s the same … That trick is as old as Chicago lobbyists. But I mean it’s great to document specific examples of this. I also want to get to this story. Tell us the story of Scranton Joe. His son Hunter Biden and John Kerry’s stepson Christopher Heinz, get together and partner with a Ukrainian natural gas company.
PETER: This is one of the reasons I call the book Secret Empires is that a guy like Joe Biden will say, well you know, my family doesn’t have any money. Look at my financial disclosure. But what’s done is the deals are funneled through your adult kids, and you don’t have to disclose the assets and income of your adult kids. So in the case of Joe Biden and his son Hunter Biden and Chris Heinz, and a guy named Devon Archer, who’s a longtime Kerry aide, they’re doing deals with people from Ukraine to China. In the case of Ukraine, there’s a oligarch named Igor Kolomoisky, who is a notorious oligrach. Now, if you know anything about Ukraine, oligarchs can be bad enough, but if you are the most notorious of the oligarchs, that’s saying something and that’s who Igor Kolomoisky is. This guy puts Hunter Biden on the payroll of his energy company to help him on compliance matters, whatever that means, and we, of course, don’t know how much he made. But you can imagine it was a pretty penny for, you know, Hunter Biden to take a job like this. But here’s where it gets interesting. Kholamosky, among owning an energy company, also owns a bank Joe Biden, Hunter’s father, the vice president of the United States is responsible for the flow of U.S. aid dollars to the Ukraine. That aid is funneled through PrivatBank, which is owned by Kolomoisky, who again is paying Hunter Biden large sums of money. U.S. taxpayer dollars disappear in Kolomoisky’s bank. More than a billion dollars, and a lot of people in the Ukraine believe that Kolomoisky himself siphoned that money off. Now, here’s where it gets interesting. When Donald Trump was inaugurated in January of 2017, in the last days of the Obama administration, where was Joe Biden? He wasn’t in Washington D.C. He wasn’t in Scranton, Pennsylvania. He was in the Ukraine, and he was working to eliminate an investigation of Kolomoisky, who of course is an oligarch that was paying his son.
DAN: Unbelievable.
PETER: It’s dirty, dirty stuff.
DAN: So the vice president’s son, at the time he’s vice president, the Secretary of State’s son, at least in part at the time that he was Secretary of State, his stepson, John Kerry’s. And they’re in bed with this corrupt Ukrainian oligarch, and spending sending billions of dollars of American money taxpayer money to cement the relationship. I mean is this is the kind of remarkable stuff in this book, people. You almost think this is like a John le Carré novel. But but it’s not, and it’s well-documented. I want to get to another example here. Let’s go to the Republican side. Mitch McConnell and Elaine Chao, of course a cabinet secretary before, a cabinet secretary again, and how their net worth has gone from as little as 3 million dollars 15 years ago to as much as 36 and a half million today. Part of of it, I know, is Elaine Chao comes from wealth, a family shipping company. But connect the dots for us on that explosion in net worth.
[Mitch McConnell] was a very critical voice against China when it came to human rights, military expansion, trade issues. Then when the deal was struck, he started to change.
PETER: Yeah, I mean China figures large in this book because China has basically embarked on a strategy, and they’ll say this openly, a strategy of seeking favors with American political leaders by doing lucrative deals with their families. And that’s certainly the case with Mitch McConnell. Mitch McConnell, as you said, married to Elaine Chao, the Transportation Secretary in the Trump administration. Her father launched a shipping business, but the shipping business didn’t really take off until 1993 when then-Senator Mitch McConnell, who had just married Elaine and his father-in-law go to Beijing, China. The trip is not an official government trip. It’s not a Senate delegation. They are there as guests of the China State Shipbuilding Corporation — CSSC — which as the name implies is wholly-owned by the Chinese government. And they basically say to McConnell and Chao, we will set you up in a major way in the shipping business. We will build your ships. We will finance the construction of those ships. We will provide crews for those ships. We will provide contracts for you to ship government-owned companies’ goods around the Pacific. And they say they are in, and of course, the rest is history. They make a fortune. Their relationship is so close between this family and the Chinese government that Elaine Chao’s father and sister joined the board of directors of DSS Holdings which is one of the largest military contractors in Beijing, China. And so they’re getting rich courtesy of the help of the Chinese government. Mitch McConnell’s Senate career, something very interesting happens. He was a very critical voice against China when it came to human rights, military expansion, trade issues. Then when the deal was struck, he started to change. And today he nary has a bad word to say about the Chinese government. And I would argue it’s because he precisely knows that the family’s fortunes are tied up with the good graces of the Chinese government. And that net worth increase you talked about comes almost entirely because James Chao, the father-in-law, a couple of years ago, made a gift of between 5 million and 25 million dollars to Senator Mitch McConnell. So, you know, who wouldn’t wish to have in-laws like that?
DAN: Right. Yeah, and I mean and McConnell’s been very skeptical, openly, of Trump’s, you know, trade policy with respect to China. And the point is even if Mitch McConnell was a free marketeer, it doesn’t matter because of this relationship, and his financial interests, he’s hopelessly conflicted in his pronouncements in this area. I mean, this is the kind of … This is why this is so great. We don’t have time to get to the princelings of Chicago and Mayor Daley, former Mayor Daley’s deals with the Russians and the Chinese, which is why we need to get this book Secret Empires: How the American Political Class Hides Corruption and Enriches Family and Friends. This is just great stuff, important stuff. Peter Schweizer, the author of Clinton Cash, is the author of this book. Peter, thanks so much for joining us. Appreciate it.
PETER:I enjoyed it. Thanks a lot.