Jared Kushner under new scrutiny over business connections

Alistair Gray and Andrew Edgecliffe-Johnson in New York

March 1, 2018

Jared Kushner is under new scrutiny over his business connections after it emerged he met top Wall Street executives before their companies extended loans to his family property group, and banking regulators question other lenders about their ties.

Donald Trump’s son-in-law and adviser met Joshua Harris, co-founder of the private equity group Apollo Global Management, and Michael Corbat, chief executive of the US bank Citigroup, while Mr Kushner was in the White House last year, said people familiar with the matter.

Apollo and Citigroup subsequently extended loans to Kushner Companies to help finance real estate in Chicago and Brooklyn, respectively.

A spokesman for Mr Kushner’s attorney said on Thursday that his client had “met with hundreds of business people during the campaign, transition and in the administration to hear ideas about improving the American economy. He has had no role in the Kushner Companies since joining the government and has taken no part of any business, loans, or projects with or for the companies after that.”

Citigroup said Mr Corbat had not been involved in the transaction, and that the bank had dealt exclusively with RFR Realty, Kushner Companies’ joint venture partner on the loan. Apollo Commercial Real Estate Finance similarly said Mr Harris was not involved in the decision to extend the Chicago loan, “which went through the firm’s standard approval process”.

Since he joined the president in the White House as a senior adviser, Mr Kushner has recused himself from the day-to-day running of the family business. However, ethics experts said the contacts with the financial chiefs, first reported by the New York Times, raised new questions about potential conflicts of interest.

“The optics are not good here,” said Scott Amey, general counsel at the Project On Government Oversight. “The public is left wondering if subsequent loans were the spoils of promises or impartiality that might be paid at some point down the road. This problem is the direct result of keeping one foot in the White House and the other foot in Wall Street.”

New York’s financial regulator has asked Deutsche Bank and two local lenders — Signature Bank and New York Community Bank — for details about their dealings with Mr Kushner and the property group.

This problem is the direct result of keeping one foot in the White House and the other foot in Wall Street

In letters last week, first reported by Bloomberg, the state’s Department of Financial Services — run by Maria Vullo, an appointee of Andrew Cuomo, New York’s Democratic governor — requested information about loans the banks made to the Kushners.

The regulator, which has a remit to ensure the safety and soundness of financial companies in New York, is seeking the details in part over questions it has about the concentration of the banks’ loan books, a person with knowledge of the matter said.

Kushner Companies is behind a wide range of property developments in the New York metropolitan area, including the Watchtower building in Brooklyn, a retail condominium on Times Square and a 53-storey luxury rental tower in Jersey City.

Kathleen Clark, law professor at Washington University, said it was unclear whether the contacts with the financial leaders violated government ethics rules in part because it was unclear exactly what had been discussed. Citigroup said its chief executive “never discussed” the transaction with Mr Kushner.

Congress was unlikely to investigate, Ms Clark added. “Congress could care, if Congress was controlled by people who cared.”

The spokesman for Mr Kushner’s attorney added: “He has followed the ethics advice he has received for all of his work, which include the separation from his business and recusals when appropriate.”

Citigroup added: “The loan we closed in last March was to a joint venture of which Kushner Companies is a less than 50 per cent partner.

“While Kushner Companies has been a Citi client for years, we dealt exclusively with RFR Realty, the other partner in the joint venture, on this loan.”

Kushner Companies, Deutsche, New York Community Bank and the DFS did not comment. Signature said: “By law, we cannot disclose regulatory or legal inquiries.”

Additional reporting by Javier Espinoza

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