Aides’ ties to firms present Biden with early ethics test
WASHINGTON — One firm helps companies navigate global risks and the political and procedural ins and outs of Washington. The other is an investment fund with a particular interest in military contractors.
But the consulting firm, WestExec Advisors, and the investment fund, Pine Island Capital Partners, call themselves strategic partners and have featured an overlapping roster of politically connected officials — including some of the most prominent names on President-elect Joe Biden’s team and others under consideration for high-ranking posts.
Now the Biden team’s links to these entities are presenting the incoming administration with its first test of transparency and ethics.
The two firms are examples of how former officials leverage their expertise, connections and access on behalf of corporations and other interests without, in some cases, disclosing details about their work, including the names of the clients or what they are paid.
And when those officials cycle back into government positions, as Democrats affiliated with WestExec and Pine Island are now, they bring with them questions about whether they might favor or give special access to the companies they had worked with in the private sector. Those questions do not go away, ethics experts say, just because the officials cut their ties to their firms and clients as the Biden transition team says its nominees will do.
WestExec’s founders include Antony Blinken, Biden’s choice to be his secretary of state, and Michèle Flournoy, one of the leading candidates to be his defense secretary. Among others to come out of WestExec are Avril Haines, Biden’s pick to be director of national intelligence; Christina Killingsworth, who is helping the president-elect organize his White House budget office; Ely Ratner, who is helping organize the Biden transition at the Pentagon; and Jennifer Psaki, an adviser on Biden’s transition team.
WestExec did not respond when asked for a list of its clients. But according to people familiar with the arrangement, they include Shield AI, a San Diego-based company that makes surveillance drones and signed a contract worth as much as $7.2 million with the Air Force this year to deliver artificial intelligence tools to help drones operate in combat missions.
At the same time, Blinken and Flournoy have served as advisers to Pine Island Capital, which this month raised $218 million for a new fund to finance investments in military and aerospace companies, among other targets.
The team recruited by Pine Island Capital Partners — which is led by John Thain, the chief executive of Merrill Lynch at the time of its collapse in 2008 during the recession and sale to Bank of America — was chosen based on its members’ “access, network and expertise” to help the company “take advantage of the current and future opportunities present in the aerospace, defense and government services industries,” including artificial intelligence, according to a Securities and Exchange Commission filing in September describing the new fund, Pine Island Acquisition Corp.
Pine Island Capital has been on something of a buying spree this year, purchasing weapons system parts manufacturer Precinmac and a company until recently known as Meggitt Training Systems and now known as InVeris, which sells computer-simulated weapons training systems to the Pentagon and law enforcement agencies.
Flournoy, who served as undersecretary of defense for policy during the Obama administration and as an assistant secretary of defense during Bill Clinton’s administration, has other business ties that could overlap with her role if Biden chose her to run the Pentagon.
She is a member of the board at Booz Allen Hamilton, a global firm that has billions of dollars in federal contracts, including a deal signed in 2018 to provide cybersecurity services to six federal agencies. That company paid her about $440,000 in the last two years, much of it stock awards.
Republicans have already signaled they intend to bore in on WestExec in confirmation hearings for Blinken and other nominees with links to it.
And Biden’s team has faced pressure from the left and government watchdogs to outline steps to minimize the sort of corporate influence and conflicts of interest that marked President Donald Trump’s tenure from the start.
These groups worry not only that Biden’s aides could shape government policies in ways that could benefit companies that paid their firms but also that the firms could become magnets for access seekers in the Biden administration.
At a minimum, these critics say, Biden must demand that his team fully disclose all financial relationships and clients, divest any ownership stakes and make sure that his aides recuse themselves from any decisions that could benefit their previous business interests.
“We want to make sure that they are not beholden to anyone else and that any decisions they make would be beyond reproach,” said Mandy Smithberger, a director at the Project on Government Oversight, a nonprofit group that investigates spending and conflicts of interests at federal agencies.
A spokesperson for Biden said in a statement that, if confirmed, Blinken and any other appointees who were partners in WestExec and Pine Island would leave the firms if they had not already done so, sell their ownership stakes and make “proper” client disclosures.
“Joe Biden has pledged the most ethically rigorous administration in American history, and every Cabinet member will abide by strict ethics rules and abide by all disclosure requirements,” the spokesperson, Andrew Bates, said. Blinken already took a leave from Pine Island and WestExec as of August, when he joined the Biden campaign full time.
But Biden’s transition office stopped short of saying that all clients would be disclosed — and ethics rules allow incoming federal officials to withhold the identities of clients if the arrangements are subject to confidentiality agreements.
WestExec was created in 2017 to offer what its website calls “unique geopolitical and policy expertise” to companies seeking to navigate “external factors and relationships that affect businesses” in Washington and around the world.
The company said that “it does not lobby, does not act as an agent of foreign principals and does not work for any governments or state-owned enterprises.”
Its co-founders — Blinken, Flournoy, Sergio Aguirre and Nitin Chadda — had worked in foreign policy and national security posts under President Barack Obama. The firm has prominently highlighted those connections, featuring a large photo on its home page of Blinken in the White House Situation Room with Obama.
The firm became a holding pen of sorts for prominent national security and foreign policy officials from previous Democratic administrations who could help attract clients while waiting to reenter the next Democratic administration.
Two former government officials listed as principals at WestExec — former deputy defense secretary Robert Work and former deputy CIA director David Cohen — joined Blinken recently to brief Biden and Vice President-elect Kamala Harris on what the incoming administration described as “national security planning.”
And former Obama adviser Lisa Monaco, who had been listed as a principal by WestExec, is believed to be under consideration for a post in the Biden administration.
Biden’s team has played down some of its advisers’ ties to WestExec. While the firm had listed both Haines and Psaki as WestExec principals, a transition official said they had spent a relatively limited amount of time working with the firm, with Haines serving as a consultant and Psaki as an outside contractor.