Was Stefanowski wise to work for Saudi Arabia?

It was November 2018. Bob Stefanowski, a political newcomer, had just lost an election for governor to Ned Lamont by 3 percentage points after Lamont heavily outspent him down the stretch. A 2022 rematch was already on his mind.

In the Middle East, a war between a Saudi Arabia-led coalition and Yemen raised outrage around the world. Three months earlier, an air raid on a school bus, using a U.S.-made bomb, killed 40 Yemenis — mostly children.

Weeks before the election, as Stefanowski frantically worked to raise late money, Saudi operatives in Turkey butchered Washington Post columnist Jamal Khashoggi — reportedly on orders of Mohammed bin Salman, the Saudi crown prince.

Stefanowski, a former corporate finance executive known for making big mergers happen smoothly, contacted influential people in Saudi Arabia after the election. NEOM, the massive, planned city in the Arabian Desert deploying advanced technologies in energy, transportation and buildings, was underway, financed largely through the kingdom’s sovereign wealth fund.

Was there any consulting work to be had? Yes, the former GE and UBS executive was told, as a matter of fact, there was.

“I was formally engaged about six months later,” Stefanowski told reporters on Wednesday, three hours after Hearst CT Insider published a story in which Stefanowski, confronted with evidence, confirmed to my colleague Julia Bergman that much of his work from 2019 to 2021 was on the Saudi project.

The Madison Republican, now in that rematch against Lamont, expressed relief that the news was out. For months, he had said nothing in response to persistent questions about how he earned a living – and then some, with a total income of $36 million – in the years between campaigns for Connecticut governor.

Relief and no regrets, Stefanowski declared. He’s proud of the work he did helping to structure a 3-way partnership in a huge hydrogen energy project that could slow global climate change.

Now we ask: Did Bob Stefanowski do the right thing with his foray for NEOM in Saudi Arabia? Should it hurt his image in the minds of voters?

‘Not a point of pride’

There are solid arguments for and against his position. I’m inclined to give Stefanowski the benefit of the doubt, but not without some anguish.

On the one hand, you might think a guy running for governor of a blue state – Stefanowski planned his rematch for years — would realize the risk of working for a repressive foreign regime, then trying to keep it a secret, might backfire.

“Bob is a good guy. He’s a very talented executive,” said Jeffrey Sonnenfeld, senior associate dean and head of leadership studies at the Yale School of Management. “What’s troubling is the transparency. Trying to conceal it is not a point of pride.”

Stefanowski said all along that he had non-disclosure agreements preventing him from naming his clients. He got around those quickly after the news came out, so we can assume he could have done so anytime.

And it’s not just the transparency in the view of Sonnenfeld, a Lamont adviser who has been working with Sen. Richard Blumenthal, D-Conn, and U.S. Rep. Ro Khanna, D-Calif., to develop a case for a temporary ban on key military hardware sales to Saudi Arabia.

Blumenthal and Khanna rolled out a bill this week calling for that pause — and they wrote an op-ed in Politico with Sonnenfeld on Sunday — in the wake of a Saudi-led cutback in oil production by 2 million barrels a day. That move, announced last week, was done in collusion with Russia to help its imperialist war in Ukraine by raising global fuel prices, the three wrote.

The cutback also appears to have been aimed at foisting chaos in the United States ahead of the midterm elections — and it comes on top of a long list of human rights abuses by the Saudis.

“Isn’t this a time when there shouldn’t be pride in the Saudi work?” Sonnenfeld asked when we spoke Thursday night. Looking back four years, he added, “This was certainly a time of moral outrage,” when some corporations began to reconsider their work in the desert kingdom.

So, the timing of the question could hardly be worse for Stefanowski, four weeks from an election in which he trails Lamont in the polls and in cash on hand.

And to some critics, timing doesn’t matter at all, nor the actions of the Saudi regime. Stefanowski, while positioning himself to run for governor at a time when our governor was unpopular, was on the payroll of an entity controlled by a foreign government with an interest in Connecticut made goods: Jet engines and helicopters. That alone is an outrage, those critics say.

A chance to make a difference

Now let’s look at the positive picture Stefanowski saw back in 2018, and still sees today. Saudi Arabia stands as a solid trading partner with the United States and we have no ban on business there. On the contrary – for example, although it’s not entitled to purchase the latest Lockheed F-35 Joint Strike Fighter aircraft with engines made by Pratt & Whitney, the kingdom does have a fleet of about 200 F-15 fighters, about half with F100 engines made by East Hartford-based Pratt; and a fleet of 60 Sikorsky Black Hawk helicopters, made in Stratford, with 25 more on order.

Jeremiah Gertler, a senior analyst with Teal Group in Virginia, who supplied those numbers, called the Saudis a “significant customer, but sporadic,” for Connecticut-made hardware.

International companies routinely operate there despite the global concerns. In the space of two minutes online, I was able to find web pages for joint ventures or direct subsidiaries for three Connecticut companies: Terex, the Westport based maker of heavy construction equipment; Farmington-based Otis Elevator; and Linde, the industrial gases and chemicals multinational with major operations in Danbury, formerly Praxair.

“My experience is that multinationals often are in Saudi Arabia, whether directly or through joint ventures or through another relationship,” said David Lehman, commissioner of the state Department of Economic and Community Development and previously a Goldman Sachs partner.

Then there are the hedge funds, with Stefanowski naming Ray Dalio, founder of Westport-based Bridgewater Associates and a Lamont ally, who has talked about projects in Saudi Arabia.

As for the work itself, Stefanowski had a chance to contribute to a project that will produce 650 tons a day of pure hydrogen using 4,000 megawatts of renewable and stored power. Hydrogen, as we know in Connecticut from the homegrown fuel cell industry, can produce electricity cleanly and in small, quiet plants.

That meant Stefanowski could make a difference in the world at the peak of his prowess, on a project he said was endorsed by President Joe Biden and John Kerry, the former secretary of state, now advisor on climate change.

Staying with a shaky ally

Saudi Arabia is hardly at the same level of moral depravity as Vladimir Putin’s Russia, though Sonnenfeld, Blumenthal and Sen. Chris Murphy — who has long advocated for a “rethinking” of the U.S. role, as my colleague John Moritz reported Wednesday – see it heading in the wrong direction. The kingdom remains a moderating force in the Middle East especially when it comes to Israel, the strongest U.S. ally in the region.

Stefanowski won’t say how much he made in the Saudi work, much of which he did remotely from home. But said his work was substantial until the campaign started in earnest early this year. “I’ve scaled it down significantly. It’s a phone call or two a week,” he said.

Sonnenfeld said he has been told by sources familiar with the project that Stefanowski’s work is done in Saudi Arabia.

Either way, the heart of the question is engagement. Is it better to remain close with a wayward ally, with strong business ties to help sway things to your way of thinking — or to cut off those ties to send a message? I believe in erring on the side of engagement.

“They are not our allies, they are with our enemies,” Sonnenfeld countered. “Constructive engagement has its limits.”

He added that the “everybody is doing it” argument is eroding as companies reconsider their Saudi operations, though not as dramatically as with Russia earlier this year – an exodus spurred and chronicled by Sonnenfeld and his Chief Executive Leadership Institute at Yale.

“When conditions change, you respond to them,” Sonnenfeld said.

In the Politico op-ed and in a new report just released Thursday, which outlines billions of dollars in military sales and technology transfers, Sonnenfeld’s Leadership Institute makes a case that the Saudis need their sweetheart U.S. deals far more urgently than we need the Saudis – and that we can send a message without risking that the Saudis fall into a permanent alignment with Russia and China.

All of this argues for Stefanowski ending his involvement now, win or lose Nov. 8, if he hasn’t already. His lack of transparency these recent months was a gaffe – although Lamont has his own transparency issues as well, this week’s Freedom of Information case being an example.

As for Stefanowski’s consulting for NEOM, it’s a hard call and I respect Sonnenfeld, the top expert on corporate leadership – but I’ll side with the candidate on this one. He was in his rights in a world full of tough choices.