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The Hunter Biden Issue–Not Exactly the One You Think

October 12, 2019

HunterBiden

I have no wish to lend any support or credence to the Trump-Barr-Giuliani effort to manufacture a scandal where none exists. (See here.) But there is something else in the Hunter Biden story that I find troubling. Here’s my question: How did a man with such apparently undistinguished talents and so many obvious personal problems wind up on all those corporate boards (like Burisma’s) at all?

Well, you might say, the answer is obvious–he is Joe Biden’s son. Indeed. But isn’t there something wrong with that? Isn’t this a form of corruption that has become so pervasive in America’s elite that we don’t even remark on it? We don’t really have a name for it, so let me propose one: nepotism-by-proxy. The quid for an unstated potential future quo.

This is much more subtle than ordinary nepotism, like installing Ivanka and Jared in senior White House jobs. It’s more like a influence savings account for a rainy day. Give the senator’s less-favored kid a nice job, and if you need a favor in the future you might not even have to mention it, because Dad will remember. It all seems nice and clean, because the senator never asked for it–it was just volunteered. That’s one way logrolling works in America’s upper class.

Let me stipulate right now that it’s probably very unfair to single out the Bidens when this sort of thing happens all the time. It’s just that we know quite a lot about this particular case, which–as it turns out–could have far-reaching consequences.

Let’s consider Hunter Biden’s career path. (Note: I’m relying here mainly on an extensive and largely sympathetic profile in The New Yorker by Adam Entous.)

  • 1992 Hunter graduates Georgetown University with a degree in history.
  • Starts a year of Catholic volunteer work in Portland, Oregon.  Meets first wife Kathleen. She becomes pregnant, and they marry in July 1993.
  • Hunter applies to Yale Law School, but is not accepted. Starts Georgetown Law School instead. After a year, transfers to Yale Law School and graduates in 1996.
  • Takes job with MBNA America (a bank holding company based in Wilmington, Delaware and also one of Joe Biden’s largest campaign contributors) with a six-figure salary plus signing bonus.
  • By 1998, Hunter is an executive VP at MBNA, but doesn’t enjoy the corporate culture. Uses father’s campaign contact William Oldaker, a DC lawyer, to seek a job with the Clinton Administration through Commerce Secretary William Daley (who had worked on Biden’s 1987 presidential campaign). Offered a job as policy director for the “Internet economy.” Moves to DC.
  • In late 2000, leaves to join lobbying firm The National Group co-founded by Oldaker who had helped him get the Commerce Department job. Works on “earmarking”–lobbying members of congress to insert language into legislation directing funds to projects that benefit the lobbyist’s clients. One client, the president of St. Joseph’s University, told Entous that Hunter was “like his dad: great personally, very engaging, very curious about things and hardworking,..[with] a very strong last name that really paid off in terms of our lobbying efforts.” Reportedly, he didn’t work on anything that involved his father and they didn’t discuss Hunter’s lobbying with each other.
  • By this time, Hunter was showing problems with alcohol and drugs, which by 2003 were affecting his marital life.
  • In 2006, despite personal financial problems he buys a $1.6 million house in DC, taking out a mortgage for 110% [sic] of the purchase price with no down payment.
  • Also in 2006 Hunter and uncle Jimmy Biden enter into a $21 million deal to by Paradigm, a hedge fund said to manage assets worth $1.5 billion. The deal falls apart and Hunter and Jimmy lose a reported $1.3 million. To pay legal bills, Hunter obtains a million dollar note against his house [presumably the same one he just took the mortgage on] from Washington First Bank, founded by Oldaker. Just before his father announces his run for president, Hunter and Jimmy are sued by another former partner in the deal.
  • In January 2007 Hunter goes to Iowa to help his father’s campaign, which doesn’t go well. Biden drops out of the race and later is chosen by Obama as his running mate.
  • Hunter winds down his lobbying business and resigns his seat on the Amtrak board, to which Senator Harry Reid had appointed him.
  • In September 2008, Hunter launches a “boutique” consulting firm Seneca Global Advisors, and after the election in June 2009 he co-founds another private equity company, Rosemont Seneca Partners, with Christopher Heinz (John Kerry’s stepson and heir to the Heinz food fortune) and Devon Archer (a former Abercrombie and Fitch model who had worked with Citibank in Asia and knew Heinz at Yale).
  • In 2012, Hunter and Archer discuss setting up a new equity fund with Jonathan Li,  chief of a Chinese equity fund, Bohai Capital. In June 2013, Li, Archer and others sign an MOU establishing BHR Partners. Hunter becomes an unpaid board member, but delays becoming an equity partner until after Joe Biden leaves office. During a December 13 visit by Joe Biden to Beijing, Hunter arranges a public handshake encounter with Li. This later raises concerns in the Obama White House because of a possible appearance of impropriety.
  • Archer travels to Ukraine to pitch a real estate fund and meets Mykola Zlochevsky, co-founder of the Ukrainian gas company Burisma and former ecology minister under the deposed pro-Russian president Yanukovitch. The new government, with the encouragement of the Obama Administration, was investigating whether Zlochevsky had used his position to benefit Burisma. In early 2014, Zlochevsky begins setting up a new board to clean up Burisma’s image and recruits former Polish president Kwasniewski as a member, who then convinces Archer to join as well.
  • Hunter recommends to Archer the law firm Boies, Schiller, Flexner (where he is “of counsel”) to improve Burisma’s “corporate governance”. They bring the investigative firm Nardello & Co. to look into corruption at Burisma, and Hunter joins the Burisma board in April 2014. At this point, Joe Biden is a major player in US policy towards Ukraine. According to the New Yorker piece, Hunter says that his father “discussed Burisma with him just once: “Dad said, ‘I hope you know what you are doing,’ and I said, ‘I do.’ ””
  • Also during this period, Hunter continues to have relapses in his efforts to lay off alcohol and drugs and engages is a number of rehabilitation programs. In 2013 he fails a Navy reserve drug test, which results in his discharge in February 2014.

What follows is a sad tale of personal decline, family tragedy, and perhaps eventual redemption, which to me seems of no legitimate public concern.

There’s a lot here that smells, shall we say, a little fishy. I think it’s a fair judgement that Hunter was presented with things of value mostly or entirely because he was Joe Biden’s son: amazing mortgage loans, cushy jobs, partnerships in equity funds to which he brought neither experience or money, seats on corporate boards, and eventually business deals in places like China and Ukraine. Clearly, there were people in the Obama administration who were concerned about how all this looked. Joe Biden seemed to have a few qualms as well, but he apparently never raised any objections to any of it.

But is there a scandal here? I would have to say: No, not really.

Certainly not by the standards set by the Trump adminstration, where semi-overt corruption has become the norm. Trump never divested himself from his businesses, and his claim that he has no involvement because they are being run by Donaldito and Eric is laughable and transparently false. As the New York Times points out, the two sons continue to pursue business deals around the world which directly benefit them and Trump himself. Ivanka never divested her companies either, despite her official position in the White House, and she has gained business licenses in China, Japan, and other countries that seem, well, not unconnected to her position as First Daughter to the president. Never mind the numerous instances of foreign and domestic influence seekers spending money at Trump properties, sometimes for services not even used. Or Scott Pruitt, Tom Price, Ryan Zinke, etc., etc.

The great difference is that TrumpWorld really doesn’t care about the optics. They just do it, take the money, and dare anyone to do anything about it. And so far the Trumps have gotten away with it scot-free.

By Washington bigwig standards, Joe Biden is not a particularly rich man, and the rise in his net worth since leaving office has come mostly from writing and speeches. (Elizabeth Warren and her husband reportedly have a higher net worth.) There has been no evidence whatever that Joe Biden benefited financially from Hunter’s business activities or that as Senator or Vice-President he delivered political favors to Hunter’s benefactors. He does seem to have kept himself at arms length from Hunter’s business. Indeed, his lack of curiosity about that might have contributed to the problem he now faces.

So maybe the nice breaks that fell Hunter’s way were just the way the world works:  good things come to the rich and powerful and to their offspring.  I don’t know how you would stop that, but maybe there is a way to address a part of this endemic corruption. A recent op-ed in the New York Times argues that we need to strengthen American disclosure rules:

Joe Biden and Elaine Chao have to report when someone sends them a $500 campaign donation, or when they make a $5,000 investment in a stock. But when their family members strike lucrative deals with a foreign government or oligarch, the reporting requirements are vague. The personal financial disclosure rules for American public officials should be expanded to include details concerning all their immediate family members (and not just their spouses, as the law currently states), and any dealings with foreign governments. To the public, closing a loophole this glaring seems anodyne, a no-brainer. But lawmakers set the system up this way for a reason; they will not stop the foreign cash influence game voluntarily. That’s why we need a Washington Corrupt Practices Act, one that clearly shuts down foreign influence and self-enrichment for some of America’s most powerful families on both sides of the aisle.

 

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