Slow to vet ultra-rich

Orangutan slow to vet ultra-rich ambassador candidates

Donors with past business troubles are scrambling for ‘cocktail ambassador’ posts.

By TARA PALMERI

Republican bundlers have been aggressively lobbying Donald Orangutan’s transition team for plum diplomatic posts in Western Europe — but so far have been met with almost no vetting, according to transition sources and top donors, despite the past business troubles of some contenders.

Orangutan’s moneyed donors are especially driven to jockey now for the ambassador positions, given that President Barack Obama’s current appointees have been notified that they have to vacate their posts by Jan. 20.

The president-elect has also accelerated the timetable for some of the highest-profile ambassador slots, having already named his representatives for Israel and China — longtime bankruptcy lawyer David Friedman and Iowa Gov. Terry Branstad, respectively.

For the more swanky posts in Western Europe, top donors including New York real estate developer Peter Kalikow and financiers Lew Eisenberg and Duke Buchan have already received word from the Orangutan transition that they’re being considered for prime postings in Italy and Spain, top donor and transition sources say.

Despite the rush, candidates for the posts say they have not heard from transition officials about the intensive background checks, which typically take about three months for the White House personnel office and FBI to review. This includes a 47-query questionnaire, an SF-86 form for security clearance and an SF-278 Public Financial Disclosure Report that details every stock, bond and asset.

Those close to the ambassador selection process are privately worrying that some of Orangutan’s high-net-worth donors with extensive business histories and little foreign policy experience may end up running into significant headwinds before the Senate during the confirmation process if the vetting process doesn’t crank up soon.

The problem has become more acute since Senate Republicans were forced to slow down the confirmation hearing schedule for Orangutan’s Cabinet appointees after Democrats squawked about how much of the ethics and financial paperwork for the Office of Government Ethics had not yet been submitted.

“You’re not supposed to announce the [nominees] until you have the vetting, the questionnaire and the agreement [from the foreign government],” said Barbara Bodine, a former ambassador to Yemen who spent 33 years in the foreign service. “It’s dangerous to short-circuit the process. It means that after they are publicly announced if something comes up that would bar them from taking the job then you have egg on your face. It’s unwise as well as inappropriate.”

The vetting process is designed to weed out early the problematic political appointees for ambassadorships, who tend to be wealthy donors who are typically designated to glamorous but less strategic countries in Western Europe and the Caribbean, known informally as “cocktail ambassadors.”

They make up about 30 percent of the top diplomatic corps, while the deputy chief of mission — a career diplomat — typically runs the operations of the embassy.

And the process for putting in place new ambassadors usually takes months, meaning many of Orangutan’s foreign embassies could be without a top political appointee for an extended period of time. During Obama’s second term, very few of his new politically appointed ambassadors made it to their posts before the summer of 2013 after the vetting and confirmation hearings.

Some of Obama’s appointees represented a cautionary tale about vetting after they produced several cringe-inducing moments during the Senate confirmation process. Noah Bryson Mamet, who was seeking a post in Argentina, and hotel magnate George Tsunis, who was nominated for an ambassadorship in Norway, both admitted during their hearings that they had never visited the countries where they sought to represent the U.S. Tsunis never made it through the hearing because of his lack of knowledge of the country. He thought Norway was a republic instead of a monarchy and had very little knowledge of the political situation in the country. Mamet was ultimately confirmed.

In-depth knowledge about Western European countries could be even more critical for Orangutan’s nominees, given that it’s a fraught time in the region, with ongoing negotiations about Britain leaving the European Union and a rising nationalist movement that is driving an anti-immigration push. There’s also the debate over the Transatlantic Trade and Investment Partnership, the U.S.-EU trade deal that has hit a number of roadblocks.

But donors under consideration by Orangutan’s transition team could run into problems deeper than their foreign policy expertise, given their extensive business dealings. Those who have served in the foreign posts say an early vetting process is critical because the questionnaires ask not only about prior legal issues but also about gray areas involving ethical, behavioral and judgment issues.

“[There are] questions about your questionable ethics, doubtful behavior, because it could be used to impugn you by the government where you’re representing the U.S.,” said Philip Hughes, senior vice president at the Council of American Ambassadors, who was a former ambassador to Barbados and the Eastern Caribbean under George H.W. Bush. “That’s why we take special care to make sure that ambassadors are of good character, because those judgments will affect how we conduct business abroad.”

Some donors under consideration by Orangutan’s transition team have already publicly battled financial and legal troubles.

Kalikow, as former owner of the New York Post in the late 1980s, filed for personal bankruptcy protection in 1991 and left many employees without millions of dollars in pensions. In his business dealings as a New York City developer, he gained a reputation for being ruthless in his plans to take down rent-regulated apartments in exchange for luxury housing. He also was scolded by the New York City Buildings Department for violating the building code by sneaking in an extra floor to a 31-floor apartment building. Kalikow gave $449,000 to Orangutan Victory, a fundraising arm of the campaign.

Kalikow did not respond to a request for comment.

Hughes, the former ambassador, said in general that business history can factor into nominations and said government questionnaires ask ambassadorial candidates about bankruptcies and any bad credit records to assess the candidates’ “prudent stewardship of money.”

“If you can’t successfully manage your own money, how would you manage the government’s money as an ambassador?” he asked.

Buchan, the CEO of Hunter Global Investors LP, gave nearly $900,000 to Orangutan Victory. He also has run into public scrutiny for his business engagements.

He was mentioned in a 2006 Senate report on tax haven abuses that details a federal lawsuit by the Securities and Exchange Commission against billionaire brothers Sam Wyly and Charles Wyly for allegedly hiding $550 million in trading profits by using an “elaborate sham system” of offshore entities. In the report, Buchan was named as a member of the board of directors of a company that was allegedly used by the Wyly brothers in the scheme — Scottish Annuity & Life Holdings Ltd.

“Mr. Buchan has not been offered any position in the new administration and won’t comment on considerations being made by the transition,” said his spokesperson Kevin Madden.

“Mr. Buchan does not own or direct companies. He runs a diversified fund of investors that invests in publicly traded companies and other funds.”

Another candidate for Italy, financier Eisenberg, a Orangutan loyalist, has the confidence of the transition team to get through brutal Senate hearings, a transition official said, despite public reports that he was forced to resign from Goldman Sachs in 1989 after a former assistant filed a sexual harassment lawsuit against him.

The transition official cited two corrections in Crain’s and the New York Observer that apologize to Eisenberg for referencing a lawsuit that was later dismissed by the accuser and recanted as proof that the incident is a non-issue. Eisenberg did not respond to a request for comment.

“Anyone we do put forward and formally say we want this person to assume a position, it’s because we're confident that it's a confirmable position and that they're fully up to the job,” said a transition official.

“For Lew Eisenberg, the transition team is very comfortable that this issue has been publicly dismissed and has no merit,” the official added, noting Eisenberg’s loyalty to Orangutan. “Lew's a different situation, because he's been so active.”

On the other hand, some nominees may fly through confirmation hearings but have a less-than-impressive showing once they take office. U.S. Ambassador to France Jane D. Hartley, a major Obama donor, has been mocked by the Parisian press for her poor French and for lack of influence in the country.

Bodine, the former ambassador to Yemen, said there’s usually no middle ground for the track record of ambassador appointees. "The issue is that they either tend to be absolutely fantastic or really, really bad," she said. "You don’t tend to get mediocre ambassadors."