Democrats: Trump friend sought to profit from Saudi nuclear deal

House panel says 'corporate and foreign interests use unique access to advocate for transfer of US nuclear technology'.

by
    Monday's report comes as Congress expresses frustration over Trump's handling of the US's relationship with Saudi Arabia [File: Jonathan Ernst/Reuters]
    Monday's report comes as Congress expresses frustration over Trump's handling of the US's relationship with Saudi Arabia [File: Jonathan Ernst/Reuters]

    Washington, DC - Since President Donald Trump won the 2016 election, a group of US businessmen have sought to profit on deals to build nuclear power plants in Saudi Arabia, while trying to avoid US restrictions designed to prevent the spread of nuclear weapons, the House Oversight Committee said in a new report, released on Monday.

    Based on 60,000 pages of documents, the report lays out in detail how the Trump administration allegedly backed efforts by IP3 International, a private consortium, to win contracts to build nuclear power plants in Saudi Arabia.

    "Today's report reveals new and extensive evidence that corroborates committee whistle-blowers and exposes how corporate and foreign interests are using their unique access to advocate for the transfer of US nuclear technology to Saudia Arabia," Representative Elijah Cummings, the Democrat chairman of the Oversight Committee, said in a statement.

    "The American people deserve to know the facts about whether the White House is willing to place the potential profits of the president's personal friends above the national security of the American people and the universal objective of preventing the spread of nuclear weapons," Cummings said.

    The Oversight Committee has been investigating the Trump administration on multiple fronts and had reported in February that several unnamed "whistle-blowers" had come forward to warn about White House attempts to speed the transfer of highly sensitive US nuclear technology to Saudi Arabia.

    Arms control experts fear the technology would allow Saudi Arabia to produce nuclear weapons in the future, contributing to a new arms race in the Middle East.

    IP3 is a private group led by a group of former government officials including retired Admiral Michael Hewitt, retired Army Generals Keith Alexander and Jack Keane and former Reagan National Security Adviser Bud McFarlane. Trump's former National Security Adviser Michael Flynn was a consultant until he was fired by Trump in January 2017.

    Thomas Barrack, a friend the president and chairman of Colony Capital, a major US investment company, was recruited by IP3 International to use his access to Trump to win administration backing for IP3's plans to build nuclear power plants in the Middle East, according to the report. 

    Thomas Barrack
    Billionaire real estate investor Thomas Barrack, Chief Executive Officer of Colony Capital, holds a meeting with media to discuss investment plans in Mexico and Latin America, in Mexico City [File: Henry Romero/Reuters] 

    With the prospect of lucrative Saudi deals on the line, and a potential $2.6 trillion global market for new power plants, IP3 and Barrack were among competing US investors who manoeuvred in 2017 and 2018 to buy Westinghouse Electric Company, the only US manufacturer of nuclear power plants, out of bankruptcy.

    IP3 pitches MBS

    In a previously undisclosed trip, a group of IP3 officials travelled to Riyadh in December 2016, during the transition between Trump's election and taking office, to meet Saudi Crown Prince Mohammed bin Salman (MBS) and pitch him on investing $120m in exchange for a 10 percent ownership position in the US company that would bid on the Saudi projects, according to the House report.

    "We had a very successful trip to KSA," Hewitt emailed a colleague. "We have the Trump administration in full support of our plan."

    The meeting with high-level officials in Saudi Arabia had been "very good for IP3", Alexander said in an email to nuclear industry officials. "Our key buyer is MBS."

    "We conveyed strong, unequivocal support for this programme from the Trump administration, which was very well received from all key officials," Alexander wrote.

    McFarlane wrote in an email to Flynn about the trip, "I should note in particular that much of our confidence derives from how emphatically positive your message expressing your - and the President Elect's - support … was received by the leadership of KSA. It had a palpable impact on the tone and substance of all of our meetings," according to the report.

    The plan was to find a US buyer for Westinghouse and then "rebuild the US industry around Westinghouse - starting with a huge order from KSA and GCC states," according to a January 2017 email from McFarlane to Flynn.

    MBS, Trump and Kushner meet

    MBS met Trump and Trump's son-in-law and senior White House adviser Jared Kushner in the Oval Office on March 14, 2017. During the meeting, Trump expressed his support joint US-Saudi projects "in energy, industry, infrastructure and technology worth potentially more than $200bn in direct and indirect investments with the next four years," according to the White House. 

    190219181918317

    On the same day, Barrack met Trump both before and after the meeting with the Saudi prince, according to emails in disclosed in the report. In addition to promoting the IP3 plan, Barrack was trying to get himself named a "special envoy" to the Middle East for economic development, according to the report.

    Three days after the White House meeting, IP3 officials touted in a letter to MBS that the meeting "established the framework for our unique opportunity to take the next steps with IP3 and the Kingdom of Saudi Arabia" and referenced a "partnership to acquire Westinghouse between IP3 and Saudi Arabia," according to the report.

    In subsequent weeks, IP3 officials promoted the plan with top Trump administration officials; Commerce Secretary Wilbur Ross, then Defence Secretary James Mattis, Energy Secretary Rick Perry, then CIA Director Mike Pompeo and others, the report said.

    In pitching the plan, IP3 officials "repeatedly pressed the Trump administration not to require Saudi Arabia to commit to the 'Gold Standard' in any future" non-proliferation agreement, the report said. Separately, IP3 was promising to advance Saudi nuclear power and strategic standing in the region above Iran's, a document in the report said.

    Under US law, any deal that involves the transfer of US nuclear technology requires the so-called "Gold Standard", also known as a 123 Agreement, approved by Congress that includes international monitoring and prohibits reprocessing or enrichment of nuclear fuel. Such an agreement was seen by IP3 as a "total roadblock" because Saudi Arabia would not agree, the report said.

    Plan to buy Westinghouse

    On August 2, 2017, IP3 officials briefed Kushner on their plan to buy Westinghouse out of bankruptcy, the report said. The financing would include equity investments from Saudi Arabia and the United Arab Emirates, the report added.

    "A Saudi strategic investment in Westinghouse would serve as a signal towards US partnership," said the report, quoting an IP3 presentation apparently prepared for Kushner about their plan. 

    190328053752802

    Kushner followed up in an email to an IP3 adviser saying he would "gather the interagency assessment of the importance, impact and national security considerations both domestically and internationally."

    Preparing for the Westinghouse bid, Barrack reached out to the CEOs of two major US investment firms, Blackstone and Apollo. He described the strategic and financial benefits of acquiring Westinghouse in a memorandum, according to the report.

    "Our GCC allies in Saudi Arabia and the UAE have committed to invest in the Westinghouse acquisition and are willing to concurrently lock-in Westinghouse as the primary partner on the 30+ reactors expected to be constructed in their countries in the coming decade," the memo stated.

    Brookfield buys Westinghouse

    But in January 2018, a Canadian-based fund, Brookfield, announced it had won a $4.2bn bid to acquire Westinghouse, leaving the IP3 Blackstone/Apollo bidders empty-handed. Within weeks, Barrack approached Brookfield CEO Bruce Flatt with an offer to join forces, the report said. 

    190604185250641

    Subsequently, Barrack's firm Colony was invited to make a $50m co-investment alongside Brookfield in Westinghouse. Colony was "seen as a significant value-add partner due to our experience and relationships with key stakeholders in growth markets such as the Middle East," the report added.

    On August 1, 2018, Brookfield completed its acquisition of Westinghouse after the US government's Committee on Foreign Investment in the United States (CFIUS), composed of Secretaries Mnuchin, Ross, Mattis, Pompeo and Perry, approved the deal.

    Two days later, Brookfield said it had agreed to a 99-year lease of Jared Kushner's family business's financially-troubled Manhattan office tower at 666 Fifth Avenue. The back-to-back announcements raised eyebrows in Congress and Democrat politicians say the House Oversight Committee is currently looking into the arrangements.

    Representatives for Brookfield nor IP3 did not immediately respond to Al Jazeera's requests for comment. The White House also was not immediately available.

    A spokesperson for Barrack said the businessman has been cooperating with the House Oversight Committee and has provided requested documents. 

    The spokesperson added that Barrack's investments and business development in the region are for a "better aligned Middle East", adding that "this is not political it is essential."

    IP3 switches sides to Korea

    In 2018, after the failed IP3 bid to acquire Westinghouse, Westinghouse terminated IP3 from participation in its "Team USA" bid to develop two Saudi power plants, the report said. Westinghouse executives were concerned "IP3's actions may create a faulty assumption that IP3 is in charge." 

    In response, IP3 joined a bid by the Korean Electric Power Corporation (KEPCO) for the opportunity to build nuclear reactors in Saudi Arabia, the report said. Although KEPCO's technology is based on Westinghouse's, the Koreans represented their offer would avoid the need for a US non-proliferation agreement.

    IP3 continued to leverage its connections in the Trump White House, according to the report. Officials boasted of "unique access" to the president and disparaged bipartisan efforts in the US Congress to prohibit Saudi Arabia from enriching uranium for weapons as an obstacle to be "overcome".

    Monday's report comes as Congress expresses frustration over Trump's handling of the US's relationship with Saudi Arabia in the wake of the October 2018 murder of Saudi journalist Jamal Khashoggi, and as the death toll from the Saudi-UAE war in Yemen mounts. 

    Earlier this month, Congress sent three resolutions of disapproval over the sale of precision-guided munitions to Saudi Arabia and the UAE to Trump's desk. The president vetoed the measures. On Monday, the Senate failed to override the vetoes. 

    Will Saudi Arabia go nuclear?

    Inside Story

    Will Saudi Arabia go nuclear?

    SOURCE: Al Jazeera News