Six months after leaving the White House, Jared Kushner secured a $US2 billion ($2.7 billion) investment from a fund led by the Saudi crown prince, a close ally during the Trump administration, despite objections from the fund\u2019s advisers about the merits of the deal.<\/p>\n
A panel that screens investments for the main Saudi sovereign wealth fund cited concerns about the proposed deal with Kushner\u2019s newly formed private equity firm, Affinity Partners, previously undisclosed documents show.<\/p>\n
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A panel that screens investments for the main Saudi sovereign wealth fund cited concerns about the proposed deal with Kushner\u2019s newly formed private equity firm but it was overruled by the Saudi crown prince,<\/span>Credit:<\/span>Getty Images<\/cite><\/p>\n Those objections included: \u201cthe inexperience of the Affinity Fund management\u201d; the possibility that the kingdom would be responsible for \u201cthe bulk of the investment and risk\u201d; due diligence on the fledgling firm\u2019s operations that found them \u201cunsatisfactory in all aspects\u201d; a proposed asset management fee that \u201cseems excessive\u201d; and \u201cpublic relations risks\u201d from Kushner\u2019s prior role as a senior adviser to his father-in-law, former President Donald Trump, according to minutes of the panel\u2019s meeting June 30.<\/p>\n But days later, the full board of the $US620 billion Public Investment Fund \u2014 led by Crown Prince Mohammed bin Salman, Saudi Arabia\u2019s de facto ruler and a beneficiary of Kushner\u2019s support when he worked as a White House adviser \u2014 overruled the panel.<\/p>\n Ethics experts say that such a deal creates the appearance of potential payback for Kushner\u2019s actions in the White House \u2014 or of a bid for future favour if his Trump seeks and wins another presidential term in 2024.<\/p>\n Kushner played a leading role inside the Trump administration defending Crown Prince Mohammed after US intelligence agencies concluded he had approved the 2018 killing and dismemberment of Jamal Khashoggi, a Saudi columnist for The Washington Post<\/em> and resident of Virginia who had criticised the kingdom\u2019s rulers.<\/p>\n The Saudi fund agreed to invest twice as much and on more generous terms with Kushner than it did at about the same time with former Treasury Secretary Steven Mnuchin \u2014 who was also starting a new fund \u2014 even though Mnuchin had a record as a successful investor before entering government, the documents show. The amount of the investment in his firm, Liberty Strategic Capital, was $US1 billion and has not been previously disclosed.<\/p>\n A spokesperson for Kushner\u2019s firm said of its relationship with the Saudi Public Investment Fund, \u201cAffinity, like many other top investment firms, is proud to have PIF and other leading organisations that have careful screening criteria, as investors.\u201d<\/p>\n A spokesperson for the Saudi fund declined to comment on its investment process. If any additional discussions about the deal took place, they were not reflected in the documents and correspondence obtained by The New York Times<\/em>.<\/p>\n The Times<\/em> reported last fall that Kushner had been seeking a Saudi investment. Now, the internal fund records and correspondence obtained by the Times<\/em> show the outcome, scale and timing of his firm\u2019s deal as well as the debate it aroused. Those documents and other filings indicate that, at this point, Kushner\u2019s venture depends primarily on the Saudi money.<\/p>\n Ethics experts say that such a deal creates the appearance of potential payback for Kushner\u2019s actions in the White House \u2014 or of a bid for future favour if his Trump seeks and wins another presidential term in 2024.<\/span>Credit:<\/span>AP<\/cite><\/p>\n Kushner planned to raise up to $US7 billion in all, according to a document prepared last summer for the Saudi fund\u2019s board. But so far he appears to have signed up few other major investors.<\/p>\n In its most recent public filings with the Securities and Exchange Commission, dated March 31, Kushner\u2019s firm reported that its main fund had $US2.5 billion under management, almost entirely from investors based overseas. Most of that appears to be the $US2 billion from Saudi Arabia.<\/p>\n The Saudi documents obtained by the Times<\/em> say that in return for its investment, the Saudi fund would receive a stake of at least 28 per cent in Kushner\u2019s main investment vehicle.<\/p>\n No law or rules constrain the investment activities of former administration officials after leaving the White House; many from both parties have profited from connections and experiences gained in government.<\/p>\n Kushner, whose fund has not publicly disclosed a theme or focus, has little experience or track record in private equity.<\/p>\n But Robert Weissman, president of nonprofit group Public Citizen, called Kushner\u2019s relationship with the Saudis \u201cextremely troubling,\u201d arguing that his stance toward the kingdom\u2019s leadership as a senior adviser \u201cmakes the business partnership appear even more to be both a reward to, and an investment in, Kushner.\u201d<\/p>\n Saudi officials say that the kingdom\u2019s Public Investment Fund, which also holds stakes in ride-sharing company Uber and Newcastle United Football Club in Britain, operates autonomously, with an elaborate governance structure that includes the investment panel. But Crown Prince Mohammed took control of the fund when he rose to power in 2015 and he is its paramount decision-maker.<\/p>\n Kushner, whose fund has not publicly disclosed a theme or focus, has little experience or track record in private equity. Before working in the White House, he ran his family\u2019s commercial real estate empire, sometimes with disappointing results. His best-known deal was the $US1.8 billion purchase of the office tower at 666 Fifth Ave. in Manhattan in 2007; the building\u2019s mortgage became a crippling liability when the recession hit the next year.<\/p>\n Diplomats, investors and ethics experts noted during the Trump administration that his anticipated return to the family business injected a potential conflict of interest into Kushner\u2019s relationship with Crown Prince Mohammed and other oil-wealthy Arab royals. Many are major long-term investors in American real estate, and the Kushner family had courted them before.<\/p>\n Former Treasury Secretary Steven Mnuchin also got an investment from the Saudi fund for his new venture but despite his superior investment record, it was not as large, or on terms as favourable, as Kushner\u2019s.<\/span>Credit:<\/span>Iman Al-Dabbagh for The New York Times<\/cite><\/p>\n While advising Trump, Kushner developed a friendship and informal alliance with the Saudi crown prince. Crown Prince Mohammed signalled that he favoured closer relations between Israel and the Arab monarchs of the Persian Gulf, which was also one of Kushner\u2019s priorities while in the Trump administration. He helped negotiate a series of agreements, called the Abraham Accords, opening diplomatic relations between Israel and other Arab monarchies. After leaving government, he set up a nonprofit to promote economic and other ties between the countries.<\/p>\n In Washington, Kushner had also helped broker $US110 billion in weapons sales to Saudi Arabia over 10 years. He helped protect those and other weapons deals from congressional outrage over the murder of Khashoggi and the humanitarian catastrophe created by the Saudi-led military intervention in Yemen.<\/p>\n In a letter dated July 5, fund staff explained to a board member who had questioned the size of the investment why it could not be cut back.<\/p>\n \u201cThis investment aims to form a strategic relationship with the Affinity Partners Fund and its founder, Jared Kushner,\u201d the letter said. A reduction of the size of its $US2 billion stake \u201cmay negatively or fundamentally affect the framework of the agreed strategic and commercial relationship.\u201d<\/p>\n<\/p>\n
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