Well, he did say he was going outside the beltway and he did promise to shake the box.
If current predictions from the normally astute New York Times pan out, the next real shake of the box will come with the selection of Rex Tillerson to be Secretary of State. Tillerson is the current chairman and CEO of Exxon-Mobil, the largest petroleum producer in the world. He graduated from the University of Texas with a single degree in civil engineering, immediately joined Exxon as a junior engineer, and remained in that company ever since. He rose through the ranks of the company he now heads without ever seeking experience of any kind outside his own company.
We have no idea, and no way of figuring out, how Tillerson’s experience will translate to public service, or exactly what to expect from this appointment. We do know that in Tillerson’s immediate background is a history of extensive personal and business connections with Russia, as he was attempting to maneuver Exxon Mobil into a joint venture with Rosneft, the Russian national petroleum company, to explore the Arctic and develop the billion-barrel oil finds in Siberia. He traveled frequently to Russia in pursuit of business, occasionally even vacationing with Putin, and was personally was awarded the Russian “Order of Friendship” medal in 2013.
The joint venture effort was a pen-stroke away when it was blocked by the sudden imposition of international sanctions resulting from the civil unrest and Russian intervention in Ukraine. The pieces and parts of the venture are still poised, needing only some favorable developments on the diplomatic front to permit them to finally fall into place.
All this brings to mind the appointment of business icon Charles E. Wilson, the former CEO of General Motors who served as Secretary of Defense under Eisenhower in the 1950’s. GM was a major defense contractor during the war years, and still a healthy supplier of military armament for the Korean conflict. When asked in his confirmation hearings how he would decide if matters came up that were adverse to the interests of his former company, Wilson is said to have responded, “What is good for General Motors is good for the country.” Could foreign policy in the United States become tied to a similar mantra? “What is good for Exxon-Mobil is good for the United States?” Watch and learn.
In a move to eliminate the appearance of conflict of interest, Engine Charlie was required to sell all of his GM stock in 1952, then valued then at over $2.5 million which was an enormous sum, as a condition of his being confirmed by the Senate. Compare this to Dick Cheney, who, when he was elected vice president, was required to divest himself of all Haliburton stock, but permitted to hang on to over 433,000 shares in unexercised stock options together with a deferred compensation arrangement that paid him $200,000 per annum in benefits while he was in office. His stock options were said to have increased by more than 3000%, as the United States provided billions of dollar per year to Haliburton under direct, no-bid contracts in Iraq. Although a tiny faction in the media constantly brought these issues up, the main stream never picked up on any of it, and the story never grew legs.
What of the new guy? Tillerson’s net worth is estimated at $150 million, with much of it probably in Exxon-Mobil stock and options received as part of his $27 to $40 million annual compensation package, which varies as the barrel price of oil fluctuates. He doesn’t have to reveal the full value of any option shares that are not yet exercised, which could be a staggering amount. Will Tillerson be required to divest himself of his personal holdings? Given the obvious and immediate expectation of international developments with Russia, would placing the stock and options in a blind trust suffice? What about options: same rule as Cheney? No problem as long as he does not exercise them? Whoop-de-do.
Or will Tillerson be entitled to follow the lead of the President-elect and do nothing? Trump’s business empire is so diverse and so grounded in operations tied to the Trump name that a blind trust would be meaningless. The circumstance of blatant obsequiousness is already apparent as political entities, foreign governments, lobbyists, and others of like ilk, scramble to host extravagant galas and reserve rooms and suites in Washington’s Trump International. One suspects the same phenomena is beginning to occur world-wide in all the Trump-branded properties.
The cognoscenti have almost uniformly opined that the only acceptable means of eliminating conflicts of interest would be a complete divestiture, but Trump has shown no interest going down this route. He has clearly indicated that he has no intention of divesting himself of any of his business interests. All he has indicated that he plans to do is to turn active management of his companies over to his children. Trump and his family are showing no interest in exploring any other alternative.
Although the media and the political left are beside themselves with the specter of escalating conflicts of interest, the potential problems are being met with nothing but proverbial yawns from the inner circle, from Trump’s base, and increasingly from his fellow Republicans. Are we entering a new age, where actively monetizing the opportunities derived from public office are going to be acceptable? Will the new Secretary of State be able to move to reshape the business climate for Exxon Mobil with Russia and the billion barrel reserves discovered in Siberia, knowing of his Exxon-Mobil stock and options safely interred in his bank box, as he watches the value of his holdings react daily to his decisions on the international stage?
How about Puzder’s stock in his fast food operation, or the lady wrestler and the WWE, or Mnuchin and the CIT bank. Or anybody else from Trump’s roster of billionaires. Same deal? Anybody foresee any problems here?
Watch and learn, watch and learn.