The Ethics Pledge Obama issued as an executive order requires of “all appointees entering government” that they must agree to “not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts.”
The emails obtained by TheDC show that on July 16, 2009, those senior Obama administration officials were informed about Silver Point Capital’s role in the auto bailout process.
Early that morning Maurice Lefkort, of Willkie Farr & Gallagher, emailed Rick Westenberg of General Motors and several others. That email, with the subject “Term Sheet,” read:
“Enclosed at the request of Elliott and Silverpoint is a term sheet reflecting the discussions this evening, both clean and marked to show changes from GM’s last draft. Please note that although we have discussed the enclosed with our client [Silver Point Capital] and Elliott at length, and they reviewed earlier drafts, this final draft has not been reviewed by them, and remains subject to further comment.”
Without hours, Jeffrey Tanenbaum of the firm Weil, Gotshal & Manges LLP forwarded Lefkort’s email to Wilson and Feldman, among others.
Feldman forwarded the email later the same day to Bradley Robins, the Head of Financing Advisory and Restructuring for North America at the finance restructuring firm Greenhill & Co.
In September 2011 TheDC published emails showing that these same senior Obama officials were aware their involvement in decisions affecting Silver Point’s business opportunities was a violation of ethics. (RELATED: Prior to political appointment, Obama official angled for gains from GM bailout)
“Know you folks are busy, but hope you and/or another non-conflicted person will agree to hear proposals for Delphi from the lenders, who are potential acquirors as well as holder of the traditional DIP lender rights,” then Blue Wolf Capital Management operating partner Josh Gotbaum emailed White House auto czar Ron Bloom on July 9, 2009.
“Bernie Knight, Treasury’s Ethics Counsel, told us that we could not communicate with Messrs Feldman or Wilson, but that we could meet with others without a conflict.”
President Obama later made a “recess appointment” of Gotbaum to become director of the PBGC, over the objection of Ohio Democratic Sen. Sherrod Brown.
Despite Gotbaum’s emailed warning that Feldman and Wilson were ethically prohibited from dealing with this situation, Bloom forwarded it to Wilson, Feldman and Steve Rattner within five minutes of receiving it.
Rep. Turner added that he thinks this new information raises yet more questions about the administration officials’ “outrageous behavior.”
“This is definitely crony capitalism,” Turner said. “It makes you wonder what sorts of back door deals were going on.”
“While Delphi pensioners were having their pensions slashed, these guys had apparently ongoing relationships that could absolutely affect the way in which they handled their responsibilities on the Auto Task Force. It’s hard to have a fiduciary obligation to the taxpayers, and to pensioners, when you have ongoing questionable ties to your business partners or law firms.”
UPDATE — A representative for Harry Wilson responds:
“Upon joining the Treasury Department, Mr. Wilson divested himself of all auto-related investments – these included auto-related investments in his own accounts as well as any such investments through his former firm. His divestment took place by March 1, 2009, near the market lows and before he joined the auto task force. As a result, Mr. Wilson did not earn a single penny of profit from his work on the auto task force; on the contrary, because of his government service, he knowingly and willingly forewent opportunities for substantial gains that later materialized as a result of the rescue.
“Mr. Wilson had no material involvement in the PBGC’s discussions with Delphi and General Motors. This fact was substantiated by internal emails at the time the relevant discussions took place as well as by sworn testimony subsequent to those discussions.
“Finally, all of Mr. Wilson’s dealings with Delphi were governed by Treasury ethics counsel from the outset. When Delphi became involved in the pending General Motors restructuring, Mr. Wilson appropriately notified Treasury ethics counsel that his previous firm was among Delphi’s lenders. Treasury ethics counsel established proper guidelines governing Mr. Wilson’s interactions with Delphi.
“Those guidelines included a prohibition on Mr. Wilson speaking directly with his former firm, its fellow lenders or their advisors, and Mr. Wilson followed those guidelines throughout the entirety of his work for the auto task force.”