US Investigation: Qatar Involved in Financing Kushner Family Interests

11 December، 2020

Following Senior Adviser Jared Kushner’s latest official trip to Qatar and Saudi Arabia, Senate Finance Committee Ranking Member Ron Wyden, D-Ore., and House Foreign Affairs Subcommittee Chairman Joaquin Castro, D-Texas, today launched an investigation into whether Jared Kushner’s conflicts of interest influenced U.S. foreign policy.

Specifically, the members of Congress are probing whether Kushner advised Donald Trump to support a blockade against Qatar while Kushner Companies was seeking a billion-dollar bailout from Qatari, and possibly other Middle Eastern officials, for the property at 666 Fifth Avenue.

“We write to seek information on any ethics guidance that has been provided to Senior White House Advisor Jared Kushner on potential conflicts of interest related to Kushner Companies, a real estate company owned and operated by his family in which he remains a significant investor. Specifically, we are asking what advice Mr. Kushner has received regarding whether he should recuse himself from issues involving Qatar, Saudi Arabia, and the United Arab Emirates (UAE) in light of these governments possibly helping to rescue a distressed Manhattan property owned by his family. Jared Kushner reportedly has significant influence over U.S. foreign policy in the Middle East. Given Jared Kushner’s refusal to properly divest from his family’s business, it is crucial that Congress gain an understanding of whether and how his personal financial interests or those of his family may have impacted U.S. foreign policy in the Trump Administration,” the members wrote to the White House Counsel’s Office.

“While Brookfield has claimed that Qatari representatives had no involvement in the 666 Fifth Avenue transaction, we remain troubled that Qatari funds ended up in a billion dollar rescue for a company directly tied to Mr. Kushner while he remained a senior White House official deeply involved in formulation of U.S. policy towards the Middle East. Federal criminal conflicts of interest statutes for senior White House officials extend not only to matters affecting their own financial interests, but that of their direct relatives and spouses. Based on testimony before the House Foreign Affairs Committee by former Secretary of State Rex Tillerson, we have a number of concerns related to whether Mr. Kushner in his official capacity advised the President to support a diplomatic blockade against Qatar at a time when members of his family were seeking funding from Qatari and possibly other Middle Eastern officials,” the members wrote to Brookfield Asset Management.

Text of the letter to the White House Counsel’s Office follows:

Dear Mr. Gast:

We write to seek information on any ethics guidance that has been provided to Senior White House Advisor Jared Kushner on potential conflicts of interest related to Kushner Companies, a real estate company owned and operated by his family in which he remains a significant investor. Specifically, we are asking what advice Mr. Kushner has received regarding whether he should recuse himself from issues involving Qatar, Saudi Arabia, and the United Arab Emirates (UAE) in light of these governments possibly helping to rescue a distressed Manhattan property owned by his family. Jared Kushner reportedly has significant influence over U.S. foreign policy in the Middle East. Given Jared Kushner’s refusal to properly divest from his family’s business, it is crucial that Congress gain an understanding of whether and how his personal financial interests or those of his family may have impacted U.S. foreign policy in the Trump Administration.

Qatar Rebuffs the Kushner Family’s Efforts to Seek Foreign Financing

Public reporting indicates that, in the summer of 2017, Jared Kushner may have played a key role in altering the U.S. position towards Qatar. These actions took place shortly after Qatar had declined to invest in 666 Fifth Avenue, a property which the Kushner family purchased in January 2007 – at Jared Kushner’s urging – for a record-breaking $1.8 billion dollars. Most of the purchase was financed with debt and reports indicate that, by 2017, the property remained 30% vacant and generated only about half the money that the Kushners owed on the mortgage. In the summer of 2017, the Kushner family faced a looming payment of $1.4 billion, which was coming due in February 2019.

It was against this backdrop that Jared Kushner’s father, Charles Kushner, met in April 2017 with Qatari Finance Minister Sharif Al Emadi, to solicit an investment from Qatar’s sovereign wealth fund for the 666 Fifth Avenue property. According to a financial analyst familiar with the meeting, Charles Kushner asked the Qataris “for just under a billion dollars.” The Qataris reportedly declined, citing the dubious business logic of Charles Kushner’s proposal. Shortly thereafter, and apparently with the involvement of Jared Kushner, U.S. foreign policy towards Qatar began to shift dramatically.

President Trump Abruptly Overrules State and DoD to Support the Saudi/UAE Blockade of Qatar

In Riyadh, Saudi Arabia on May 21, 2017, President Trump gave a speech that had been reviewed by then-Secretary of State Rex Tillerson in which he referred approvingly to “Qatar, which hosts the U.S. Central Command,” as “a crucial strategic partner.” During the same trip, however, Jared Kushner reportedly met privately, and without U.S. diplomats, with officials from Saudi Arabia and the United Arab Emirates. During this private meeting, Saudi and UAE officials reportedly discussed the blockade they were planning to impose on Qatar with him. This followed earlier communications that Jared Kushner had with Middle Eastern leaders outside of traditional diplomatic channels without the involvement of the State Department.

On June 5, two weeks after President Trump’s speech, the blockade was launched, without any prior warning to Secretary Tillerson or then-Secretary of Defense James Mattis. On June 9, Secretary Tillerson called for an end to the blockade and announced that the U.S. would support a Kuwait-led mediation effort. Secretary Tillerson strongly objected to the blockade on the grounds that Qatar hosts an important U.S. military base and the blockade disrupted Gulf unity, which is necessary for presenting a united front against Iran. That afternoon, however, apparently without consulting the State Department, the Department of Defense, or the Intelligence Community, President Trump publicly supported the blockade.

An Investment Firm Linked to UAE and Qatar Bails out the Kushners

More than a year later, the Kushner family eventually received the financing it had been so desperately seeking from Brookfield Assets Management, which has links to both Qatar and the UAE.

In May 2018, there were reports that Canadian private equity firm Brookfield Asset Management was “in advanced talks” with Kushner Companies to rescue its struggling 666 Fifth Avenue Property. On August 3, 2018, Brookfield finalized a $1.28 billion deal to purchase a 99-year lease on the 666 Fifth Avenue property, allowing Kushner Companies to pay the $1.4 billion debt it owed a few months later. The transaction was executed through BPY, in which the Qatar Investment Authority (QIA) owned a 7% stake, according to BPY’s 2017 Annual Report. Furthermore, according to news reports, $3 billion of the private fund used to lease 666 Fifth Avenue comes from sovereign countries, including $2 billion from the Middle East. Along with Qatar, BPY also has significant connections to the United Arab Emirates, including owning properties in that country. Notably, only a month before the reports that Brookfield was seeking to bail out Kushner Companies, President Trump appeared to withdraw his support for the blockade of Qatar.

This sequence of events, especially the stunning reversal in U.S. policy towards Qatar, raises serious questions about what role Jared Kushner—and the financial interests of his family—may have played in influencing U.S. foreign policy regarding the blockade.

Jared Kushner’s Financial Interests Present a Conflict of Interest

Mr. Kushner, the President’s son-in-law, has made the unprecedented choice to serve as Assistant and Senior Adviser to the President while still retaining his stake in a substantial amount of real estate holdings and assets directly linked to Kushner Companies, a family business in which he served as the Chief Executive Officer until joining the Administration. Jared Kushner’s initial public financial disclosure form filed in 2017 indicates that he retained almost 90 percent of his real estate holdings, which at the time were valued between $132 million and $407 million. According to media reports, Jared Kushner’s 2018 financial public disclosure form showed that he retained the “bulk of his stake in the company,” from which he continued generating millions in profits.

To the extent Jared Kushner no longer directly owns certain assets, public reports indicate that, rather than truly divest himself, he sold those assets to his brother, Joshua Kushner, and a family trust controlled by his mother, Seryl Kushner. For example, Jared Kushner sold his equity stake in the 666 Fifth Avenue property to the aforementioned family trust where he is not a beneficiary, but his siblings reportedly are. Despite these transactions, it’s clear that his immediate family would stand to gain from any foreign backed bailout of the 666 Fifth Avenue property.

The Code of Federal Regulations, which contains civil ethics rules, prohibits any White House employee from “using his public office for his own private gain…or for the private gain of friends, relatives, or persons with whom the employee is affiliated in a nongovernmental capacity.” Similarly, criminal conflict of interest statutes for White House employees prohibit Mr. Kushner from being involved in matters affecting his financial interests as well as those of his spouse and relatives.

In order to better understand Jared Kushner’s potential conflicts of interest, as well as to ensure that they have not influenced U.S. policy in the Middle East, and to consider any necessary legislative responses, I ask that you provide answers to the following questions, as well as the documents requested below no later than December 23, 2020:

Has Jared Kushner or anyone acting on his behalf ever sought or received advice or an opinion, whether formally or informally, from the Office of Government Ethics or White House Counsel with regard to his work on Middle East policy? If so, please provide copies of any and all documents related to such advice or opinion.
Has the Office of Government Ethics or White House counsel ever provided, or been asked to provide advice or an opinion, whether formal or informal, regarding any member of the Kushner family or any entity associated with Jared Kushner? If so, please provide copies of any and all documents related to such advice or opinion.
Please provide a full and complete list of issues, countries, companies and/or matters from which Jared Kushner has been advised to consider recusing himself and/or did, in fact, recuse himself. For each such item, please provide dates, topics, and a full description of the reason for such recusal

Text of the letter to Brookfield Asset Management follows:

Mr. Bruce Flatt

Chief Executive Officer

Brookfield Asset Management

Brookfield Place, Suite 300

181 Bay Street

Toronto, ON M5J 2T3

Dear Mr. Flatt:

We write to seek information pertaining to Brookfield Asset Management’s 99 year lease agreement with the Kushner Companies for the 666 Fifth Avenue property, a significant financial transaction that involved a fund in which the Government of Qatar is a major investor.

On May 17, 2018, public reports revealed that Brookfield Asset Management (Brookfield) was in the final stages of discussions with Kushner Companies to sign a long term deal to rescue its 666 Fifth Avenue property, a building which was experiencing significant financial distress and for which Kushner Companies was obligated to repay $1.2 billion in loans by February 2019. According to public reports, the property had been operating at a loss for almost a decade, was more than 30 percent vacant, and generated about only half of its annual mortgage payments.

As these discussions became public, Brookfield indicated it was aware of the potential conflicts of interest created by making a substantial investment in an entity owned and operated by members of the Kushner family, given Mr. Jared Kushner’s employment in the White House as a Senior Adviser to the President. Of particular concern was that the Government of Qatar was a significant investor in Brookfield’s real estate fund, Brookfield Property Partners (BPY). In 2014, the Qatari Investment Authority (QIA) invested $1.8 billion in BPY, giving the Qatari government a 9 percent stake of preferred equity in BPY and making it the second largest investor in the fund. According to a recent Financial Times investigation, this would give QIA “significant influence” over Brookfield Property Partners and allow it “to receive confidential information that other investors never see.”

Brookfield’s negotiations with Kushner Companies were preceded by several instances in which Mr. Kushner and his father, Charles Kushner, engaged Qatari officials and businessmen in pursuit of financing for the 666 Fifth Avenue property. Throughout 2015 and 2016 Jared Kushner negotiated directly with Sheikh Hamad in Jassim-al-Thani (HBJ). Terms were reportedly agreed to in principle for HBJ to invest up to $500 million if the Kushners were able to secure capital commitments from other investors. These negotiations reportedly fell through when the Kushner family was unable to secure additional outside capital. Shortly after Jared Kushner officially joined the White House, Charles Kushner met with the Qatari Minister of Finance, Ali Sharif Al Emadi, at the St. Regis Hotel in New York City the week of April 24, 2017.

On August 3, 2018, Brookfield finalized a deal worth approximately $1.28 billion with Kushner Companies for a 99 year lease on the 666 Fifth Avenue property. While the full terms of the transaction have not been made public, the deal involved an up-front payment of $1.1 billion in rent that provided the Kushners a significant cash infusion to help pay off $1.2 billion in loan payments due a few months later.

During its negotiations with Kushner Companies, Brookfield publicly stated that “no Qatar-linked entity has any involvement in, investment in or even knowledge of this potential transaction.” Brookfield officials indicated they planned to invest in the 666 Fifth Avenue property using a separate fund from BPY in order to prevent Qatari money from being involved in the project.

Despite aforementioned assurances by Brookfield that no Qatar-linked entity would be involved, and that the transaction would not involve its BPY fund to avoid using funding from Qatar, it appears that is exactly what happened. A few months after the deal was signed, Reuters reported that the Government of Qatar claimed it was unwittingly involved in the transaction and that it had no knowledge it was done through the Brookfield’s BPY fund, which it co-owns. More recently, Financial Times reported that the limited liability company used to sign the lease on 666 Fifth Avenue, BSREP III Nero LLC, was controlled by BPY at the time of the transaction. Furthermore, the same report notes that BSREP III includes $3 billion in capital from sovereign governments, including $2 billion from Middle Eastern ones.

While Brookfield has claimed that Qatari representatives had no involvement in the 666 Fifth Avenue transaction, we remain troubled that Qatari funds ended up in a billion dollar rescue for a company directly tied to Mr. Kushner while he remained a senior White House official deeply involved in formulation of U.S. policy towards the Middle East. Federal criminal conflicts of interest statutes for senior White House officials extend not only to matters affecting their own financial interests, but that of their direct relatives and spouses. Based on testimony before the House Foreign Affairs Committee by former Secretary of State Rex Tillerson, we have a number of concerns related to whether Mr. Kushner in his official capacity advised the President to support a diplomatic blockade against Qatar at a time when members of his family were seeking funding from Qatari and possibly other Middle Eastern officials.

In order to better understand how funds linked to the Government of Qatar and possibly other Middle Eastern countries became involved in the 666 Fifth Avenue transaction, please respond to the following questions no later than December 23, 2020:

During negotiations with Kushner Companies, were any representatives from Brookfield Asset Management aware that Mr. Kushner and his family had held previous discussions with Qatari government officials and businessmen, including the April 24, 2017 meeting between Charles Kushner and Minister Ali Sharif Al Emadi?
Why did Brookfield Asset Management decide to sign a 99 year lease through its Brookfield Property Partners fund, despite previous claims it would not do so to avoid potential conflicts of interest?
At what date was any individual or entity that represented or was a part of the Qatari Investment Authority or the Qatari government made aware that Brookfield Asset Management and Brookfield Property Partners were negotiating with Kushner Companies regarding an investment in the 666 Fifth Avenue Property?
According to public reports, Brookfield began selling off parts of its BSREP III Fund, allowing for new investors to acquire portions of the 666 Fifth Avenue lease agreement. Has Brookfield opened up its BSREP III Fund to additional foreign investors since signing the 666 Fifth Avenue lease with Kushner Companies?
With respect to Brookfield Asset Management, including, but not limited to, any of its subsidiaries, affiliates, partnerships, groups, special purpose entities, joint ventures, predecessors, successors, or any other entity in which they have or had a controlling interest, any employee, shareholder, partner, member, consultant, independent contractor, agent, attorney or other representative of any of those entities, (hereafter referred to collectively as “Brookfield”) please provide the following:
Any document related to the matters identified in items 1 -3 above generated by, received by or possessed by Brookfield.
Any document related to any communication notifying any individual or entity that represented or was a part of the Qatari Investment Authority or the Qatari government of Brookfield’s efforts to sign a 99 year lease agreement between the entities BSREP III NERO LLC and 666 Fifth Associates LLC.
Any document related to Brookfield’s lease of any portion of the building at 666 Fifth Avenue that was provided to any individual or entity that represented or was a part of the Qatari Investment Authority or the Qatari government, including any communication with any individual or entity that represented or was a part of the Qatari Investment Authority or the Qatari government that was related to the lease.
A complete copy of the lease agreement between BSREP III Nero LLC and 666 Fifth Associates LLC, including but not limited to the full list of all the terms and conditions.
A full list of all investors in Brookfield’s BSREP III fund, which reportedly owns BSREP III Nero LLC and the rights to the 666 Fifth Avenue property. Please include a detailed and itemized list of all investors (and the amounts they invested) in funds affiliated with Brookfield Asset Management that have participated in the 99 year lease with Kushner Companies for the 666 Fifth Avenue Property.
A detailed list of all meetings with the Kushner Companies and/or any individual or entity that represented or was a part of the Qatari Investment Authority or the Qatari government, in which Brookfield’s employees participated, in person, by telephone or video conference. Please also included a detailed description of issues discussed during these meetings and any summaries of formal or informal agreements reached in these meetings, including any meeting notes, agendas, transcripts or memoranda memorializing or documenting any aspect of these meetings.
Any document related to any analysis (including any financial analysis) or evaluation of the lease agreement between BSREP III Nero LLC and 666 Fifth Associates LLC as well as any other any lease or investment arrangement involving all or any portion of the 666 Fifth Avenue building considered or proposed by Brookfield.
Any document that addresses any advantage or disadvantage of or reason for or against, Brookfield making a full, up-front payment of most of the amount that would be owed to 666 Fifth Associates LLC over the 99 year term of the lease.