On President Biden’s first day in office, he made clear that, after the Trump administration’s fantastically corrupt reign, restoring trust in the federal government’s senior leadership would be a priority. His executive order on ethics, signed within hours of his inauguration, went further than any other towards slowing the revolving door and limiting conflicts of interest while in office. Subsequent appointments make clear, however, that these elevated standards are still not enough. Simply following the letter of the order will leave significant room for conflicts of interest to poison the administration’s actions and public trust.
In early March, Axios reported that John Kerry, the Special Presidential Envoy for Climate was bringing Democratic donor and private equity executive Mark Gallogly onto his team to handle business outreach. Gallogly is an alarming pick for many reasons. He spent sixteen years at the private equity firm Blackstone, which has played an outsized role in deforestation in the Amazon among many other devastating exploits. The firm he subsequently co-founded, Centerbridge Partners, was among the “vulture funds” that bought up Puerto Rican debt for pennies on the dollar and then pressured the Puerto Rican government to impose harsh austerity measures to “free up space” to pay them back. In short, his record should be disqualifying. Even if you, like John Kerry, disagree, Gallogly’s glaring conflicts of interest and the inadequacy of our current ethics regime for managing them should be cause for considerable concern.
Gallogly retired from Centerbridge Partners at the end of 2020 to focus on his family investment office, Three Cairns Group. (A family office exists to manage the wealth of a single ultra-high net worth individual or family.) That office has been particularly interested in climate solutions, an area over which Gallogly will have immense power in his new role. Current ethics rules will do little to stop him from abusing that power.
Gallogly will be required to step back from any involvement with Three Cairns Group, but it is highly unlikely that he will be asked to divest his stake. Even if he were forced to, it would stand to reason that he still has an interest in the office’s financial success, since it exists to benefit his immediate family. If he continues to hold climate-focused investments, he may be asked to periodically recuse from decisions that directly implicate them. As a rule, this is interpreted very narrowly. Gallogly might be asked to recuse from a decision to contract with a specific firm in which he is invested but not to leave the room when decisions implicate a particular sector in which he may hold many investments (as is likely to occur frequently).
Worse still, it is unlikely that the public will have access to the necessary information to scrutinize and act as a check on Gallogly. Gallogly’s position is not subject to Senate confirmation and likely not to public financial disclosure either (whether a non-Senate confirmed official must file a public financial disclosure is determined by their rate of compensation which, for advisory positions like these, is highly variable–and someone as rich as Gallogly can make vastly more money from insider information than any imaginable government salary).
Moreover, being at the epicenter of international negotiations on the economics of the climate crisis will leave Gallogly in an enormously enhanced position to invest his family’s fortune after he revolves back out of public “service.” If Gallogly can figure out a way to profit from the pain of Puerto Ricans, we’re sadly confident that he can make money from having been in many rooms where the future of the planet’s economy is being hashed out.
In our view, these conflicts simply add to Gallogly’s long list of “disqualifications” for this position. The fact that he is allowed to enter a position of great power, with very few limitations, in spite of them simply underscores that careful adherence to ethics laws and executive orders as currently written is not enough. Public trust in government will continue to suffer so long as people like Gallogly are allowed to rotate into, and profit off, of government service. If Biden is serious about fixing the damage Trump and others have caused, he should make clear that he will keep people with egregious conflicts out of government.
Header image: “Wall Street Sign” by Ramy Majouji is licensed under CC BY 2.0