‘Old-school revolving door’: Private-sector ties complicate Biden’s efforts to staff incoming administration

© Demetrius Freeman/The Washington Post Antony Blinken, Joe Biden’s pick for secretary of state, at the Queen in Wilmington, Del., on Nov. 24.

The Washington Post-Joe Biden’s secretary of state nominee, Antony Blinken, founded a consulting firm that promises corporate clients a bridge from “the Situation Room to the Board Room.” The incoming National Economic Council director, Brian Deese, and the deputy treasury secretary nominee, Wally Adeyemo, both recently held jobs at BlackRock, the world’s largest asset management firm.

They have all been called back to public service in recent weeks because of their experience in the Obama administration. And the private-sector baggage they bring now threatens to undermine Biden’s promise to “restore ethics in government.”

Like many others now staffing Biden, they built résumés during the Trump years that abound with the kind of financial connections that typically set off alarm bells: managing the money of Persian Gulf states’ sovereign wealth funds, drafting legal and regulatory battle plans for Silicon Valley giants, or helping American companies conduct business overseas.

Behind the scenes, Biden’s advisers have tried to confront the apparent conflicts directly, with extensive ethics trainings and detailed rules that bar, in most cases, transition officials from working on issues that could benefit a recent employer or client. Incoming White House counsel Dana Remus, who oversaw ethics issues for President Barack Obama, is also drafting new guidelines for the Biden administration with the goal of marking a sharp departure from Trump’s approach of dismissing ethical concerns as political attacks.

Revolving-door watchdogs and liberal activists say Biden and his team have so far been more cautious about picking officials with industry ties than the Obama transition effort was in 2009. Those who have been chosen, like Deese and Adeyemo, have received praise from these same critics for their close ties to industry reformers. But there remains a worry that the sheer number of overlapping interests could affect policy decisions down the road.

“Biden sees the people he is hiring as veteran government hands and doesn’t necessarily care that much about what they have been doing in the interregnum,” says Jeff Hauser, the founder of the Revolving Door Project, a liberal effort to track the private-sector conflicts of public officials. “I disagree with that. My concern is that people like BlackRock’s Larry Fink and Facebook’s Sheryl Sandberg are very smart and knew who they were hiring.”

Liberals are particularly concerned about big technology companies that vacuumed Obama officials onto their payrolls, and about BlackRock, which has been hiring high-level Democratic officials for years, even as it fights to keep from being regulated as a “systemically important financial institution” under reforms Obama signed into law in 2010.

Other watchdogs say that the jury is still out and that the Biden transition needs more time to prove its ethics bona fides. Outside groups have been drafting research documents on potential nominees for particularly sensitive posts, including top regulatory oversight jobs at the Office of Management and Budget.

© Demetrius Freeman/The Washington Post President-elect Joe Biden announces his economic team at the Queen in Wilmington, Del., on Tuesday.

Norm Eisen, who served as ethics counsel to Obama at the beginning of his presidency, said he is optimistic that there will be adequate safeguards in the Biden administration that will blunt any problems.

“Government can’t just be staffed with professors and think tankers,” Eisen said. “The president-elect has made strong ethics commitments — the strongest in American history — and we should allow the transition and the new administration to apply them to its appointees with business backgrounds.”

With many key positions unfilled, the biggest challenges so far have come from the relationship of several top advisers, including Blinken, to the consulting firm he helped form, WestExec Advisors, which takes its name from the road between the White House and the Eisenhower Executive Office Building. A WestExec spokesperson said that the phrase “the Situation Room to the Board Room” is meant to describe the depth of experience at the company, not “any literal flow of information.”

Incoming White House press secretary Jen Psaki and director of national intelligence nominee Avril Haines have done limited work with the firm, along with other Obama-era veterans such as Michèle Flournoy, another co-founder, who has been discussed as a possible defense secretary nominee, and Matt Olsen, a transition volunteer who works at Uber.

Sen. John Cornyn (R-Tex.) has raised the prospect of blocking Blinken’s nomination to run the State Department if he is not able to disclose all of his former clients, some of whom the company says are protected by nondisclosure agreements. Blinken has been making progress in recent days to obtain permission from clients to reveal their identities, according to a transition official who spoke on the condition of anonymity to describe internal discussions.

“The most significant part of WestExec’s business centers on assisting U.S. companies with global footprints navigate geopolitical risks abroad,” said a company spokeswoman, Erin Pelton. “As a matter of policy, WestExec does not work for any foreign governments, political parties or state-owned enterprises.”

Asked about WestExec specifically, a transition official not authorized to speak publicly said that “any current or former WestExec team members who return to government service will divest from the firm, follow all recusal requirements relating to their work at WestExec and disclose their clients consistent with the law.”

But Richard Painter, who advised the George W. Bush White House on ethics matters, said more is needed from the Biden administration. He did not fault Blinken and his colleagues for setting up the firm. But now, he said, the firm’s access to government agencies, including the State Department, needs to be strictly limited.

“I believe they have to institute very stiff controls on these consulting firms that are basically selling access,” Painter said.

© Nicholas Kamm/AFP/Getty Images One possible Biden Cabinet pick is Jeh Johnson, seen testifying on Capitol Hill in 2015 while serving as homeland security secretary. More recently he has worked as a director for Lockheed Martin.

Danielle Brian, Pentagon watchdog at the Project on Government Oversight, said the activities of WestExec are worrisome, and the fact that so many likely Biden nominees are associated with that firm is “disappointing, because I thought the message was clear in the past few years that the swamp is unacceptable and it’s time for a change.”

“It’s old-school revolving door,” Brian said. “That’s why we are really interested in seeing the Biden executive order on ethics.”

The apparent conflicts facing Biden extend far beyond a single firm or industry, especially given the ties of many Obama advisers to Silicon Valley companies.

Former homeland security secretary Jeh Johnson, who has been discussed as a potential Cabinet pick at the Justice or Defense department, has been working as a director for Lockheed Martin, the nation’s largest defense contractor.

Jeffrey Zients, a former head of Obama’s National Economic Council who is expected to have an official role coordinating Biden’s coronavirus response, worked as a Facebook director during Trump’s presidency, though he left after two years amid disagreements about the corporate direction and no longer owns stock in the company.

Zients more recently worked at an investment firm called Cranemere, which manages “major families and institutions” in Latin America, the Middle East and elsewhere, including sovereign wealth funds for Bahrain and Oman.

Cynthia Hogan, a former top lawyer for Biden in the vice president’s office who now has a senior personnel role in the transition, worked as a lobbyist for Apple between 2016 and 2018.

Liberal groups, and even some involved in the transition process, have expressed concern about the impact of such connections on the appointment of key regulatory positions, including jobs at the Labor and Justice departments that could hold enormous sway over antitrust efforts against large tech firms and the regulation of gig workers.

Biden’s transition chiefs overseeing the future White House and some national security agencies have expressed a “mild sensitivity” to the appearance that big tech companies have been paymasters for the core of the new administration’s leadership, according to a person familiar with the discussions who spoke on the condition of anonymity about internal deliberations.

One adviser likened the role of technology firms in the Biden presidency to the role Goldman Sachs played in previous administrations. The agency review teams planning the incoming administration include volunteers who previously worked or still work for companies like Stripe, Airbnb, Uber, Lyft, Apple, Facebook and Amazon Web Services. (Amazon chief executive Jeff Bezos personally owns The Washington Post.)

Much of the overlap is a result of the lucrative job offers that greeted people from the Obama administration as Trump took over. Many chose jobs at those firms and others because they “had a chance to work at someplace innovative and also make money — it’s not that complicated,” the adviser said.

But Big Tech’s policy goals aren’t discussed in daily meetings, the person said.

One political strategist for Silicon Valley companies, who requested anonymity to speak more frankly, said the tech community is not advocating for specific executives to be placed in anything other than technology expert positions in the government. The concern is that the people who are picked might be hostile to their interests.

© Carolyn Kaster/AP Brian Deese, then serving as National Economic Council deputy director, speaks at the White House in 2012.

Biden has said that on Day One in office, he will sign an executive order similar to the ethics rules Obama introduced on his first full day as president. The Obama rules included a two-year ban on appointees’ participation in “any particular matter involving specific parties that is directly and substantially related to my former employer or former clients,” unless they had a specific waiver. Officials who had registered to lobby within two years of their appointment faced additional restrictions, including a ban on working for any agency they had lobbied.

During the campaign, Biden promised to set up a new ethics watchdog agency in the government and push for an expanded definition of lobbying that would include those involved in developing and overseeing a lobbying strategy. He also vowed to once again make public the records of all individuals who gain access to the White House complex, a practice Trump halted.

“The charge facing the president who follows Donald Trump is as big as it is essential: restoring faith in American government,” the Biden campaign promised in a position paper. “The next president must demonstrate with their actions — not empty words — that public servants serve all Americans, not themselves or narrow special interests.”

The Biden team has so far been silent on whether the expanded lobbying definition would apply to the revolving-door policies in the administration or if the definition of what is considered a conflict would be changed.

Like previous transition efforts, Biden’s has invited corporate leaders and consultants to help plan his administration, though he has also established guidelines aimed at avoiding specific conflicts of interest.

“The really difficult challenge for the government is how to get the experience and knowledge that they need from the private sector to work in the public sector, while minimizing the problems of the revolving door,” said Dennis Kelleher, a co-founder of Better Markets, which seeks more regulation of financial markets. “It’s a tough balance.”

Volunteers and staff on the Biden transition team are barred from participating in matters that “directly conflict” with an immediate family or business relationship from the past year, without a special waiver. Indirect conflicts, in which “a reasonable person would question” the impartiality of a transition worker, must be reported to the general counsel, Jessica Hertz, a lawyer who recently left her job as a regulatory adviser at Facebook.

© Yuri Gripas/Reuters Michèle Flournoy, who co-founded WestExec Advisors with Antony Blinken, is among those under consideration to be Joe Biden’s defense secretary.

The transition would not disclose how many such conflicts have been flagged to Hertz or how many waivers have been given under another part of the ethics rules, which bars lobbyists and foreign agents from working on matters they have lobbied on over the prior year. At least five recently registered lobbyists, all of whom work for labor unions, have been named as transition volunteers.

“We have granted a limited number of authorizations, including for individuals working on behalf of labor and those with expertise in pandemic response who recently advocated on behalf of their public-interest, nonprofit employers,” said Cameron French, a transition spokesman.

Some newer transition volunteers said they were bowled over this fall by the intensity of the focus on ethics. There were hours of training and tons of disclosure forms to fill out to identify potential conflicts, two members said. Volunteers are barred from trading stocks during their service without permission or publicly advertising their transition status to get future work.

Transition team members also have been required to agree to take vacation time from their tech or corporate firms, and cannot be paid for any of the time they spend advising on how to staff agencies, interviewing prospective appointees or crafting Biden’s plans for the first 100 days.

Some transition advisers have been urged — and have agreed — to step down from company boards and cut ties with associations in which government affairs or government consulting is a focus of the group or its work.

“They are very conservative about potential conflicts,” said one person briefed on the transition leaders’ demands of volunteers.