Steven Mnuchin’s financial disclosures haven’t earned ethics officials’ blessing. What’s the hold-up?

Introduction

The executive branch’s chief ethics watchdogs have yet to certify Treasury Secretary Steven Mnuchin’s annual financial disclosure — an unusually lengthy delay in finalizing a document they’ve had for more than eight months.

While the Office of Government Ethics won’t publicly explain the holdup, an analysis of Mnuchin’s disclosure, which was obtained by the Center for Public Integrity, identified entries that outside ethics experts say could be the hitch.

The disclosure statement covers Mnuchin’s 2017 personal finances, and Treasury’s own ethics officials certified it after finding no conflicts of interest.

Some entries on Mnuchin’s 53-page form involve Stormchaser Partners LLC, a film production company owned by Mnuchin’s wife, Louise Linton.

Mnuchin’s ethics agreement, negotiated when he joined the government, required him to step down from the chairmanship of Stormchaser Partners and divest his own ownership interest in it within 90 days of his confirmation in February 2017. (Mnuchin also agreed to divest dozens of other assets that ethics officials said potentially presented conflicts of interest or the appearance of one.)

Mnuchin reported selling his interests in Stormchaser Partners in May 2017 for a total between $1 million and $2 million; values are reported in ranges.

When President Donald Trump nominated Mnuchin for Treasury secretary at the beginning of his administration, Mnuchin and Linton were engaged, not married. That means Linton’s assets weren’t required to be included in the public financial disclosure form Mnuchin filed at the time.

Nonetheless, Mnuchin promised to disclose her interests to Treasury officials, and Treasury later said he had done so. He also said he would avoid participating in any matter with a “direct and predictable effect on my fiancee’s financial interests” without prior authorization.

The couple married in June 2017. As required, Mnuchin publicly disclosed Linton’s assets on the disclosure form he filed last year. The form is not yet publicly released, but the Center for Public Integrity obtained it via a records request.

Mnuchin’s current disclosures show Linton continues to own Stormchaser Partners. Under ethics law, spousal assets are treated identically to assets owned directly by the government official. Therefore, any issues that would have been raised by Mnuchin’s ownership of Stormchaser Partners would also be raised if Linton owns it.

That means the divestment of Mnuchin’s ownership stake won’t cure any conflicts that arise as long as Linton owns it. This would require Mnuchin to recuse himself if something comes up.

A note on the form describes her ownership as “Treasury approved,” an indication that  Treasury ethics officials reviewed and signed off. It does not address whether OGE reviewed or approved it.

Treasury ethics officials have also signed off on Mnuchin’s overall disclosure.

In a statement issued in response to questions from the Center for Public Integrity, the Treasury Department said, “Treasury’s career ethics lawyers certified the Secretary’s 2017 financial disclosure on June 27, 2018, and identified no outstanding conflicts of interest. Treasury continues to work with the Office of Government Ethics to obtain certification of the disclosure.”

OGE declined to comment.

But it “makes sense” that OGE would have questions about the asset, since the company was listed in the ethics agreement as something Mnuchin was required to divest, said Delaney Marsco, ethics counsel at the nonprofit nonpartisan Campaign Legal Center, a watchdog group.

“To me, this is functionally the same as if he were to buy back an asset that he said he would divest as part of his ethics agreement,” Marsco said.

Mnuchin’s latest disclosure also reports that Stormchaser Partners itself owes Mnuchin between $1 million and $2 million, an amount equal to what he said he sold his ownership stake for back in May 2017.

Such a debt means Mnuchin has a continuing financial interest that would bar his participation in any “particular matters” that could affect the company’s ability to pay him. There is no indication that he has participated in anything he should not have.

Mnuchin’s entertainment industry holdings have prompted other ethics kerfuffles in the past.

In early 2017, Linton took over as interim CEO of Dune Entertainment, a movie financing company. Sen. Ron Wyden, an Oregon Democrat who serves as ranking member of the Senate Finance Committee, objected, questioning whether her role undermined Mnuchin’s efforts to divest from the company and related holdings as required in his ethics agreement, according to a report by CNN. Treasury told Wyden that Linton’s work with Dune was uncompensated, and that she’d step down once Mnuchin’s divestment was finalized.

Separately, in March 2017, shortly after he took the Treasury job, Mnuchin was forced to apologize for jokingly endorsing “The Lego Batman Movie,” for which he was an executive producer.

The Stormchaser Partners debt isn’t due to be paid in full until May 2026, according to the disclosures. Until then, Mnuchin is entitled to annual interest of 2.04 percent of the unpaid balance — an amount roughly equal to between $20,000 and $41,000 per year.

Stormchaser’s website lists several upcoming projects, including “Serial Daters Anonymous” and “Me, You, Madness.” Linton was at the Sundance Film Festival earlier this year searching for projects, according to an article by the Hollywood Reporter.

Mnuchin’s latest disclosures also report he is separately owed another sizable debt, this one from a trust named for his brother, Alan G. Mnuchin. The timing of the disclosure indicates the transaction creating the debt took place after Trump nominated Mnuchin as Treasury secretary.

The trust owes Mnuchin between $25 million and $50 million, the document shows.  

The terms of the trust debt are nearly identical to those of the Stormchaser Partners debt: The trust note also comes due in May 2026, and until then, calls for Mnuchin to be paid 2.04 percent of the unpaid balance in interest annually, the disclosures show.

Treasury did not respond to a specific question about whether the debt is related to the Stormchaser transactions, given the similar terms.

Mnuchin was a multimillionaire investor with complex holdings before leading the Treasury Department, and some back and forth with ethics officials over complicated filings isn’t unusual.

Nevertheless, this lengthy a delay is rare, and “the only thing you know for sure, I know for sure is that [OGE Director] Emory Rounds is not satisfied with what he sees,” said Don Fox, a former general counsel and acting director of OGE.

The only other Cabinet-level official whose 2018 personal financial disclosure forms have not yet been certified by OGE is Commerce Secretary Wilbur Ross. Late last month, OGE said it would not certify Ross’ forms after finding Ross was not in compliance with his ethics agreement.