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Mnuchin Pledges Recusal If Wife's Film Company Poses Conflicts

Ethics Watchdog Faults Mnuchin Over Wife’s Film Company

(Bloomberg) -- U.S. Treasury Secretary Steven Mnuchin’s pledge to recuse himself from matters involving his wife’s film production company passed muster with the top federal ethics watchdog, though it declined to certify his financial disclosure.

Mnuchin agreed to recuse himself from matters involving Stormchaser Partners LLC, a film production company that Louise Linton started in 2012. Mnuchin, who held a stake in the company worth at least $1 million when he was nominated to be Treasury secretary, had agreed to divest his interest within 90 days of his confirmation, according to his original ethics agreement.

The Office of Government Ethics said Mnuchin sold his stake in May 2017 to Linton, then his fiancee, and in effect reacquired it when they married the following month, according to a letter dated April 4 from the ethics office to Senator Chuck Grassley, the chairman of the Senate Finance Committee. Under federal ethics rules, a spouse’s assets can create conflicts for a government official.

OGE Director Emory Rounds said in the letter to Grassley, an Iowa Republican, that OGE was satisfied that Mnuchin’s new ethics agreement, which is dated April 3, would enable him to “continue to hold an imputed interest” while complying with conflict-of-interest laws.

Treasury’s ethics officials, who approved the arrangement, had determined that Stormchaser Partners, which has five films either completed or in production, wouldn’t pose a conflict of interest.

Even though Mnuchin had agreed to recuse himself from matters involving the company if a potential conflict arose, Treasury hadn’t consulted with OGE, Rounds wrote. Federal ethics rules require prior approval from the agency before an official can reacquire an asset he or she was required to divest.

The episode is the latest in a series of faults found by the agency with some of the high net-worth people that President Donald Trump brought into his administration.

“This is simply the result of a technical difference between OGE and Treasury’s career ethics officials,” Treasury spokesman Tony Sayegh tweeted out in a statement, adding that OGE didn’t identify a conflict posed by the asset.

OGE declined to comment, citing its policy not to publicly discuss individual cases.

Mnuchin’s revised ethics agreement calls for him to recuse himself in matters that could affect the company, including international film issues or tax matters. “Stormchaser does not currently own or have an interest in any film being marketed internationally,” the agreement says.

In the letter to Grassley, Rounds said his agency declined to approve Mnuchin’s annual disclosure because of Linton’s ownership of Stormchaser Partners, which Mnuchin was required to divest, and Treasury ethics officials did not consult with OGE about the situation.

This isn’t the first run-in that a member of Trump’s cabinet has had with OGE. In February, the ethics watchdog declined to certify Commerce Secretary Wilbur Ross’s financial disclosure, citing his failure to adhere to his ethics agreement.

Ross reported on the form that he had sold his shares of BankUnited Inc., a stake worth about $3,500, in 2017, a transaction he didn’t actually make until October, 16 months after he’d promised to sell it. The New York investor previously had numerous other inaccuracies and omissions in his filings, and received a public rebuke from OGE last July.

The ethics office earlier had criticized Mnuchin for joking in a public appearance in March 2017 that parents should take their children to see the Lego Batman Movie, which his company Ratpac-Dune Entertainment LLC produced. Mnuchin still held a stake in that company, which he divested two months later, according his his financial disclosure reports. Government officials aren’t allowed to promote private interests in their official capacity. Mnuchin later apologized for the comment in a letter to OGE.

Mnuchin, who served as Stormchaser Partner’s chairman from December 2015 to January 2017, is still owed money for the sale of his stake in the company, according to his financial disclosure. The balance, worth between $1 million and $2 million, is due to be paid off in May 2026, the document says. Financial disclosures list assets and obligations in broad ranges.

Stormchaser Partners has one film in production and another in post-production, according to its website. It is also producing short films highlighting nonprofit groups. The first, a short documentary about the Central Union Mission in Washington, is available on its website.

To contact the reporter on this story: Bill Allison in Washington at ballison14@bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, John Harney

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