Trump aides ignored legal warnings in pushing reactor plan: Democratic report

[February 20, 2019]  By Jonathan Landay and Nathan Layne

WASHINGTON (Reuters) - Top White House aides ignored repeated warnings they could be breaking the law as they worked with former U.S. officials and a close friend of President Donald Trump to advance a multi-billion-dollar plan to build nuclear reactors in the Middle East, Democratic lawmakers alleged in a report released Tuesday.

The House of Representatives Oversight Committee report said former national security adviser Michael Flynn and two aides promoted the plan with Tom Barrack, the chairman of Trump's inaugural committee, and a consortium of U.S. firms led by retired military commanders and former White House officials.

The effort, the report said, began before Trump took office and continued after his inauguration in January 2017 despite National Security Council staff warnings that a proposed transfer of U.S. nuclear technology to Saudi Arabia was being fast-tracked around a mandatory approval process in possible breach of the Atomic Energy Act.

John Eisenberg, the top NSC lawyer, had ordered the work halted because of concerns that Flynn could be breaking a conflict of interest law as he advised the consortium while serving on Trump's campaign and transition team, said the report, which is based on documents and whistleblower accounts.

Administration support for the nuclear project, however, appears to have continued to the present, with Trump meeting consortium representatives in the Oval Office last week, the committee report said.

"The committee is now launching an investigation to determine whether the actions being pursued by the Trump administration are in the national security interests of the United States, or rather, serve those who stand to gain financially," the report said.

The report, compiled by the Democratic staff of the panel chaired by Representative Elijah Cummings, comes as Democrats expand inquiries into alleged administration wrongdoing after winning a majority in the House in November elections.

The nuclear project is being promoted by IP3 International, a consortium of U.S. technology firms founded by retired Navy Rear Admiral Michael Hewitt, retired Army General John Keane, and Robert McFarlane, a former national security adviser to President Ronald Reagan. The board includes former senior U.S. civilian and military officials.

The report said the companies include reactor manufacturer Westinghouse, which emerged from Chapter 11 bankruptcy last year.

The White House had no immediate response to the report.

IP3 denied in a statement that Flynn ever served as an adviser and said he "had no stake in the company and was never compensated or reimbursed for expenses."

IP3 "looks forward to sharing what we know" with Cummings and the committee's top Republican, Jim Jordan, it said.

A spokesman for Barrack said in an email that the long-time Trump friend and CEO of Colony Capital, a private equity firm, was not contacted prior to the report's release, was reviewing the document and "stands ready to cooperate" with the committee.

PLAN FOR DOZENS OF REACTORS

Working with the U.S. government, the consortium would build dozens of power reactors in Saudi Arabia, Egypt and other U.S. Arab allies, according to the IP3 website. In doing so, the project would help restore U.S. influence in the Middle East while boosting regional economic and political stability, according to the website.

Former National Security Adviser Mike Flynn arrives for a status hearing related to his guilty plea on charges that he made false statements in Special Counsel Robert Mueller's Russia investigation, at U.S. District Court in Washington, U.S., July 10, 2018. REUTERS/Joshua Roberts/File Photo

Flynn, a retired Army general, promoted the plan on two 2015 trips to Saudi Arabia, and listed himself on government documents as an IP3 adviser during a period in 2016 while he was working for Trump's campaign and transition, the report said.

Flynn's work on the nuclear plan was "thoroughly" reviewed by Special Counsel Robert Mueller, who never indicated it was legally problematic, a person familiar with the matter said. Flynn was charged in December 2017 with lying to FBI agents about his contacts with the Russian ambassador and is cooperating with Mueller's investigation into Russian interference in the 2016 election.

A spokesman for Mueller declined to comment.

Barrack was represented in the plan, the report said, by the then-head of his firm's Washington office, Rick Gates, a former political consultant and Trump's deputy campaign manager. Gates pleaded guilty last year to financial fraud and lying to the FBI and also is now cooperating with Mueller.

Documents appended to the report included a draft presidential memorandum appointing Barrack as a special envoy to oversee implementation of the project that McFarlane sent to Flynn and his then-deputy, K.T. McFarland, on Jan. 28, 2017.

Also included with the committee's report was a document authored by Barrack titled "The Trump Middle East Marshall Plan" that promoted the plan and was sent to NSC staff on March 28, 2017, by IP3 board member Frances Fragos Townsend, who served as homeland security adviser to President George W. Bush.

IP3 issued the statement on behalf of the company but did not respond to a request for comment from Townsend and others.

A current senior administration official was among the unnamed whistleblowers who came forward "with significant concerns about the potential procedural and legal violations connected with rushing through a plan to transfer nuclear technology to Saudi Arabia," the report said.

The whistleblowers, it said, also warned about political appointees ignoring the advice of "top ethics advisers at the White House who repeatedly and unsuccessfully ordered senior Trump Administration officials to halt their efforts."

In addition to McFarland, Flynn's top Middle East adviser, Derek Harvey, played a key role in promoting the plan in the White House, doing so despite warnings of possible ethics and criminal law violations, the report said.

Harvey and a lawyer for McFarland did not respond to requests for comment.

(This story was refiled to correct spelling of "respond" in paragraph 21 and "Middle East" in paragraph 24)

(Reporting by Jonathan Landay and Nathan Layne; Editing by Bill Trott and Lisa Shumaker)

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