Ethics experts alarmed by Trump adviser Carl Icahn’s big bet on biofuels

Billionaire activist investor Carl Icahn, left and President Trump.
Billionaire activist investor Carl Icahn and President Trump. (Photos: Victor J. Blue/Bloomberg via Getty Images, Alexander Shcherbak/Tass via Getty Images)

Experts in government accountability, including President George W. Bush’s former White House ethics counsel, warn that billionaire investor Carl Icahn’s status as an unpaid White House adviser represents a serious conflict of interest and a possible violation of federal law.

In particular, they say Icahn’s company raised red flags with a successful bet on falling prices for biofuel credits that may be linked to his influence at the White House.

The story begins in December, when Donald Trump’s transition team announced that his friend Icahn would serve as “a special advisor to the President on regulatory reform.” In that role, Icahn has urged Trump to make changes to the federal renewable fuel (better known as ethanol) standards that would benefit one of Icahn’s companies, CVR, which owns two oil refineries. The Trump administration leaked in February that it is actively considering the rule changes Icahn advocates, such as shifting the obligation to buy biofuel credits from the refiner to the companies that actually blend ethanol into gasoline. Freeing refineries of that burden would be a boon to their bottom lines. Thanks to Icahn’s influence in the White House and the possibility of such helpful policy changes, CVR’s stock price has surged, benefitting Icahn, the majority stakeholder.

But a Reuters report last week added an even more confusing — and, good-government advocates say, improper — wrinkle. Thanks to the threat of Icahn’s desired regulatory changes, the value of tradable renewable fuel credits has taken a nosedive. And guess which company recently bet $50 million on shorting renewable fuel credits: Icahn’s CVR.

Trump administration opponents have taken notice: On Tuesday, eight Democratic senators, including Elizabeth Warren of Massachusetts, sent a letter to the heads of the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Environmental Protection Agency asking them to investigate Icahn’s potential market manipulation or insider trading.

“We are writing to request that your agencies investigate whether Carl Icahn violated insider trading laws, anti-market manipulation laws, or any other relevant laws based on his recent actions in the market for renewable fuel credits,” the senators wrote. (The agencies have not yet responded to the senators and they have no legal obligation to do so.)

While the senators were careful to couch their concerns as being about merely potential misbehavior, government watchdogs that spoke to Yahoo News are unequivocally alarmed by the actions of Icahn and the Trump administration. “As a special adviser, it is an enormous conflict of interest for Icahn to be moving the administration in a way that directly benefits him financially,” says Tyson Slocum, director of the energy program at Public Citizen, a consumer rights advocacy group. “Financially self-interested parties cannot be put in charge of dictating regulatory policy.”

Government ethics experts say that, as an unpaid but regular adviser, Icahn is what is called a Special Government Employee, who should either have to divest his holdings that could be affected by his work in the White House or resign his role.

“I think he’s got serious problems with ethics law and insider trading,” says Richard Painter, a Trump critic who was the chief White House ethics lawyer in the George W. Bush administration from 2005–2007 and now teaches law at the University of Minnesota. “We went through this with Ivanka Trump: [The administration] said she was going to be a volunteer and not a federal employee. I said, ‘This is ridiculous. She has a West Wing office, security clearance, she’s an employee.’ With Icahn, it’s a little different because he has no office or security clearance. But if you give someone a title you give them what we call ‘apparent authority.’”

Billionaire activist-investor Carl Icahn gives an interview on the Fox Business Network.
Carl Icahn gives an interview on the Fox Business Network. (Photo: Brendan McDermid/Reuters)

A White House spokeswoman told Yahoo News in an email that Icahn does not have a title in the administration. But that is contradicted by the press release from December announcing his role on the official Trump transition website, It begins, “President-elect Donald J. Trump today announced that Carl Icahn has agreed to serve as a special advisor to the President on issues relating to regulatory reform,” and it goes on to quote Icahn saying, “I am proud to serve President-elect Trump as a special advisor on regulatory reform.” The average reader would likely infer that “special advisor on regulatory reform” is indeed Icahn’s title. CVR declined to comment, and Icahn Enterprises did not respond to multiple queries from Yahoo News.

The White House denies that there is anything improper about Icahn’s influence and downplays its significance, arguing that he is not a federal employee and therefore not subject to any ethics rules. “Mr. Icahn will be speaking with the President solely in his individual capacity and will not be serving as a federal employee nor as a Special Government Employee and will not have any specific duties,” a White House official, who communicated on the condition of anonymity when discussing personnel matters, emailed Yahoo News. “He is simply a private citizen whose opinion the President respects and whom the President speaks with from time to time.”

That statement also echoes a disclaimer in the original press release: “Carl Icahn will be advising the President in his individual capacity and will not be serving as a federal employee or a Special Government Employee and will not have any specific duties.”

But experts say that, even without a title, whether Icahn meets the criteria for a government employee is determined by how he interacts with the administration. “He’s not just an outside adviser,” says Fred Wertheimer, president of Democracy 21, a nonpartisan government accountability advocacy organization. “He has been given the aura of the presidency, of the White House behind him. It’s not like the president calling a banker in New York and getting advice on banking policy. [The banker] would not have the power and influence to go into the White House and EPA and lobby for policies.” In that position, according to Wertheimer, it’s unethical for Icahn to promote policies that help his own business. Instead, he is supposed to advance the national interest, regardless of its impact on his own bank account.

To outside critics, the Icahn situation embodies the degradation of governance that Trump represents. “This whole thing is unseemly,” Wertheimer concluded. “It’s not the way government is supposed to run.”


Ben Adler is a journalist in New York. He is a former reporter for The Nation, Newsweek, and Politico and he has written for The New York Times, The Atlantic and The Washington Post, among other publications.

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