This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.nytimes.com/2017/02/01/us/politics/vincent-viola-army-secretary.html
The article has changed 2 times. There is an RSS feed of changes available.
Previous version
1
Next version
| Version 0 | Version 1 |
|---|---|
| Trump’s Army Secretary Pick Could Trade One Potential Conflict for Another | Trump’s Army Secretary Pick Could Trade One Potential Conflict for Another |
| (about 9 hours later) | |
| Vincent Viola, the billionaire Wall Street trader who is President Trump’s nominee to be secretary of the Army, has been negotiating to sell his airline, a move that would alleviate a potential conflict of interest. But, if the deal goes ahead, he may be buying himself another headache. | Vincent Viola, the billionaire Wall Street trader who is President Trump’s nominee to be secretary of the Army, has been negotiating to sell his airline, a move that would alleviate a potential conflict of interest. But, if the deal goes ahead, he may be buying himself another headache. |
| Mr. Viola, co-owner of the Florida Panthers hockey team with an estimated net worth of approximately $1.8 billion, has been trying to swap his majority interest in Eastern Air Lines for a smaller stake in Swift Air, a charter company with millions of dollars in hard-to-track government subcontracts, according to people with knowledge of the negotiations who spoke on the condition of anonymity. | Mr. Viola, co-owner of the Florida Panthers hockey team with an estimated net worth of approximately $1.8 billion, has been trying to swap his majority interest in Eastern Air Lines for a smaller stake in Swift Air, a charter company with millions of dollars in hard-to-track government subcontracts, according to people with knowledge of the negotiations who spoke on the condition of anonymity. |
| While Mr. Viola’s reasons for seeking a sale of Eastern Air Lines are not known, such a transaction would certainly reduce his exposure to the airline industry, which is heavily regulated by the federal government. But in exchange, Mr. Viola, a retired Army major, may find himself in the precarious position of being a government official who benefits from federal contracts. | While Mr. Viola’s reasons for seeking a sale of Eastern Air Lines are not known, such a transaction would certainly reduce his exposure to the airline industry, which is heavily regulated by the federal government. But in exchange, Mr. Viola, a retired Army major, may find himself in the precarious position of being a government official who benefits from federal contracts. |
| Mr. Trump has asked an unusual number of extraordinarily wealthy businesspeople to join his administration, and ethics lawyers and government watchdog groups have predicted that their complicated financial lives could create conflicts of interest. Mr. Viola has remained largely under the radar, but his airline negotiations bring an unexpected twist, showing that even when appointees try to sell assets, the transactions can be bedeviled with ethical issues. | Mr. Trump has asked an unusual number of extraordinarily wealthy businesspeople to join his administration, and ethics lawyers and government watchdog groups have predicted that their complicated financial lives could create conflicts of interest. Mr. Viola has remained largely under the radar, but his airline negotiations bring an unexpected twist, showing that even when appointees try to sell assets, the transactions can be bedeviled with ethical issues. |
| It is not known exactly how much Swift, based in Phoenix, earns from the government; it is a subcontractor and its government business is not logged in any public, federal contracting database online. But one person with knowledge of its operations said it takes in at least $15 million to $18 million a year from Immigration and Customs Enforcement alone, in part from deporting illegal immigrants. | It is not known exactly how much Swift, based in Phoenix, earns from the government; it is a subcontractor and its government business is not logged in any public, federal contracting database online. But one person with knowledge of its operations said it takes in at least $15 million to $18 million a year from Immigration and Customs Enforcement alone, in part from deporting illegal immigrants. |
| As for Eastern, James Tolzien, the company’s chief executive, said the airline had flown just three government-related flights, transporting child refugees for the Administration for Children and Families. | As for Eastern, James Tolzien, the company’s chief executive, said the airline had flown just three government-related flights, transporting child refugees for the Administration for Children and Families. |
| If the deal proceeds, Swift would have a powerful shareholder who has the president’s ear at a time when Mr. Trump is looking to increase deportations. | If the deal proceeds, Swift would have a powerful shareholder who has the president’s ear at a time when Mr. Trump is looking to increase deportations. |
| “As a government official, he would be in a position to push the policy in a way that benefits him,” said Charles Tiefer, a law professor at the University of Baltimore who specializes in government contracting. “As an ethical matter, that would be inappropriate. And he should not put himself in a position where he could push a controversial policy in a direction that profits him.” | “As a government official, he would be in a position to push the policy in a way that benefits him,” said Charles Tiefer, a law professor at the University of Baltimore who specializes in government contracting. “As an ethical matter, that would be inappropriate. And he should not put himself in a position where he could push a controversial policy in a direction that profits him.” |
| Mr. Viola is not the only appointee with a complicated portfolio. | |
| On Wednesday, Anthony Scaramucci, a former Trump campaign fund-raiser who was awaiting swearing in as the White House liaison to the business community, was told to step aside in the face of concerns over the recent sale of his investment firm to a Chinese company with deep ties to the nation’s Communist Party. | |
| And in January, The New York Times reported that Jared Kushner, Mr. Trump’s son-in-law, had been involved in negotiations to sell a stake in his family’s flagship building to a large, opaque Chinese company. | |
| Mr. Kushner, who was subsequently appointed a senior adviser to the president, has resigned as chief executive of his family’s real estate firm and announced plans to sell various assets to his brother or to a family trust controlled by his mother, a plan that some ethics experts said did not go far enough. | |
| In Mr. Viola’s case, the current status of the negotiations for his airline, which have not been previously reported, and the financial terms under discussion are not known. Eastern Air Lines — the latest, and far smaller incarnation of the once-famous domestic airline — is worth upward of $25 million and is 75 percent owned by Mr. Viola, according to one person with knowledge of its operations, who spoke on the condition of anonymity. | |
| Mr. Tolzien declined to comment on whether his airline was in talks with Swift, saying only that Eastern Air Lines had received “numerous strategic offers for possible sale, acquisition or merger.” Jeff Conry, Swift’s chief executive, declined to comment. | Mr. Tolzien declined to comment on whether his airline was in talks with Swift, saying only that Eastern Air Lines had received “numerous strategic offers for possible sale, acquisition or merger.” Jeff Conry, Swift’s chief executive, declined to comment. |
| David White, a spokesman for President Trump’s transition team and speaking on behalf of Mr. Viola, said: “Mr. Viola shared all of his business dealings with the transition and is actively pursuing full compliance with all requirements necessary for his confirmation.” | David White, a spokesman for President Trump’s transition team and speaking on behalf of Mr. Viola, said: “Mr. Viola shared all of his business dealings with the transition and is actively pursuing full compliance with all requirements necessary for his confirmation.” |
| Mr. Trump seems particularly fond of Mr. Viola, who is the son of a truck driver and who founded Virtu Financial, a high-frequency trading company. “Vincent Viola, everybody likes Vincent,” Mr. Trump remarked just hours after his inauguration while signing orders nominating his cabinet at the Capitol. Nearby, the Senate minority leader, Chuck Schumer of New York, chimed in: “I like Vinnie.” | Mr. Trump seems particularly fond of Mr. Viola, who is the son of a truck driver and who founded Virtu Financial, a high-frequency trading company. “Vincent Viola, everybody likes Vincent,” Mr. Trump remarked just hours after his inauguration while signing orders nominating his cabinet at the Capitol. Nearby, the Senate minority leader, Chuck Schumer of New York, chimed in: “I like Vinnie.” |
| There has not been much media attention surrounding Mr. Viola’s nomination, though he did recently make the news because of an incident in August in which he was accused of punching a concessions worker at a racehorse auction in Saratoga Springs, N.Y. No charges were brought against him. | There has not been much media attention surrounding Mr. Viola’s nomination, though he did recently make the news because of an incident in August in which he was accused of punching a concessions worker at a racehorse auction in Saratoga Springs, N.Y. No charges were brought against him. |
| The man who may soon be Mr. Viola’s boss, Mr. Trump, is facing criticism of his own for how he has handled his business interests. He has ignored repeated calls to sell his assets to avoid allegations of self-dealing. Instead, Mr. Trump has said his two sons will run his company and his assets have been placed into a trust. The president, however, has refused to name the trust’s beneficiary or trustee publicly. | The man who may soon be Mr. Viola’s boss, Mr. Trump, is facing criticism of his own for how he has handled his business interests. He has ignored repeated calls to sell his assets to avoid allegations of self-dealing. Instead, Mr. Trump has said his two sons will run his company and his assets have been placed into a trust. The president, however, has refused to name the trust’s beneficiary or trustee publicly. |
| A top aide also recently said Mr. Trump had no intention of releasing his tax returns, a decision that leaves Americans largely in the dark about the extent of his business ties. | A top aide also recently said Mr. Trump had no intention of releasing his tax returns, a decision that leaves Americans largely in the dark about the extent of his business ties. |
| Mr. Trump’s situation is a bit different; the president is exempt from federal laws that prohibit employees from participating in government matters that will affect their own financial interests. | Mr. Trump’s situation is a bit different; the president is exempt from federal laws that prohibit employees from participating in government matters that will affect their own financial interests. |
| But Mr. Viola, along with Mr. Trump’s other picks for top government jobs, is not exempt. There are a variety of ways they can deal with assets that might present a conflict, including placing them in a blind trust, or selling them. | But Mr. Viola, along with Mr. Trump’s other picks for top government jobs, is not exempt. There are a variety of ways they can deal with assets that might present a conflict, including placing them in a blind trust, or selling them. |
| The Florida Panthers announced in December that Mr. Viola’s interest in the team would be placed in a trust, but it is unclear if this was done to address a conflict or simply to allow him to step away from the day-to-day operations of the team. | The Florida Panthers announced in December that Mr. Viola’s interest in the team would be placed in a trust, but it is unclear if this was done to address a conflict or simply to allow him to step away from the day-to-day operations of the team. |
| “I don’t see a conflict in the secretary of the Army owning a hockey team,” said Richard W. Painter, a professor of law at the University of Minnesota and a chief White House ethics lawyer under President George W. Bush. | “I don’t see a conflict in the secretary of the Army owning a hockey team,” said Richard W. Painter, a professor of law at the University of Minnesota and a chief White House ethics lawyer under President George W. Bush. |
| Beyond that, Mr. Viola has yet to announce how he plans to deal with his assets. His confirmation hearing has not yet been held, and the Office of Government Ethics has not made available a list of his assets. Like Swift, two of Mr. Viola’s other major assets, Virtu and Independent Bank Group, are regulated by the federal government. | Beyond that, Mr. Viola has yet to announce how he plans to deal with his assets. His confirmation hearing has not yet been held, and the Office of Government Ethics has not made available a list of his assets. Like Swift, two of Mr. Viola’s other major assets, Virtu and Independent Bank Group, are regulated by the federal government. |
| Though the nomination of Mr. Viola, who graduated from West Point, requires confirmation by the Senate, his new job is not a cabinet position. | Though the nomination of Mr. Viola, who graduated from West Point, requires confirmation by the Senate, his new job is not a cabinet position. |
| Eastern Air Lines is a familiar name to many people; it was once one of the “big four” domestic airlines of the mid-20th century but eventually went bankrupt. A new company acquired the rights to its name and intellectual property, and Mr. Viola bought a majority stake in that company in 2014. | Eastern Air Lines is a familiar name to many people; it was once one of the “big four” domestic airlines of the mid-20th century but eventually went bankrupt. A new company acquired the rights to its name and intellectual property, and Mr. Viola bought a majority stake in that company in 2014. |
| Eastern has six aircraft, according to the Federal Aviation Administration. The person with knowledge of its operations said it had not turned an annual profit since 2014. The company’s planes are primarily used to shuttle private clients, such as the Florida Panthers. | Eastern has six aircraft, according to the Federal Aviation Administration. The person with knowledge of its operations said it had not turned an annual profit since 2014. The company’s planes are primarily used to shuttle private clients, such as the Florida Panthers. |
| In October an Eastern Air Lines plane carrying Mike Pence, a vice-presidential candidate at the time, overshot the runway at La Guardia Airport, skidding sideways into a field of concrete blocks. The plane has not flown commercially since, resulting in a significant loss of revenue for Eastern, according to the people with knowledge of the matter. | In October an Eastern Air Lines plane carrying Mike Pence, a vice-presidential candidate at the time, overshot the runway at La Guardia Airport, skidding sideways into a field of concrete blocks. The plane has not flown commercially since, resulting in a significant loss of revenue for Eastern, according to the people with knowledge of the matter. |
| Swift operates 12 Boeing 737s, according to F.A.A. records. A main client is CSI Aviation, a government contractor. CSI and Swift have provided charter flights to deport illegal immigrants. They also transport unaccompanied children apprehended near the United States border with Mexico to refugee and resettlement shelters, according to a document provided to Congress by Sarah Saldaña, former director of Immigration and Customs Enforcement under the Obama administration, and reviewed by The New York Times. | Swift operates 12 Boeing 737s, according to F.A.A. records. A main client is CSI Aviation, a government contractor. CSI and Swift have provided charter flights to deport illegal immigrants. They also transport unaccompanied children apprehended near the United States border with Mexico to refugee and resettlement shelters, according to a document provided to Congress by Sarah Saldaña, former director of Immigration and Customs Enforcement under the Obama administration, and reviewed by The New York Times. |
| Since 2009, CSI Aviation has been paid more than $844 million in federal contracts, including over $819 million from the immigration agency, according to procurement records analyzed by The Times. Swift’s recent government work is more difficult to pin down because there is no comprehensive public, online database of federal subcontracts. Since 2010, the direct (or prime) recipients of federal contracts have been tasked with reporting some subcontract information for public consumption at USAspending.gov, but the results have been patchy. | Since 2009, CSI Aviation has been paid more than $844 million in federal contracts, including over $819 million from the immigration agency, according to procurement records analyzed by The Times. Swift’s recent government work is more difficult to pin down because there is no comprehensive public, online database of federal subcontracts. Since 2010, the direct (or prime) recipients of federal contracts have been tasked with reporting some subcontract information for public consumption at USAspending.gov, but the results have been patchy. |
| “I.C.E. has no insight into a prime and subcontractor relationship,” said Sarah Rodriguez, a spokeswoman for the immigration agency, in response to questions about the amount of money Swift makes from its subcontracts with CSI Aviation. | “I.C.E. has no insight into a prime and subcontractor relationship,” said Sarah Rodriguez, a spokeswoman for the immigration agency, in response to questions about the amount of money Swift makes from its subcontracts with CSI Aviation. |
| As secretary of the Army, Mr. Viola would be the senior civilian official overseeing his agency’s budget and personnel. The Department of Defense, where he would work, generally represents about 70 percent of federal contract spending over all, and spent about $303 billion on contracts in the 2016 fiscal year, an uptick from the previous year. Almost $74 billion of that was spent by the Army. Comparatively, Immigration and Customs Enforcement spent about $1.3 billion in that period. | As secretary of the Army, Mr. Viola would be the senior civilian official overseeing his agency’s budget and personnel. The Department of Defense, where he would work, generally represents about 70 percent of federal contract spending over all, and spent about $303 billion on contracts in the 2016 fiscal year, an uptick from the previous year. Almost $74 billion of that was spent by the Army. Comparatively, Immigration and Customs Enforcement spent about $1.3 billion in that period. |
| It is unclear whether Swift is currently doing any work for the military. If Mr. Viola were to interfere directly in the contracting process to favor a company, he could be in violation of contracting and conflict-of-interest laws. | |
| “We’re not used to seeing company officials in such large numbers inside the government,” said Mr. Tiefer at the University of Baltimore. “It creates an opportunity for undue influence.” |
Previous version
1
Next version