U.S. Ethics Agency Warns Bessent Over Conflicts of Interest

New York Times

3 days ago

The U.S. government's ethics watchdog agency warned this week that Treasury Secretary Scott Bessent has failed to comply with an agreement that required him to divest his financial assets, posing potential conflicts of interest as he leads the Trump administration's economic policy agenda.
The United States Office of Government Ethics sent a letter dated Aug. 11 to Senator Michael D. Crapo, the Republican chairman of the Senate Finance Committee, alerting him to Mr. Bessent's delinquency in fulfilling or amending the agreement. The questions about conflicts of interest come as Mr. Bessent is steering President Trump's agendas on taxes, trade and financial deregulation.
A millionaire former hedge fund manager, Mr. Bessent pledged before his confirmation hearing in January to divest from dozens of funds, trusts and farmland investments. In a letter to the Treasury's ethics office at the time, Mr. Bessent, who was formerly the top investor for the liberal billionaire philanthropist George Soros, said that he would do so to 'avoid any actual or apparent conflict of interest.'
Cabinet officials are required to shed certain holdings and investments within 90 days of being confirmed to avoid the potential for conflicts of interest. Mr. Trump has pushed the boundaries of traditional government ethics norms by publicly pushing his business interests, and top Trump administration officials have reached unusual ethics agreements that have allowed them to oversee government matters that involve former lobbying clients or could benefit family members.
Most members of Mr. Trump's cabinet have completed their compliance agreements, but Mr. Bessent has not yet lived up to that commitment.
'I am notifying you that Scott Bessent, secretary of the Department of the Treasury, has failed to timely comply with certain terms of the ethics agreement he signed and that O.G.E. previously provided to your office for consideration during his confirmation process,' Dale Christopher, the ethics office's deputy director of compliance, wrote to Mr. Crapo in a letter on Monday that was reviewed by The New York Times.
Mr. Christopher said that Mr. Bessent was required to divest from certain investments or sell assets by April 28. The Treasury secretary made changes to his ethics agreement on May 2 and June 5, but still has yet to fully honor his pledge and has offered no timeline for when he will comply.
'O.G.E. will continue to monitor the status of the secretary's compliance with his ethics agreement,' Mr. Christopher wrote. 'O.G.E. has also advised Treasury's ethics officials to emphasize to the secretary that it is his personal responsibility to avoid taking any action that could create a real or apparent conflict of interest with regard to his holdings.'
In a follow-up letter that the ethics office sent to the Senate Finance Committee on Wednesday, Mr. Christopher said that Mr. Bessent subsequently indicated through Treasury ethics officials that he was committed to complying with the divestiture agreement by Dec. 15.
'The ethics officials explain that the assets are illiquid and are not readily marketable,' Mr. Christopher wrote. 'They add that excluding the farmlands, the assets also have significant restrictions on who can acquire them and that the secretary has been working to divest them since his confirmation in January 2025.'
Treasury officials told Mr. Christopher that Mr. Bessent would continue to be recused from 'particular matters' affecting his assets and that the department's ethics staff had given Mr. Bessent's office a 'screening memorandum' to help identify potentially conflicting matters that the secretary might encounter.
Mr. Bessent said in a statement that he divested 90 percent of the assets that he was required to before assuming office and that just 4 percent of the required divestitures remain. He explained that much of what remains is farmland, which is 'an inherently highly illiquid asset,' and made clear that he was not using the job for personal financial gain.
'The honor of serving the American people under President Trump can't be ascribed a dollar value,' Mr. Bessent said. 'As agreed upon with O.G.E., I am working towards selling the rest of my required divestitures before the end of this year.'
The Treasury secretary added that he was 'committed to full transparency and disclosure in my personal finances.'
After he was nominated, Mr. Bessent shuttered his Key Square Capital Management investment fund and resigned from several nonprofit organizations and trusts that he oversaw. The letter from the Office of Government Ethics does not specify exactly which holdings Mr. Bessent has yet to divest.
However, in a June letter to the Treasury's ethics office, Mr. Bessent said that he would not divest from a private equity fund or his investments in a flavored water company and a clinical stage drug development company. He explained that the assets, which he originally pledged to divest, proved too difficult to sell and that officials from the government ethics office confirmed that they did not pose conflicts of interest.
'I initiated the process to find buyers for these private holdings, but all three assets are privately held investments for which there is no liquid market for their resale,' Mr. Bessent wrote.
The biggest potential conflict of interest for Mr. Bessent is his ownership of as much as $25 million of soybean and corn farmland in North Dakota. The land spans thousands of acres in Burleigh, Kidder, Eddy, Benson and Wells Counties and earns Mr. Bessent as much as $1 million a year in rental income, according to his financial disclosure form.
Cropland values in the state have been rising by more than 10 percent annually over the last four years, according to data from North Dakota State University.
Farm brokers in North Dakota were not aware of a public listing of Mr. Bessent's properties and noted that there was traditionally a six-week marketing period before an auction. Wealthy individuals such as Mr. Bessent might also try to sell a big portfolio of land privately.
The sale of Mr. Bessent's farms could be complicated by the U.S. trade war with China, which the Treasury secretary has been actively trying to defuse.
According to William Wilson, a professor at North Dakota State University, about 70 percent of North Dakota soybeans are exported to China. As trade tension escalated this year, however, China has purchased more of its soybeans from Brazil and has bought virtually none from the United States.
Although real estate holdings can be more complicated to sell than other assets, senior government officials have historically been able to take other measures to distance themselves from assets that could pose conflicts of interest.
In 1977, President Jimmy Carter, who was a peanut farmer, put his family farm supply business into a blind trust. According to his presidential library, the trust allowed for a law firm in Atlanta to take full administration of the business while he was in office. When Mr. Carter reclaimed the business after his failed re-election bid, it was $1 million in debt.
It is not clear how Mr. Bessent, who has at times referred to himself as a farmer, is disentangling his holdings from trade negotiations with China. At his confirmation hearing in January, he said that one of his first acts as Treasury secretary would be to push China to honor the commitments to buy American farm products that it made during Mr. Trump's first term.
Soybean purchases have continued to be a central part of the trade negotiations with China. In a post on Truth Social this week, Mr. Trump urged China to quadruple its purchases of American soybeans.
'Our great farmers produce the most robust soybeans,' Mr. Trump said.
Ethics watchdog groups have raised alarm about Mr. Bessent having conflicts of interest while serving as the nation's top economic policymaker.
On Wednesday, the Campaign Legal Center and the Democracy Defenders Fund filed a formal complaint with the government ethics office and requested that the Treasury's inspector general investigate whether Mr. Bessent had violated criminal conflict-of-interest laws. The groups pointed to Mr. Bessent's role overseeing trade negotiations, regulation of cryptocurrency markets and policies that affect private equity funds.
'Secretary Bessent's continued deferral of his ethics obligations raises serious concerns about whether he is complying with the ethics laws or not,' wrote officials from the Campaign Legal Center and the Democracy Defenders Fund, which is led by the former Obama administration ethics czar Norm Eisen.
Democrats in Congress have also been scrutinizing Mr. Bessent's holdings.
Senator Ron Wyden of Oregon, the top Democrat on the Finance Committee, suggested that Trump administration officials were being duplicitous by flouting federal ethics guidelines.
'If these guys gave a whit about clearing the stink of corruption off this administration,' Mr. Wyden said, 'then you wouldn't have the Treasury secretary picking and choosing which ethics requirements to follow and which to blow off.'