Apollo Global bought Caesars Entertainment in 2007.
Joshua Harris, one of the co-founders of Caesars Entertainment parent company Apollo Global Capital, is receiving scrutiny for giving White House senior advisor Jared Kushner hundreds of millions of dollars in loans weeks after meeting with him in the White House, according to the New York Times.
The criticism is part of a wider story that implies influence peddling by the president’s son-in-law.
Apollo Global Management holds a controlling interest in Caesars Entertainment. Founded in 1990 by Joshua Harris, Marc Rowan, and Leon Black (the current CEO), Apollo Global owns US$232 billion of investor commitments in private equity, credit, and real estate funds.
According to the NY Times, Joshua Harris paid regular visits to the White House in early 2017 in order to discuss infrastructure plans. Much media speculation at the time centered around a potential $1 trillion bill to repair America’s roads, bridges, airports, and other infrastructure.
Apollo Refinanced Kushner’s Chicago Holdings
What is suspicious is the fact Joshua Harris met with Jared Kusher, son-in-law and Senior Advisor to President Donald Trump, then extended $184 million in loans to Kushner to refinance one of his Chicago properties. Jared Kushner was given a sweeping portfolio, including oversight of the Middle East peace process, China policy, information-technology contracting for the US government, the opioid crisis, reforming Veterans Affairs, and achieving criminal justice reform.
Because Jared Kushner did not fully divest himself of his family’s assets, any seeming favors done to him by business or government interests has the appearance of a conflict of interest.
“Manipulating” Kushner thru His Business Interests
Kushner currently is undergoing scrutiny for the FBI’s unwillingness to grant him full security clearance, which apparently have to do with suspicious contacts he had with four countries. According to a leaked report, US intel intercepts noted that four countries dealing with Kushner thought he was open to influence, due to his company’s debt situation.
The intercepts suggested that several countries were considering “manipulating” Jared Kushner “through his business interests, troubled finances, and inexperience in foreign affairs.” Those countries are China, Mexico, the United Arab Emirates (UAE), and Israel. Given the concern Kushner might trade secrets or favors to foreign powers, the FBI would not authorize high-level security clearance for him.
New York Times Report
In light of those concerns, it was perhaps inevitable that the possibility of domestic influence peddling would be scrutinized. Thus, Apollo Global’s loans are held as suspicious. With a portfolio of $232 billion, loans of $200 million would be less than one-tenth of 1% of Apollo’s resources. The fact that Kushner’s expansive portfolio does not include infrastructure might normally mitigate the concerns, since Kushner would not be in a position to influence decisions on infrastructure. Since he is the president’s son-in-law and is married to the POTUS’s favored child, Ivanka Trump, the nebulous nature of Kushner’s influence might mean he could influence President Trump on infrastructure policy.
The New York Times suggests that Apollo Holdings has multiple reasons to influence the White House. Its article reads, “Apollo has sought ways to benefit from the White House’s possible infrastructure plan. And its executives, including Mr. Harris, had tens of millions of dollars personally at stake in the tax overhaul that was making its way through Washington last year.”
Analysis of Apollo Global Loans
Given the level of secrecy he conducted government business, in which he declined to inform the State Department of his negotiations, Jared Kushner’s critics would argue he was either reckless, careless, or naive in his dealings with foreign governments. It seems a stretch that Kushner peddled influence to Apollo Global Capital, because he did not oversee the infrastructure plan. Perhaps Joshua Harris was influenced by Kushner’s rise in government, but that influence might have been to see Kushner as a more bankable asset — essentially, more worth the risk of a new loan. That is not illegal or unethical.
The New York Times implies Joshua Harris might have wanted a job within the White House. Had that job involved infrastructure or tax policy, that would be more troubling set of circumstances. One thing in the story is undoubtedly reckless: leaking intel documents involving foreign conversations is short-sighted. Those four countries now know the US intel has the ability to listen to their conversations, meaning they will review their protocols and take better steps to hide their communications. Someone in the government had to burn significant intel community assets to make Jared Kushner look bad.
Joshua Harris/Apollo Global Profile
In its story, NY Times described Joshua Harris as a “private equity billionaire”. Sports fans might know Mr. Harris as the current owner of the Philadelphia 76ers and New Jersey Devils. Harris is also an advisor to the Federal Reserve Bank of New York.
Apollo bought Harrah’s Entertainment (later renamed Caesars Entertainment) in 2007 in a leveraged buyout, leaving the company with roughly $32 billion in debt. When the Global Recession hit, Caesars moved slowly towards insolvency. The company paid down its debt to about $23 billion, but interest payments became untenable by 2015. A reorganization plan for a subdivision, Caesars Entertainment Operations Company (CEOC), led to a junior shareholder revolt and a lawsuit.
The suit, which claimed CEOC was burdened with $18 billion in debt and shorn of over a dozen of its top casino-resort assets, help up the CEOC bankruptcy organization for over 2 years. Eventually in early 2017, Apollo Global settled with the junior lienholders, allowed Caesars Entertainment’s reorganization to continue.
Apollo Global’s executives have been friendly with Mr. Kushner for some time. In September 2016, Apollo CEO Leon Black attended the U.S. Open tennis tournament alongside Jared Kushner and Ivanka Trump.
