Hagel Vote Postponed

Financial concerns, lack of disclosures hold up Hagel vote

February 6, 2013

The Senate Armed Services Committee will not hold a vote Thursday on the confirmation of secretary of defense nominee Chuck Hagel.

The office of Sen. Jim Inhofe (R., Okla.) confirmed to the Washington Free Beacon that the vote has been delayed and that no new date has been set.

"Hagel vote won't be tomorrow in Armed Services," Politico's Manu Raju tweeted Wednesday afternoon. "Levin: "The committee’s review of the nomination is not yet complete.'" Foreign Policy's Josh Rogin also confirmed the delay.

Hagel’s murky financial entanglements are a major concern in the delay, according to sources close to the Senate Armed Services Committee (SASC). Also of concern is a committee investigation into how Hagel and his Senate office handled a 2007 sexual harassment allegation made by a former staff member.

Sen. Ted Cruz (R., Texas) distributed a letter to his Republican colleagues calling on SASC Chairman Carl Levin (D., Mich.) to delay a committee vote until Hagel responds to the numerous questions about his financial entanglements, according to multiple Senate sources.

The letter has garnered at least two dozen signatures thus far, the sources said. The signatories include every GOP member of SASC.

"Your refusal to respond to this reasonable request [for more information] suggests either a lack of respect for the Senate’s responsibility to advice and consent or that you are for some reason unwilling to allow this financial disclosure to come to light," Cruz and his colleagues state in the letter sent late Wednesday to Hagel.

"This Committee, and the American people, have a right to know if a nominee for Secretary of Defense has received compensation, directly or indirectly for foreign sources," the letter states. "Until the Committee receives full and complete answers, it cannot in good faith determine whether you should be confirmed as Secretary of Defense."

Hagel, a former Nebraska Republican senator, "informed [SASC] that he will not provide foreign financial details for the corporate and nonprofit organizations he was affiliated with since he left the Senate in 2009," BuzzFeed reported Wednesday.

Hagel told the committee he was unable to provide further information about possible foreign funding sources for the organizations and corporations he is affiliated with.

"The information you seek is legally controlled by the individual entities and not mine to disclose," Hagel wrote in a letter to SASC. "As a board-member, I have a fiduciary duty that includes the obligation to maintain the confidentiality of non-public corporate information. The information may also be subject to various other legal requirements or contractual arrangements that prohibit its disclosure."

Hagel’s refusal to provide further information about who funds the organizations and companies he is affiliated with could lead some GOP senators to consider holding up his nomination until the issue is resolved, sources close to the committee told the Free Beacon.

"Senators are really taken aback that Hagel would refuse to provide financial information about foreign governments and foreign agents that may have been indirectly paying his salary for the last few years," said one Republican Senate aide who is close to the process. "We are talking about the most sensitive cabinet post—control over our nuclear secrets, our intelligence agencies, our covert activities—and we don't have a right to know if he's got IOUs for certain countries or groups?"

Another source close to the confirmation indicated Hagel’s refusal to be transparent could be a game changer for those senators who do not support a filibuster of Hagel’s nomination.

"I think [lawmakers] are in a position where this is something different," said the source. "The question is how do you approve someone who does not respect the Senate or the American people enough to be transparent about who’s been funding him?"

Hagel argued in his letter addressed to Sen. Roger Wicker (R., Miss.) that he is not permitted to release the financial information for nonprofit organizations and other corporations he has worked for.

"My obligations do not permit me to disclose non-public information," Hagel wrote.

One official working on Hagel’s confirmation maintained Hagel has fully met his obligations to provide SASC detailed financial information as well as details pertaining to his multiple speaking engagements over the years.

"Sen. Hagel has conducted an exhaustive search for all of his speaking engagements over the past five years, as the committee requested," the source told the Free Beacon. "He has provided all available prepared texts and transcripts from those speeches to the committee."

"There are some speeches Sen. Hagel gave for which there were no prepared remarks and no transcripts," the source added. "A list of those speeches has also been provided to the committee."

Hagel has conferred with Defense Department lawyers "to ensure he is in compliance with all applicable ethics laws and regulations," the source said.

Hagel’s critics maintain that financial transparency is of the utmost importance.

"To run the Pentagon, you are primarily dealing with foreign nations," said one of the sources quoted above who is close to the confirmation process. "How in the world can we trust [Hagel] if we don’t know who’s been funding him over the past five years."

Questions still linger about Hagel’s many financial involvements.

The Atlantic Council, a think-tank at which Hagel serves as chairman, has published at least one report "supported by a grant from the government of Kazakhstan" that portrays that nation in a favorable light. Kazakhstan has been rated "not free" by international watchdog Freedom House.

Hagel also has served as a paid adviser to Deutsche Bank, which is under investigation for allegedly violating United States sanctions on Iran.

Because Hagel has not revealed the financial information for these organizations, it remains unclear if he could have profited from their involvement with these foreign governments.

Additionally, Hagel has maintained close ties to Nebraska’s McCarthy Capital, a private equity firm that has raised red flags with the Senate Ethics Committee in the past.

Hagel has invested as much as $5 million of his personal fortune in McCarthy Group since first joining the company.

He has served as president of a McCarthy subsidiary and currently serves as senior adviser to another subsidiary.

Hagel appears to have changed his story about the availability of public information pertaining to McCarthy’s investments, which the nominee lists as one of the corporations he is not permitted to release information about.

This response marks a departure from his past statements about McCarthy’s holdings.

Hagel maintained during his tenure in the Senate that his investment in the company was exempt from more expansive disclosure since the investment information was publicly available to a small number of institutions.

None of the financial institutions specified by Hagel in his January 2009 Senate disclosure were willing to provide information about the McCarthy Group’s holdings when contacted by the Washington Free Beacon last week.

Update (5:30 p.m.): The full text of the letter can be seen here. The senators who signed the letter: Cruz, Lindsey Graham (S.C.), John Cornyn (Texas), David Vitter (La.), Deb Fischer (Neb.), Mitch McConnell (Ky.), Saxby Chambliss (Ga.), Tom Coburn (Okla.), Marco Rubio (Fla.), Roy Blunt (Mo.), James Risch (Idaho), John Barrasso (Wy.), John McCain (Ariz.), Ron Johnson (Wis.), Rob Portman (Ohio), Dean Heller (Nev.), Kelly Ayotte (N.H.), John Hoeven (N.D.), Mark Kirk (Ill.), John Thune (S.D.), Pat Toomey (Pa.), Jeff Sessions (Ala.), Mike Lee (Utah), and Inhofe.