Ex-Treasury Secretary Steve Mnuchin Takes Stand at Tom Barrack’s Foreign-Agent Trial

Patricia Hurtado, David Voreacos and Zijia Song
·3 min read
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(Bloomberg) -- Former US Treasury Secretary Steve Mnuchin testified that Colony Capital LLC founder Tom Barrack advised him in 2017 that a key policy goal of the United Arab Emirates was a “bad idea.”

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Mnuchin took the stand Thursday as a defense witness in Barrack’s trial on charges that he tried to influence US policy as an unregistered agent of the UAE. His testimony sought to undercut the government’s case by showing that Barrack didn’t act at the UAE’s direction, as prosecutors allege.

According to Mnuchin, Barrack opposed a blockade of Qatar imposed by the UAE, Saudi Arabia and other Middle East states over alleged support for terrorism and other grievances. Barrack met with the treasury secretary the day after then-President Donald Trump signaled support for the blockade in a June 2017 tweet.

“I recall him telling me that he believed that Qatar was an important ally of the United States, that we had a significant military presence there, that Qatar was important in regard to what was in our public agenda in the Middle East,” Mnuchin said in federal court in Brooklyn, New York. Mnuchin said Barrack, a longtime friend of Trump, called the blockade “a distraction” for the US, which never took a formal position on the crisis.

‘Mind-Boggling’ Numbers

The government claims Barrack was motivated to act for the UAE by his desire for sovereign wealth fund money. UAE funds invested $374 million in Colony in 2017 and 2018. Colony’s former private equity head testified Tuesday that the firm had a spreadsheet category for such investments entitled “Barrack magic.”

Barrack denies there was any connection between the money Colony received from UAE funds and informal advice he gave the Trump administration.

Mnuchin was on the stand for less than 20 minutes. Prior to his testimony, prosecutors expressed concern about the possibility of “bias” due to the former treasury secretary’s own dealings with Middle East sovereign wealth funds.

US District Judge Brian Cogan agreed there was some concern since the “UAE is a very important client” for Mnuchin. The judge said the Gulf state would likely prefer not to see someone convicted for trying to surreptitiously influence US policy on its behalf. He said prosecutors could ask Mnuchin about his business dealings with the UAE but not about specific amounts.

“What I don’t want is numbers paraded before the jury,” Cogan said. “The numbers are mind-boggling.”

Last September, Mnuchin’s private equity fund, Liberty Strategic Capital, raised $2.5 billion, largely from Middle East sovereign wealth funds, including the Public Investment Fund of Saudi Arabia. It’s not clear how much of the money came from UAE funds. Mnuchin on Thursday said some of the money for his fund came from the UAE.

Mnuchin began his testimony by briefly recounting his tenure as Trump’s treasury secretary as well as his 17 years at Goldman Sachs Group Inc. He then said Barrack, whom he knew both socially and professionally for about 15 years, did offer him advice occasionally on the Middle East. But he said it was a one-way street.

“I would never share information with him or anybody else that I thought was confidential information,” Mnuchin said. He said Barrack was one of perhaps 100 business people to whom he spoke to while he was in office.

Mnuchin invoked executive privilege several times when asked about Trump administration discussions. He said Barrack never asked him to do anything for him in his role as treasury secretary.

The case is US v. Al Malik Alshahhi, 21-cr-00371, US District Court, Eastern District of New York (Brooklyn).

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