March 27,2017

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Wyden Seeks Answers on Possible Treasury Secretary Ethics Violation

Letter to top ethics official follows comments Treasury Secretary made encouraging audiences to see movie he has direct financial interest in

WASHINGTON Senate Finance Committee Ranking Member Ron Wyden, D-Ore., today asked U.S. Office of Government Ethics (OGE) Director Walter Shaub to review comments made by Treasury Secretary Steven Mnuchin for potential ethics violations. Sen. Wyden’s letter to Director Shaub follows comments Secretary Mnuchin made on Friday that encouraged a live audience to go see “Lego Batman,” a movie his own company, Ratpac-Dune Entertainment, produced. Secretary Mnuchin agreed not to engage in any activity as Treasury Secretary that would affect the financial success of this entity. 

“The American people deserve to know whether Secretary Mnuchin violated his promise to sever financial ties with Hollywood or if he’s instead using the government to increase his own bottom line.” said Wyden. “Aside from the president, there may be no individual with a tighter grasp on the levers of this country’s economy than the Secretary of the Treasury.  Secretary Mnuchin’s remarks signal a blatant disregard and disrespect to the office he serves and the power it holds.”

Treasury Secretary Mnuchin agreed that he would divest his financial interests in Ratpac-Dune Entertainment within roughly four months of his confirmation as Treasury Secretary. Secretary Mnuchin was confirmed as Secretary of the Treasury on February 13, 2017.  

Earlier this year, Director Shaub recommended disciplinary action against Senior Counselor to the President Kellyanne Conway after she publicly promoted Ivanka Trump’s fashion line.

The text of the letter questioning Secretary Mnuchin’s ethics agreement can be found here and below.

Dear Director Shaub,

I am writing regarding troubling comments made by Steven Mnuchin in his capacity as Treasury Secretary during a live interview with Mike Allen from Axios. 

In response to a reader question asking for a movie recommendation, Sec. Mnuchin responded “I’m not allowed to promote anything that I’m involved in.  So I just want to have the legal disclosure, you’ve asked me the question, and I am not promoting any product. But you should send all your kids to ‘Lego Batman’.”  Lego Batman is a movie produced by Ratpac-Dune Entertainment, a film production company founded by Sec. Mnuchin and in which he held a significant financial interest.  Sec. Mnuchin also described Avatar, another film produced by Ratpac-Dune, as his favorite movie, and described The Wolf of Wall Street and The Big Short, two films not produced by Ratpac-Dune, as “complete misrepresentations.” 

I am concerned that despite his “legal disclosure,” these comments may constitute a violation of Secretary Mnuchin’s January 10, 2017 ethics agreement.  In that agreement, Sec. Mnuchin asserted the following: 

Within 120 days of my confirmation, I will divest my interests in Ratpac-Dune Entertainment Holdings LLC.  With regard to these interests, I will not participate personally and substantially in any particular matter that to my knowledge has a direct and predictable effect on the financial interests of the entity until I have divested it, unless I first obtain a written waiver, pursuant to 18 U.S.C. § 208(b)(1), or qualify for a regulatory exemption, pursuant to 18 U.S.C. § 208(b)(2). 

According to Sec. Mnuchin’s Office of Government Ethics (OGE) form 278e, Ratpac-Dune Entertainment Holdings LLC holds a film agreement with Warner Bros. and Ratpac-Dune receives an income stream with respect to each film it invests in.  Specifically, Sec. Mnuchin’s form 278e notes Ratpac-Dune “receives the ‘ultimates’ for each film 6 weeks after the film is released.  The ultimates are [Warner Bros.’s] estimate of receipts and distribution costs.”  Ratpac-Dune also holds an ongoing copyright interest in the films it produces.  Therefore, I am concerned that Sec. Mnuchin’s comments, may be seen to have a predictable effect on the financial interests of the entity.

OGE regulations require Sec. Mnuchin to notify the Finance Committee with evidence of compliance with the terms of his ethics agreement.  At this time, Sec. Mnuchin has provided the Committee no evidence that he has divested his interests in Ratpac-Dune Entertainment Holdings LLC, and I assume he still holds this interest.

Regardless of Sec. Mnuchin’s personal financial interest in films produced by Ratpac-Dune, OGE regulations state that “An employee shall not use or permit the use of his Government position or title or any authority associated with his public office to endorse any product, service or enterprise” with limited exceptions. I am concerned that Sec. Mnuchin’s comments may also be interpreted as an explicit endorsement of films produced by Ratpac-Dune in violation of OGE regulations.  

As the director of the Office of Government Ethics, you have the authority to review potential ethics violations and notify the employee’s agency of any potential violation.  I request that you review Sec. Mnuchin’s comments, and report any findings to me and the Treasury Department.