This post was authored by Max Moran, senior fellow with the Revolving Door Project.
The Revolving Door Project requested and received Hochstein’s public financial disclosure forms, as we do for many Biden appointees. Hochstein’s 39-page disclosure reveals that he owns far more individual stocks than most other Biden appointees whose forms I’ve read, and that he was running a secretive consulting firm on the side up until days before his appointment.
According to the form, Hochstein was well compensated for his time at Tellurian. He made $623,155 in salary compensation, received between $100,001 and $1 million worth of restricted stock in the company, and enjoyed $86,230 in severance pay. He also received $24,500 in total from fees for giving speeches to financial services companies—specifically, Bank of America, Merrill Lynch (itself a division of Bank of America), Royal Bank of Canada, and the European insurance company Ergo. He made another $10,000 from speaking to Dorian LPG, a gas shipping company.
Hochstein also received $75,000 in “consulting income” from Dana Gas, an Emirati company that is the largest non-government-owned gas firm in the Middle East. Dana Gas is the only consulting client listed on the form. Dana Gas likely contracted Hochstein’s services through Hochstein Enterprises LLC, a previously unknown company of which Hochstein was the “sole owner and managing member.”
Plenty of political operatives set up consulting services like these to act as “shadow lobbying” firms, as the Revolving Door Projected has previously covered. Due to glaring holes in U.S. ethics law, political consultants aren’t required to disclose what they counsel their clients on, what services they provide, or even who their clients are, in most cases. Thus, we don’t know if Hochstein Enterprises LLC had any other clients, or what Hochstein advised Dana Gas on. Hochstein also may have spoken with government officials on Dana Gas’ behalf: influence peddlers only have to register as lobbyists if they spend more than 20% of their time on lobbying activities and make at least two lobbying contacts during a three-month period. As long as Hochstein didn’t meet those criteria, he could have been trying to sway U.S. policy on Dana Gas’ behalf without needing to register as a lobbyist and file more detailed disclosures.
A consultant to a major Emirati firm suddenly taking a high-level position in the State Department should prompt some scrutiny. Then again, this is the same State Department chock-full of alumni from WestExec Advisors, Secretary of State Antony Blinken’s old shadow-lobbying firm. The public deserves to know what its diplomats have done for major foreign firms, whether or not that work legally constitutes lobbying.
Meanwhile, Hochstein reported extensive holdings of individual stocks in major firms across the American economy. These include tech firms (up to half a million dollars worth of Facebook stock), Wall Street (plenty of Citigroup, Morgan Stanley, and Bank of America stock), Big Pharma (AstraZeneca, Novartis) and more. Indeed, most of the 39-page document is just a listing of his individual stock holdings. Government watchdogs have long argued that members of Congress shouldn’t be allowed to buy or sell individual stocks, due to self-evident conflicts of interest. The same holds true for executive branch appointees, and Hochstein appears to be a model example.
Ethics officers sometimes require executive branch appointees to divest their individual holdings within 90 days of their nomination or appointment. However, it depends on the individual appointee and their perceived conflicts of interest. Hochstein was appointed on August 10, so he’d likely have until November to make any divestitures.
One of the more notable stocks on Hochstein’s form is Nestlé. Across stock purchases and dividend payments, the Swiss food conglomerate shows up seven times in the form. At one point, Hochstein owned between $250,000 and $500,000 worth of Nestle stock.
Nestlé is notorious for abusing human rights worldwide. It is the subject of a four-decade-long boycott campaign for aggressively and inaccurately marketing its breast milk substitutes in the developing world. At the World Water Forum in 2000, it pushed to redefine access to drinking water as a “need” rather than a “right” under international humanitarian law. ( Nestlé is one of the top sellers of bottled water worldwide.) In 2005, Nestlé CEO Peter Brabeck characterized calling water a human right as “extreme,” comments he has walked back ever since.
Nestlé harvests much of its cocoa from the Ivory Coast, where plantations use child laborers as young as 12 years old, some of whom are trafficked from neighboring countries. Just this year, the Supreme Court of the United States ruled that Nestlé and Cargill cannot be sued domestically by formerly-trafficked children for their knowledge of this horrific source for their materials.
Suffice to say, Nestlé is not a firm known for egalitarian engagement with the rest of the world—yet one of the highest-ranked diplomats in the United States is literally invested in it.
All of this would be grounds for aggressive questioning at a confirmation hearing if Hochstein was up for a Senate-confirmed undersecretaryship. Unfortunately, his role as a “senior advisor” is appointive, meaning he doesn’t have to appear before Congress. It’s a familiar situation for Hochstein, who was nominated to serve as the State Department’s assistant secretary for energy resources under Obama, but was never confirmed.
The situation recalls the story of Obama appointee Antonio Weiss, a hedge fund mogul who was up for an undersecretaryship at the Treasury Department until Senator Elizabeth Warren derailed his chances. Despite not being confirmed as an undersecretary, Weiss was given an appointive advisory position at Treasury, where he ended up de facto serving as undersecretary anyway.
The public deserves a lot more answers about Hochstein’s specific duties at State, the clients he had and transactions he made before revolving back into government, and how his work will or won’t help bring about the green American future Biden promised repeatedly on the campaign trail. Some enterprising members of Congress committed to oversight and the public interest might want to think about this in the months ahead.
