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Betsy DeVos’s ethics review raises further questions for Democrats and watchdogs

President Trump’s nominee for Education Secretary, Betsy DeVos, appears before the Senate Health, Education, Labor and Pensions Committee for her confirmation hearing on Capitol Hill in Washington on Jan. 17. (Photo by Melina Mara/The Washington Post)

Betsy DeVos, President Trump’s nominee to lead the Education Department, promised late last week to divest from more than 100 entities to avoid potential conflicts of interest with her new job. But there are important unanswered questions about the considerable financial interests — including, it appears, in education-related companies — that DeVos will continue to hold, according to Democrats and ethics watchdogs.

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DeVos’s supporters point out that DeVos’s handling of her investments have been blessed by the Office of Government Ethics (OGE), which signed off on her financial disclosures and ethics agreement last week. They accuse her critics of mounting a groundless political attack.

“The OGE was created to be an independent and impartial mechanism for preventing conflicts of interest among executive branch officials, and OGE certification is broadly considered the gold standard of ethics reviews,” said Ed Patru, spokesman for Friends of Betsy DeVos, a group of supporters. “The OGE has spent weeks reviewing Betsy’s financial holdings, it produced a sterling report that is both thorough and comprehensive, and Betsy intends to abide fully by OGE’s findings. I hope Betsy’s political opponents are not suggesting a return to the pre-Watergate era in which ethics judgments were determined by partisan personal opinions instead of objective and independent guidance.”

Under her agreement with federal ethics officials, DeVos will continue to serve as a co-trustee in three family trusts that benefit her and her husband, Dick DeVos Jr.

Her disclosures do not list assets for two of the trusts, so there is no sense of whether they have investments in education companies that might present potential conflicts of interest. Patru declined to say why she did not disclose information about the assets in those two trusts.

OGE spokesman Vincent Salamone would not discuss the specifics of DeVos’s review, but he said that nominees are under no obligation to associate assets listed as belonging to a trust. What’s most important, he said, is that assets are listed for ethics officials to do the conflict of interest review.

“The holdings would have to be revealed to someone at the very least in the Department of Education or the Office of Government Ethics, so that person can adequately help put in place procedures so she doesn’t end up violating the statute,” said Kathleen Clark, a law professor at Washington University.

DeVos disclosed her holdings in a third trust. It has an indirect financial stake in Sextant Education, which operates a chain of for-profit colleges, through its parent company AEA Investors. The trust also holds an interest in Discovery Communications, which is perhaps best known for operating cable television channels such as Animal Planet and TLC, but which also sells services and products to schools, including digital textbooks and teacher training, according to its website.

“If she has some kind of investment in an entity involved in these issues, then she should recuse herself from making decisions affecting those issues,” said Meredith McGehee, a government ethics expert at the nonpartisan Campaign Legal Center.

DeVos wrote in a letter to the Education Department’s lead ethics official that she would not “participate personally and substantially in any particular matter that to my knowledge has a direct and predictable effect on the financial interests of any of these trusts or their holdings, unless I first obtain a written waiver.”

Though DeVos lists AEA and Reinhart Partners, which manages an account including interests in Discovery, as among the assets she intends to divest, it’s unclear whether she would retain a partial stake in either or both companies through the trust. Patru declined to discuss specifics, and the ethics officer at the Education Department did not respond to a request seeking clarification.

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In a forceful defense of DeVos on the Senate floor Tuesday morning, Alexander said that Democrats are “grasping at straws” with their attacks on her. Their concerns about conflicts of interest, he said, are unfair given that the OGE and ethics officer at the Education Department have come to an agreement that her conflicts will be resolved with her divestment from the 102 assets she has promised to sell.

“After she divests herself, she has no conflicts of interest,” he said.

According to her disclosures to OGE, DeVos has invested more than $1 million in AEA, and earns between $100,000 and $1 million per year on that investment. She also has more than $1 million invested in the account managed by Reinhart Partners, including her interest in Discovery, and earns between $50,000 and $100,000 per year on that investment.

But those assurances have done little to allay the concerns of Democrats on the Senate Committee on Health, Education, Labor and Pensions. Sen. Patty Murray (D-Wash.), the top Democrat on the committee, sent a letter Monday to committee chairman Sen. Lamar Alexander (R-Tenn.) requesting a second hearing in light of the ethics report released on Friday. She said members have questions about the companies DeVos will continue to own that are directly impacted by the Education Department and the administration’s education agenda. Alexander said he is not going to schedule a second hearing.

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Sens. Tammy Baldwin (D-Wis.) and Robert P. Casey Jr. (D-Penn.) already have said they will not vote in favor of DeVos.

“Having a Secretary of Education with financial interests in companies that would be impacted by her actions is deeply troubling,” Casey said in an email. “Instead of draining the swamp, Ms. DeVos’ nomination threatens to further engrain the very conflicts that President Trump campaigned on ending.”

DeVos’s ethics agreement does not require her to divest from Neurocore, a company that purports to use biofeedback techniques to help children and adults overcome the effects of conditions such as attention-deficit hyperactivity disorder (ADHD) and autism. The company says that its approach can improve patients’ sleep, mood, focus and school performance.

She has invested between $5 million and $25 million in the company, according to her disclosures. Patru declined to directly address questions about potential conflicts of interest related to Neurocore.

DeVos also will retain considerable additional interests in companies that don’t present a conflict of interest, according to her ethics disclosures. Those include a company that owns and operates a resort and marina in the Bahamas, a Hawaiian lumber supplier for commercial and residential construction, BMW dealerships in China, Whole Foods grocery stores and Michael’s craft shops.

She also has a stake in Boxed Water is Better, a company that sells drinking water in boxes that resemble milk cartons rather than in plastic bottles, and in the World Series Champion Chicago Cubs. According to her disclosures, DeVos has invested between $5 million and $25 million in the baseball team via Northside Entertainment Holdings, which has a controlling interest in the Cubs and Wrigley Field.

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