August 9, 2021

O'Melveny's friend Thomas Barrack got arrested for doing something ingrained in O'Melveny's culture

       Last year, I wrote about a video of O'Melveny's most eminent partner, in which he talked about his friend Thomas Barrack's attractive young wife. Poor Mr. Barrack has fallen on hard times recently. A few weeks ago, he was arrested for trying to use his government connections to alter U.S. foreign policy for an investment fund client. In googling about that story, I also learned that his wife Rachelle filed for divorce

       The arrest has nothing to do with O'Melveny (the full indictment is here if you're curious about the details.) And of course these are just allegations; Mr. Barrack might not have done any of the things he's accused of. 

       But the story interested me because I've written about O'Melveny's culture of "monetizing" government connections and experience. There was a public example of this last year, when former O'Melveny partner Brian Brooks hijacked a government office to advance his industry of cryptocurrency, after which he was given his second high-paying job in that industry (links one and two.) O'Melveny is even trying to change case law to make it harder to prosecute public officials who grant favors in exchange for money. 

       Or look at Deputy Attorney General Lisa Monaco's resume. She used to split her time between O'Melveny and WestExec advisors. WestExec's entire business model is premised on using its government connections to advance its clients' interests. One of WestExec's people even bragged about all the clients WestExec expects to get, by advertising its contacts in the new Biden administration.

       "I know someone in government, or I work in government, and if you give me something I will advance your interests there," is a thought that occurs in Washington. That's what Mr. Barrack did. He used his government contacts to advance the interests of one of his fund's investors. So why was Mr. Barrack arrested for doing something that seems commonplace? 

       Well, in reading the indictment, he was allegedly acting on behalf of a foreign government, which requires a special registration that he didn't file. There are additional charges, because he allegedly misled FBI agents when they started investigating the matter -- but his failure to register was what initially got him in trouble. 

       The idea behind this rule is that, if you're going to use your access to government officials to promote the interests of a third party, you should disclose that third party's name. This quote from the DOJ's press release summarizes the spirit of this law: “American citizens have a right to know when foreign governments [are] attempting to exert influence on our government." 

       The rule might be more of a technicality than something with a meaningful impact -- because it's usually obvious who the advocate is working for. In Mr. Barrack's case, his connections with his client were known, and people could have put two and two together. But still, it's one speed bump on the lobbyist's path.

       You're probably wondering how places like WestExec deal with those registration and disclosure rule. This article claims that WestExec uses a legal loophole to avoid having to register and disclose the names of its clients. So they're also violating the spirit of the disclosure rule? Why didn't Mr. Barrack just use that loophole? I don't know. The journalists who wrote that article, Bryan Bender and Theodoric Meyer, appear to be top grade. But I haven't dug into the rules, and juxtaposed them with what WestExec actually does to get to the bottom of it. It would take months of research, and possibly FOIA lawsuits, to understand how WestExec and that whole industry operate, and this is just an article-every-other-month hobby blog. 

       So I'm not sure what to make of all this. I don't know why Mr. Barrack was arrested for doing something that others appear to do. Maybe his was a particularly egregious case. Maybe he's like that person who gets pulled over for going over the speed limit, even though dozens of other cars are also going over the limit. Maybe he's the first in a series of prosecutions. Maybe WestExec is not violating the spirit of the disclosure rule; maybe they do disclose their client names, and the Bender/Meyer article is wrong. I don't know.

       Closing on a positive note, I guess the arrest shows that the FBI is working hard to monitor these things, and using whatever technicality they can find to stop them. And don't forget that we have a vigorous press that scrutinizes the revolving door (there were an endless number of articles about WestExec.) And of course there's the ballot box. These are more than a lot of other countries have. Hopefully they're enough to ensure that the government occasionally does something for us unconnected masses.

       [Addendum: A few weeks after I wrote this post, the government of Afghanistan fell. According to the articles below, too many Afghan politician approached their job with the "monetize government" mindset. The government became so corrupt that the population lost all faith in it. Of course, no one accuses the United States of being as bad as Afghanistan in terms of corruption, but this event makes the obvious point. If government is just a bunch of people trying to profit off of their position, it might not function as well as it could, and it might cause people to lose faith in their country.

       Around that time, I happened to watch the acclaimed biographical movie Vice, about the life of Dick Cheney. According to the film, he was known as a "ne’er-do well" and "dirt bag" in his younger years, and he rose to wealth only after he entered government and used those connections to make money. Per this Atlantic article, he was hired as the CEO of Halliburton despite having "virtually no business experience" because "he had valuable relationships with very powerful people." If that's true, it would be a classic example of monetizing government. The movie suggests that the most problematic decisions of the war were pushed by Mr. Cheney.]  

       [Second addendum: O'Melveny is representing Mr. Barrack in this case. Dan Petrocelli is the lead attorney.]