The Scoop
U.S. presidential candidate Robert F. Kennedy, Jr. was a senior advisor to a firm helping advise on investments for a business that is part of a sprawling corruption investigation into Venezuela’s national oil company, according to people familiar with the matter and documents seen by Semafor.
Kennedy, who is challenging President Joe Biden for the Democratic nomination, was a senior adviser to Highmore Group, a New York-based firm, from 2017 to 2020. That association was highlighted as part of Highmore pitches to prospective clients, according to the people and documents.
His advisory role is typical for high-profile people like Kennedy — legendary for his name, his environmental campaigning, and for his journey from the heir to Camelot to the fringe of American politics.
But lending their names can come with risks and his White House run draws more scrutiny of his past commercial activities. Kennedy, whose plans include “unwinding empire,” appears poised to play a serious, if limited, role in the presidential campaign, reaching 20% in a recent CNN poll of Democratic voters.
The files viewed by Semafor show that Highmore helped advise on investments for Barbados-based Energy Risk Indemnity, which is at the heart of a probe into $2 billion allegedly stolen from Venezuela’s national oil company, PDVSA, and whether some of it was potentially laundered through U.S. financial firms.
U.S. officials have been investigating whether ERI sold bogus and inflated insurance policies to PDVSA, which is controlled by the leftist Venezuelan government, and later rinsed the money through accounts at U.S. firms including Interactive Brokers and Morgan Stanley. The Wall Street Journal reported the probe into those financial firms in 2021.
The U.S. Justice Department announced its first arrests in a broad PDVSA probe in 2015, the same year that authorities in Andorra, a microstate between France and Spain, kicked off a related money laundering investigation of bank accounts belonging to those suspected in the scheme, including the then-owner of ERI, Luis Mariano Rodriguez Cabello. He was listed as a director of the firm in 2015 in filings with the Barbados corporate registry, and he is cited as the owner in a November 2017 credit rating report from AM Best.
Highmore, whose connection to ERI that began in 2017 has not been previously reported, was paid more than $400,000 for its work between January 2018 and September 2019, or about 50 basis points, according to the documents, a period during which Kennedy was a senior advisor at the firm, according to archived Highmore web pages and marketing materials.
Hundreds of pages of account statements, investment presentations, invoices, and text messages between executives at Highmore and money managers for ERI, reviewed by Semafor, show no sign that Kennedy dealt with anyone at ERI. The former head of Kennedy’s family office, who joined Highmore in 2017 around the time Kennedy became an advisor, remains one of just three partners at the firm. His Linkedin profile says that he “continues to direct” the Kennedys’ private investments from his seat at Highmore, which manages and advises on more than $2.5 billion in assets, according to its web site.
A spokesperson for his presidential bid said: “This is outside the scope of this campaign, so we have no comment.”
An attorney for Rodriguez Cabello, whose location is unknown and is facing corruption-related charges in Andorra and Venezuela, could not be identified after his previous one was charged by Andorran authorities, along with his client.
— Additional reporting by David Weigel
The View From Highmore
Highmore said in a statement: “It is wildly irresponsible to suggest that Highmore could have known what wasn’t revealed in extensive know your customer (KYC) and anti-money laundering (AML) checks about a client’s client and its owners. Neither ERI nor Mr. Rodriguez Cabello has ever been a client of Highmore. Mr. Kennedy received no compensation from Highmore and he has no knowledge of these matters.”
Highmore also said it was “engaged by US registered investment advisors to provide routine investment sub-advisory services to recommend a basket of publicly traded securities for portfolio construction. Highmore never executed any trades for ERI, never transferred any money for ERI, and never had custody of any ERI assets.
“As part of its voluntary AML program, Highmore performed KYC due diligence by screening its clients and their client as well as their owners. Highmore also submitted that same information to multiple global third party fund administrators to conduct their own checks to meet their KYC/AML requirements. That process also did not return any red flags.”
Know More
In total, at least 30 people have been charged in the United States so far as part of the DOJ probe into PDVSA, with numerous guilty pleas to allegations that include money laundering, bribery, obstruction and making false statements in federal tax documents.
Some of the documents reviewed by Semafor were included in a 2018 whistleblower complaint filed to the SEC by Mark Coffey, a former executive at another firm that managed investment accounts for ERI, who is represented by attorneys Phil Brewster, Patrick Mincey and Stephen Bell.
Gina’s view
The policing of the U.S. financial system largely relies on the firms that house, manage, or transfer money. But those players face different rules, with banks under the most stringent measures while investment advisers aren’t required to file suspicious activity reports to the government.
Yet the cases are becoming more global and more complex. The corruption scandal involving Malaysia’s sovereign wealth fund, 1MDB, for which Goldman Sachs was hit with about $3 billion in penalties, involved investigations in the U.S., the U.K., Singapore, and elsewhere. The bribery case that ensnared the global football body FIFA, which kicked off in 2015 and is still ongoing, spanned multiple continents.
The patchwork U.S. rules and the international movement of money mean potential wrongdoing is going to fall through the cracks. A plan in Congress to impose certain anti-money laundering regulations on investment advisers and others could’ve helped close the gap, but it was rejected by the Senate last December.
Room for Disagreement
The Investment Adviser Association said it was pleased that the measure failed to pass. “We believe that policymakers should refrain from imposing overbroad [anti-money laundering] regulation on advisers whose business models or activities do not raise money laundering risks,” the group said.
The View From Andorra
The funds of more than 20 Venezuelans were frozen by authorities in Andorra. The $55 million held at Banca Privada d’Andorra were alleged to be bribes by local police in May. Since 2018, prosecutors in Andorra have charged about 30 individuals with corruption-related and other allegations as part of the Venezuelan probe, El País reported.
Notable
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