For-profit

Pine Island Capital Partners

Pine Island Capital Partners (PICP) is an investment management firm based in Washington, D.C. that primarily invests in the aerospace and defense industries. The firm advertises its partners’ backgrounds as “deeply-connected” former high-level government and military officials. [1]

In November 2020, the transition team of President-elect Joe Biden announced that several DICP partners were under consideration for top-level appointments. News aggregator Axios reported that the appointments could raise concerns about a “revolving door”-type conflict of interest between the defense industry and the Biden administration. [2] Biden announced that he would nominate two DICP partners for Cabinet positions: former Deputy Secretary of State Antony Blinken for Secretary of State, and retired Army general Lloyd Austin for Secretary of Defense. [3]

Background

John Thain, former chief executive officer of the investment management firm Merrill Lynch, founded PICP in 2018 with former Goldman Sachs partner Phil Cooper and former Coca-Cola executive Clyde Tuggle. The firm invests primarily in aerospace and defense companies. [4]

Investments

As of late 2020, PICP discloses two portfolio companies on its website: Precinmac Precision Machining, a manufacturer with facilities in the United States and Canada that supplies parts to companies in aerospace, defense, and other industries, and InVeris Training Solutions, a Georgia-based provider of virtual and live-fire training systems to armed forces and law enforcement agencies worldwide. [5] InVeris was known as Meggitt Training Systems until October 2020. [6]

Leadership and Partners

John Thain is the co-founder and chairman of PICP. [7] He previously served as chief executive officer of the investment management firm Merrill Lynch, which took significant losses during the 2008 financial crisis. Thain arranged the sale of Merrill Lynch to Bank of America in September 2008. [8] The deal, which Thain worked out in just two days, nearly fell apart less than a month later when the bank discovered more than $15 billion in losses at Merrill Lynch and forced Thain to resign. [9] In January 2009, then-New York attorney general Andrew Cuomo (D) issued a subpoena to Thain ordering him to testify about bonuses that he and other Merrill Lynch executives received just before Bank of America acquired the firm. [10] Thain served on the boards of the National Urban League, a left-of-center activist group, and the Trilateral Commission, an international society for government and industry leaders. [11]

Former high-level military officers who became partners at PICP include retired Army general Lloyd Austin and retired Navy admiral Mike Mullen. Austin also sat on the board of the Carnegie Corporation of New York, a foundation that funds a variety of left-of-center initiatives. In December 2020, the Biden transition announced that it would nominate Austin to lead the Department of Defense. Austin’s confirmation would require Congress to waive the requirement that the Secretary of Defense be a civilian who has been retired from the military for at least seven years. [12]

Former U.S. Senators Tom Daschle (D-SD), Saxby Chambliss (R-GA), Byron Dorgan (D-ND), and Don Nickles (R-OK) are partners, as is former House Democratic leader Dick Gephardt (D-MO). Daschle is the chair of the Center for American Progress, vice chair of the National Democratic Institute, and co-founder of the left-leaning Bipartisan Policy Center, where Dorgan is now a senior fellow. Former ambassadors Stuart Holliday and Capricia Marshall are also partners at the firm. [13]

Two former Obama administration officials are partners at PICP: former Undersecretary for Defense for Policy Michele Flournoy, who also co-founded the Center for a New American Security, and former Deputy Secretary of State Tony Blinken, who is now on leave. [14] In November 2020, President-elect Joe Biden announced that he would nominate Blinken to be his Secretary of State and indicated that he was considering Flournoy for Secretary of Defense. [15]

Controversies

The announcement that the Biden transition was considering PICP partners Tony Blinken and Michele Flournoy for top Cabinet positions caused both Republicans and the left wing of the Democratic party to voice concerns about potential influence-peddling. Senator John Cornyn (R-TX) noted that “Mr. Biden’s transition office stopped short of saying that all clients would be disclosed” and indicated that “the Senate is not obligated to confirm anyone who hides this information.” [16] Left-wing news site Common Dreams was one of many outlets which reported that PICP partners’ being picked for senior administration positions represented the revolving door between the White House and industry, claiming that PICP partners “cashed in on government service” and that the firm was “promising investors big profits off government business.” [17] Socialist magazine Jacobin similarly accused the firm of “promising big profits off administration access.” [18]

The left-of-center magazine Slate reported that many black Democratic politicians had called on Biden to nominate a black Secretary of Defense, but also that his rejection of Flournoy for the position was “likely to irritate women, who voted for Biden in large number.” Slate noted that Biden had now passed over two female candidates for Cabinet positions, which was “bound to demoralize many of his once-hopeful supporters.” [19]

Flournoy and Blinken are co-founders of WestExec Advisors, a consulting firm run by former Democratic national security and foreign policy officials. Mandy Smithberger of the Project on Government Oversight told Politico magazine that firms like WestExec become “strategic consultants” instead of registered lobbyists in order to avoid disclosing their clients and services. [20]

References

  1.               Pine Island Capital Partners. Accessed December 8, 2020. https://pineislandcp.com ^
  2. Dan Primack, “What to know about the private equity firm linked to Tony Blinken,” Axios, November 30, 2020. Accessed December 8. 2020. https://www.axios.com/pine-island-private-equity-blinken-biden-06f8dd00-7ada-4a81-acd9-56801ea81b97.html ^
  3. Brian Schwartz, “SPAC with ties to Biden Cabinet picks sees surge in support from Wall Street after offering ‘access’”, CNBC, December 9, 2020. Accessed December 11, 2020. https://www.cnbc.com/2020/12/09/spac-with-ties-to-biden-cabinet-picks-sees-surge-in-wall-street-support.html ^
  4.             Dan Primack, “What to know about the private equity firm linked to Tony Blinken,” Axios, November 30, 2020. Accessed December 8. 2020. https://www.axios.com/pine-island-private-equity-blinken-biden-06f8dd00-7ada-4a81-acd9-56801ea81b97.html ^
  5.        Portfolio Companies, Pine Island Capital Partners. Accessed December 8, 2020. https://pineislandcp.com/portfolio-companies/ ^
  6.   Joe Gould, “Meggitt Training Systems changes name to InVeris Training Solutions,” DefenseNews, October 7, 2020. Accessed December 8, 2020. https://www.defensenews.com/2020/10/07/meggitt-training-systems-changes-name-to-inveris-training-solutions/ ^
  7.        Our Team, Pine Island Capital Partners. Accessed December 8, 2020. https://pineislandcp.com/team/ ^
  8.         “Bank of America Buys Merrill Lynch Creating Unique Financial Services Firm,” Bank of America, September 15, 2008. Accessed December 8, 2020. http://investor.bankofamerica.com/news-releases/news-release-details/bank-america-buys-merrill-lynch-creating-unique-financial/ ^
  9. Jonathan Stempel and Elinor Comlay, “Thain ousted from Bank of America amid losses,” Reuters, January 22, 2009. Accessed December 8, 2020. https://www.reuters.com/article/us-bankofamerica-thain-idUSTRE50L4C720090122 ^
  10.        Martha Graybow and Jonathan Stempel, “Thain subpoenaed as probe into Merrill widens,” Reuters, January 27, 2009. Accessed December 8, 2020. https://www.reuters.com/article/topNews/idUSTRE50Q4TR20090127 ^
  11.       “Goldman’s Thain trades Money For Fame,” Forbes, December 19, 2003. Accessed December 8, 2020. https://www.forbes.com/2003/12/19/cx_da_1219topnews.html?sh=294091331b33 ^
  12.        Franco Ordonez et. al., “Biden Expected to Nominate Gen. Lloyd Austin as Defense Secretary,” NPR, December 7, 2020. Accessed December 11, 2020. https://www.npr.org/sections/biden-transition-updates/2020/12/07/944049746/biden-expected-to-nominate-gen-lloyd-austin-as-defense-secretary ^
  13.        Our Team, Pine Island Capital Partners. Accessed December 8, 2020. https://pineislandcp.com/team/ ^
  14.        Our Team, Pine Island Capital Partners. Accessed December 8, 2020. https://pineislandcp.com/team/ ^
  15.        Dan Primack, “What to know about the private equity firm linked to Tony Blinken,” Axios, November 30, 2020. Accessed December 8. 2020. https://www.axios.com/pine-island-private-equity-blinken-biden-06f8dd00-7ada-4a81-acd9-56801ea81b97.html ^
  16.     Mark Moore, “Cornyn: Senate ‘not obligated’ to confirm Biden appointees,” New York Post, November 29, 2020. Accessed December 8, 2020. https://nypost.com/2020/11/29/cornyn-senate-not-obligated-to-confirm-biden-appointees/ ^
  17.        “The Revolving Door: Biden’s National Security Nominees Cashed In on Government Service—and Now They’re Back,” Common Dreams, November 28, 2020. Accessed December 8, 2020. https://www.commondreams.org/news/2020/11/28/revolving-door-bidens-national-security-nominees-cashed-government-service-and-now ^
  18.             David Sirota, “BREAKING: Potential Biden Officials’ Firm Is Promising Big Profits Off Administration Access,” Jacobin, November 28, 2020. Accessed December 8, 2020https://jacobinmag.com/2020/11/biden-administration-access-sirota-flournoy-austin-pine-island-capital-partners ^
  19.             Fred Kaplan, “Lloyd Austin Is the Wrong Choice for Secretary of Defense,” Slate, December 8, 2020. Accessed December 11, 2020. https://slate.com/news-and-politics/2020/12/lloyd-austin-secretary-defense.html ^
  20. Bryan Bender and Theodoric Meyer, “The secretive consulting firm that’s become Biden’s Cabinet in waiting,” Politico, November 23, 2020. Accessed December 8, 2020. https://www.politico.com/news/2020/11/23/westexec-advisors-biden-cabinet-440072 ^
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