Puzder’s Hearing Finally Nears, But There May Be One More Hurdle

Updated on
  • Fast-food executive would recuse from matters involving chain
  • Judge to hear arguments on unsealing 1987 divorce case

Andrew Puzder has agreed to divest an ownership stake worth as much as $50 million in the fast-food chain that includes Hardee’s and Carl’s Jr. restaurants if he’s confirmed as the next U.S. labor secretary, according to his federal financial disclosure and ethics agreement.

That disclosure helps clear the way for Puzder, the chief executive officer of CKE Restaurants Inc., to finally get a Senate confirmation hearing Feb 16. Four previously scheduled hearings were postponed.

For Puzder, who has encountered Democratic resistance, there may one more hurdle: A Missouri judge this week set a court hearing for Feb. 14 -- two days before his Senate confirmation hearing -- on a liberal group’s motion to unseal records from Puzder’s 1987 divorce.

The 66-year-old Puzder has agreed in a signed letter to recuse himself from official decisions involving his restaurant company during his entire tenure in office -- unless he receives a special waiver or authorization to participate. He will also forfeit an unvested stake of as much as $5 million in the chain, according to ethics documents obtained by Bloomberg News.

Unusual Plan

His recusal plan is unusual: It exceeds the two-year recusal period that President Donald Trump, who tapped Puzder as his labor nominee in December, has ordered his appointees to observe with regard to their prior employers.

Puzder’s nomination has been opposed by labor groups and Senate Democrats, who have highlighted alleged labor law violations at his businesses, his opposition to minimum wage increases, and that he once employed an undocumented immigrant as a housekeeper.

Opponents have also seized on multiple news reports saying that Puzder had been accused by Lisa Fierstein, his first wife, of domestic abuse. Puzder has denied the allegations. Fierstein, in a Jan. 18 letter to lawmakers, said that she had made such allegations against Puzder but later withdrew them, saying “Andy is not and was not abusive or violent.”

Still, the Campaign for Accountability, a liberal watchdog group, filed the motion in Missouri to have the divorce records unsealed.

Fierstein said in a statement Thursday that the group’s attempt to unseal her divorce is an “unfair invasion of my personal life. None of the events from so far in the past have anything to do with Andy’s kindness and generosity or his ability to serve this country.”

Long Delay

Puzder’s financial disclosure form suggests that complications in sorting out his financial holdings may have contributed to the delay in his hearing before the Senate Health, Education, Labor and Pensions Committee. The document shows that he filed it on Jan. 7, but it was approved by the federal Office of Government Ethics on Wednesday. That delay is the longest of any Trump cabinet appointee so far.

The disclosure lists six entities in which Puzder has invested as much as $2.5 million, but it doesn’t identify their underlying assets. They include four entities run by Solamere Capital, a private equity firm founded by Tagg Romney, the son of former Massachusetts Governor Mitt Romney; Spencer Zwick, top fundraiser for both of Romney’s presidential campaigns; and Eric Scheuermann, formerly of Jupiter Partners. The elder Romney is the firm’s chairman.

“Underlying assets are not disclosed due to a preexisting confidentiality agreement,” say notes related to each of those six entries. “I will divest this asset if confirmed.” The federal documents report values only in ranges.

Disclosure Question

That lack of disclosure is “troublesome and disturbing,” said Larry Noble, a former general counsel for the Federal Election Commission. “How does OGE or the public know what potential conflicts exist and what he should recuse himself from while he is still holding the assets?”

“During his initial ethics briefing, he will work with the agency ethics officer to develop an effective recusal mechanism for particular matters,” George Thompson, a spokesman for Puzder, said in an e-mail, adding that ethics officers could be confidentially briefed on the underlying assets.

Because CKE is closely held, the company did “an internal valuation” to determine the value of Puzder’s stake, according to his ethics agreement, and will purchase it from him for between $10 million and $50 million before he starts work at the Labor Department. Puzder intends to keep his 2016 bonus, which could be worth as much as $5 million, and as much as $500,000 in expenses the company footed when it relocated its headquarters to Nashville, Tenn. from California last year.

Undocumented Worker

Puzder will also divest his financial interests in 213 entities, including Apple Inc., Bank of America Corp. and Ford Motor Co., within 90 days of his confirmation, according to the ethics agreement. And he’ll divest from 13 other, illiquid investment funds -- including those for which the underlying assets weren’t disclosed -- within 180 days, the agreement says. If he makes substantial progress in selling them off, he can seek a 60-day extension to finish, the agreement says.

Puzder’s latest controversy arose Monday, when he acknowledged that he once employed an undocumented immigrant as a housekeeper.

“My wife and I employed a housekeeper for a few years, during which I was unaware that she was not legally permitted to work in the U.S.,” Puzder said in a statement. “When I learned of her status, we immediately ended her employment and offered her assistance in getting legal status.” He said the couple has paid all back taxes owed to the Internal Revenue Service and the state of California.

Senator Lamar Alexander, the Tennessee Republican who chairs the HELP Committee, said in a statement that because Puzder reported his mistake and voluntarily corrected it, “I do not believe that this should disqualify him from being a cabinet secretary.”

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