WASHINGTON, DC - JANUARY 20: Retired Army Lt. General Michael Flynn arrives for the Presidential Inauguration of Donald Trump at the US Capitol on January 20, 2017 in Washington, DC. Flynn is appointed National Security Advisor to Trump. Donald J. Trump will become the 45th president of the United States today.  (Photo by Saul Loeb - Pool/Getty Images)
Source: Flynn wanted Russian sanctions removed
02:15 - Source: CNN
CNN  — 

Despite a half-dozen warnings from National Security Council officials about the ethics and legality of a proposal to export nuclear technology to Saudi Arabia, White House officials continued to push for it in the early months of the administration, promoting a lucrative project backed by former National Security Advisor Michael Flynn, according to a new report from congressional Democrats.

The details, in an interim staff report released by Rep. Elijah Cummings, the head of the House Oversight Committee, paint a picture of the harried early months of the administration and the role of Derek Harvey, a senior director at the National Security Council and aide to Flynn.

The report says Harvey overrode staff warnings and promoted the nuclear project pitched by IP3 International, a private company founded by former US generals. Flynn previously advised an IP3 subsidiary, IronBridge Group. The Democrats’ report also claims that Flynn’s deputy, KT McFarland, continued to raise the proposal even after these warnings, triggering career officials to report her comments to NSC lawyers.

A spokesman for Republicans on the House Intelligence Committee, where Harvey is now a staffer, responded to the letter by saying it contains “a ridiculous conspiracy theory floated by media partisans.”

Flynn has not immediately responded to CNN’s request for comment.

Flynn’s involvement in efforts to broker US-backed nuclear development deals with Saudi Arabia have previously been detailed. However, the Democratic report provides information from whistleblowers describing how one of these proposals circulated among Trump’s newly-minted national security appointees at the White House, and the extent of the internal handwringing by career NSC staff and legal officers who tried to shut down the project. ProPublica previously reported that NSC staff were concerned the plan was bypassing the process but its advancement continued despite the objections.

NSC staff consulted with other career and political members of NSC who were senior to Harvey expressing their concerns. One senior official, who is described in the report as a senior political appointee currently serving in the administration who is not affiliated with the IP3 plan, is quoted as saying the proposal is “not a business plan” but “a scheme for these generals to make some money.” The official also stated to NSC staff, according to the report, “Okay, you know we cannot do this.”

The report, which relies on quotes from anonymous whistleblowers, does not identify if the quotes it references are from documents or transcripts of interviews. CNN cannot independently verify the remarks.

The Democrats provide what they feel is the basis for an investigation. But the 24-page document tells an incomplete story covering a four-month period in the White House ending in April 2017.

The House Oversight Committee is launching an investigation, Cummings said, to determine whether the Trump administration’s actions are made in the national security interest of the country or to “serve those who stand to gain financially as a result of this potential change in US foreign policy.” Cummings is questioning whether there are ongoing concerns but acknowledging the whistleblowers provided a “snapshot of events at the beginning of the Trump Administration, but it is limited.”

Cummings’ staff undertook an investigation when they were in the minority but did not have the support of Republicans to formally investigate and could not subpoena many of the entities and individuals involved for documents. Almost immediately after Trump took office, Cummings started looking into Flynn’s dealings on similar Middle East nuclear projects and was able to obtain some documents from companies with ties to Flynn.

The Trump administration’s relationship with Saudi Arabia has drawn scrutiny because of the President’s personal business dealings in the region and the President’s refusal to accept his intelligence community’s findings on the murder of Saudi journalist Jamal Khashoggi.

The report alleges, beginning the week of the inauguration until early April, that staff on the National Security Council repeatedly raised concerns about the project to Harvey and NSC ethics and legal officials citing conflicts of interest and the potential circumvention of the Atomic Energy Act, which limits the transfer of nuclear technology to a foreign country without the approval of Congress. Harvey, despite these warnings, repeatedly pushed the plan, telling the staff that Flynn wanted it included in the President’s talking points for a scheduled call with King Salman of Saudi Arabia, the report said.

The name of the project, the “Middle East Marshall Plan,” was an homage to the post-World War II program that poured billions of US dollars into European economies, rebuilding ravaged countries and expanding American influence along the way. Supporters of the 2017 proposal believed it would bring the Saudis closer to the US and bolster the kingdom as a regional counterweight to Iran. In a memo to Flynn, one of the lead backers of the project suggested it could stave off a “potential nuclear arms race in the years ahead.”

That was one of several memos, released Tuesday by the Democrats, that was written or signed by IP3 co-founder Robert “Bud” McFarlane. He previously served as President Ronald Reagan’s national security adviser and pleaded guilty in 1988 to withholding information from Congress as part of the Iran-Contra scandal.

A spokeswoman for IP3 declined to comment. Representatives for McFarlane did not immediately respond to CNN’s requests for comment.

The White House has not immediately responded to CNN’s request for comment.

IP3 officials were actively soliciting the administration and provided to Flynn a draft memorandum describing the program that is included in the Cummings report for him to submit under his name to Trump. The report goes on to say IP3 also provided another draft for Trump to sign directing relevant cabinet officials and agency heads to express their support for the plan. The memo noted that Tom Barrack, a long-time friend of Trump’s and private investor close to Gulf countries, wanted to run the plan and that Rex Tillerson, then secretary of state, and James Mattis, then-defense secretary, were “supportive of Tom’s focus on this also,” according to a draft memorandum included in the staff report.

Neither Tillerson nor Mattis has immediately responded to CNN’s request for comment.

When Flynn sent the packet to White House staff directing them to “prep a staff packet to go to the POTUS,” NSC staff again raised concerns about the potential financial benefits to Flynn’s former partners and to Barrack, the report said.

After consulting with ethics counsel and several attorneys in the legal department of the NSC, the staff met with NSC legal adviser John Eisenberg, who according to the report, instructed them to stop working on the plan.

The following day, NSC ethics counsel and the unnamed senior Trump-appointed official attended a meeting at the White House with IP3. At the meeting, according to the report, IP3 was told it was not appropriate to pitch the White House and that proposals from third parties should be submitted to a relevant cabinet agency.

Eisenberg later told the NSC staff, according to the report, “We don’t need to do anything else about this.” He added, the report said, that McFarland, then the deputy National Security Advisor, agreed there would be no further action on the plan. McFarland left the White House in May 2017.

However, despite the multiple warnings, talks continued on the proposal even after Flynn was fired in mid-February 2017 for lying. IP3 reached out again to Harvey with an email dated March 4, saying, “We’re very close to losing our position in the Middle East,” according to email included in the report. Those concerns that the plan was still being discussed were raised again with Eisenberg who promised to investigate.

The staff’s concerns were amplified after Trump met with Mohammed bin Salman, then the deputy crown prince of Saudi Arabia. In a read-out of the meeting, Harvey referenced a “new United States-Saudi program,” prompting the unnamed senior official to ask the NSC staff, “What the hell is going on?” according to the report.

The next day, McFarland said during a staff meeting that Trump told Barrack that he could lead the implementation of the plan and that he said Barrack could not be paid for the role, according to the report.

Harvey subsequently held a call with Barrack and his consultant at the time, Rick Gates, to discuss the plan, the report says. Gates, who was Trump’s deputy campaign chairman and a longtime business associate of Paul Manafort, has pleaded guilty to financial fraud and is cooperating with special counsel Robert Mueller’s investigation into Russian interference in the 2016 election. Harvey was trying to promote the plan “so that Jared Kushner can present it to the President for approval,” according to the report.

Neither McFarland nor Gates immediately responded to CNN’s request for comment.

A spokesperson for Barrack said he was ready to cooperate with the committee.

“Mr. Barrack was not contacted prior to the issuance of today’s Interim Report and is currently reviewing the document,” the spokesman said. “Mr. Barrack’s engagement in investment and business development throughout the Middle East for the purpose of better aligned Middle East and US objectives are well known, as are his more than four decades of respected relationships throughout the region. Mr. Barrack has never had a position in the Trump administration.”

The involvement of Flynn and Gates, as described by the Democrats, raises questions about whether they provided Mueller with any information about the project. Both men have cooperated extensively with Mueller’s investigation, which has explored a host of issues beyond Russian election meddling.

By late March, multiple NSC staff reported to Eisenberg their concerns as well as efforts by “Mr. Harvey to terminate NSC staff’s employment following their protected disclosures about these actions.”

Retired General HR McMaster, after he replaced Flynn as national security adviser, told the staff that, “John (Eisenberg) and I agree that this is done. Nobody should work on this anymore,” according to the report.

But the report says the matter still didn’t end there.

The next month, Andrea Thompson, then-national security adviser to Vice President Mike Pence, asked someone on their staff to meet with IP3 to discuss the plan, according to the report. That contact was also reported to Eisenberg.

The State Department, where Thompson now works, has not immediately responded to CNN’s request for comment.

Harvey, a former Defense Intelligence Agency analyst and Ret. Army Col., was fired in July 2017. He now serves on the staff of Rep. Devin Nunes, a California Republican and the ranking member of the House Intelligence Committee.

“The attack on Mr. Harvey is a ridiculous conspiracy theory floated by media partisans and now, shamefully, championed by Democrats in Congress,” said Jack Langer, spokesman for Republicans on the House Intelligence Committee. “Members of Congress who defame staff members for political purposes will be reported to the Ethics Committee.”

Langer did not answer detailed questions about Harvey’s role the Saudi plan and whether he ignored warnings about it.

McMaster resigned in March 2018. He has not responded to CNN’s request for comment.

Rick Perry, Trump’s Energy Secretary, has revived talks about nuclear cooperation, telling Congress in May 2018, “[W]e tried to really drive home to the crown prince … that if you want the best reactors in world, you have to come to the United States and you have to use Westinghouse.” Westinghouse was acquired by a subsidiary of Brookfield Asset Management in early 2018.

Brookfield took over a lease of Kushner’s troubled 666 Fifth Avenue office tower. Representatives for Kushner did not immediately respond to CNN’s request for comment.

According to The New York Times, Perry began negotiating with Riyadh over possible terms in late 2017.

The Saudis placed Westinghouse on a short list of companies to build a nuclear plant, Perry said, according to the Wall Street Journal.

This story has been updated with additional developments Tuesday.

CNN’s Greg Wallace, Ellie Kaufman and Tara Subramaniam contributed to this report.