The Cable

Briefing Skipper: Afghanista, START, North Korea, Cairo, passports

In which we scour the transcript of the State Department's daily presser so you don't have to. These are the highlights of Thursday's briefing by spokesman P.J. Crowley:

  • President Obama convened his monthly meeting on Afghanistan and Pakistan Thursday morning at the White House and Deputy Secretary of State Jim Steinberg and Special Representative Richard Holbrooke represented Foggy Bottom. Meanwhile, next door Vice President Joseph Biden was meeting with key GOP senators about the new START treaty, including Jon Kyl, R-AZ, Lindsey Graham, R-SC, Joe Lieberman, I-CT, and Tom Udall, R-NM. Kyl is leading a delegation to Los Alamos and Sandia national nuclear laboratories Friday.
  • Special Advisor Bob Einhorn is headed to South Korea and Japan to start work on those new North Korea financial sanctions that the State Department is being so mysterious about. He'll also be discussing Iran sanctions and will be joined by Treasury deputy assistant secretary for terrorist financing and financial crimes Daniel Glaser, on what will the first trip of several. "I don't think he'll make any announcements while he's out there," said Crowley.
  • The State Department is closely watching the Arab League meetings in Cairo as hoping they will push (or permit) the Palestinians to move to direct talks before the Israel (partial) settlement freeze expires in September. "We are encouraged by reports that Arab states meeting in Cairo agree on the need to resume direct negotiations between Israel and the Palestinians to reach a final-status agreement," Crowley said.
  • Crowley wasn't aware of the new China-North Korea economic agreement, but he did say, "Clearly, China, as a neighbor of North Korea, has become an increasing factor in North Korea's economy... China has responsibilities, you know, with respect to specific aspects of U.N. Security Council resolutions as they pertain to the areas of concern: our proliferation concern, our nuclear concerns in particular. So we would expect China to live up to its international obligations. But at the same time, we want to see China use its leverage with North Korea to encourage North Korea to move in a fundamentally different direction."
  • Potential North Korea nuclear cooperation with Burma is also a concern of the administration, but they don't know what's the ground truth. "We don't see the transparency in that relationship that we'd like to see. North Korea is a serial proliferator. North Korea is engaged in significant illicit activity. Burma, like other countries around the world, has obligations, and we expect Burma to live up to those obligations," Crowley said.
  • State is defending itself in light of a new GAO report where GAO investigators were granted passports based on fake documents they created. Maryland Sen. Ben Cardin held a hearing on the issue Thursday. "And as we will outline in testimony before Senator Cardin's committee today, we have improved our tools in recent years," Crowley said. "There's more work that needs to be done."

The Cable

State Dept. official: Jack Lew answers to a higher authority

Jack Lew, the deputy secretary of state who is President Obama's nominee to head the White House Office of Management and Budget, is coming under fire today because of a $944,578 bonus he took from Citigroup just before he joined the administration last year. But those who know him in the State Department defended him Thursday as a man who is above reproach and argued that his actions were completely on the level.

Citigroup paid the hefty bonus to Lew about two weeks before he joined the State Department as deputy secretary of state, the Washington Times reported. Lew had already disclosed a $1.1 million compensation package covering his Citigroup work in 2007, but the amount of the newly disclosed bonus, which covers his work for the banking conglomerate in 2008, wasn't known until today.

A State Department official close to Lew told The Cable that Lew had fulfilled all his obligations regarding the Citigroup bonuses. When he was nominated, Lew disclosed the figures to everyone inside the system who needed to know, the official said, including the White House, the State Department, and the Senate Foreign Relations Committee.

In answers submitted to the committee and in his 2009 ethics filing, Lew said that the bonus was coming, he just didn't know the amount at that time, the official said.

Moreover, those who know Lew, an observant Orthodox Jew, say he's even more kosher in his professional dealings than he is when separating milk and meat at dinner time.

"If this city and government were filled with Jack Lews, we wouldn't need ethics rules," the official said, "because, like Hebrew National, Jack holds himself accountable to a higher authority."

The official also thought it important to note that Lew was a manager and did not make investment decisions, much less those that led Citigroup and several other Wall Street firms to seek billions of dollars in taxpayer bailouts during the Great Recession. Lew also took a significant pay cut when he came over to Foggy Bottom. He now makes $177,000 per year.

When Lew was undergoing his vetting and confirmation process last spring, the State Department acknowledged that Citigroup had given Lew another bonus but declined to release the figure. Congress at that time was seething with anger at Citigroup and other firms for paying exorbitant bonuses to executives while receiving bailout funds, and was even considering a 90 percent tax on such rewards.

From the Washington Times report:

Formerly a chief operating officer at Citi Alternative Investments, a unit of Citigroup, Mr. Lew disclosed in an ethics filing that the money was "discretionary cash compensation" from 2008 that he received on Jan. 15, 2009.

The records show that Mr. Lew received the $944,578 payment four days after he filed his 2008 ethics disclosure.

That filing did note that he was eligible to collect additional discretionary compensation for 2008 prior to joining the State Department. It also disclosed that he had received $1.1 million in salary and discretionary cash compensation from Citigroup for 2008.

Congressional Quarterly