(Bloomberg) — 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.
Puzder, the chief executive officer of CKE Restaurants Inc., will also forfeit an unvested stake of as much as $5 million in the chain, according to the documents, which were obtained by Bloomberg News.
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He will recuse himself from decisions involving the restaurant company during his entire term in office — unless he receives a special waiver or authorization — according a signed ethics agreement dated Feb. 7.
That recusal will extend to any entity that holds at least a half interest in CKE and to any entity in which CKE owns at least a half interest, the agreement says.
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 ethics and disclosure documents, which have been received by the Senate Health, Education, Labor and Pensions Committee, should allow the panel to finally give Puzder a confirmation hearing.
The committee has postponed his hearing four times — citing complications associated with his disclosure paperwork. A hearing is now set for Feb. 16.
Long delay
Puzder's financial disclosure form 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 — suggesting that among a cabinet of high net-worth individuals, Puzder's holdings may have presented disclosure challenges.
For example, the disclosure lists six entities in which he 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.
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.
'Internal valuation'
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.
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.
Nomination opposed
Labor groups and Senate Democrats have opposed Puzder's nomination by highlighting alleged labor law violations at Hardee's and Carl's Jr. stores. He has opposed large increases to the minimum wage as well as a recent federal rule that expanded workers' eligibility for overtime pay.
More controversy arose Monday when Puzder 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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