ND treasurer says David Petraeus visit wasn’t unethical

By Rob Port | Watchdog.org North Dakota Bureau

BISMARCK, N.D. — Accusations of media management and unethical behavior have arisen after a recent trip to North Dakota by former CIA Director David Petraeus hosted by Treasurer Kelly Schmidt.

“DeSmogBlog has obtained hundreds of documents portraying the blurred lines between North Dakota’s government, the oil and gas industry and the private equity world,” wrote Steve Horn, a research fellow for the blog, for the Huffington Post.

Horn points out that Petraeus’ current employers, private equity firm Kohlberg Kravis Roberts, wrote a press release about the visit for Schmidt’s office. He also criticized Schmidt taking a seat on a private airplane rented by KKR for a flight across the state, as well as meetings set up between KKR and state investment officials.

In an interview with Watchdog, Schmidt said Petraeus’ trip to North Dakota, which included a visit to the state’s oil fields and an event with the North Dakota National Guard, was planned after she invited him to visit the state during a chance meeting at a conference.

“Not believing or thinking anything would come to fruition,” Schmidt said of the invitation, “a month or two later I get a phone call saying he would like to come and visit. So we worked collaboratively with KKR to set things up.”

That collaboration is one of Horn’s complaints about the visit. He notes a final press release announcing the visit was written by a KKR employee, according to the document’s metadata, and that KKR planned “every minute” of Petraeus’ tour of the state.

Schmidt said that sort of collaboration isn’t unusual for a visit by someone of Petraeus’ notoriety. “When you’re working with someone who has the caliber and in some cases security issues that I may not be aware of or my staff, we always work together with the staff of someone who is coming to visit or someone of his caliber,” she said.

Schmidt also said security concerns, as well as distractions from Petraeus’ personal life, were a consideration in how the tour of the state was handled.

“We didn’t want it to become something it was never intended to be,” she said. “That being said, most people are familiar with the indiscretion that the general had and its relationship to North Dakota. I was concerned that this would take on legs and it would end up being something that none of us wanted to see happen.”

In 2011, Petraeus began an extra-marital affair with Paula Broadwell, a Bismarck native. After the affair became public, Petraeus announced his resignation as CIA director.

Another criticism of the visit was Schmidt’s ride in an airplane rented by KKR, but Schmidt said she got it cleared by the state’s legal counsel.

“I know the ethics policy of both the State Investment Board and the Land Board and I follow it very, very carefully,” Schmidt said. “And because I felt there would probably be an extra level of scrutiny relating to this event I made sure I got something in writing, and also KKR requested that we have something in writing.”

Janilyn Murtha, a lawyer from the North Dakota Attorney General’s office, signed off on the flight, noting in an email responding to Schmidt’s request for advice that “KKR does not have any current or pending business relationship.”

“If in the future the NDSIB considers entering into a business relationship with KKR, and Treasurer Schmidt is then an acting board member, she may bring the prior contact with KKR to the attention of both the board and legal counsel and determine at that time if a conflict exists,” wrote Murtha.

As part of the duties of her office, Schmidt is a member of the State Investment Board, the Board of University and School Lands and the Teachers Fund for Retirement Board, all of which handle investments on behalf of the state.

Those are all investments of which KKR would like to be a part.

Horn wrote that Petraeus invited one state investment official to New York for a visit, while other KKR officials met with officials from the North Dakota Department of Trust Lands. But Schmidt said such meetings “aren’t unusual,” noting the state has billions of dollars in investments.

You can reach Rob Port at rport@watchdog.org