A case of nepotism? Explosive connections of Trump's Secretary of Commerce uncovered

XXL-style AI data centers and billion-dollar deals: US Secretary of Commerce Howard Lutnick has high hopes for the AI boom. Political pressure is a means to an end - and is allowing the family business to flourish.

"We're having our best year ever," Brandon Lutnick cheered at a conference in Switzerland in October. He is the chairman of the US company Cantor Fitzgerald L.P., which generates billions from financial services.

However, he is also the son of US Secretary of Commerce Howard Lutnick - and is therefore at the center of a major conflict of interest that is now causing headaches for more than just a team of ethics lawyers.

It involves gigantic AI data centers, deals worth billions and political influence from within government circles. This has now been revealed by research by the New York Times.

US government granted Lutnick an exemption

At his inauguration as minister, Lutnick had said: "I have earned enough money in my life." From now on, he wanted to serve the USA. To avoid ethical problems, he had given all his shares to his children and the profits and losses of the company conglomerate would no longer affect him personally, the 64-year-old assured.

But this is where things get tricky for the first time: According to research by the "New York Times", the shares were not officially transferred to Lutnick's sons until the beginning of October. By this time, however, he had long been in office as Secretary of Commerce - and was involved in political procurement processes that meant advantages for Cantor Fitzgerald L.P..

"Small, rich country"US Secretary of Commerce rages against Switzerland - during Parmelin's visit to Washington

This was possible thanks to an ethics exemption granted by the US government. According to ethics lawyers, Lutnick's clear violations were difficult to prove.

But one thing is clear: the ethical tightrope walk between government responsibility and family business raises questions. And it poses a risk, as Kedric Payne from the ethics group Campaign Legal Center describes: "You run the risk of the public losing trust in the government."

White House spokesman defends Lutnick

Cantor Fitzgerald L.P. makes money in countless industries, from cryptocurrencies to real estate and property management to data centers for artificial intelligence.

The latter business runs across the desk of the subsidiary Newmark. And this business sector in particular is booming: in the past twelve months, the real estate company has concluded deals worth 25 billion dollars. A commission flows into the business accounts for each transaction.

"Newmark's consulting activities in the data center sector are independent of government and other private activities," says CEO Barry Gosin, emphasizing his company's market leadership - and taking Howard Lutnick out of the line of fire.

"The fact is that the only special interest guiding the decisions of Secretary Lutnick and the rest of the Trump administration is the welfare of the American people," Kush Desai, a White House spokesman, also tries to nip any skepticism about the Secretary of Commerce in the bud.

Lutnick put pressure on other countries for AI deals

But it is no coincidence that critical voices are being raised: Since Lutnick's inauguration as Commerce Secretary, he has been pushing ahead with the construction of huge data centers - complete with tax breaks and the acceleration of grants and permits to build new energy sources to power the facilities.

Lutnick's push in the AI sector is not surprising given the seemingly limitless growth potential of the industry. However, the lengths to which he is apparently prepared to go to achieve this casts doubt on the integrity of the trade minister.

As the "New York Times" investigated, Lutnick repeatedly exerted pressure on other countries to push ahead with the construction of data center projects in the United States with foreign funds. This is exemplified by the case of the United Arab Emirates (UAE).

For months, the state courted the favor of US President Trump in order to accelerate AI progress in its own country with US computer chips.

But even Trump - like the Biden administration before him - was skeptical. There were fears that the emirate could pass the chips on to China, where they could in turn be used to manufacture sophisticated weapons. A risk that could cost the lives of US soldiers in case of doubt.

Newmark employee speaks of "modern gold rush"

However, Lutnick pushed the deal forward and finally got it signed and sealed. "They will invest in America and build data centers in America in return for an equal amount of chips," he told a Senate hearing in June.

In other words, the UAE gave in to Lutnick's pressure and co-financed the construction of an XXL data center in Abilene, Texas. This in turn - and here the circle closes - benefits Newmark. Among other things, the company brokered loans with a volume of over 9.4 billion dollars to those responsible for the project, including commission payments, of course.

Chad Lavender, a senior Newmark employee, compared the AI boom to "a modern-day gold rush" in a podcast interview in September. Newmark is skimming off the top as a leading dealmaker with special involvement, including as a real estate broker for the required land.

Super-rich developer consulted Lutnick company

"The AI revolution is going to change the way the world works, and we can't lose," Howard Lutnick implored in Lancaster, Pennsylvania in July. What he failed to mention was that the gigantic AI project there was also made possible by Newmark, thanks to a joint venture worth four billion dollars.

The overlap between political action and profit for Newmark becomes even more striking with the President Donald J. Trump Advanced Energy and Intelligence Campus. The project, under the auspices of Fermi America, is to be built in Amarillo, Texas, and will be partly powered by nuclear energy.

However, the billions from super-rich developer Toby Neugebauer are not enough. That's why the founder of Fermi commissioned Lutnick's sons Kyle and Brandon to raise 107.6 million dollars in a first round of financing.

This is why South Korea is supporting US construction projects

However, the construction project is likely to receive a much larger financial injection from South Korea. Doosan Enerbility, the industrial giant based there, is to supply components for the nuclear power plant. The cooperation came about on the political initiative of Howard Lutnick. He negotiated a trade agreement with the Asian country worth 350 billion dollars. Lutnick used lower tariffs for South Korea as leverage.

A piquant fact: the US Secretary of Commerce posed proudly next to Neugebauer and representatives of Doosan and the Korean government when the agreement was announced. And Newmark and Cantor, who had acted as advisors for the deal, earned six million dollars.

But that was not enough. Fermi went public at the beginning of October with a company valuation of 12.5 billion dollars. Because Cantor also played a major role in this deal, fees in the millions again flowed into the company coffers of Lutnick's sons.

No evidence of nepotism at Howard Lutnick

The US Department of Commerce seems to be aware of the explosive nature of the deals. In any case, spokesman Ben Kass appealed for patience shortly after the Fermi IPO. The final terms of the trade agreement were still being negotiated, he said, in an attempt to calm the waters.

"Do I think it will probably work? Yes," Neugebauer nevertheless remains optimistic. Also because he has another powerful political string-puller at his side in his "close friend" Ted Cruz, Senator and Republican in Texas.

Despite extensive research, the New York Times found no evidence that Howard Lutnick used his political power to facilitate business deals for his family. However, it is also clear that the company has never been as successful as it is now. In this respect, further jubilant reports from the company's top management in the future would come as no surprise - possible nepotism or not.