NUE Nucor Corporation

By Nick Timiraos and Rebecca Ballhaus 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (March 17, 2018).

WASHINGTON -- When Peter Navarro needed financing for a documentary film on the dangers to the U.S. of China's trade policy, he sought out Nucor Corp., an American steel company.

Nucor made payments to fund the film through a San Diego nonprofit then led by a friend of Mr. Navarro. The arrangement was examined as part of a broader 2012 FBI investigation of the nonprofit's finances, according to three former employees of the nonprofit. No charges were filed.

Mr. Navarro is now a top trade adviser in the White House, with a growing public profile for his get-tough views on trade. His connection with Nucor underscores the wide-ranging, historic ties between Mr. Trump's top trade advisers and the U.S. steel industry, which stands to benefit from tariffs the Trump administration recently imposed.

Commerce Secretary Wilbur Ross, a Wall Street veteran, spent more than $1 billion to purchase distressed steel firms and assembled them into a new company, International Steel Group Inc., which he sold for $4.5 billion to the London-based Mittal family in 2004, The Wall Street Journal reported at the time. He served on ArcelorMittal's board until becoming commerce secretary last year.

Gilbert Kaplan, Mr. Trump's nominee as undersecretary for international trade at the Commerce Department, is a former steel-industry lobbyist. U.S. Trade Representative Robert Lighthizer represented American steel companies as a lawyer in private practice before his current turn as the government's top trade negotiator. The USTR's nominated deputy, Jeffrey Gerrish, and his general counsel, Stephen Vaughn, lobbied on trade laws for U.S. Steel Corp.

Legal experts said the presence of U.S. officials with industry ties doesn't on its face violate federal ethics rules, but some experts questioned the appearance.

Compared with previous administrations, "the Trump administration seems to have far more individuals in key government positions regulating industries that those individuals got rich working in," said Paul Ryan, vice president for policy and litigation at Common Cause, an advocacy group that supports greater transparency in politics.

A White House spokeswoman said Mr. Trump's position on trade has been clear for decades.

Nucor paid $1 million in 2011 to the Utility Consumers' Action Network, a nonprofit that advocates on behalf of utility customers in San Diego County, Calif., which in turn paid Mr. Navarro's production company to make the film, according to documents reviewed by The Wall Street Journal.

UCAN received a federal grand-jury subpoena as part of a broader investigation into its finances, according to three former employees of the nonprofit who said they were interviewed by investigators or asked to provide documents. A spokeswoman for the Federal Bureau of Investigation field office in San Diego didn't respond to inquiries about the investigation.

Nucor's funding helped Mr. Navarro produce the documentary, "Death by China," according to the documents.

The movie chronicles the erosion of the U.S. manufacturing base and China's rise as an industrial power since the 1990s. Mr. Navarro co-wrote a book by the same name that was published in 2011. In the movie, Tom Danjczek, then-president of the Steel Manufacturers Association, points to the problem of Chinese steel overproduction due to government subsidies.

Dan DiMicco, who was chief executive of Nucor from 2000 to 2012, said the company paid for the film through the San Diego nonprofit at Mr. Navarro's request.

"Peter asked and we agreed. Peter directed us where to make payment," said Mr. DiMicco in an email. "We had no part in that decision nor did we try to camouflage our support."

Nucor entered into a contract with the Southern California utility watchdog, according to the documents, which at the time was led by Michael Shames, a friend of Mr. Navarro.

Mr. Navarro said the financial arrangement helped ensure his independence and that he never took steps to hide the arrangement.

"It was important for me personally and for the integrity of the film project that I have complete creative control over the process," Mr. Navarro said in a statement to the Journal. "This financing arrangement was done in a completely transparent way."

The payments to Mr. Navarro became public after one of the nonprofit's attorneys alleged in a 2011 letter to the board improper financial behavior by UCAN. Many of the allegations were unrelated to the Nucor payment, such as improper bonus payments and a failure to conduct audits in a timely manner.

The allegations in 2012 led UCAN to file for court-supervised dissolution -- the equivalent of bankruptcy protection -- in the Superior Court for the County of San Diego.

A whistleblower suit filed by two then-employees of the nonprofit was settled out of court and the dissolution petition was withdrawn, but an FBI investigation resulted from the allegations.

Mr. Shames was later fired by UCAN's board.

On its website, UCAN said in 2012 it received a federal grand-jury subpoena "related to an investigation of Mr. Shames and the whistleblower allegations." The nonprofit said no charges were issued in that investigation and the nonprofit "has complied fully with investigators' requests." UCAN's executive director didn't respond to requests for comment.

Mr. Shames said funding Mr. Navarro's documentary was well within the mission of the consumer nonprofit. "It was right up our alley to make sure the consumer component got into his film," he said. Of the broader allegations against UCAN, he said, "There was nothing there."

Federal investigators scrutinized a range of financial dealings by the nonprofit, said Kim Malcolm, who briefly succeeded Mr. Shames as executive director of the nonprofit in 2012.

The investigation included the payments to Mr. Navarro's production company, made in installments of $600,000 and $400,000 over two years, according to Mr. Shames and Ms. Malcolm.

"The FBI asked us for all kinds of documents that were relevant," said Ms. Malcolm, who resigned after three months as the group's leader.

During that time, Ms. Malcolm said she initially withheld the second payment to Mr. Navarro because she wanted to better understand why the nonprofit financed a film about China and U.S. trade policy.

"It was so outside the mission of the organization," she said.

UCAN didn't receive proceeds from the film and wasn't listed in its credits, though it was entitled to receive five free DVDs, according to its contract with Mr. Navarro's production company.

The film later became available for rent on Netflix and in 2016 was uploaded to YouTube, where it has received some 600,000 views.

The film received a glowing endorsement from Mr. Trump.

"I urge you to see it," he said in a statement on the film's website.

Mr. Navarro has said "Death by China" led to regular correspondence with Mr. Trump that accelerated in 2016, when Mr. Trump tapped him and Mr. DiMicco to serve as campaign advisers.

Write to Nick Timiraos at nick.timiraos@wsj.com and Rebecca Ballhaus at Rebecca.Ballhaus@wsj.com

(END) Dow Jones Newswires

March 17, 2018 02:47 ET (06:47 GMT)

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