WASHINGTON – Well before Elon Musk embarked on efforts to eliminate government inefficiencies, then-President-elect Donald Trump appointed another billionaire, Carl Icahn, in 2017 to assist with government regulatory reforms in his initial year in office.

The outcome was unfavorable.

Icahn, a renowned corporate raider with an office just two blocks from Trump Tower, served as Trump’s unpaid advisor on regulatory reform for only seven months before resigning amidst concerns regarding ethical issues related to changes in a longstanding energy policy that could benefit him financially.

In a filing with the SEC, his company disclosed that federal prosecutors were looking into the situation in November 2017, although no charges were ever filed.

Icahn rejected allegations of wrongdoing. Nonetheless, critics, among them Democratic lawmakers in Congress, were quick to condemn him, accusing him of seemingly profiting personally and aiding allies in the oil sector at taxpayers’ expense.

Currently, Musk, recognized as the wealthiest individual globally, is set to spearhead government reform efforts alongside billionaire entrepreneur Vivek Ramaswamy. They will manage Trump’s newly established Department of Government Efficiency (DOGE), a non-governmental entity the President-elect has assigned the task of reducing waste and enhancing the effectiveness of Washington.

On Thursday, DOGE’s account on X (formerly Twitter) sought “super high-IQ small-government revolutionaries” who would be willing to commit over 80 hours weekly to tedious cost-cutting efforts.

Regardless of Musk’s enthusiasm, the potential ethical dilemmas tied to his appointment exceed those that Trump encountered with Icahn, according to Richard Painter, who served as the chief ethics lawyer in President George W. Bush’s administration.

“You have a billionaire with a strong political connection to the president, who dominates social media, electric vehicles, and has a private space venture, taking charge of spending cuts and efficiency improvements across virtually all government agencies,” Painter told YSL News. “It’s clear that there are extensive conflicts of interest involved.”

YSL News reached out for comments from Musk, Ramaswamy, the Trump campaign, and Icahn, but did not receive any responses.

Advising on major structural changes

Trump stated that DOGE will “offer advice and direction from outside the government,” collaborating with the White House and the Office of Management and Budget to enact significant structural reforms throughout the federal government. He indicated that their work would wrap up by July 4, 2026, at the latest.

The CEO of SpaceX and Tesla, whose companies have secured over $15.4 billion in federal contracts in the last ten years, claims he can reduce the federal budget by $2 trillion. Simultaneously, he has articulated aspirations to rely on the Trump administration for his goal of Mars colonization.

Musk’s enterprises, which include Neuralink (a brain implant company) and the Boring Company, are subject to regulation by numerous federal agencies that he is now responsible for optimizing. Therefore, Musk may propose adjustments to agencies that have historically incurred substantial fines and penalties against him.

According to Good Jobs First, a national oversight group, Tesla has faced nearly $100 million in penalties from 73 actions by various agencies, including the Justice Department, the SEC, the EPA, the Labor Department, and OSHA.

Musk and Ramaswamy may also suggest policy changes that could allow them to cut substantial costs by eliminating regulations and red tape that are meant to protect consumers and the environment.

Good Jobs First indicated that SpaceX has been penalized approximately $4.2 million due to violations related to safety, labor, environmental standards, and aerospace regulations.

Musk invests millions to support Trump’s campaign

As the November 5 election approached, Musk formed a friendship with Trump and leveraged his wealth, influence, and colossal presence on X, where he boasts nearly 205 million followers, to assist him in overcoming Democrat Kamala Harris and securing a second term.

In response, Trump hailed Musk as his “rock star” and granted him significant flexibility regarding government programs and regulations he aims to eliminate.

Through this arrangement, Trump seems to empower Musk and Ramaswamy to recommend deregulatory or budget-cutting measures that could provide direct advantages to their businesses. The extent of these benefits remains unclear, known only to Trump, Musk, and Ramaswamy, given the limited information disclosed about the arrangement.

The Icahn precedent

However, if Icahn’s situation serves as an example, these two billionaires, with Ramaswamy’s net worth estimated at about $1 billion from Roivant Sciences, might encounter significant conflicts of interest.

Moreover, Musk’s vast array of holdings means his potential conflicts far exceed those faced by Icahn.

Similar to Musk, Trump had a prior relationship with Icahn before enlisting the high-profile investor as an advisor before taking office. Prior to this, Icahn’s investment firm acquired Trump Entertainment Resorts after the struggling casino business had emerged from bankruptcy for the fourth time.

“Wall Street magnate Carl Icahn will aid President-elect Trump with regulatory reform guidance, providing the well-known investor a significant influence over the operations of his own industry, among others.”

According to YSL News on December 21, 2016, it was reported that Icahn would be offering advice to Trump on regulatory matters in a personal capacity rather than as a federal employee, and he would not have specific duties assigned to him as per a press release from the Trump transition team at the time.

However, it was evident from both Trump and Icahn that his objective – similar to those of Musk and Ramaswamy – was to significantly reduce regulations.

In a statement released by the Trump transition team, Icahn remarked, “During President Obama’s administration, American business owners suffered due to over $1 trillion in new regulations and spent over 750 billion hours on paperwork. It’s time to liberate our entrepreneurs from excessive regulation so they can focus on what they excel at: creating jobs and uplifting communities.”

Concerns Over Conflicts of Interest

From the beginning, his appointment raised serious alarms about potential conflicts of interest due to his vast business interests, particularly in energy sectors that are heavily regulated by the federal government.

The Democratic National Committee criticized Icahn’s appointment, calling it a “quid-pro-quo 25 years in the making.”

Andrew Stoltmann, a partner at a securities law firm, remarked at the time, “It’s somewhat akin to asking the fox to guard the hen house.”

Questionable Conflicts and Investigation

Icahn’s investment in CVR Energy, an oil refining entity, raised concern as he promoted alterations in biofuel regulations that could favor his company and others in the refining sector.

This drew scrutiny from lawmakers.

In May 2017, a group of eight Senate Democrats formally requested a federal investigation to determine if the billionaire activist investor had influenced the Trump administration in a way that would reduce the costs associated with renewable fuel credits.

The Trump administration sought to clarify that Icahn’s role was informal and described him as “a private citizen whose opinions are valued and discuss from time to time” by the president.

On August 17, 2017, Icahn stepped down just days before The New Yorker published an in-depth article titled “Carl Icahn’s Failed Raid on Washington,” which included allegations that he had exploited his advisory position and relationship with Trump to manipulate U.S. environmental rules for personal and industry gains.

In a letter to Trump, Icahn stated, “Contrary to the insinuations from a few of your Democratic critics, I did not have access to confidential information or profit from my position, nor do I perceive any conflicts of interest arising from my role.”

A Diverse Portfolio Across Multiple Industries

In the current situation, the goals of the new DOGE – named after the Dogecoin cryptocurrency promoted by Musk – focus on evaluating federal operations and proposing reforms aimed at minimizing waste and enhancing efficiency.

This could result in Musk encountering numerous conflicts of interest due to his significant investments in various sectors including energy, transportation, space exploration, and military and intelligence.

Notably, the eight senators who expressed concerns regarding Icahn’s appointment are still serving in their roles. One of them, Sherrod Brown, will conclude his time in the Senate come January after losing his re-election bid.

However, another senator, Elizabeth Warren of Massachusetts, has already had confrontations with Musk.

Warren commented on X, “The Office of Government Efficiency seems to be off to a superb start with two leaders trying to manage the workload of one position. This truly appears to be very efficient.”

Musk responded, “Neither of us are receiving payment, which makes it remarkably efficient. @DOGE will accomplish great things for the American people. History will be the judge.”

Danielle Brian, the executive director and president of the Project On Government Oversight, shares concerns similar to Painter’s, noting that the DOGE could be rife with potential conflicts of interest.

Brian observed, “There’s a substantial similarity between the two cases. In Icahn’s situation, he seemed to take the public backlash seriously enough to resign. Conversely, I don’t see Musk displaying the same level of accountability that Icahn did eight years ago.”