The Money Trail:
Who Are Those People
Donating to Politicos?
Secrets of a GOP PAC
---
Hedge Funds Give, and Get;
Shipbuilder Bids for Aid;
Tennis Pro Stays in Touch
---
A Word in Trent Lott's Ear
WASHINGTON -- In the summer of 1996, hedge-fund managers placed a big
bet on the Republican Party.
In mid-June, Tiger Management LLC's Julian Robertson gave $100,000 to
the GOP. Two weeks later, Stan Druckenmiller of Soros Fund Management
LLC upped the ante, giving $250,000 to the party. That same day, an
obscure political-action committee headed by Senate Majority Leader
Trent Lott began recording a harvest of $5,000 contributions, the
maximum allowed by law, from a Who's Who of hedgefund celebrities. Vince Rossi of Turnberry Capital Management in Greenwich, Conn.,
ponied up. So did hedge-fund legend Harvey Sandler, his longtime partner
Barry Lewis and Mr. Lewis's wife, Barbara. Jack Nash, another pioneer
hedger, also joined Sen. Lott's $5,000 club that summer, as did investor
Lewis Ranieri. By Labor Day, Sen. Lott's New Republican Majority Fund
had raked in $165,000 in $5,000 checks from financiers of various
stripes.
Why the largess? Some, such as Mr. Ranieri, say they can't recall why
they gave. Others, like Mr. Sandler, don't remember giving at all. "If I
did it," he says, "it was because somebody else asked me." Mr. Rossi
says it may sound "stupid or corny," but "I fundamentally believe you
don't have a right to complain if you don't participate."
But perhaps there was another force at work. That fall, Sen. Lott
found time in the Senate's end-of-the-session crush to take up the
National Securities Markets Improvement Act. Among other things, the
bill lifted hedge funds' limit of 99 U.S. investors, allowing money
managers of these private investment funds to cast a wider net for
capital.
After the bill passed, Mr. Robertson gave another $100,000 to the
RNC. A spokesman says his giving had nothing to do with the legislation.
A Soros spokesman says the same about Mr. Druckenmiller's contribution:
"We took no interest in the legislation whatsoever."
Once again, the House of Representatives is considering proposals to
overhaul the creaky campaign-finance system. And once again, there is
little chance Congress will enact anything. In the Senate, Sen. Lott
himself has been a leading pallbearer for proposed reforms, deep-sixing
a bill fashioned by a GOP colleague, Sen. John McCain of Arizona. Key
members of Congress have made it clear they would rather retain the
current incumbent-friendly system than significantly limit donations. As
Sen. Lott put it last year, writing big checks to politicians you like
is "the American way."
So donors with deep pockets will remain a fixture of American
politics.
But who are they? Why do they give? What motivates them-ideology,
partisanship, parochialism or something else? Are they the predators of
the political system, buying influence through legalized bribery? Are
they victims, pawns of moneyhungry pols too powerful to refuse? Or are
they simply patriots seeking nothing more than a stake in the system,
supporting candidates in whom they believe?
To find out, The Wall Street Journal took a close look at a defined
sample of big donors: everyone who contributed the $5,000 maximum to
Sen. Lott's New Republican Majority Fund in any of the three years after
the GOP took control of Congress in 1995. Sen. Lott is a natural draw
for big contributors. His fund, which supports other candidates and
helps finance the Mississippi Republican's political activities,
reflects that: Dormant for years, it has raised $5.4 million since being
reactivated in 1995, when Sen. Lott began his leadership ascent as
majority whip.
A total of 144 individuals contributed the $5,000 maximum to the
senator's PAC in 1995, 1996 and/or 1997, for a total of $850,000. The
Journal tried to get in touch with all of these donors and identify
their business interests, political leanings and anything else that
might have motivated them to give. Some couldn't be reached. Sen. Lott
declined to discuss contributions to his PAC and didn't respond to
written questions.
Almost all of those reached say they were moved to give primarily by
kinship with Sen. Lott's conservative ideology or by a long-standing
friendship. For many, that appears to be the case. But the Journal's
analysis shows that four out of five donors to the Lott PAC had
identifiable stakes in specific programs and policies pending before the
government. "I gave because I have an interest in how he votes on
maritime issues," says John Raggio, a shipping executive from Long
Island, N.Y. "It's self-interest."
More than six dozen of the donors stood to benefit from specific
legislation or other official actions favorable to their business
interests, the Journal analysis found. Half of those donors' interests
got attention from Sen. Lott himself. For example, the senator is the
chief sponsor of an obscure bill imposing uniform standards on states
for labeling cars as having been rebuilt from wrecks. His PAC received
$5,000 from Sherry Sharp, the wife of Circuit City Stores Inc. Chairman
Richard Sharp. The Richmond, Va., company's used-car subsidiary, CarMax,
and the heavily Republican auto-dealership lobby favor the bill. The
measure, which is opposed as too lax by consumer groups and the National
Association of Attorneys General, is pending in the Senate after having
cleared the House. The Sharps decline to comment.
Sen. Lott's top donors, nearly all well-to-do, are nevertheless an
eclectic bunch. While hedge-fund managers and other financiers account
for more than a third of them, the group also includes lobbyists for
interests ranging from peanuts to Playboy. There is also actress Marla
Maples, New York diamond dealer Jack Schmidt and Texas chicken magnate
Lonnie "Bo" Pilgrim, who once opined that "giving large amounts of money
to a politician is all-American as far as I'm concerned . . . . If you
give them money, they return your calls."
There are also some otherwise-loyal Democrats, such as money manager
Meyer Berman in Boca Raton, Fla., who is pushing Congress to overhaul
the Nasdaq Stock Market. "Relative to some of the nuts I find in the
Republican Party," Mr. Berman says, "Lott strikes me as a relatively
reasonable person."
Some of the donors are so wealthy they barely remember giving $5,000,
which represents six weeks' gross pay for the average American family.
Philip Merrill, publisher of the Washingtonian magazine, became angry
when told that campaign records had him giving $5,000: "I have never
contributed to any PAC in my life! I don't believe I ever contributed to
Trent Lott!" Later, he allowed that it is possible he did give, but
forgot.
Others regret being part of what they consider a tainted political
system. "It's gotten out of hand," says Ronald Sandmeyer, chairman of
Sandmeyer Steel Co. in Philadelphia. "We have become a government of
special-interest groups." The system "creates cynicism, skepticism, all
of the above. I'm part of it, absolutely."
The Lott PAC wasn't immune to some of the same sorts of
campaign-finance troubles that plagued Democrats in 1996, when
individuals of questionable background contributed to the party to aid
President Clinton's re-election effort. A handful of Lott-PAC donors
have or had legal entanglements.
Lobbyist Vernon Clark is under federal fraud indictment in Boston in
a public-corruption probe; he has pleaded not guilty. Andrew Bressman
pleaded guilty in a New York court to grand larceny in connection with
failed brokerage firm A.R. Baron & Co. Contributor Hedi Lieberman is the
wife of Victor Teicher of Westport, Conn., who served 10 months in
prison for securities fraud; an associate says her husband was behind
her contribution. Finally, contributor Alfred S. Palagonia and his
employer, D.H. Blair & Co., paid a $25,000 fine last year to settle
improper-trading charges brought by the National Association of
Securities Dealers.
While most of Mr. Lott's big donors are wealthy, Federal Election
Commission records also list one secretary, Jeanne Fletcher, as
contributing $5,000 in March 1997. She works for C. Boyden Gray, who was
counsel to President Bush. When asked, Ms. Fletcher and Mr. Gray both
say the money actually came from him. They call it an innocent mistake.
Campaign law requires the actual source of the money to be disclosed
in FEC reports. The provision helps enforce a $25,000 cap on
individuals' total annual giving to federal campaigns. A closer look at
FEC records shows that Mr. Gray appears to have exceeded that cap in
three of the past four years. Nearly $17,000 in contributions were
attributed to Ms. Fletcher, but she and Mr. Gray say the money was
really his. Counting the Fletcher donations, Mr. Gray gave more than
$50,000 for 1994 campaigns, about $26,000 for 1995 and $31,000 for 1996,
FEC records show.
A frequent television commentator on Democratic ethics, Mr. Gray says
Ms. Fletcher handles his finances, has authority to sign his checks and
sometimes transmits his campaign donations. He and Ms. Fletcher say that
may explain the incorrect reports. They say they previously asked
various campaigns and the FEC to correct mistakes in the reports for
1994 donations but learned through inquiries from The Wall Street
Journal that they weren't successful. Now Mr. Gray's office is asking
campaigns to refund excess donations and to attribute all remaining
Fletcher donations to Mr. Gray.
"There are times I frankly say, `Thank God there are limits,"' Mr.
Gray says.
Mr. Gray is now a lobbyist. Among his clients: Tiger Management, Mr.
Robertson's hedge-fund company. Tiger hired Mr. Gray to lobby for the
new investor rules passed in 1996.
A few businesses are especially well represented among top donors to
the Lott PAC:
Two issues have helped Sen. Lott's standing in Silicon Valley. Many
executives there want protection from shareholder suits, and some want
Congress to change "encryption" rules that don't permit them to export
cutting-edge information-security technology that is difficult for
law-enforcement agencies to crack.
Technology and telecom executives accounted for $75,000 in $5,000
gifts to Sen. Lott's PAC from 1995 through 1997.
In 1995, Sen. Lott helped rally the Senate to override a Clinton veto
of the securities-litigation bill, winning tech firms some protection
against federal suits. Plaintiffs' lawyers, however, found a loophole by
turning to state courts, and now Sen. Lott is supporting an industry
effort to close that loophole. He also is trying to broker an encryption
compromise.
"He's been very helpful, from his leadership position, to make sure
I've been able to be heard," says Netscape Communications Corp. CEO
James Barksdale, who has known Mr. Lott since their future wives were
sorority sisters at Ole Miss.
James and Sally Barksdale gave the PAC $5,000 each, and last fall Mr.
Barksdale hosted a fund-raiser for the PAC in Palo Alto, Calif. Mr. Lott
told attendees of his interest in litigation reform and the encryption
issue. "I thought he went over very well," says former Hewlett-Packard
Co. Chairman John Young, who gave $5,000.
Also helping coordinate the fund-raiser was Floyd Kvamme, a
technology venture-capitalist who lobbies for the industry. Mr. Kvamme
was impressed with Sen. Lott last summer while lobbying him on
litigation reform. "He was quite motivated to be helpful," recalls Mr.
Kvamme. Soon after, he sent $5,000 to Sen. Lott, at the suggestion of
Michael Boland, a lobbyist who used to be Sen. Lott's chief counsel.
"We're interested in passing some legislation," Mr. Kvamme explains. "I
felt he was on the right wave length."
A similar pattern appears in Sen. Lott's relationship with John
Kluge, the billionaire communications investor. During consideration of
a telecommunications bill two years ago, Sen. Lott shepherded an
amendment giving LDDS WorldCom, a long-distance service based in
Jackson, Miss., a competitive edge over major carriers. Mr. Kluge was
then LDDS WorldCom's chairman.
In the spring of 1996, shortly after the bill passed, Mr. Kluge lent
his New York apartment to Sen. Lott's PAC for a mixer that raised tens
of thousands of dollars from Kluge associates, including $20,000 from
new members of Sen. Lott's $5,000 club. And last fall, Sen. Lott flew to
Charlottesville, Va., in a helicopter made available by Mr. Kluge's
Metromedia Co. for another fund-raiser, at Mr. Kluge's 8,000-acre
estate. Following FEC rules, the PAC paid Metromedia $2,117 for the
ride.
Meanwhile, Mr. Kluge is branching out. Metromedia recently took
control of a small New Jersey power marketer. Expansion plans are in the
works to capitalize on an effort Mr. Lott supports to loosen utility
regulation.
A spokeswoman for Mr. Kluge says he doesn't donate "out of a sense of
crossing palms to get a favorable vote. He contributes to a list of
politicians as long as your arm. He truly believes it's part of the
process."
A longtime supporter of shipping and shipbuilding, Sen. Lott receives
significant support from those industries. In some cases, the money has
bought contributors access to the Senate majority leader.
Shipping executive William Charrier, of Maryland-based American
Automar Inc., paid $5,000 last year to attend a discussion with Sen.
Lott about maritime issues. About 25 shipping types sat around an oblong
table nibbling finger-food. "Sen. Lott sat there and went around the
table and listened to what we had to say," Mr. Charrier says, recalling
the meeting. "What attracted me about it was that it was billed to be a
small group."
Mr. Raggio, of Sealift Inc. on Long Island, also attended. He says he
had been told by someone -- he doesn't recall whom -- that "if you
contribute to this, you'll get invited to this get-together."
The Senate Ethics Committee discourages members from charging people
to participate in policy discussions. "Offering campaign contributors
access to those discussions in direct return for campaign contributions
creates the appearance that contributors receive special access to
members and thereby exercise undue influence," the panel said in 1987.
Some of Mr. Lott's top donors got more than just access.
Consider World City Corp. Since 1990, the New York-based company has
pushed a proposal to build the world's largest cruise ship, a
6,200-passenger behemoth featuring three hotels, a town of shop-lined
streets and a 2,000-seat movie theater. The stumbling block has been the
federal Maritime Administration, which has doubts about the project's
feasibility and is refusing to approve a $1 billion loan guarantee.
The company and its main proponents used to be fairly modest donors,
giving no more than occasional $500 gifts. Then in early 1996, the
Maritime Administration formally rejected World City's application for
the loan guarantee. A lobbying frenzy ensued.
In the next two years, World City and its supporters gave nearly
$250,000 to candidates and committees from both parties. Much of it went
to members of Congress who signed letters pressing the Clinton
administration to reconsider; some donations came within weeks of the
letters.
Most of the $40 million-plus spent developing the project came from
Knut Kloster, founder of Norwegian Cruise Line, says World City Chief
Executive John Rogers. But World City says all campaign donations came
from U.S. funds and thus didn't violate laws against foreign
contributions.
Through donations to his PAC and campaign, Sen. Lott received more
money tied to World City than did any other congressional candidate. The
timing may be noteworthy.
In the spring of 1996, World City persuaded several Mississippi
shipbuilding-related companies to lobby the senator to support the
project. On April 25, 1996, Sen. Lott met with World City officials. Two
weeks later, two proponents of the project sent his PAC $5,000 each.
The following month, World City tried to get the senator to attend a
meeting it had set up with Federico Pena, then the secretary of
transportation, to "muster some significant political support at that
meeting," as a Mississippi company put it in a letter to Sen. Lott. On
July 8, 1996, a Lott aide attended a meeting between Mr. Pena and World
City officials; the next day, the senator wrote Mr. Pena a glowing
letter about the project. "It is a significant opportunity for America
to show its leadership as both a shipbuilding and a tourism nation," he
wrote.
Later that month, Sen. Lott was lobbied to support a measure the
company wanted to help it secure financing. On Aug. 7, World City
supporters sent his PAC another $10,000. A further $14,000 came over the
next eight months.
"Increasingly, we saw it as a way of life in Washington," World City
Chief Executive Rogers says of the donations. "Obviously, what we want
to do is create a climate in Congress where people are aware of the
project." But the money was "not central" to the lobbying effort, Mr.
Rogers adds. "We are not out there saying, `See this check? You write
this letter, you get this check."'
The coincidence of the timing between donations and official action,
however, sometimes makes it look that way. That's why the Senate Ethics
Committee advises members to be wary. "A decent interval of time should
be allowed to lapse so that neither party will feel that there is a
close connection between the two acts," the committee told senators in
1991. Sen. Lott was a member of the panel at the time.
In all, nearly 20 lobbyists and consultants made $5,000 contributions
to Sen. Lott's PAC. Many have close ties to him.
James H. Johnson, for example, has known Sen. Lott since their days
together at the University of Mississippi. He later worked as an aide to
the senator, then became the Lott PAC's chief fund-raiser. Today Mr.
Johnson is part of a circle of Mississippians and former Lott aides
making their way in Washington as lobbyists known to have the Senate
majority leader's ear. After leaving the PAC, Mr. Johnson formed his own
lobbying business and became "of counsel" to the lobbying firm founded
by one of Mr. Lott's Mississippi associates, Haley Barbour, the former
GOP chairman.
After Sen. Lott became majority leader in 1996, his lobbyist friends
exulted. "The environment for developing new business is the best that
it's ever been," said Lanny Griffith, another Mississipian in Mr.
Barbour's lobbying firm. Mr. Boland, who is in the lobbying business
with another Lott friend named Peter Madigan, told a reporter at the
time, "Life has always been good, but it got a lot better recently."
All the name partners of their firms -- Barbour, Griffith & Rogers
and Boland & Madigan -- have contributed to Sen. Lott's PAC and
encouraged clients to do so. Simultaneously, they lobby him and function
as his kitchen cabinet, dispensing political advice.
"I encourage them all" to contribute, says Mr. Barbour, explaining
that the money helps the GOP retain control of Congress, and this favors
his clients. "It's a hell of a lot easier going into the meeting," he
says, "when you've got a chairman that agrees with you."
Barbour partner Edward Rogers is one of Mr. Lott's biggest
fund-raisers. He was behind a $5,000 donation from California investor
Sam Bamieh, who wrote a check after hearing a Lott talk about cutting
inheritance taxes. "I figured, what the heck -- let's support him and
see if he can deliver," Mr. Bamieh says. The donor was disappointed: "I
don't think he went far enough," he says, because estate taxes were
merely cut, not eliminated.
Many of their clients haven't fared too badly on Capitol Hill.
Mr. Johnson has represented D.H. Blair Investment Banking of New
York, whose chairman, J. Morton Davis, contributed $5,000 to Mr. Lott's
PAC in both 1995 and 1996. Last year, Mr. Johnson lobbied for a targeted
capital-gains provision sought by Mr. Davis, which passed with the
support of Sen. Lott and others. Mr. Johnson declined to comment, and
Mr. Davis didn't return phone calls.
An issue of interest to some Lott-PAC donors last year was the
Medicare payment system. Shortly after Mr. Barbour left his GOP post and
rejoined his lobbying firm last year, the Lott PAC got $5,000 from a new
Barbour client: Robert Elkins, CEO of Integrated Health Systems Inc. in
Owings Mills, Md. The nursing-home company also retained another
lobbying firm, U.S. Strategies Corp. of Alexandria, Va., whose lobbyists
gave $15,000 to Sen. Lott's PAC. IHS was lobbying on changes in
Medicare's payment system. After some changes were contained in last
year's budget bill, an IHS executive was quoted as saying IHS would reap
benefits under the new system.
Also interested in the Medicare bill was Bruce Lunsford, CEO of
Vencor Inc., a Louisville, Ky., operator of nursing homes and long-term
hospitals. He contributed $5,000 at the urging his lobbyist, Mr.
Madigan, but congressional aides who worked on the bill say Vencor
didn't fare very well. Mr. Lunsford didn't return a call seeking
comment.
Washington's top health-care lobbyist, Deborah Steelman, also gave
$5,000 to the Lott PAC. A few months later, Sen. Lott appointed the
lobbyist to a commission studying how to overhaul Medicare. Ms. Steelman
says there was no connection between the two events.
Mr. Barbour also represents the tobacco industry, a major source of
contributions for the GOP. Last summer, he helped win approval of a
provision that would have saved cigarette makers tens of billions of
dollars under the proposed tobacco liability settlement. Although later
repealed amid controversy, the proposal was supported by Sen. Lott,
whose PAC received a $5,000 donation from Sara Bible, the wife of Philip
Morris Cos. CEO Geoffrey Bible, another Barbour client. The Bibles had
no comment.
Major donors sometimes hope the access their money buys will prompt
action. Jeremy Jacobs, the CEO of a Buffalo, N.Y., food-concessions
concern called Delaware North Cos., hired another former Lott aide to
lobby for opening National Park Service contracts to competitive
bidding. The aide, John Scruggs, encouraged Mr. Jacobs to give $5,000 to
the senator's PAC.
The gift got Delaware North's in-house lobbyist, Bill Bissett, into a
small dinner with Mr. Lott at the City Club in Washington. "We thought
it would be a chance to get the issue in front of Sen. Lott," Mr.
Bissett says. "We wanted to see it passed."
Not all of Mr. Lott's contributors give because they want legislative
action. Kathleen Kemper just likes to be part of the Washington scene. A
$75-an-hour tennis coach to some of Washington's best-connected
political operatives, she twice donated the maximum $5,000 to Sen.
Lott's PAC after meeting the wife of its chief fund-raiser at a
political event.
It's all "networking," Ms. Kemper says; "I have no intrinsic interest
in politics." But she devours newspapers "so I have things to talk about
with my pals." She also raises money herself to sponsor breakfasts
featuring talks with political figures.
"Washington has been very good to me. I have a very good tennis
business. So I'm happy to give something back to the system," says Ms.
Kemper, who says she is "not strictly" Republican and donates to both
parties. "I support the people I like who are my friends."
A handful of big Lott donors are longtime friends. Among them is Roy
Newman, a Gulfport, Miss., dealer in mahogany and oak lumber. He keeps a
picture of the senator in his office, just above a photo of Ronald
Reagan. The septuagenarian Mr. Newman has known the senator for three
decades and says he is proud his friend hasn't forgotten his Mississippi
roots.
Mr. Newman made a $5,000 donation to Sen. Lott's PAC in 1995 and sent
another $5,000 in 1996. "I probably need to make another one," he says.
"You ought to encourage good men. It's your duty to support them."
---
Trent Lott's $5,000 Club
A
Angell, Don G., Bermuda Run, N.C., Angell Group
B
Bamieh, Sam, San Mateo, Calif., Investor
Barbour, Haley R., Yazoo City, Miss., Lobbyist/Barbour, Griffith &
Rogers
James Barksdale, Mountain View, Calif., Netscape Communications Corp.
CEO
Sally Barksdale, Palo Alto, Calif., Wife of James Barksdale
Barrack, Thomas J. Jr., Los Angeles, Calif., Colony Capital Inc. CEO
Bartz, Carol, Atherton, Calif., Autodesk Inc. CEO
Battenberg, J. T., Bloomfield Hills, Mich., General Motors Corp.
executive
Bedsole, Palmer, Mobile, Ala., Businessman
Berman, Meyer A., Great Neck, N.Y., Money Manager
Bible, Sara C., Greenwich, Conn., Wife of Philip Morris Cos. CEO
Geoffrey Bible
Boland, Michael J. P., Washington, D.C., Lobbyist/Boland &
Madigan Inc.
Bonderman, David, Fort Worth, Texas, Investor/Texas Pacific Group,
which controls Continental Airlines
Bressman, Andrew, Cliffside Park, N.J., A.R. Baron & Co. Inc.
president
Browning, Peter C., Hartsville, S.C., Sonoco Products Co. president
Burt, Richard R., Bethesda, Md., Investor; former ambassador to
Germany
C
Carroll, Philip, Houston, Texas, Shell Oil Co. CEO
Cassidy, Thomas J., Norfolk, Mass., Harvard Institute for Int'l
Development
Charrier, J. William, Potomac, Md., American Automar Inc.
Chambers, Constance, Los Altos, Calif., Wife of
John Chambers
Chambers, John, Los Altos, Calif., Cisco Systems Inc. CEO
Childs, John W., Boston, Mass., Investor
Clark, A. J., Bethesda, Md., Clark Construction Group Inc.
Clark, Elaine J., Potomac, Md., Wife of Vernon A. Clark
Clark, Vernon A., Potomac, Md., Vern Clark & Associates
Collazo, Carmen, Huntsville, Ala., Wife of Frank J. Collazo
Collazo, Frank J. , Huntsville, Ala., Collazo Enterprises Inc. CEO
Cook, Scott D. Woodside, Calif., Intuit Inc. chairman
D
Davis, J. Morton, Lawrence, N.Y., D.H. Blair Investment Banking
chairman
Dishongh, Emmett G., Columbus, Miss., Valley Construction Co.
Dishongh, Gill III, Columbus, Miss., Valley Construction Co.
Dishongh, Gill Jr., Columbus, Miss., Valley Construction Co.
Dorne, Renee, N. Bay Village, Fla., American Medical
Plans Inc.
Doshay, Glenn R., Rancho Santa Fe, Calif., Investor/Palantir Capital
Inc.
Duberstein, Gary K., New York, Investor/Greenway Partners
E
By Greg Hitt and Phil Kuntz
Staff Reporters of The Wall Street Journal
05/28/1998
The Wall Street Journal
A1
(Copyright (c) 1998, Dow Jones & Company, Inc.)
The following individuals donated the maximum allowable amount
($5,000) to Senate Majority Leader Trent Lott's political action
committee, the New Republican Majority Fund, in one or more of the three
years after the GOP took control of Congress in January 1995.
Identifications are based on Federal Election Commission records,
supplemented by other public records and interviews.