Post by POA on Oct 27, 2004 12:51:36 GMT -5
October 19, 2004
Party Favors
The Political Business of Terry McAuliffe
By JEFFREY ST. CLAIR
In May 1999, the Labor Department brought suit against Jack Moore and John Grau, charging the two men with mismanaging the pension fund for the International Brotherhood of Electrical Workers. Moore was the longtime secretary of the union, while Grau was the vice-president of the National Electrical Contractor's Association, which was partner in the fund. At issue was a series of sweetheart real estate deals in central Florida, which regulators labeled "imprudent", and cost the fund money. Moore and Grau eventually settled the case for more than six figures. The union was forced to kick in another $5 million to cover the losses to the pension fund. The person at the center of the scandal, however, made out in the deal very well, indeed. His name: Terry McAuliffe, now head of the DNC.
McAuliffe met Moore in 1988, when both were raising money for the doomed presidential bid of Dick Gephardt. They became close friends, allies in a campaign to redesign the Democratic Party into a more moderate political vessel, along the lines of the pre-Reagan Republicans. Moore controlled the $6 billion IBEW pension fund and had a reputation for investing money in businesses run by friends and political cronies.
So it was that in November 1990, McAuliffe approached Moore and his friend Grau with a proposal for a real estate partnership in central Florida with an investment company called American Capital Management, which McAuliffe owned with his wife Dorothy. The deal involved the purchase of the Woodland Square Shopping Center and five apartment complexes outside Orlando, Florida. It was a lopsided partnership. The pension fund put up $39 million to purchase the property. McAuliffe shelled out $100, yet he and his wife enjoyed 50 percent ownership in the project. He eventually parlayed his $100 investment into a $2.45 million profit.
Fresh from this triumph, McAuliffe approached Moore with a new proposal. He asked Moore to dip into the pension fund one more time for $6 million so that he could purchase a parcel of land south of Orlando called Country Run, which McAuliffe planned to subdivide into 500 single-family homes. Moore obliged and loaned McAuliffe the money. The development soon proved to be a bust. Only half the homes were built and many of them didn't sell. Years passed, but McAuliffe never bothered to make a single payment to the pension fund on the loan. According to Labor Department records, McAuliffe was in default from December 1992 through October 1997. The managers of the pension fund never demanded payment or called in the loan. The only collateral they had required was the nearly worthless Country Run property itself.
Eventually, McAuliffe found a buyer for the property and repaid the loan. But the aroma of the deals attracted the attention of the Labor Department, which had been looking into the looting of worker pension funds. In May of 1999, the agency brought a suit against Moore and Grau for mismanagement of the fund. Both eventually settled, agreeing to six figure fines, and resigned their positions. The IBEW was compelled to reimburse the pension fund to the tune of five million dollars. The Labor Department didn't have any authority to go after McAuliffe. That was up to the Clinton Justice Department and they took a pass. He wasn't sued or otherwise inconvenienced. So a labor fund got looted and Terry McAuliffe got very rich.
This wasn't the only time McAuliffe steered a labor union toward dangerous legal and financial shoals. In 1996, McAuliffe helped devise a political money-cycling scheme that led to the downfall of several leaders of the Teamster's Union, including the union's reform-minded president Ron Carey and his political director William Hamilton. At Hamilton's trial on corruption charges, Richard Sullivan, the former director of finance for the Democratic National Committee, testified that McAuliffe asked Sullivan and other top DNC fundraisers to approach big Democratic donors who could make at least a contribution of at least $50,000 to the re-election campaign of Ron Carey, then in a pitched battle with James Hoffa, Jr. Under McAuliffe's scheme, Sullivan testified, the Teamster's Union would later recycle that $50,000 back into various Democratic Party accounts. Once again, McAuliffe was never charged with wrongdoing and his lawyer, Richard Ben-Veniste, repeatedly said there's was nothing illegal in his client's plan. He lives a charmed life.
* * *
Terry McAuliffe was born in 1957 in Syracuse, New York. His father was a longtime Democratic powerbroker in upper state New York and a top fundraiser for the party. Terry got into politics at a young a young age. But as anyone can tell there's not much evidence that he was ever excited about policy issues. The environment, abortion rights, civil rights, peace. These great issues didn't turn Terry on. Instead, he was entranced by the mechanics of political fundraising, party planning and schmoozing with business elites and Hollywood celebrities.
He made a beeline for the Beltway, attending Catholic University. Through his father's influence, he got a position as a fundraiser for Jimmy Carter. And then he was off and running, renting his financial services to House and senate races and gubernatorial elections.
In the meantime, McAuliffe managed to earn the obligatory law degree from Georgetown University. Then in 1984, he began to fine-tune his craft under the wing of Tony Coelho, the longtime House whip and master fundraiser from California. At the time, Coelho was heading up the Democratic Congressional Campaign Committee, the main DNC fundraising apparatus for House races.
More than anyone, Coelho laid the foundations for the Democratic Party's open courting of big business. And Terry McAuliffe, working from the master's Rolodex, served as Coelho's chief apprentice, sprinting from one Beltway lobby shop to the next offering prime access to Democratic powerbrokers for political cash, hard and soft money, the new coin of the realm.
The young fundraiser learned an early lesson. No enterprise was off-limits, no matter how tarnished the reputation of the company: weapons-makers, oil companies, chemical manufacturers, banks, sweatshop tycoons. Indeed, McAuliffe made his mark by targeting corporations with festering problems, ranging from liability suits to environmental and worker safety restraints to bothersome federal regulators. The more desperate these enterprises were for political intervention, the more money McAuliffe knew he could seduce into DNC coffers. What about environmental groups? Big labor? The traditional core of the Democratic Party? Not only didn't their objections (assuming they voiced any) matter, they actually made McAuliffe's pitch more appealing to the corporadoes. After all, the Republicans didn't have any sway over these organizations. Triangulation, the backstabbing political playbook of Clintontime, originated as a fundraising gimmick. A very lucrative one.
In the early 90s, really big money began to pour into the DNC. McAuliffe recruited robust donations from Arco and Chevron, Entergy and Enron, Phillip Morris and Monsanto, Boeing and Lockheed, Citibank and Weyerhaeuser. Many of these corporations had all but abandoned the Democrats during the Reagan era. McAuliffe lured them back with promises of favorable treatment by a new generation of anti-regulatory Democrats attuned to the special needs of multinational corporations. This was the mulch bed from which the Clinton presidency took root.
By 1994, Clinton himself had aligned himself to McAuliffe's magic touch. He tapped him as the chief fundraiser for the 1996 reelection campaign. In this capacity, McAuliffe masterminded some of the more risqué political fundraising operations since the Kennedy era. There were the fundraisers at Buddhist temples in California. There were the notorious coffee klatches, where for a six-figure contribution to the DNC, corporate executives were brought to the White House for some face-time with Bill and Hillary, Al and Tipper, and a retinue of cabinet secretaries, with pen in hand ready to address any nagging problem. McAuliffe also devised the plan to rent out the Lincoln Bedroom to top contributors for slumber parties with the president.
Over the course of the next six years, McAuliffe was personally responsible for raising, largely from corporate sources, more than $300 million for the DNC.
* * *