A Legitimate Need for a Reformer in Richmond

by Jim Geraghty

Virginia governor Bob McDonnell, whose term ends in January, is ending what once looked like a quite successful term with a terrible morass of ethics allegations, including disturbing reports of receiving expensive gifts from wealthy supporters and the use of the governor’s mansion for a campaign donor’s corporate event.

Gov. Bob McDonnell on Thursday refused to answer questions on whether he knew that an expensive Rolex watch he received from his wife was, in fact, a gift from Star Scientific CEO Jonnie Williams Sr.

Following a radio appearance in Richmond, McDonnell was asked whether he realized that the $6,500 timepiece was a gift from Williams — a McDonnell mega-donor and friend whose dietary supplement, Anatabloc, has been promoted by first lady Maureen McDonnell on at least two occasions.

“I’m not going to comment any further on that,” he responded.

The governor did say that his wife did not work for Star Scientific, even as sources said she has received a number of checks from Williams, in addition to numerous expensive gifts that include thousands in designer clothing purchased during a New York City shopping spree in the spring of 2011.

The answers came during and after the governor’s appearance on WRVA. McDonnell, with barely six months left in office, finds himself entangled in three criminal investigations.

For an opposition party, this would normally be a golden opportunity, a chance to campaign in 2013 on the need to clean up Richmond and end a way-too-cozy relationship between elected officials and wealthy donors.

The problem is that the Democrats’ gubernatorial candidate, Terry McAuliffe, is pretty much the living embodiment of a way-too-cozy relationship between elected officials and wealthy donors.

Back in the mid-1990s, McAuliffe was more or less bragging about it:

His closeness to the first couple and the expanding network of political contacts he has built in the Clinton years have also enhanced an enterprise that Mr. McAuliffe has built more quietly: a web of business deals, from telecommunications to real estate, that the fund-raiser keeps far from the public spotlight. His business confederation, a veritable McAuliffe Inc., has generated tens of millions of dollars, but Mr. McAuliffe keeps his affairs so private that he does not even have a business listing in the Washington telephone directory.

His quietly acquired private fortune is illustrative of changes in the political culture here. Raising money for politicians was once a ticket to an ambassador’s post or other influential job in the government. Other presidential money men have hung shingles as lobbyists, openly trading on their access, or peddled influence as lawyers.

Charting a new course, Mr. McAuliffe has transformed the art of raising money for public figures into the art of raising money for himself, leveraging a personal fortune from his political fund-raising contacts.

Mr. McAuliffe lives in a Virginia suburb of Washington but calls a Florida house-building company his main business. And though he is chairman of the Florida company, he was unable to provide its address in a deposition this year. The aide who handles his frenetic schedule has been working out of Mr. McAuliffe’s obscure title insurance company in Florida.

Although the capital is the central nervous system of both his fund-raising and business dealings, Mr. McAuliffe does not have his own Washington office, so when he is in town he often conducts business at restaurants like the Palm and the Oval Room. In lengthy interviews at both restaurants he shed some light on his private deal-making and its symbiotic relationship with his political fund-raising.

”I’ve met all of my business contacts through politics. It’s all interrelated,” he said. When he meets a new business contact, he went on, ”then I raise money from them.”

Among those political contact/business contacts was the International Brotherhood of Electrical Workers. That organization gave McAuliffe a deal that is unbelievable . . . in the sense that you cannot believe that there wasn’t some other angle that went undisclosed to the public:

In the late 1990s, some of McAuliffe’s business ventures came under investigation by the U.S. Department of Labor, which filed suit against two labor-union officials, both of them with the International Brotherhood of Electrical Workers pension fund, for entering into questionable business arrangements with McAuliffe. Both officials later agreed to pay hundreds of thousands of dollars in penalties for their actions, and the union itself had to reimburse its pension fund by nearly $5 million.

In one deal, McAuliffe and the fund officials created a partnership to buy a large block of commercial real estate in Florida. McAuliffe put up $100 for the purchase, while the pension fund put up $39 million. Yet McAuliffe got a 50-percent interest in the deal; he eventually walked away with $2.45 million from his original $100 investment. In another instance, the pension fund loaned McAuliffe more than $6 million for a real-estate development, only to find that McAuliffe was unable to make payments for nearly five years. In the end, the pension fund lost some of its money, McAuliffe moved on to his next deal, and fund officials found themselves facing the Labor Department’s questions…

On October 16, 2001, Jack Moore and another official named in the suit agreed to pay six-figure penalties for their role in the McAuliffe ventures, and the electrical workers union was forced to reimburse the pension fund for its officers’ failure to act “with the care, skill, prudence, and diligence . . . that a prudent person acting in a like capacity and familiar with such matters would use.” McAuliffe was not charged with any wrongdoing; his $2.45 million payday, while a violation of common-sense norms of business propriety, did not break any laws.

Just the guy Virginians should entrust the public treasury too, huh?

The Campaign Spot

Election-driven news and views . . . by Jim Geraghty.