Undernews is the online report of the Progressive Review, edited by Sam Smith, who has covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

May 24, 2009


A few forgotten tales from the past of the leading candidate in the Virginia gubernatorial primary

Business Week, December 22, 1997: The U. S. Attorney's Office in Washington is trying to learn more about how McAuliffe earned a lucrative fee in helping Prudential Insurance Co. of America lease a downtown Washington building to the government. Prudential just settled a civil case involving that lease for over $300,000 without admitting any liability . . . The Labor Dept. is probing McAuliffe real estate deals that were bankrolled by a union pension fund .. . . And Labor Dept. probers are looking at possible conflicts of interest in at least two of McAuliffe's Florida real estate deals that were bankrolled by International Brotherhood of Electrical Workers pension money. Investigators want to know why McAuliffe got what look like very sweet deals.

Washington Post, January 12, 1998: McAuliffe, the premier Democratic fund-raiser of the decade, has spent much of the past 12 months dealing with hostile Republican investigators, federal prosecutors and adverse news stories. He has emerged as a key, but enigmatic, figure in two overlapping federal investigations: the broadening inquiry into illegal fund-raising on the part of the Teamsters union conducted by the U.S. Attorney's Office in New York, and the Justice Department's investigation into alleged 1995-96 Democratic presidential fund-raising abuses. In addition, the U.S. Attorney's Office in the District of Columbia investigated McAuliffe's role in the award of a $160.5 million federal lease, but decided against bringing criminal charges. . . McAuliffe has given depositions to federal prosecutors and congressional investigators, but he has not been called to testify publicly, and he has not been charged with any crime .... McAuliffe's success has come from his knack for being in the middle of a deal while maintaining a critical distance. For almost 17 years - as broker, lawyer, promoter and facilitator - McAuliffe had estimated with uncanny precision the sustainable distance between contributor and candidate, as well as between seller and buyer.

Wall Street Journal, 1999 - In his defense of the [Clinton house] loan, Mr. McAuliffe asks: What can Bill Clinton do for me? For starters, he could make it tough for the U.S. Attorney's office to get to the bottom of Mr. McAuliffe's oft-denied role in the sleazy 1996 "contributions swap" between the Democratic Congressional Campaign Committee and the Teamsters union . . . What Terry McAuliffe did in essence is make a contribution to Hillary's campaign. Its whole purpose is to enable her to establish residence in New York, thus the money is absolutely essential to her campaign . . . In the Hillary race, no McAuliffe "loan," no residency, no campaign. His contribution would seem to be more than $1,000.

Washington Post, 1999 - In a move that enables the Clintons to buy the house – and Hillary Rodham Clinton to have a base for her New York Senate run – the 42-year-old real estate developer and dealmaker pledged to put up $1.35 million in cash to secure a mortgage for the Clintons. Otherwise, swamped by more than $5 million in legal debts, the Clintons might have had difficulty obtaining the loan for the five-bedroom, century-old house.

Ethics law experts said yesterday that there is no legal difficulty with the Clintons' accepting McAuliffe's help, but some questioned the propriety of the president's accepting such a benefit from a private citizen.

"It's just plain wrong. It's dangerous. It's inappropriate," said Fred Wertheimer of Democracy 21. "This is a financial favor worth over a million dollars to the president."

McAuliffe is not actually giving any money to the Clintons. Rather, he will deposit $1.35 million in cash – the full amount of their mortgage – with Bankers Trust; the only risk to McAuliffe's money is in the unlikely event that the Clintons default.

And there's the little matter reported by John McCaslin in the Washington Times: Chapter 5 of the Federal Elections Commission's guide for candidates states: "An endorsement or guarantee of a bank loan is considered a contribution by the endorser or guarantor and is thus subject to the law's prohibitions and limits on contributions."

New York Times, 1999 - A former Democratic official has testified that Terence McAuliffe, President Clinton's friend and chief fund-raiser, played a major role in promoting an illegal scheme in which Democratic donors were to contribute to the Teamster president's re-election campaign, and in exchange the Teamsters were to donate large sums to the Democrats. The official, Richard Sullivan, the Democratic National Committee's former finance director, testified in Manhattan at the trial of William Hamilton, the Teamsters former political director, that McAuliffe urged him and other fund-raisers to find a rich Democrat to donate at least $50,000 to the 1996 re-election campaign of Ron Carey, the former Teamsters president. During the three-week-long trial, Sullivan testified that McAuliffe had said that if a Democratic donor made a large contribution to the Carey campaign, then the Teamsters would contribute at least $500,000 to various Democratic Party committees . . . McAuliffe's lawyer, Richard Ben-Veniste, said his client had done nothing wrong.

Drudge Report, 2001 - Enron-stung GOPers are discreetly eyeing the collapse of Global Crossing [which became the 4th largest bankruptcy in history] and its Chairman Gary Winnick, a top Democrat donor who helped DNC head Terry McAuliffe turn a $100,000 stock investment - into $18,000,000. McAuliffe arranged for Winnick to play golf with President Clinton in 1999 after his cash windfall. Winnick then gave a million dollars to help build Clinton's presidential library . . .

McAuliffe told the NY Times' Jeff Gerth in late '99 that his initial $100,000 investment grew to be worth about $18 million, and he made millions more trading Global's stock and options after it went public in '98.

Worth Magazine, 2001 - In 1995, Cincinnati billionaire Carl Lindner, whom McAuliffe had successfully courted as a donor, put up money for McAuliffe to buy American Heritage Homes, then the second-largest home builder in Florida. And in 1997, Los Angeles businessman Gary Winnick, also a Democratic donor, gave McAuliffe an early opportunity to invest $100,000 in Winnick's new company, Global Crossing, an owner and operator of undersea fiber-optic cables. When the stock subsequently soared, McAuliffe made a reported $18 million from that $100,000 investment. Two years later, McAuliffe arranged for Winnick to play golf with President Clinton, and Winnick then gave a million dollars to help build Clinton's presidential library. So it went in the 1990s: McAuliffe was helping the rich and powerful gain access to Bill Clinton, and everyone was making money.

Anyone who suggested that there was something inappropriate about all the back-scratching-something that reeked of access peddling-only sounded like a spoilsport. With the stock market boom and the Internet gold rush and the whole country making money, why not join the party?

Newsmax, 2002 - Though he insists now that his relationship with bankrupt telecommunications giant Global Crossing was strictly business, Democratic National Committee Chairman Terry McAuliffe admitted in 1999 that he once worked for Global CEO Gary Winnick, who, McAuliffe said, hired him to "help him work on deals" because Winnick "was looking for a little political action." After President Clinton's reelection to a second term, the top Clinton fund-raiser began "operating out of an office in downtown Washington that belonged to Mr. Winnick's Pacific Capital Group, a billion-dollar operation based in Beverly Hills," the New York Times reported in Dec. 1999. Winnick had retained Mr. McAuliffe as a "consultant," the paper said. The DNC chief told the Times, "Gary (Winnick) likes the action. He wanted a stable of people around him with great contacts" to "help him work on deals." . . .

The bankrupt ex-billionaire seems to have gotten what he wanted. Not only did Winnick's company win a $400 million Pentagon contract with the help of the Clinton White House, but he managed to get a public endorsement from the president himself. "Gary Winnick has been a friend of mine for some time now and I'm quite thrilled by the success that Global Crossing has had," then-President Clinton told a Calif., fund-raiser in Nov. 1999.


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