Catastrophe (26 page)

Once it stopped registering as a lobbying firm, Marwood—and later Waypoint—had no obligation to disclose their clients. So we don’t have any idea whom the firm now represents.

We do know that Marwood (and Waypoint) still maintains a Washington, D.C., office. The company’s sparse Web site description suggests that the firm provides “asset management,” “healthcare research,” and health-care sales.” But a series of news reports provided some insight into what Ted Kennedy, Jr., has been doing since his days helping out BMS.

Since Ted Jr.’s firm focuses on health care and private investments, most of his clients are still extremely interested in access to credible intelligence on new legislation that might affect the health care industry and the private equity field. And the younger Kennedy can still be helpful in this regard—because information is what it’s all about.

As Jeff Young of
The Hill
noted in writing about the Marwood Group:

For all practical purposes, the fact that Ted Kennedy, Jr.’s, firm is no longer a registered lobbying organization may not be what matters. He has unique access to the only person besides President Obama who will decide which provisions will be in the health care reform package that will come before Congress. This is the number one concern of the universe of pharmaceutical companies, hospitals, doctors, nurses, insurance companies, nursing homes, hedge funds, investors, and labor unions—all of whom want to know what’s going on behind the scenes in the great battle for health care reform.

Whether or not he’s a lobbyist, Ted Jr. is still a player in the Washington information game.

HITTING UP THE LABOR UNION PENSION FUNDS

In 2004,
Forbes
reported that Kennedy was soliciting labor union pension funds from pals of his father to invest in a private fund he was marketing:

But here’s the strange thing: The $1.2 million Kennedy Jr. made for getting the union’s pension board to invest with the Intercontinental Real Estate Fund III didn’t come from Intercontinental. It was charged to the unions!

Why would a union pay Kennedy’s marketing fee in exchange for the privilege of investing its pension money? Wouldn’t it make more sense for
Intercontinental—which had hired the marketers and gotten the money—to pay that fee? A lot of union people asked the same question. After all, pension funds don’t normally pay for the marketing expenses of companies that pitch them to get them to invest.

One of the board members of a teachers’ pension fund invested in Intercontinental raised the issue:

The Chicago board refused to pay the fee.

After all, the fee was backward. The company that’s soliciting the investment should pay for the marketing, not the pension fund that contributes its money.

So why did Kennedy Jr. hit up the union for the money?

Taking a page from the Bill Clinton playbook, Kennedy did it because he could.

With Senator Edward Kennedy’s power in labor circles—and his chairmanship of the labor committee—most unions wouldn’t want to say no. And who knows how many gave in and paid up?

When the dispute became public, Kennedy defended himself against suggestions that he was trading on his family name. He suggested that he viewed his work as a “public service,” insisting “I am committed to building my company and providing the highest-quality service to my friends in organized labor.”
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Public service? Is he kidding? What kind of public service is it to take
millions of dollars from working people’s pensions to line your own pockets? Especially when the entire transaction is predicated on your relationship to your father? Remember, those “friends” Ted Jr. referred to are the same folks who are always looking for votes from their other good friend, Senator Ted Kennedy, chairman of the Senate committee on Health, Education, Labor and—what was that again? Oh, yes, and
Pensions.

Do you see what’s wrong with this picture? The son of a senator who’s in a position to influence all legislation regarding unions and pensions is hitting up pension funds from the very unions who want favors from his father? And hitting them up for a controversial and unorthodox fee?

Do the unions have to worry that they might not get what they want—or even might see retaliation—if they don’t succumb to the demands for enormous fees to come from the pensions of their workers?

It gets worse. The teachers’ union incident wasn’t an isolated one. In Senator Kennedy’s home state of Massachusetts, the state’s Pension Reserves Investment Management Board approved a $10 million investment in another Intercontinental fund marketed by Ted Kennedy, Jr. The pension board was chaired by the state’s treasurer, Timothy Cahill. According to the
Boston Globe,
Senator Kennedy invited Cahill and a deputy, Doug Rubin, to a special barbecue dinner at his Hyannis Port oceanfront home.
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Cahill told the
Globe
the pension issue was never discussed at the Kennedy party.

Of course not.

And Rubin says they didn’t even know that Kennedy was involved in the deal.

Of course not.

Rubin even disputes the $200,000 fee Kennedy Jr. billed the State of Massachusetts, claiming that Kennedy had nothing to do with the deal.
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What’s going on there? It’s impossible to say.

Can’t Ted Kennedy, Jr., find something to do that doesn’t involve his father?

These days, Kennedy is still involved in private financing, including other health care ventures. And he’s a prominent speaker at business conferences predicting what will happen on specific health care issues before the federal government—including the business ramifications of health care reform.

Once again, he’s taking advantage of his closeness to the core of power on health care issues. And no doubt he’s figured out ways to turn his position to his financial advantage.

It’s a powerful position indeed. Information on the specifics of the health care plan in each sector of the industry can change markets, make or lose millions, and lead to big fees.

Ted Kennedy, Jr., has figured it all out.

It’s all in a name.

The Former Congressional Leaders Who Secretly Influence Federal Policies and Spending

Please don’t call them lobbyists. You might upset them.

They’re
not
lobbyists! Not at all.

They call themselves something entirely different: “strategic advisers,” for instance, or “policy advisers.” Sometimes they’re just “government relations consultants.” But they’re definitely not lobbyists.

Why would you even think such a thing? Simply because they work for lobbying firms to help get legislation passed in Congress?

Here’s a helpful translation of this novel insider Washingtonspeak:

Terms like “strategic advisers,” “policy advisers,” and “government relations consultants” refer to the well-heeled people—usually high-level former government officials or relatives of powerful lawmakers or former presidential campaign gurus—who charge exorbitant fees to corporations, foreign governments and other foreign interests, labor unions, trade associations—and anyone else who will secretly pay them—to try to pass (or kill) special-interest legislation or get money for favorite projects.

Think that sounds a lot like what a lobbyist does? You’re right. If it walks like a duck, talks like a duck, and acts like a duck, it’s a duck. And if it acts
like a lobbyist, is paid like a lobbyist, and works for a lobbying firm or to influence legislation, it’s a lobbyist.

Except, of course, in Washington.

The lobbyists who wrote the legislation to regulate lobbying actually managed to protect their little game by carving out several rather ridiculous exceptions to the definition of a lobbyist. For example, if you don’t actually call or write to a member of Congress or the Executive Branch or their staff to get legislation passed, you’re not a lobbyist—even if you push for that legislation in plenty of other ways. You can be paid to offer advice on whether specific legislation should be passed or killed; sit with your client and draft legislation; prepare a list of talking points; create a list of all of the people who should be contacted to further the legislation; organize
other
people and groups to contact legislators; make appointments with key staff and legislators; speak to reporters about the merits of your client’s position; track the progress of the bills; even draft revisions to bills and amendments.

None of that counts as lobbying. Not in Washington.

That’s what happens when the goats are put in charge of guarding the garbage.

The “advisers” who thrive under these rules righteously claim that they’re not lobbyists. In fact, they’re
stealth lobbyists
—working to get legislation passed while these regulations shield them from the reporting and disclosure requirements of all other lobbyists, subverting the entire purpose of lobbying disclosure requirements.

It’s time to out them.

They need to be treated like any other lobbyists—regardless of what professional name they give to their work.

They need to disclose what they’re doing and how much they’re paid.

Think about it: Why do we require quarterly and annual lobbying disclosure? So that we can monitor several things: who’s trying to influence the people we elected to represent us; how much they’re being paid to wield their influence over the legislative process; and what it is they’re trying to achieve. But as inadequate as the lobbying disclosure requirements are—and they certainly are—the stealth lobbyists get around even those minimal legal requirements.

They’ve figured out how to game the system, and they’ve made it legal. For example, you’re technically not a lobbyist if you devote less than 20
percent of your total working time on a client’s matters to lobbying activities. In other words, you can engage in covered lobbying activities all you like—as long as you do so for only 19 percent of the time spent on the client’s work.

Should serious regulation of lobbyists depend on the amount of time they spend on lobbying? If you’re engaged in lobbying activities at all, you’re a lobbyist and you should be regulated like one. End of story.

Why did the lobbying industry push for this crazy distinction? For one simple reason: because registered lobbyists are required to disclose what they are working on, who hired them, and how much they’re being paid.

Unlike lobbyists, “strategic advisers” and “government relations consultants” keep their work secret. For them—and their clients—that’s a big plus. Many corporate clients would prefer that no one know about the millions they spend to defeat health care reforms, for example, or to get an earmark passed that will benefit their business. That’s where “strategic advisers” come in handy: as stealth lobbyists, they’re very effective in producing results for their clients while keeping things conveniently under the radar.

Another reason these lobbyists want to avoid being regulated is the legal prohibition on lobbying for two years after leaving government service. Under our current lobbying regulations, former senators, cabinet members, and assistant secretaries, to mention just a few, are forbidden to lobby their colleagues for two years after leaving their influential government jobs. That’s a sensible provision, designed to prevent government officials from cutting last-minute deals before leaving office in exchange for future work or favors and to prevent even the perception of conflicts of interest. But the folks in Washington have figured a way around it: under today’s loose standards, all a departing official needs to do is join a lobbying firm and call himself an “adviser.” Like cockroaches that develop immunity to every new roach spray, lobbyists find their way out of the regulatory scheme without missing a step.

Who are these clever stealth lobbyists? You’ll recognize many of them. They’re former everythings: senators, congressmen, even a former president (Bill Clinton is one stealth lobbyist who doesn’t hesitate to pick up the phone and call Democratic leaders to push the programs that are important to groups that are paying him). Some are relatives of prominent politicians, such as Ted Kennedy, Jr. Others are close former presidential campaign op
eratives who want to preserve the option of joining the executive branch at a later date. Senate majority leaders are especially popular stealth lobbyists. Of the last four Senate majority leaders, three are stealth lobbyists: Tom Daschle, George Mitchell, and Trent Lott. The fourth, Bob Dole, is a full-fledged registered lobbyist. All four now work for lobbying firms. While it’s not illegal, these “advisers” should all have to disclose their clients and the issues that they “advise” them about getting through Congress.

Former House leaders are doing well under this system, too—among them former majority leaders Richard Gephart and Dick Armey, both registered lobbyists.

It’s obvious that leadership positions in Congress are good training spots for both lobbyists and stealth lobbyists. That’s where they develop their skills—and, apparently, find their future clients. The ones they don’t want us finding out about.

There are now 15,150 registered lobbyists in Washington. D.C. Among them, they were paid $3.24 billion in 2008.
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They’re a fast-growing population. But we have no idea exactly how many stealth lobbyists are out there or exactly how much they were paid. All we know is that they’re out there doing their quiet and influential work and getting paid well—quite well—for their time.

That stealth technology really works!

Take a look at a few of our former congressional leaders:

TOM DASCHLE: STEALTH LOBBYIST PAR EXCELLENCE

Former Senate majority leader Tom Daschle is the quintessential stealth lobbyist. After his defeat in 2004, he joined the powerful Washington law firm and lobbying organization, Alston & Bird.

Daschle claims he’s not a lobbyist. In fact, he’s stated publicly that lobbying is “beneath” him.
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The thing is, he’s not a lawyer, either. So what’s he doing working at a firm that only does lobbying and legal representation?

Take a guess.

He’s a special adviser to Alston & Bird’s public policy group. He was lured to the firm, in part, by another former Senate majority leader, Bob Dole, who sought him out after he lost his Senate seat. These former majority leaders sure stick together.

At the time, Dole apparently envisioned a hands-on lobbying role just like his own for Daschle. Because when Daschle joined the lobbying firm in 2005, Dole told the
Washington Post:
“He’s got a lot of friends in the Senate, and I’ve got a lot of friends in the Senate, and, combined, who knows—we might have 51,” Dole joked. “It’s going to work fine. You need some flexibility and diversity. I don’t think any successful firm is all Democrat or all Republican.”
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Dole was obviously referring to the likelihood that the well-connected new bipartisan duo would be lobbying together to round up the fifty-one votes that would be needed to pass or kill a client’s bill, amendment, or earmark. That’s called lobbying. What else would he be expecting Daschle to do?

As another former Senate majority leader turned lobbyist, Trent Lott, explained it, “You can’t be advising people on how to deal with Congress without, in effect, at least indirectly influencing Congress.”
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And that’s what Daschle does. He helps clients figure out the best way to influence Congress, directly or indirectly. There’s a word for that:
lobbying.

As the
Washington Post
observed about the former senator’s new role: “Daschle is merely the latest high-profile former lawmaker to jump to the lucrative world of lobbying and law firm work in what has become an increasing trend.”
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It seems as if everyone knew that Daschle was a lobbyist—except Daschle himself.

Oh, and one other important official: Barack Obama.

Obama had promised that he would neither appoint former lobbyists nor permit political appointees to work on contracts or regulations that related to their previous employment. Yet as soon as he became president-elect, Obama made Tom Daschle his first cabinet appointment, tapping him to be secretary of health and human services. Apparently all Daschle had to do was label himself an “adviser” and deny he was a “lobbyist,” and that was enough to convince Obama.

But even Daschle couldn’t sincerely claim there would be no conflict of interest because of the breadth of his former clients and the firm’s and his own affiliations that relate to health care. First of all, Daschle had been a board member of the Mayo Clinic, an organization with major financial and programmatic interests in federal health care policy. Second, and
more important, Daschle’s employer, Alston + Bird, received more than $4.7 million in lobbying fees in 2008 from health care interests, including drug companies, nursing homes, nurses, clinical laboratories, and insurance companies. Finally, Daschle had been paid big bucks for speeches paid by health giants such as UnitedHealth Group.

Why didn’t anyone on Obama’s team raise a concern about Daschle’s work for Alston & Bird? His status within the firm was no secret. His role as an important part of its “health care and legislative policy team” was highly touted by the firm. Here’s how its Web site describes Daschle’s role:

Did the Obama folks really think there’d be no conflict of interest when Daschle’s employer, Alston & Bird—and maybe Daschle himself—represented every possible aspect of health care? The firm’s health care clients included:

• Nursing home coalitions that receive reimbursements from HHS and that depend on Medicare rates set by the agency
  
• Pharmacies that also receive federal reimbursements on prescription drugs
  
• Insurance companies, hospitals, doctors, and nurses, who will be seriously affected by the massive health care reform touted by Obama
  

It’s a manifestation of Obama’s hypocrisy that he actually nominated Daschle and planned to elevate him to be the White House health czar—
with an unprecedented office in the White House as well as at HHS. Why? Because, given Alston & Bird’s portfolio of clients, it’s hard to imagine that Daschle didn’t spend most of his time there working on health care issues.

As the list of Alston & Bird’s lobbying clients below indicates, $4.75 million—60 percent—of the firm’s roughly $8 million in lobbying fees in 2008 were paid by clients with health care interests.

Even by Washington standards, that’s enormous. And, trust us, those folks weren’t looking for an “adviser” to give a PowerPoint presentation on how the committee system works, or to tell them who the key players are in the Senate, or to give some general lecture on health care reform. They were looking for success and influence. That’s why they went to Alston & Bird in the first place.

And Alston & Bird very much understands what its clients want. The firm is proud of the fact that it counts such former congressional leaders among its members, publicly promoting their experience in Congress. Here’s another candid description of their work on the firm’s Web site: