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Published: Wednesday, 7/20/2005

Bank board hired lobbyist with links to Ohio GOP chief

BY JAMES DREW
BLADE COLUMBUS BUREAU CHIEF
Bob Bennett, chairman of the Ohio Republican Party, was head of a federal bank cooperative last year when it hired a lobbying firm that retained Mr. Bennett as a consultant. Bob Bennett, chairman of the Ohio Republican Party, was head of a federal bank cooperative last year when it hired a lobbying firm that retained Mr. Bennett as a consultant.
SIMMONS / BLADE Enlarge

COLUMBUS - While Ohio GOP Chairman Bob Bennett served as chairman of the board for a federal banking cooperative last year, the financial organization gave a lobbying contract to one of his longtime associates who had hired Mr. Bennett as a consultant.

Mr. Bennett was chairman of the Federal Home Loan Bank of Cincinnati in 2004 when the bank paid at least $80,000 to Whatman & Associates, a lobbying firm operated by former Ohio Republican Party executive director Tom Whatman, who retained Mr. Bennett at another firm he operates.

David Hehman, president of the Federal Home Loan Bank, said last week that Mr. Bennett recused himself from the vote on Mr. Whatman's hiring.

Mr. Hehman declined to say whether Mr. Bennett introduced Mr. Whatman to the bank or pushed for hiring his lobbying firm.

"All I will say is that it was my decision to hire a lobbyist, and I chose Tom Whatman," Mr. Hehman said.

Mr. Bennett said he introduced Mr. Hehman to Mr.

Whatman.

"Believe it or not, I don't believe I ever mentioned Tom Whatman's name to anybody. His name came up in Washington, I believe, and I was asked about it. David Hehman asked me, maybe, he asked if I knew Tom. I introduced him to Tom. It was not my suggestion," Mr. Bennett said.

The regional wholesale bank, which has 750-member financial institutions in Ohio, Kentucky, and Tennessee, provides loans and other services to community-based financial institutions, but it does not receive taxpayer funding.

Mr. Bennett, who was appointed to the board by a Bush administration official in 2002, said he "made a full disclosure to everybody, including the board" that he works as a consultant for Strategic Public Partners, a Columbus consulting firm operated by Mr. Whatman in addition to his lobbying firm.

Mr. Bennett said he consulted the bank's attorneys before the Federal Home Loan Bank of Cincinnati moved forward on hiring Mr. Whatman's firm.

As a consultant for Strategic Public Partners, Mr. Bennett "serves as an adviser to businesses looking to get involved in grass-roots politics," Ohio GOP spokesman Jason Mauk said.

Mr. Whatman, who worked for Mr. Bennett at the Ohio GOP for nine years and has said he considers him a "mentor," didn't return messages seeking comment.

Bill Woods, issue coordinator for the Common Cause Education Fund, said the hiring of Whatman & Associates by the bank should be investigated.

He said the $80,000 in fees paid to Mr. Whatman's firm - when Mr. Bennett was on the board of the bank and a consultant himself for Mr. Whatman - is a vivid example of "interlocking money and politics."

"It shows how deep the impact of big money and politics goes, and how intrusive this becomes through the hiring of lobbyists," Mr. Woods said.

Formed in 1970, Common Cause is a nonprofit group that pushes for campaign finance reform and "open, ethical, and accountable" government.

Doug Duvall, a spokesman for the Federal Housing Finance Board - which regulates the 12 Federal Home Loan Banks, including the Federal Home Loan Bank of Cincinnati - said the conduct of board members is subject to federal and state ethics laws.

Mr. Duvall said the hiring of Mr. Whatman's firm "does not seem like cause for undue concern."

He said Mr. Bennett made the right call by recusing himself from the vote to hire Mr. Whatman.

"If it is a board decision rather than a unilateral one, that protects them too," Mr. Duvall said.

Even if Mr. Bennett's conduct involved no allegations of wrongdoing, Mr. Woods said the public deserves to know how and why Mr. Whatman was hired by the federally regulated banking board and Mr. Bennett's role in the contract.

"It would seem to me that what you are looking at looks like a potential conflict of interest," the Common Cause official said. "One of the problems we see right now is this absolute power by the Republican Party. They have this arrogance of being able to do anything they want to do."

Melissa Dallas, a spokesman for the Federal Home Loan Bank of Cincinnati, yesterday provided The Blade with a copy of the federal regulation governing conflict-of-interest issues at the bank.

"A director shall disclose to the Bank's board of directors any personal financial interests he or she has ... in any matter to be considered by the Bank's board of directors ... A director shall refrain from considering or voting on any issue in which the director, any immediate family member, or any business associate has a financial interest," the federal regulation states.

"Our position is Bob Bennett followed that procedure," Ms. Dallas said. "Nothing improper was done."

The bank's president, Mr. Hehman, and one bank board member, however, said they were not aware of Mr. Bennett's financial relationship with Mr. Whatman before the lobbyist's firm was hired by the bank board.

Mr. Hehman said last week that he was unaware "of any business interest" between Mr. Bennett and Mr. Whatman.

Bank board vice chairman Carl Wick, a retired NCR Corp. executive who owns a Dayton area consulting firm, said he knew Mr. Whatman had worked for Mr. Bennett at the Ohio GOP, but he did not know that Mr. Bennett was being paid as a consultant for Mr. Whatman's other company, Strategic Public Partners.

Mr. Wick, an appointee of Gov. Bob Taft to the state Board of Education, said it didn't bother him that he didn't know about Mr. Bennett's business link to Mr. Whatman.

When asked if that link was a conflict of interest for Mr. Bennett, Mr. Wick replied: "Not necessarily. I have political connections. Some of these players are evident to me just because of the contacts I have."

In 2002, all 12 Federal Home Loan Banks, including the Federal Home Loan Bank of Cincinnati, registered with the Washington-based lobbying firm Fried, Frank, Harris, Shriver & Jacobson LLP, which specializes in banking issues.

In addition, the Federal Home Loan Banks have hired their own lobbyists and the one based in Cincinnati was the last of the 12 to do so, Ms. Dallas said.

The bank's spokesman said the board voted in October, 2003, when Mr. Bennett was vice chairman, to approve spending money on a lobbyist, and Whatman & Associates was hired in January, 2004.

Ms. Dallas said the bank would not supply The Blade with copies of board meeting minutes. She said the firm is not required by federal law to release board meeting minutes.

The bank also would not release the names of the two other lobbying firms it said were interviewed before the contract was awarded to Mr. Whatman's firm.

Mr. Bennett, a certified public accountant and attorney, has served as chairman of the Ohio GOP since 1988, leading the GOP to its domination of the state political scene.

He's been on the short list of candidates to lead the Republican National Committee because of his success in Ohio, and he has also discussed the idea of moving into the private sector in recent years.

Mr. Bennett was a Bush Ranger in 2004 because he raised at least $200,000 for the President's re-election campaign. Mr. Whatman was a Bush Pioneer for raising at least $100,000 for the campaign.

Mr. Bennett was appointed to the Federal Home Loan Bank of Cincinnati in 2002 by former Federal Housing Finance Board Chairman John T. Korsmo - an appointee of President Bush - to serve a three-year term.

Six of the bank's board members are selected by the Federal Housing Finance Board, an agency within the executive branch of the federal government. The other 10 seats on the board are filled by officials from member banks in the cooperative, who are elected by their peers.

Mr. Bennett was one of the six "public interest" appointees to the board.

He was elected by fellow board members to serve as chairman, and he also led the board's finance committee.

The chairman of the board is paid $3,700 a meeting, with a maximum of $28,364 per year, and there were nine board meetings and two conference calls last year.

"The board is very hands-on, " said Ms. Dallas, the bank spokesman. "The majority of the board are members of the cooperative system, so they themselves are part of the process that uses the system we offer."

In 2003, Mr. Bennett served as vice chairman of the board, and beginning on Jan. 1, 2004, he served as chairman of the board until his term expired this year.

On Jan. 16, 2004, Mr. Bennett announced he would work as a consultant for Strategic Public Partners, according to press reports.

Six days later, the U.S. Senate received Mr. Whatman's registration to lobby on behalf of the Federal Home Loan Bank of Cincinnati.

Senate records show that Whatman & Associates received at least $80,000 from the Cincinnati federal bank in 2004.

Additionally, Mr. Bennett serves on the board of directors of Pennsylvania-based Howland Group, which has directed at least $40,000 in lobbying work to Mr. Whatman's firm, Senate records show.

Susan Howland, the CEO of Howland Group, a privately owned and operated maritime consulting firm based outside of Philadelphia, said she has had a longstanding relationship with Mr. Bennett and Mr. Whatman.

"I've known these people for a long, long time," Ms. Howland said. "We don't have a very active lobbying requirement, but we needed a lobbyist. I know [Whatman & Associates] and we hired them."

Mr. Bennett said he introduced Mr. Whatman to Ms. Howland about 10 years ago.

The Federal Home Loan Bank of Cincinnati found it was necessary to hire a lobbyist because there's a great deal of policy being crafted in Washington that impacts the bank, said its presidnet, Mr. Hehman.

The role of Mr. Whatman, he said, is to advise the board and the firm's leaders on the political landscape in Washington.

When asked why Mr. Whatman was hired, Mr. Hehman said: "He's a smart guy."

Mr. Hehman would not say what role Mr. Bennett played in the hiring of Mr. Whatman's firm.

"I won't answer that question," he said. "I don't think it is any of your business how our board acted."

Bill Allison, a spokesman for the Washington, D.C.-based Center for Public Integrity, said a key issue is how much information Mr. Bennett provided to board members about his financial tie to Mr. Whatman.

"Disclosure is the key thing. Knowing a financial relationship is crucial information to have. Recusal is a good first step," he said.

"To an outsider looking in, the question is, 'How could that be legal?' "

Blade staff writer Steve Eder also contributed to this report.

Contact James Drew at:

jdrew@theblade.com

or 614-221-0496.



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