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Published: 10/30/2005

STATE OF TURMOIL

Ohio Bush donors richly rewarded

The fund-raisers gain access to contracts, policymakers

BY JAMES DREW
AND STEVE EDER
BLADE STAFF WRITERS

COLUMBUS -- The Ohio business leaders and lobbyists who steered at least $4.1 million to President Bush's re-election campaign last year collected more than $1.2 billion in taxpayer dollars for their companies and clients, a Blade investigation shows.

The fund-raisers who helped deliver the battleground state - and ultimately the 2004 presidential election - also received choice appointments from state and federal officials. The posts included an ambassadorship to Germany and a seat on the Ohio State University board of trustees.

Others made millions from unbid contracts varying from supplying ball bearings to the military or office furniture for federal agencies.

As they raised millions to help re-elect George W. Bush in 2004, the 30 Bush "Pioneers" and "Rangers" from Ohio - who raised at least $100,000 and $200,000 respectively - also had access to policymakers from the Ohio Statehouse to the White House.

The fund-raisers included Tom Noe, a former Toledo-area rare-coin dealer who is facing multiple investigations into the state's failed $50 million investment in rare-coin funds. He was indicted Thursday on three felony charges that he laundered money into the President's re-election campaign.

Both Bush-Cheney and the campaign of Democrat John Kerry tapped "bundlers" who would find dozens of others - often business associates and other contacts - who would each contribute $2,000, the maximum allowed by federal law to a candidate in an election.

But in Ohio, where the election swung on fewer than 120,000 votes, Mr. Bush's 30 premier fund-raisers exceeded the Kerry campaign's take from the state by themselves.

"This fund-raising is just a pyramid scheme, except that it works," said Alex Knott, a spokesman for the Center for Public Integrity, a nonpartisan watchdog group based in Washington. "The Pioneers and Rangers are the networks of people - the friends of the friends of the friends - who put money into these coffers. They are given a tracking number so their donations can be given credit and there is only one reason for that - if that is going to be used as value later."

The three Ohio Pioneers and Rangers who agreed to speak with The Blade said ideology and a fondness for the President drove their giving. They also sketched a picture of behind-the-scenes campaign access few Bush supporters experienced.

One Ranger, insurance executive Doug Corn of Cincinnati, told The Blade he met with President Bush 16 times during the last two years. A Pioneer, Ron Beshear, described a late-night White House tour that included a stop at the Oval Office.

The newspaper's investigation also found:

 

  • The state of Ohio paid about $800 million to the companies and lobbying clients of Ohio's 30 Pioneers and Rangers during the last six years, an analysis of a state expenditure database shows. The money flowed from the state to the fund-raisers for a number of purposes, including charter school payments, development grants, and tax refunds.
  • Records showed that the federal government paid more than $447 million to the firms of the President's Ohio fund-raisers and their lobbying clients since Mr. Bush took office in 2001.
  • The revenues of some of the firms headed by Ohio Bush Pioneers and Rangers are determined partly by the amount of subsidies they get from Columbus and Washington and by the regulatory decisions made by government officials.

 

John Edwards, the 2004 Democratic vice presidential nominee, said Friday that The Blade's findings are "part of a continuing pattern" of the Bush administration's giving of special access to fund-raisers.

The former U.S. senator from North Carolina said the culprits are the nation's flawed campaign finance system and the government officials who act in the interest of their "cronies."

Mr. Edwards said President Bush's Pioneers and Rangers system had a "significant effect" on Ohio and the outcome of last year's presidential race.

"George Bush and Dick Cheney had significant amounts of money raised by these Pioneers and Rangers in Ohio," Mr. Edwards said, adding, "huge amounts of money raised by them and others around the country were infused into Ohio."

"A significant amount of that money was raised by people who had particular interests. And it is obvious that some of them were awarded for what they did. Unfortunately, it's the voter and the taxpayer who suffers for that," he said.

A spokesman for the Republican National Committee, Aaron McLear, said there is no connection between campaign contributions and government payments to firms of big GOP fund-raisers.

"Our supporters ensure that we have the tools and resources necessary to get our message out and mobilize voters," he said. "They donate time and money because they believe in our values and support our candidates."

Mr. Corn, the insurance salesman for Northwestern Mutual Life who raised at least $200,000 for the President last year, had never made a campaign donation before last year's election, but said he was inspired by Mr. Bush's "out-front Christian values" on issues such as abortion and gay marriage.

"I didn't want, nor did I expect, anything at all in return," Mr. Corn said. "My reward was that he was re-elected, and my reward was [newly appointed Chief Justice] John Roberts."

But assessing other Ohio presidential campaign fund-raisers, Mr. Corn added: "Positively, I think people got involved and they wanted something."

'Bundling' the cash

By the end of the 2004 race for political money, President Bush out-raised his opponent, Democrat John Kerry, $293 million to $252 million.

Some of the first Pioneers and Rangers helped Mr. Bush become governor of Texas in 1995.

By 2004, the Bush-Cheney campaign had "perfected" its money-bundling machine, said Mr. Knott, the spokesman for the Center for Public Integrity.

The Bush-Cheney campaign recruited 548 Pioneers and Rangers nationwide, with 30 coming from Ohio and 18 from Michigan.

There also was a "Super Ranger" class, with eight Ohioans raising $300,000 for the Republican National Committee. The money helped fund campaigns across the country.

Health-care interests

In the realm of health care, there are two Ohio firms with Bush fund-raisers as executives - HCR Manor Care Inc., a Toledo company that provides nursing home care, and Invacare, an Elyria health products manufacturer.

According to federal lobbying records, Invacare has spent more than $1.5 million since 1999 lobbying Washington officials on health-care issues. The company's CEO, Malachi Mixon, who was a Bush Ranger, and his employees and associates have contributed at least $1 million to political campaigns since 1989.

Mr. Mixon declined a request for an interview with The Blade, but it's clear from the company's statements that Invacare relies heavily on the support of the federal government.

In its Aug. 8, 2005, financial statement, Invacare wrote: "The Company is directly affected by government regulation and reimbursement policies in virtually every county in which it operates."

In its most recent quarterly filing, the company noted that "reimbursement uncertainties" have affected the performance of the company and there wouldn't be stability until Medicare and Medicaid implement plans for new codes and fees in 2006.

Invacare and its subsidiaries have received at least $3.1 million in contracts from the federal government since President Bush took office in 2001. Invacare largely provided hospital products for the U.S. Department of Veterans Affairs.

In Ohio, Invacare has received payments of at least $691,000 from the state of Ohio since 1999. Most of the money Invacare received from the state came by way of development grants between July, 2004, and July, 2005.

The Ohio Department of Development awarded Invacare with about $446,000 in grants during that period.

Like Invacare, Manor Care Inc. has a strong interest in government health policy.

The company's chief operating officer, M. Keith Weikel, is a Bush Ranger. He, his employees, and associates have contributed more than $1.6 million to political campaigns since 1989.

Mr. Weikel declined to be interviewed for this article.

His company, which relies on Medicare and other government payments for 67 percent of its $3.36 billion in revenue last fiscal year, has legislative needs.

Manor Care has lobbied heavily in favor of reducing jury awards in lawsuits, known on Capitol Hill as tort reform. A group Mr. Weikel helped form campaigned against Nancy Argenziano, a Republican lawmaker in Florida, in 2002 because she didn't support a proposed cap on punitive damages in jury awards against nursing homes in Florida. The law passed, and Ms. Argenziano won a state senate seat.

In a 2003 quarterly filing with the U.S. Securities and Exchange Commission, the company cited "strong tort reform" measures enacted in Texas and other states as reasons for increased profits, adding: "There is still significant work to be done on this serious, industry-wide issue, especially in the state of Florida."

Manor Care spokesman Rick Rump said Manor Care is interested in tort reform and increasing Medicare payments, particularly in rolling back a planned cut on Jan. 1 that he said would equal a $17-a-day loss per patient at some of its facilities. But employees are not forced or encouraged to contribute to any politician, he said.

More than simple entitlement payments from Medicare, the company and another that Mr. Weikel helps oversee as a board member, Laboratory Corporation of America, enjoy various federal contracts, including with the U.S. Department of Veterans Affairs and other agencies that total at least $65 million from January, 2001, to July, 2005.

The companies have been paid at least $1.6 million by state of Ohio agencies.

President Bush announces his economic agenda at the Timken Co. in Canton, Ohio, during his re-election campaign. President Bush announces his economic agenda at the Timken Co. in Canton, Ohio, during his re-election campaign.
BLOOMBERG NEWS Enlarge

Timken's tie-ins

On April 24, 2003, the President announced his economic agenda at the Timken Co.'s research facility in Canton, Ohio.

"The greatest strength of the American economy is found right here, right in this room, found in the pride and skill of the American work force," the President said. "Here at Timken, last year, productivity rose 10 percent, which means that America can compete with any nation in the world because we got the finest workers in the world."

W.R. "Tim" Timken, Jr., who inherited the manufacturer's chairmanship in 1975, hosted Ohio fund-raisers for the President.

A Ranger in 2004, he became the U.S. Ambassador to Germany last month.

Even though Mr. Bush praised Timken Co. as an example of a thriving American business, the company had relied on government handouts worth $259 million since 2001.

In a 2003 claim to the federal government, Timken requested subsidies because France, Germany, Italy, China, Japan, and even Romania "dumped" ball bearings on the American market. Timken reported damage in excess of $63 billion.

The U.S. government paid Timken $109 million in 2003, almost three times the company's profits.

Timken was the primary recipient of a 2000 federal anti-dumping and subsidy law, according to a September report by the Government Accountability Office.

The law was proposed by U.S. Rep. Ralph Regula (R., Navarre) in 1999. Timken is headquartered in his district.

Two weeks later, Ohio's Mike DeWine presented the legislation to the U.S. Senate. Mr. Regula and Mr. DeWine have received $30,700 and $46,750 respectively in contributions since 1989 from Timken employees and members of the Timken family.

Timken spokesman Jeff Dafler said he would not comment on the company's individual sources of revenue.

"The company's focus is and always has been on the markets themselves," he said.

Mr. Timken would not agree to an interview with The Blade.

Schools and fund-raising

In the business world, CEOs look for every edge.

A year after George Voinovich took office as governor of Ohio in 1991, he picked Akron industrialist David L. Brennan to chair a committee studying whether state tax dollars should be used to enable parents to send their children to private schools.

The study prompted the creation of a voucher program in Cleveland, and Mr. Brennan in 1995 opened three schools that received $2,250 per student.

When Mr. Voinovich ran for re-election in 1994, Mr. Brennan helped raise $1 million for Ohio Republicans, who gained control of the Ohio House that year, ending a Democratic majority that had stood for 22 years.

A year later, Mr. Brennan became chairman of the finance committee for the Ohio Republican Party, in charge of statewide fund-raising.

Mr. Brennan then pushed for charter schools - an alternative type of public school that receives taxpayer funds but is independent of the public-school system and largely free from state and local regulations. They also receive more per-pupil funding than voucher schools.

In 1997, state Rep. Sally Perz, a Toledo Republican who now is one of Mr. Brennan's lobbyists, succeeded in getting an amendment into the state budget bill to create the first charter schools in Ohio.

A year later, Mr. Brennan formed White Hat Management to manage charter schools. White Hat now operates 49 charter schools in seven states, including 13 Hope-Academies and 20 Life Skills Centers, including one in Toledo.

The Hope Academies are K-10 schools and the Life Skills Centers are designed primarily for high-school dropouts.

Based on enrollment, Mr. Brennan's charter schools have received $263 million in Ohio tax money since 2002.

Mr. Brennan, his wife, Ann, their daughter, Nancy, and the Brennan political action committee have contributed $3.4 million to Republican candidates in Ohio and on the federal level since 1989.

"The question is: Has Mr. Brennan purchased undue influence for private profit with these large contributions," said Tom Mooney, president of the Ohio Federation of Teachers.

State legislators in 2002 changed the law to allow charter school sponsors to renew a charter for an indefinite period of time, despite saying in the late 1990s that charters would be up for renewal every five years to hold them accountable for results.

Mr. Brennan, who declined to be interviewed for this article, has said he contributes to political candidates to compete with the teachers' unions.

Since 1990, the political action committees of Ohio's teachers' unions have poured nearly $3.9 million into the coffers of candidates and the state's political parties. Although more than half of that amount was send to Democrats, the PACs did contribute heavily to Republicans as well, including more than $530,000 to GOP party funds.

Mr. Brennan now is expanding his school-choice enterprise. The federal No Child Life Behind law, the centerpiece of President Bush's education policy, requires all public school districts with low test scores to offer tutoring.

White Hat Management has formed NCLB Tutors to make money from that provision.

Voting company's stake

Wally O'Dell, the CEO of voting machine-maker Diebold Inc., has looked to the secretary of state's office in Columbus to set elections policy that would mean millions of dollars for his Canton, Ohio-based business.

In 2003, as the Bush-Cheney efforts accelerated, Mr. O'Dell, a Bush Pioneer, issued a fund-raising letter to Ohio Republicans declaring that he was "committed to helping Ohio deliver its electoral votes to the President next year."

The note sparked concern among Democrats, who charged it was an inappropriate action for a company vying to sell electronic voting machines to county governments.

Mr. O'Dell's letter was mailed one day before Secretary of State J. Kenneth Blackwell was expected to name Diebold as one of three firms eligible to sell voting machines to Ohio counties. Diebold eventually received permission to sell its voting machines to Ohio counties.

Earlier this year, Matt Damschroder, the executive director of the Franklin County Board of Elections, acknowledged that last year he had accepted a $10,000 check for the county GOP from a Diebold consultant who was seeking county business. The transaction took place in Mr. Damschroder's county office and he was fined a month's pay for accepting the payment.

Diebold officials denied they had any knowledge of the contribution. Aside from the dozens of county contracts Diebold won to supply elections machines last year, the firm has collected more than $2.7 million from the state of Ohio since 1999.

In 2001 alone, the Ohio Department of Mental Health gave Diebold more than $1.3 million for technological equipment.

The company also has won more than $24.7 million in federal contracts since President Bush took office in 2001.

Mr. O'Dell also declined a request for an interview.

Rare-coin scandal

In April, shortly after The Blade wrote the first stories on Mr. Noe's rare-coin funds, Gov. Bob Taft was asked if his longtime contributor gained special access because of his support.

"I don't know," Mr. Taft said during an April 7 interview at The Blade's editorial department. "You tell me."

During a courthouse news conference after the governor's conviction on ethics charges in August, Mr. Taft told reporters that there is "no connection" between contributions and state contracts.

"Contracts are awarded based on merit, based on qualifications, based on experience and performance under our administration," Mr. Taft said. The governor's spokesman reiterated the governor's assertion last week.

Bob Bennett, the chairman of the Ohio Republican Party, called any link between state contracts and campaign contributions "a stretch."

"Why is it wrong?" he said, of the campaign contributions. "What makes it wrong? You assume that these people are buying something, and they're not. They're buying good government. They're buying a philosophy of government."

Democratic National Committee Chairman Howard Dean believes there's a problem with corruption that extends from Columbus to Washington.

"Americans don't like the culture of corruption that Republicans have brought to Columbus and Washington D.C.," Mr. Dean said last week, reacting to The Blade's findings. "The American people are looking for an alternative to the Republicans' pay-to-play approach to government."

Despite attempts at campaign-finance reform on the federal and state levels, evidence shows that those who give money to politicians tend to get access to public money and policymakers, said Taylor Lincoln, senior researcher for Public Citizen's Congress Watch.

"Were the Pioneers and Rangers doing all of this work because they thought George W. Bush was the guy, or did they want a foot in the door if he was re-elected?'' Mr. Lincoln asked.

The answer matters to the state of democracy in the United States, said Mr. Knott of the Center for Public Integrity, "This is the American people's government. It is not the government of these individuals who coordinate campaign contributions," he said.

Staff writers Mike Wilkinson, Christopher D. Kirkpatrick, Jim Tankersley, and Joshua Boak contributed to this report.

Contact James Drew at: jdrew@theblade.com or 614-221-0496.



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