Over the years Sarah Palin has carefully crafted an image of being a crusader against "crony capitalism." However, an in-depth look at some of her past deals suggests that Sarah Palin and Dick Cheney could just be king and queen of Cronyland.
Up until the sudden silence in the wake of Joe McGinniss' "The Rogue, Sarah Palin had been recently making charges against the Obama Administration’s so-called “crony capitalism.” I doubt whether she could define exactly what she meant but cronyism is, according to our good friend Wikipedia, “ a partiality to long-standing friends, especially by appointing them to positions of authority, regardless of their qualifications.”
Adding the tag “capitalism” it suggests the use of government intervention in the economy to benefit supporters and punish his opponents. It is the biased selectivity of rewards doled out by the government, either in terms of positions of power, awarding of contracts or financial benefits. This also includes limiting the competition through regulations on private businesses that are strictly enforced on opponents of the government, and not enforced on supporters of the government.
Palin’s apparent strategy is to take all of the negatives of the previous Republican administration and foist them upon the present one. Whoever dreamed it up- and surely it couldn’t have been Palin- has attempted to use the tried and true method developed by Karl Rove of attacking the opposition with your own crimes.
Cronyism at its Highest Level
Cronyism at its Highest Level
Actually, until this high-jacking of the phrase by Palin and Bachmann, one of the best examples of crony capitalism had been the Bush administration.
Admittedly, this type of corruption-can be found in all previous presidencies but under President George W. Bush, it reached as deep in the trough as anyone had ever thought possible.
The list of examples is far too long to cover in any detail here.
Let’s look at one of the most flagrant examples. The case against Haliburton is a veritable treasure trove of crony capitalism. Halliburton's KBR subsidiary was the main government contractor working to restore Iraq's oil industry in an open-ended contract that was awarded without competitive bidding.
On May 31, 2004, Agence France Presse reported that a Pentagon e-mail revealed that Vice President Dick Cheney had coordinated a huge Halliburton government contract for Iraq. This revelation contradicted what Cheney's spokesman Kevin Kellems had claimed. Kellems had stated, that since 2000, the vice president "has played no role whatsoever in government-contract decisions involving Halliburton."
Cheney himself went on record, stating on NBC's "Meet the Press" in September, 2004, and stated categorically, "As vice president, I have absolutely no influence of, involvement of, knowledge of in any way, shape or form of contracts led by the Corps of Engineers or anybody else in the federal government."
So, he fibbed.
This scenario was played out again and again with Haliburton alone. Furthermore, it was not merely a case of making a profit for pals at a former corporation.
And Lee Drutman and Charlie Cray, writing for Citizenwork.org. point out that all through the Bush administration, while the vice-president was covertly assisting in arranging these no-bid contracts,
So, it is really no surprise that Cheney has come out against Palin of late. Crony Capitalism is one of Dick Cheney’s middle names.“Cheney continued to receive as much as $1 million a year in deferred compensation as Halliburton executives enjoy a seat at the table during Administration discussions over how to handle post-war oil production in Iraq. Additionally, according to Cheney's 2001 financial disclosure report, the vice president's Halliburton benefits included three batches of stock options comprising 433,333 shares. He also has a 401(k) retirement account valued at between $1,001 and $15,000 dollars."
The writers of the article also observe:
That's What Are Friends For
“Even without the Cheney conflicts of interest, serious doubts remain about whether a company with a record like Halliburton's should even be eligible to receive government contracts in the first place. This, after all, is a company that has been accused of cost overruns, tax avoidance, and cooking the books and has a history of doing business in countries like Iraq, Iran and Libya.”
With all the sweetheart deals and secret arrangements during the Bush years, it was often difficult to determine where the government authority ended and the corporate structure began.
Giving Sarah Palin the benefit of the doubt- which takes a lot of benefits to cover a lot of doubt- let us say she is also condemning the violations of trust in the Bush administration as well as the Obama presidency. Could this really be a sideways attack on her own party?
That's What Are Friends For
But then, Palin herself is also a worthy study if only on a smaller scale. It is clear from her time as governor that Palin has nothing whatsoever against cronyism per se.
University of Alaska historian Steve Haycox remarked, in an article for the Los Angeles Times, Palin has a penchant for placing supporters, many of them ill-prepared, in high posts. He called it "cronyism, far beyond what previous governors have done and a contradiction of her high-minded philosophy."
According to a New York Times article, Palin quickly removed veteran, qualified staff and “surrounded herself with people she had known since grade school and members of her church...The Wasilla High School yearbook archive now doubles as a veritable directory of state government."
As another blogger pointed out, this type of cronyism led to unexpected chaos.
As both mayor and governor, Palin immediately fired lots of highly skilled, experienced staff and replaced them with "her people." What that means in practice is that Alaskan government now has tons of Wasilla residents, high school friends of Palin and members of her church in high positions, in $80,000 -$120,000 a year jobs, despite minimal or no qualifications. For example, she named Franci Havemeister (a high school friend) as director of Alaska's Department of Agriculture at $95,000. Asked for her qualifications, the former real estate agent said that she loved cows as a kid.
(I loved bars of gold when I was a kid. Make me Secretary of the Treasury.)
Eventually, this appointment would lead to another under-reported scandal known as “dairygate.” More details can be found here. Needless to say, it is a perfect example of the kind of crony capitalism that Palin seems to be rallying against.
The writer also points out: This is not an isolated case. Kristan Cole is another one of Palin’s friends turned insider.
She's sole trustee of the Alaska Fund Trust, the personal slush fund for the Palin family, which was found by the investigator hired by the personnel board to be unethical and/or illegal, yet still continues to solicit donations.
Hiring friends also brought up problems of competency and suitability.
Debbie Richter and her husband were long time friends of the Palins and owned a vacation house together. First, Palin hired Debbie as her campaign treasurer, based on some bookkeeping jobs Richter had done. Once elected governor, she put Debbie in charge of the multi-billion program that send oil money rebate checks to every Alaskan resident. Soon after, the program had a famous disaster, where the computers crashed and no one had backed up key files. ...They had to recreate hundreds of thousands of records by HAND, and no one really can be sure how accurate these massive payments were.
The LA times article (cited above) checked Palin’s record and made some interesting observations about the Palin’s appointments.
- More than 100 appointments to state posts -- nearly 1 in 4 -- went to campaign contributors or their relatives, sometimes without apparent regard to qualifications.
- Palin filled 16 state offices with appointees from families that donated $2,000 to $5,600 and were among her top political patrons.
- Several of Palin's leading campaign donors received state-subsidized industrial development loans of up to $3.6 million for business ventures of questionable public value.
Despite her attempts to “refudiate” her record, Sarah Palin is essentially the Crone of Cronyism.
The Complex Mess
In the search for cronyism of the capitalist variety, we need to look no further than the infamous $12.5 million sports complex and hockey rink, that lasting monument to Palin's two terms as Wasilla mayor, belying her image as a reformer against insider corruption.
From architect to builder, from subcontractors to building supplies providers, the selection for all of these seemed to have been based more of being friendly to the Palins, rather than free competition. While donations to Palin campaigns can make one a friend, there are other ways as well.
A list of subcontractors on the job...includes many with Palin ties. One was Spenard Builders Supply, the state's leading supplier of wood, floor, roof, and other "pre-engineered components." In addition to being a sponsor of Todd Palin's snow-machine team that has earned tens of thousands for the Palin family, Spenard hired Sarah Palin to do a statewide television commercial in 2004.When the Palins began building a new family home off Lake Lucille in 2002—at the same time that Palin was running for lieutenant governor and in her final months as mayor—Spenard supplied the materials, according to Antoine Bricks, who works in its Wasilla office. Spenard actually filed a notice "of its right to assert a lien" on the deed for the Palin property after contracting for labor and materials for the site. Spenard's name has popped up in the trial of Senator Stevens—it worked on the house that is at the center of the VECO scandal as well.
Ms. Palin asked the voters for permission to issue a $15 million bond and pay for it by boosting the sales tax from 2% to 2.5%. In the end, the construction of the sports complex was a nightmare for Palin and the citizens of Wasilla.Todd Palin told Fox News that he built the two-story, 3,450-square-foot, four-bedroom, four-bath, wood house himself, with the help of contractors he described as "buddies." As mayor, Sarah Palin blocked an effort to require the filing of building permits in the wide-open city, and there is no public record of who the "buddies" were.
Why? Because, according to a Wall Street Journal article, the city began building roads and installing utilities for the project before it had unchallenged title to the land. The misstep led to years of litigation and, at least, $1.3 million in extra costs for a small municipality with a small budget. As a post in The Daily Kos notes:
The biggest problem, however, was the process of how the land was acquired. The whole thing was handled with exceptional incompetence and arrogance, ultimately costing the city an extra $1.7 million in settlement and court cost for a piece of land that would have costed only $125k if they had handled it right from the beginning in 1998.
Basically, Palin’s crony capitalism, while it benefited a selected few contractors and sub-contractors, coupled with her own incompetence, ended up costing the city of Wasilla a fortune it could ill afford.
In a WSJ article, City Councilwoman Dianne Woodruff City Councilwoman Dianne Woodruff said, "Wasilla isn't broke, but that put a big dent in our reserve" She added, "It happened on her watch."
Hugo and Sarah
Just as John McCain attempted to portray himself as a maverick during his run for the presidency, Palin too tried to create an image as a reformer.
"I took on the old politics as usual in Juneau when I stood up to the special interests and the lobbyists and the big oil companies and the good old boys."
Palin told the Republican National Convention in her acceptance speech. It’s a proud boast but there is more to it than meets the eye.
Firstly, let's give credit where credit is due.
By raising a tax on oil companies, Palin's ”Alaska’s Clear and Equitable Share” (ACES) legislation helped swell the state's budget surplus. Her plan primarily taxed oil company’s net profits on production, and its flexibility based upon oil prices and its tax credits encouraged greater capital development and investment. In a time when oil prices were at their record highest, with American consumers paying for that increase at the pump, this calls into question how valuable Palin's oil policy actually would be, when applied on a national scale.
The same revenue generating-wealth distribution scheme is applied in countries like Dubai. Dubai, like Alaska, is a fabulously rich country because it has a relatively small population with vast quantities of oil, producing much more than it consumes. That is not true for the United States as a whole. Many argued that taxing any company on its production and basing the tax on the price of the product, it would inevitably lead to higher prices and decreased output.
Effectively Palin's plan screwed the rest of the country to the benefit of her home state. While the citizens of the state might have been happy to received checks based on the tax on big oil, even now Alaskan legislators are trying to undo Palin's work.
Additionally, since residents were given handouts from their Big government, Palin appears to have much more in common with Socialist Hugo Chavez than any neo-conservative Republican. Her achievement also calls into question her honest commitment to reduce the size of Big Government, less regulation and lower taxes to spur investment.
All of the things she claims to be about now.
In any case, not everybody was so quick to jump on Palin's bandwagon. From the New York Times item:
VECO and Bill Allen“We’re probably the most fiscally sound state in the union,” said Bert Stedman, a Republican who is co-chairman of the Senate Finance Committee and one of the Legislature’s most influential members. “I’d say she had little to nothing to do with it.”
The mention of the VECO scandal and Palin’s role is another scandal waiting for an intrepid blogger or investigative journalist.
The Alaskan Dispatch reported that, after her term as mayor of Wasilla, Palin campaigned for lieutenant governor, and was quite eager to accept donations from the rich and powerful.
Allen, then in his mid-60s, shaped Alaska politics through campaign contributions and sometimes flat-out bribes. He and his VECO executives and employees gave hundreds of thousands of dollars to both Republicans and Democrats -- lawmakers Allen believed would support the oil industry. He was so steeped in politics that he co-chaired the Alaska finance committee during the Bush-Cheney 2000 campaign.
The questionable donations totaled $4,500, not a huge amount but it was over 10% of all her funding that year. It doesn’t appear at that time she was against crony capitalism, at least.
In fact, she met directly with Allen at his home on Inlet Bay back in 2001- a critical time of decision for Palin. Huffington Post quoting an AlaskaDispatch article:
Palin sat with Allen in his den and sipped wine, according to a former VECO employee who says he personally fetched the bottle of wine for the two. Why did Palin visit Allen that day? Palin spokesman Bill McAllister refuses to ask her.
Eventually, Allen’s empire crumbled On May 7, 2007 after a federal indictment forced him to plead guilty in U.S. District Court in Anchorage to charges of extortion, bribery, and conspiracy to impede the Internal Revenue Service.
In the following year, Allen began serving a three-year sentence in federal prison. (With time off for good behavior, he's expected to be released in August 2012.)
It was Bill Allen’s testimony that prosecutors used to sink Alaska Senator Ted Stevens hopes for re-election and helped secure Stevens' conviction, in U.S. District Court on charges of felonious corruption. During the trial, it was revealed that the FBI had recorded more than 100 of the Republican lawmaker's phone conversations. The FBI did not tap Stevens' phone but did tap several phones belonging to contractors in the case in a search for evidence that the Senator had received gifts as well as hundreds of thousands of dollars in home renovations.
In a carefully worded statement, Sarah was stepped up to defend him, telling reporters that indicted U.S. Sen. Ted Stevens "has dedicated his life to the betterment of the state" and that the federal indictment "rocks the foundation of our state."
Quite literally too. According to The Washington Post
A federal grand jury in Washington, D.C., has accused Stevens of concealing on financial disclosure statements lucrative gifts from the now-defunct oil company Veco and its top executives. At one point, Veco employees and contractors jacked up the senator's mountainside house on stilts and added a new first floor, with two bedrooms and a bathroom, the indictment says. (emphasis mine)
But then Palin was hardly a disinterested party. That same article states that Palin's name is listed on 2003 incorporation papers of the "Ted Stevens Excellence in Public Service, Inc.," a 527 group that could raise unlimited funds from corporate donors.
Stevens' conviction was later thrown out because of prosecutorial misconduct. Another “victory” for Holder.
With his long career over, now stained by a shameful conviction, Stevens would not have a chance to redeem himself. On August 9, 2010, Stevens was killed while en route to a private fishing lodge, when a de Havilland Canada DHC-3 Otter he and several others were flying in crashed.
To Shield From Public Knowledge
But the tribulations of Bill Allen were not over. While serving time on the corruption charges, he was further investigated on sex abuse charges, allegedly carrying on a sexual relationship with a teenage prostitute nine years ago, according to interviews with both police and the alleged victim.
The case involves allegations of sexual misconduct against Allen by Paula Roberds, who is now 26. She has agreed to have her name used publicly.She underwent multiple interviews with Anchorage police, FBI agents and prosecutors, telling the story of how Allen flew her from Seattle to Anchorage about five times for sex when she was 16, paying her thousands of dollars each time. She first met him working as a 15-year-old prostitute along Spenard Road, she said.
As such cases go, the case against Allen was solid. A key witness was able to identify a very specific, reportedly highly embarrassing feature about the suspect, Allen. It was described as "a physical characteristic of Bill Allen that would be considered extremely embarrassing, and that most men would seek to shield from public knowledge.”
Additionally, evidence revealed Allen’s desperate attempts to “convince his victims to lie to protect him. Its newly released documents contain allegations and evidence that Bill Allen committed a multitude of primarily sex crimes against children, and that he sought to have them swear that he never committed such acts”
The Anchorage Daily News published a story relating the allegation that Allen had had a sexual relationship with an Anchorage woman, Bambi Tyree when she was 14 or 15, and that Allen provided her and her family with expensive gifts.
In fact, according to court documents in a different case, it was revealed that the federal prosecutors pressured local police to drop the child-sex probe as a kind of trade-off for a wider ongoing investigation of political corruption in Alaska.
In fact, according to one report, an Anchorage police officer had testified in 2004 that he was told by a federal prosecutor to stop investigating the child-sex case because it might undermine a federal investigation which Allen was involved in.
It did, however, allow a bit of spinning by Allen’s defense attorney. In a Fox News article, he states,
"The judgment of the prosecutors not to seek criminal charges against Mr. Allen speaks for itself and renders speculation to the contrary meaningless and unnecessary," Allen's lawyer, Robert Bundy, said in an e-mail to The Associated Press. "We are gratified to learn that professionals at the Department of Justice, after carefully reviewing all the various allegations over several years, have decided that charges against Mr. Allen are unwarranted."
The world then moved on, without Allen’s influence. To nobody’s surprise, in September 2007, VECO Corporation was sold to Colorado-based CH2M HILL corporation.
It was a bargain for the buyer and it was estimated that VECO was forced to sell for far less than its market value. Incidentally, CH2M HILL had money to burn.
As a successful bidder in for Iraq rebuilding contracts, CH2M Hill, a Colorado-based company that, in a joint venture, took in a $28.5 million reconstruction contract in 2004 and teamed up with other contractors for a $12.7 million electrical power generation deal.
The CEO of CH2M HILL, Lee McIntire, was was a partner at Bechtel Group, another corporation that allegedly benefited from sweetheart deals in the Iraq war.
Following the money can be a dizzying, stupefying experience. So I will close this post by completing the circle of crony corruption.
The case against Stevens and Allen’s role exposed another connection between the corporate world and government. According to Newsweek magazine:
(I)n a 2006 conversation secretly recorded by the FBI, Stevens and Bill Allen -- the oil-services executive who allegedly provided Stevens with $250,000 in financial gifts -- discussed how to get a pipeline bill through the Alaska legislature.
Stevens told Allen: "I'm gonna try to see if I can get some bigwigs from back here and say, 'Look ... you gotta get this done'." Two days later, Vice President Cheney took the unusual step of contacting Alaska lawmakers directly, urging them in a letter to "promptly enact" the legislation. Stevens confirmed to Newsweek that he had indeed asked Cheney to write the letter.
Newsweek notes that the former executive director of Cheney's energy task force had gone on to work as a lobbyist for BP, which would have built the pipeline. The magazine doesn't name the task force director, but it appears to be Andrew Lundquist.
And it's worth pointing out that Lundquist -- who had worked as the Bush-Cheney campaign's energy expert in 2000, earning the nickname "Lightbulb" from the president -- has also worked as a top aide to Stevens.
Newsweek also reports that DOJ prosecutors did not include Cheney's letter in their motion and did not respond when the magazine asked why.
So, apparently, both Sarah Palin, small time cronyist, and Dick Cheney, master cronyist, drank from Bill Allen’s watering hole.
Compare now the construction of an wasteful, mishandled, essentially unnecessary sport complex to the benefit of her contractor buddies, to the detriment of the town of Wasilla on one hand and, on the other, the reconstruction of Iraq, to the benefit of his corporate pals but at a enormous financial cost to one nation and the miserable exploitation of the other. That undeniable, indefensible similarity puts them both up to their neck in the same species of crony capitalism.
In light of Palin’s record as mayor and governor, charging crony capitalism at the Obama administration is a case of glass houses. She is certainly not an outsider, as she claims, and more than likely a participation on the local level is exactly the kind of problem she now purports to be rallying against.