McCain the Reformer? You've Got to Be Joking

By Ari Berman, The Nation. Posted July 1, 2008.

In early April John McCain held a top-dollar fundraiser at Washington's Willard Hotel, where President Ulysses S. Grant invented the term "lobbyist." It was a fitting locale, as the election-reform group Public Campaign noted, since thirty-five of the forty-three hosts for the evening were registered lobbyists. The following week Rick Davis -- on leave from his job as a lobbyist to work as McCain's campaign manager -- gave a strategy presentation to lobbyists from the oil, utility and nuclear power industries, soliciting campaign contributions.

McCain's ties to K Street began attracting attention, and a month later two of his key operatives were forced to resign after the press revealed that they'd lobbied for the Burmese dictatorship. A top McCain fundraiser, former Congressman Tom Loeffler, also got his walking papers after lobbying McCain on behalf of Saudi Arabia. In the space of ten days, five McCain lobbyists-turned-staffers left his campaign. Those who remained included senior adviser Charlie Black -- formerly one of the most high-profile Republican lobbyists in Washington, who has represented the likes of Iraqi exile Ahmad Chalabi, mercenary contractor Blackwater and Philippine dictator Ferdinand Marcos. One could be forgiven for wondering, Was anyone in McCain's inner circle not a lobbyist?

Coziness between lawmakers and lobbyists is an old story in Washington, but in McCain's case such entanglements threaten to derail his maverick mystique. After his humiliating involvement in the Keating Five corruption scandal in the late 1980s, McCain worked tirelessly to cultivate a reputation as a chastened reformer. In the following years he made campaign-finance reform -- specifically banning unlimited "soft money" donations -- a near crusade, working closely with Democratic Senator Russ Feingold and angering many Republicans. Embracing campaign-finance reform became a useful way for McCain to differentiate himself from his earlier incarnation and from the DeLays and Gingriches and Bushes who were corrupting the Republican Party. Yet his second run for the presidency, with its emphasis on courting conservative Republicans, highlights the fact that McCain has morphed back into a quintessential creature of Washington -- just another politician who uses the issue of reform when it suits his agenda.

For McCain, there is no better example of how the image of reform has obscured the intersection of corporate donations and DC lobbyists than the Reform Institute. A nonprofit with an Orwellian name, the institute was founded by McCain and his allies a year after his failed 2000 campaign. Billed as "a non-partisan election reform organization whose Honorary Chair is Senator John McCain," the institute wasn't really nonpartisan, and McCain was far more than an honorary chair. "It was predicated on McCain's political connections," says Robert Crane of the JEHT Foundation, a social justice organization in New York and one of the Reform Institute's past funders. "It wasn't an independent entity." To be sure, the institute did some good work at the state level in support of clean elections, but it always remained a John McCain protection agency.

The Reform Institute paid for McCain to give speeches and host town hall meetings, touted him in press releases and cultivated his donor list. The group was housed in the same offices as McCain's PAC, his re-election committee and Rick Davis's lobbying firm, Davis Manafort, which represented telecommunications and gambling interests along with foreign governments like Nigeria and Ukraine. The staff included McCain's campaign manager, Davis, as president; his chief fundraiser, Carla Eudy; and his Internet consultant, Rebecca Donatelli. It was incorporated by McCain counsel Trevor Potter, with seed money from former Merrill Lynch CEO Herb Allison, McCain's finance chairman in 2000. McCain was chairman of the board from 2001 until 2005. Meanwhile, Davis earned $395,000 for three years of work, Eudy took in $294,000 as a consultant and treasurer, and McCain policy guru John Raidt made $145,000 in 2006, to give one example of how the Reform Institute padded the coffers of McCain's political brain trust.

At the outset, the organization's primary purpose was defending McCain's campaign-finance legislation, McCain-Feingold, before Congress, the Federal Election Commission and the Supreme Court. But even as McCain was pushing that bill, he was also gaming the campaign-finance system. The fact that a registered lobbyist was running an entity called the Reform Institute was not the only reason the group raised eyebrows in Washington.

As a 501(c)(3) nonprofit, the Reform Institute could accept the kinds of unlimited tax-deductible contributions that McCain's PAC and re-election committee could not. Longtime McCain donors like California businessman William Bloomfield, former Houston Astros owner John McMullen and businessman and former diplomat Robert Stuart gave more than $50,000 each to the institute. According to Citizens for Responsibility and Ethics in Washington, the largest donors to the institute also gave a combined $305,985 to McCain and his PACs. More unlikely funders included liberal foundations eager to find GOP allies on campaign-finance reform, like George Soros's Open Society Institute, the San Francisco-based Tides Foundation and the David Geffen Foundation. A number of donors who gave almost exclusively to Democrats also wrote large checks. So did wealthy executives who saw that giving to a McCain-affiliated nonprofit could be good for business. This category included insurance giant AIG (formerly run by McCain backer Hank Greenberg) and television interests like Univision, Cablevision and Echosphere.

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Ari Berman is a contributing writer for The Nation, covering national politics and the 2008 election, and an Investigative Journalism Fellow at The Nation Institute.

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