Go back to Tracker -- Winter 1999
Tracking the Statehouse Sellout
Suzanne McBride and Janet E. Williams
The Indianapolis Star and The Indianapolis News
Follow the money.
For more than two years, that has been our motto at
The Indianapolis Star and The Indianapolis News.
For the better part of the last two and a half years, we
have been writing about money and politics in the Indiana
Legislature. The result is an ongoing series, "Statehouse
Sellout" (the entire series can be viewed from
www.starnews.com/news/special/sellout4.html). The first series ran for five
days in February 1996 and detailed how several bills backed by
the state's most powerful special interests became law during
the 1995 session. It also explained how the careers of
two legislative leaders were intertwined with their work as
lawmakers and how the state's 1,200 lobbyists determine
the legislature's agenda.
In December 1996, we decided to revisit
"Statehouse Sellout." We began work in January 1997 on three stories
that ran that spring. One article detailed how the tobacco
and nursing home industries ensured the legislature would
override the governor's veto on two major bills. Another
story explained how the newspapers identified more than a
dozen corporations that had violated the state's contribution
limit law. The final article explained what happened to
campaign finance legislation in the 1997 session that would
have dramatically changed the system. To no one's surprise,
that legislation died.
After those stories were published, the Indiana
Election Commission took unprecedented action by holding
special hearings and ultimately fining several businesses for
breaking the state's laws governing contribution limits.
What next? We decided to examine the issue from
another angle. We did what journalists are supposed to do:
question the most basic premises. In this case it was lawmakers'
mantra that they need lots of special interest money to pay
for expensive TV and newspapers ads. Lawmaker after
lawmaker insisted that most campaign cash was spent on
media advertising and maybe a few glossy campaign
brochures. Was this true? Was the media indeed the
culprit in driving up the cost of campaigns? We had no idea.
Until summer 1997, we worked with a database
of contributions to every legislative candidate. The
database, which ultimately covered 1994 to 1996, was compiled
in cooperation with the Center for Public Integrity in
But this database didn't contain information on a
We knew we had to do it ourselves. We spent about
a month typing in every single expense reported in 1995
and 1996 by each of 150 lawmakers. We entered
information from four reports for each lawmaker into a Paradox
relational database program. But before we started entering the
11,000 expenses, we had to decide how to code the expenses,
which ranged from TV ads and cell phones to babysitting and
We consulted with political scientist Kent
Redfield, who had done a similar project at the University of
Illinois-Springfield. From there we developed a list of more than
40 codes. For instance, a TV ad was given its own
three-digit code, while babysitting got another three-digit code.
All the codes were then grouped into categories. The
200s were direct campaign expenses such as TV ads and
campaign staff. The 500s codes were indirect or unrelated
expenses, which included flowers, wedding gifts, babysitting and
other such interesting expenses. Another broad category
covered transfers of cash from one lawmaker's campaign to
another candidate's coffers.
Once all the data entry was finished, the fun really began.
We analyzed the data to determine how much lawmakers had
spent on particular expenses and to detect patterns of spending.
The analysis revealed that lawmakers spent only 20
cents of each campaign dollar on getting themselves elected.
The bulk of their money was spent on items or services that
had little or nothing to do with a legislator's election. Much of
it went to other candidates. This practice, known as transfers,
is banned in several states but not in Indiana. And of
course, some of it went to babysitters, athletic ticket vendors and
The expense stories ran for four days in August 1997.
After that, lawmakers asked us if "Statehouse Sellout'' would
ever end. Not yet. We began work on the fourth round of
stories, which were published in January 1998.
In round four, we did an analysis of all the legislation
that went to the governor's desk in 1997. Each of the 262 bills
was coded to show which special interest groups would be
most affected by the legislation. The legislative database was then
run against the 1995-1996 contribution database to determine
if any of the sponsors had received donations from those groups.
We found that nearly every lawmaker who
sponsored legislation got money from the special interest groups
most interested in that bill. If we had a few more months, we
would have expanded the bill database to include all
introduced legislation. We suspect this pattern would have been
even more pronounced, with lawmakers who got the most
money having the best luck in getting their bills passed.
Another story detailed how several lawmakers got
bills passed that helped them or their employers, or in one
case would have punished a not-for-profit group that had fired
The final article shed some light on the three men
who gave the most money to legislative candidates in the
1996 election cycle. Until we worked on the story, readers
knew little if anything about these mystery men. Although
they gave tens of thousands of dollars to lawmakers, few seemed
to know much about them.
As it turned out, one man who owned a fireworks
business had been sued by the federal government and could no
longer sell the product in his home state of Missouri. Another
man from Dallas was closely linked to an Indiana
insurance executive who is barred from contributing because his
company owns a riverboat license. And the third man, the
only one who lives in Indiana, made part of his fortune
peddling a sex drug that is now banned in the United States.
In March 1998, a few days after the legislature
adjourned for the year, the newspapers published three more stories
on the subject. Readers learned that state leaders aren't
interested in changing Indiana's campaign finance laws. Reforms
in other states have passed only after major scandals rocked
those legislatures. Another story explained what effect the
First Amendment has on contribution limits. And the third
article gave readers a forum in which to air their feelings on
the subject. A record 2,400 readers completed a short survey
that ran with the round four stories. Many of those readers
sent letters and dozens of others called. No other story in
the history of either newspaper has elicited the
tremendous response of "Statehouse Sellout.''
Much to the dismay of many politicians, our
commitment to covering the influence of money on state politics
continues. Our goal is to incorporate the techniques we developed
on this project into our daily coverage of issues at the
Indiana Statehouse. The public deserves no less.
Suzanne McBride can be reached at (317) 635-7580
or by e-mail at email@example.com.
Janet E. Williams can be reached at (317)633-9888 or
by e-mail at firstname.lastname@example.org.
Developer Stalls Regulators
Using campaign finance records, The Virginian-Pilot
detailed how a developer kept an unregulated insurance
business alive for five years, despite regulators' attempts to shut
I chronicled relationships between the businessman
and the politicians and the politicians' efforts to help with
the venture lobbying the U.S. Department of Labor
and introducing bills to keep the plan alive.
A look at The Virginian-Pilot's campaign finance
database (search the database from www.crp.org/vpap
or www.pilotonline.com/voter) revealed that a state
senator, Kenneth Stolle, had received at least $110,000 from
Edward Garcia, a Virginia Beach developer. It wasn't easy to see
the contributions in the campaign finance reports until I did
a search on addresses after receiving a tip from a source.
The contributions weren't listed by the individual
contributor's name, rather they were listed under the names of a number
of Garcia's businesses, all located at the same address.
Garcia gave only $280 under his own name.
I called the State Corporation Commission to find
out who owned the businesses and found out that all of
the businesses belonged to Garcia, a controversial businessman
in the area.
I then called the senator to find out what the
businessman might have coming up before the state legislature. Sen.
Stolle told me that the only thing he knew about were
some problems with United Benefit Administrators but they
were mostly problems on the federal level.
I did several searches on the Internet for United
Benefit and then finally turned to news researcher Diana Diehl
for help in finding articles about the company. She found
an obscure article from an insurance trade journal that
detailed problems with UBA and its insurance company,
Centurion. The article was written after the company had filed
a lawsuit against the labor department.
I went back to a source at the State Corporation
Commission and asked for any information they had on
Centurion and UBA. While they were searching those records, I
went over to federal court to find out what was listed in the
lawsuit. That's when I discovered that the police union was a
partner in the insurance plan.
The lawsuit also contained copies of the
insurance application forms and a letter from the labor department
to a U.S. senator and to a congressman who had apparently
gone to bat for the company.
I used www.tray.com to look up the federal
campaign finances. I looked back two years for contributions
from anyone named Garcia. I wanted a broader search because
I wanted to see if Garcia had gone outside the state for help
with his company, which he had. While I got more Garcias than
I wanted, it was fairly easy to pull out what I needed. I
put together a chart in Excel of who had received
contributions there were a lot more names than had been
included in the lawsuit.
I decided to start with the police union's president, who was also a trustee for
the insurance company to find out what he could tell me. I
also knew the union, a non-profit organization, would have
tax forms (990 c 5) that might give me a clue about
the company's relationship and financial set-up. (Handouts
547 and 728 from IRE's Resource Center offer pointers on
using 990s. Many others are available check out
The union source gave me most of the background
and then sent me to the company's comptroller who had acted
as the company's lobbyist. She filled me in on the meetings
with politicians and some of the other details.
I also found that Centurion was considered a
non-profit and immediately asked for copies of those 990s. We
also wrote to the labor department to get the LM-2 forms
that unions are required to file. The LM-2 forms yielded
less information than the 990s, but they did confirm what I
had. (Mike McGraw offers tips on using LM-2 forms in his
chapter of The Reporter's Handbook, 2nd Edition.)
In the meantime the State Corporation
Commission faxed me what they had on UBA and Centurion, including
a ruling from the State Supreme Court when it ordered
the company shut down and fined it $30.
After that it was simply interviewing all of the
parties. Some of the politicians didn't call me back. But by then
we had enough documents to write the story without
their comments. I made sure to double check all of the
campaign finance data I had gotten off of the web. I had seen a
couple of donations recorded twice on the same day from the
same person in some cases making it look like they had
taken more than the legal limit on federal donations. In the end,
it appears the donations were all within the limits.
The best tip for doing similar stories is to use
campaign contributions simply as a starting point. I make a habit
of checking every piece of legislation introduced against
campaign contributions. I regularly check all high-level
appointments against the appointee's contributions. If I see large
or strange contributions, I double check the numbers and
then try to find out what's behind them. Some things to look
for are contributions from the same address but different
names and those from variations of the same name, which can
tip you off that a family may be giving (it's especially
interesting if children's names are listed). Also, look out from
contributions from unusual sources, such as contributions
from developers to an anti-development candidate. (We
wrote about such a story this year, when a former city
councilman ran for the legislature and changed his position.) Finally,
I look for trends. I try to take contributions from industries
and rank them by amount. I know the largest givers will
usually have some hot legislation coming up.
For the Garcia story I had lots of documents to back
up what I found. The contributions were just the beginning
of the reporting. Reporters have to go beyond the
contributions, to legislation, letters, lawsuits and other documents to
find out what they mean.
Toni Whitt can be reached at (757) 446-2754 or by
e-mail at email@example.com
The Virginian-Pilot has worked with the Virginia Public Access Project in acquiring databases.
A search engine for the database is available
Mortgaged House of Representatives
Texans for Public Justice
Some legislators became visibly upset in January
when public interest groups published the first
comprehensive study of campaign contributions to the 150 members of
the Texas House.
"Mortgaged House: Campaign Contributions to
Texas Representatives" (available from www.onr.com/tpj)
concluded that the Texas House is awash in special-interest money
that elbows out the interests of regular Texans. Of the
$14.6 million that House members raised in the 1995-1996
- 80% came from outside the district of the
- 48% came from just nine of Texas' 2,618
ZIP codes (the lucky ZIP codes correspond to central
business districts in Houston, Dallas and Austin)
- 62% came from political action committees
and businesses as opposed to individual Texans
- 95% of the money came in contributions of
$100 or more (while 37 percent came in contributions of at
Such findings would have been disturbing enough.
What really gave members conniptions, however, was that
researchers crunched a set of such numbers on each member.
Having all these numbers in a database made it possible to
"benchmark" members, comparing the fundraising of each
representative to that of his or her peers.
It is one thing to report that whopper checks of $1,000
or more accounted for 75 percent of the $174,000 Rep.
Suzanna Hupp, R-Lampasas, raised. It is another thing to point
out that Hupp is just one of three members who derived such
a large share of her war chest from these big checks.
Similarly, "Mortgaged House" discovered that
Democrats Pete Patterson of Brookston, and Diana Davila of
Houston, are the only members who took more than 90 percent of
their money from businesses and PACs.
The report found that 18 members raised at least
95 percent of their money outside of their districts.
Democrat Senfronia Thompson led this pack, failing to raise a dime
in her Houston district. In fact, just 11 of the 150
members raised more than half of their money at home in the
This out-of-district data got under members'
skins most. Republican Rep. Carl Isett, who raised 71
percent of his money outside of his Lubbock district, argued that the city of Lubbock is
technically split between two districts but he likes to think that
he represents all Lubbockites.
Taking Isett at his word, researchers recrunched his
numbers, only finding 83 percent of his money coming from
inside Lubbock city limits.
Other members wrapped themselves in the entire
Lone Star flag, arguing that they represent all of Texas. Why
stop there? Wrapping oneself in Old Glory would rationalize
out-of-state contributions even those of damn Yankees. Hell,
if President Clinton is a global citizen, what besides federal
law is wrong with him taking money from Asian
corporations? And who can quibble if orbiting Senator John Glenn
takes money from Klingons in another galaxy?
Defending her reliance on PACs and businesses for
77 percent of her money, Rep. Leticia Van de Putte,
D-San Antonio, told the San Antonio
Express-News that many PACs today represent mom-and-pop businesses rather than
big corporations. To illustrate her point, Van de Putte said a
local tattoo parlor recently teamed up with other body painters
and piercers to influence the legislature.
Piercing through such red herrings, "Mortgaged
House" did analyze the House's largest contributors; the tattoo
lobby didn't leave its mark among them.
Far and away the biggest PAC in Texas is Texans
for Lawsuit Reform (TLR). It advanced its push for weaker
civil justice laws by doling out $604,795 to House candidates.
An earlier study found that TLR gets almost half of this
money from just 18 wealthy Texas families, most of which have
direct commercial interests in weaker tort laws.
Texas is one of just seven remaining states that
allow unlimited contributions to candidates, political parties or
PACs (the other states are Iowa, New Mexico, North Dakota,
Utah, Virginia and California). The three groups that sponsored
the report, Public Citizen's Texas Office, the U.S. Public
Interest Research Group and Texans for Public Justice,
recommended that the legislature limit the corrosive influence of
special-interest money by passing two kinds of reforms.
First, the groups recommended limits on contributions
to candidates and to PACs (U.S. law has limited
individual contributions to federal candidates to $1,000 since
1974). Second, the groups called for complete and timely filing
of campaign contribution data via the World Wide Web.
Most legislators continue to file paper reports with
the Texas Ethics Commission. To research "Mortgaged
House," researchers armed with calculators had to camp out at
the Commission, crunching each member's reports by
hand. First they crunched contributions by amount (less than
$100, $100 to $999 and greater than $1,000). Then they
calculated two totals, one for individuals' contributions and another
for those by PACs or businesses. Finally, a percentage of
out-of-district money was calculated by comparing contributor
ZIP codes with a list of legislative district ZIP codes provided
by the Office of Legislative Council.
The sponsors released the report (funded by the
Margaret Cullinan Wray Charitable Trust) in advance of a January
30 House hearing on campaign finance reform. Members of
that panel spent more than an hour laying into witness Tom
Smith of Public Citizen's Texas Office. One member chewed
Smith out for releasing the report without first clearing the
numbers with each member of the Houseeven though the data
came from the members' own reports. Summarizing the hearing
in an editorial, the Austin
American-Statesman wrote, "The committee savaged the report that detailed accurately
how House elections are financed now, then focused on the
flaws, no matter how minor, in proposals to change the system."
At the federal level, as in the several states, the
incumbent beneficiaries of the status quo can hardly be expected to
enact serious reforms. That is why citizens are leading the push
for serious limits on campaign contributions through
direct-democracy ballot initiatives at the state and local level.
"Mortgaged House" and other studies can be found
on Texas for Public Justice's website.
Andrew Wheat can be reached at (512) 472-9770 or
by e-mail at firstname.lastname@example.org
"Mortgaged House" can be downloaded from the Texans for Public Justice Web site at www.onr.com/tpj
Christopher H. Schmitt
San Jose Mercury News
It's the ultimate question when journalists focus on
campaign cash and elected officials' behavior: Can you
prove categorically that the money directly influences votes
on particular bills?
Ultimately, no, unless a politician cops to the charge
or gets caught trying to trade money for votes. But short of
that, we recently enjoyed success in using a method known
as regression analysis to show campaign contributions are
often a strong predictor not only of aggregate behavior, but also
of individual votes on individual bills.
The analysis, which focused on 10 major bills from a
session of the California Legislature, showed the more money
individual lawmakers took from interests pushing a
particular position on a bill, the more likely they were to vote that
position. By contrast, factors such as party affiliation and political
philosophy did little to predict how legislators would vote.
Overall, our experience showed once again that
relatively sophisticated analyses like regression can
successfully find their way into the paper, and without readers needing
a degree in statistics to understand the conclusions.
Together, the bills in question represented more than
$1 billion worth of potential or actual benefits to a range
of interests, and involved a sweep of issues including tax
breaks for financial institutions and other businesses, prices paid
to dairy farmers, windfalls for insurance agents and relaxation
of state pesticide regulation.
The bills involved 917 separate votes by 114
legislators who received $1.6 million in contributions from
major interests that were party to the legislation.
When all the crunching was done, we found
campaign contributions were a predictor of votes half the time.
"If they weren't having any effect, it shouldn't have
shown up at all," said Stanton Glantz, a University of
California-San Francisco researcher and statistical expert, who assisted
us. "When you have something where you've got an
overwhelming interest group up against a disorganized public, the
money really works."
Glantz, in fact, was key for us, and therein lies a good
piece of advice. While we felt comfortable with the idea of using
a regression, we knew it was important to have someone
who really knows this stuff give us a reality check. Glantz, who
has done considerable work researching the effect of
contributions on policy, and who was interested in what we
were attempting, graciously agreed to help. If you ever
attempt something like this, chances are you'll be able to find
someone locally who'll help you out, too.
What, actually, is regression? It's a technique in
which "explanatory factors" are matched against a variable selected for study in this
case, individual votes on individual bills. A computer creates
a mathematical model of how well the factors can account
for, or "explain," outcomes observed. For explanatory factors,
we compiled data for each legislator showing their party
affiliation, their ideological ratings by various interest groups
(both conservative and liberal), ratings on their effectiveness
and intelligence compiled through a poll by a leading
political magazine, and total contributions received from
moneyed interests affected by each bill in question.
An interesting twist to note is that we used a
"logistic" regression, which is a special kind of regression for when
the variable under study has only two possibilities in this
case, yes or no. In other types of regression analyses, the
variable under study can have a continuous range of values.
It's worth noting another potential roadblock: Not
everyone in the newsroom will see the worth of such analyses.
In our case, there was considerable discussion of whether
the results were sound enough to print. The lesson here is that
you may need to do some education within your own walls
on how these analyses are done and how the results can be read.
Finally, as fruitful as our analysis ultimately was, it's
important to note its limits. It does not because it simply can't
conclusively prove that money alone caused lawmakers to
vote as they did. It shows only there is a strong link between the
level of contributions and lawmakers' votes, after adjusting for
the other factors that might account for votes observed.
Indeed, that's why many believe analyses like this
one cannot answer politics' version of the
chicken-and-the-egg question: Do favorable votes produce big contributions, or
do big contributions produce favorable votes?
Nevertheless, money is a powerful lure, and at some
point, its influence can't be attributed to chance. "There is
no immutable certainty that a person who receives the money
is voting as a result of the money being given, but if it's true
you have a preponderance of evidence, (then) that's a
pretty strong case," said Herbert E. Alexander, a University
of Southern California political science professor and head
of Citizens' Research Foundation, a non-profit group that
studies the role of money in politics.
Christopher H. Schmitt can be reached at
(408) 920-5048 by e-mail at email@example.com.
Tip Leads to Probe, Expulsion
Walter F. Roche Jr. and Scott Higham
The Baltimore Sun
The story began with a routine tip and it ended with
the first expulsion from the Maryland General Assembly in
201 years. The last to be expelled: a state delegate for cheating
at cards in 1797.
No one was more surprised than the reporters who
investigated state Sen. Larry Young.
After examining the business dealings of Young, one of
the most powerful legislators in the state, and publishing a
report on Dec. 3, 1997 that charged him with using his public
office to benefit the corporations he controlled, Maryland's
ethics panel opened their own probe (Partial text of the stories
is available from www.sunspot.net/archive/search).
Young welcomed the investigation and attacked
The Sun. He and his supporters protested at the paper. They held
civil rights rallies in Annapolis. They said the paper was
"lynching'' a prominent African-American legislator and
proclaimed that we were racists who belonged to the Ku Klux Klan.
On Jan. 12, the ethics committee, chaired by an
African-American, issued its report. The panel found that
Young traded his position as the chairman of a health care
subcommittee to benefit himself and his corporations. He
accepted $250,000 in consulting and other fees from health
care companies and others with business interests in
Maryland. He used the public's money to support his corporations
and his private employees.
Four days later, the Senate expelled the 24-year veteran
of the State House.
The story began last fall, after Young's name
surfaced during the paper's research into the Baltimore Liquor
Board, a panel steeped in corruption. Young held enormous
influence over the agency. Sources claimed he was abusing
his position for personal gain, and camouflaging his
activities behind the banner of helping his
We began by assembling every available record on
Young and the names of current and former members of his
legislative and campaign staffs. We gathered campaign
finance reports, ethics disclosure statements, and travel and
office expense reports.
We ran his name and those of his key staffers through
civil and criminal court databases. We checked Autotrak
for corporate ties by name and address, and we checked
through Uniform Commercial Code filings for Young, his staffers
and affiliated corporations.
A key element of our searches was to identify pieces
of legislation Young oversaw. He held two key
positions-chairman of the health subcommittee and chairman of a panel
that handles gubernatorial appointments. By identifying the
bills, we were able to focus on several health care companies,
the types of favors they were seeking, who they hired as
lobbyists, their ties to Young and the role the former senator played
in the legislation.
Young also hosted a weekly radio talk show and wrote
a newspaper column. We became devoted followers.
Coupled with what we were learning through the records and
former staff members, the talk show and column became
valuable sources. Young frequently made comments that were
From our research, several patterns began emerged.
It became clear that Young was running
corporations, profit and non-profit, out of his legislative office in
West Baltimore, where the rent was paid by the state. We also
found that the phone numbers listed for Young's corporations
were the same numbers being billed to state taxpayers.
Through private business and state payroll documents, we
discovered that members of his legislative staff, paid by the state,
were also working on his corporate staffs.
From records in the state comptroller's office, we
discovered that Young and one of his corporations had been paid
by Coppin State College for consulting work. The college at
first denied a consulting contract with Young, but later, after
we refiled our records request, they produced the documents.
We found that the state-funded college had paid
more than $30,000 in consulting fees to Young. Neither the
senator nor the college could produce any evidence that
Young performed any services, including the senator's claim that
he was raising money for needy African-American students.
The story began to take shape. So did evidence of
possible criminal wrongdoing.
Since we already knew what cars he and his staffers
drove (through state motor vehicle record checks), we were able
to watch his office and his patterns. Young's office was in
an office building with a large parking lot. We stayed in the
lot and observed the building entrance. By talking to
former staffers, we were able to fill in the blanks of his routine.
Documents from Young's office revealed that one of
his corporations, the LY Group, was receiving $300 an hour
to perform consulting work for a company that was
competing for millions of dollars in state contracts.
The lobbyist for that firm, Merit Behavioral Care
Corp., was one of Young's closest allies. The same firm also had
been caught in a fund-raising scandal involving Maryland
Gov. Parris N. Glendening.
Merit also was funneling thousands of dollars to one
of Young's non-profit corporations, the National Black
Health Study Group. The group, which had lost its corporate
charter, was about to hold its annual conference in Las Vegas.
We arranged to be on the plane with Young when he flew
We tracked Young for three days. On the last day of
the conference, we walked in on a seminar that was being
hosted by Merit. We also followed Young to a Charlotte,
N.C., conference, which was underwritten by a U.S. Energy
More details began to emerge. Motor vehicle
records revealed that the owner of an ambulance company
had bought a Lincoln Continental for Young while he was in
a position to influence legislation affecting the company.
An inadvertent disclosure from Young himself revealed that
his full-time chauffeur was also a full-time employee of the
city of Baltimore. The driver also was on the payroll of a
legislator who shared office space with Young. We were able to
demonstrate that the public was paying the salary of his
Since the initial investigation was published and
the General Assembly voted to expel Young, the FBI and the
State Prosecutor's Office have been investigating the former
senator. Federal and state grand jurors have been
subpoenaing documents, and they are expected to start hearing
testimony later this spring.
Walter F. Roche Jr. can be reached at (410)
332-6175 or by e-mail at firstname.lastname@example.org
Scott Higham can be reached at (410) 332-6922 or
by e-mail at email@example.com
UPS Delivers Contributions
Traffic World Magazine
The next time you see a brown United Parcel Service
truck plying its rounds, think political clout. As one of the
largest contributors to members of Congress, UPS is as much
a presence on Capitol Hill as its brown step vans are
commonplace in communities across the nation. Between 1986
and 1996, the Atlanta-based company contributed $11,268,649
to federal lawmakers through its political action
committee, UPSPAC. The company contributed $1.3 million to
lawmakers in 1997, according to copies of campaign finance
reports available on the Federal Election Commission's Web
The PAC is funded by contributions from the
company's supervisors, managers and executives via monthly
payroll deductions. The manner in which UPS regularly solicits
its managerial employees to contribute to the PAC got
the company in trouble with the FEC last year. UPS agreed
in December to pay a $9,000 fine to settle a
four-year-old complaint by a former UPS supervisor who said he
felt intimidated into contributing to the PAC. In a
consent agreement made public Dec. 22, UPS acknowledged it
had not explicitly stated to employees that they would
face retaliation for failing to contribute to the PAC. UPS
agreed to pay the fine but continued to maintain that it always
has and always will make it clear that employee contributions
to its PAC are voluntary.
On the surface, the FEC's bland announcement three
days before Christmas seemed innocuous. As a reporter for
a weekly business magazine covering the freight
transportation industry, however, I pay close attention to UPS'
political activities. Big Brown maintains a staff of a dozen lobbyists
and public relations experts in a brick office building three
blocks from the U.S. Capital building. UPS lobbyists and
the lawmakers they seek to influence also have access to
the company's plush townhouse (located even closer to
the Capital building) for $500 and $1,000-a head
fund-raisers. UPS is also active in the American Trucking
Associations, which Fortune recently ranked one of the top lobbying
forces in Washington. The company doesn't like to talk about
its political activity, other than its highly publicized hiring
of welfare recipients as part of President Clinton's "Welfare
to Work" initiative.
Having done numerous stories about the company's
aggressive campaign giving, as well as the equally
aggressive campaign spending of the Teamsters Union
which represents UPS drivers I was curious to see what I
could learn about UPS's fundraising efforts. Entering the
FEC's offices across the street from FBI headquarters, I
was handed the two thick folders comprising the agency's record of the UPS case. Because
the case was newly settled, the files had not been transferred
to microfilm, making it easier to read.
The folders were a treasure trove, tracing as they did
the history of the 1993 complaint by then-UPS supervisor
Michael Kohr of Princeton, Ill, who described the company's
"strong armed" method of obtaining "voluntary" contributions
to UPS PAC. Kohr claimed that he and fellow supervisors
were forced to sit through numerous staff meetings
during which regional managers complained about the
level of PAC contributions from their northern Illinois
district. While upper management insisted that
contributions were confidential, Kohr was concerned that the
employee identification numbers marked on the PAC
donation cards were used to track which employees were
contributing. UPS said the employee identification numbers were used
to make sure that the contributions were deducted from
the right paychecks and that its accounting
department shared the information only with the FEC. The
company insisted it told employees both orally and in
writing that contributing to the PAC was strictly voluntary.
This finger pointing was not very interesting, but then I
hit pay dirt. Buried in the back of one file folder was a
partial transcript of a 1990 videotape the company used at its
PAC solicitation meetings. The transcript include exhortations
by then-UPS Chairman Oz Nelson to contributions to the
PAC to help fight rival Federal Express, which had outspent
UPS in the 1988 election cycle.
Going back to my clip files, I learned that 1987 and
early 1988 were a crucial time for the two package delivery
companies. FedEx wanted to eliminate intrastate regulation of
the transportation industry and had lost a 1986
congressional effort to preempt states authority over rates, routes
and services offered by overnight air carriers. The company
did better at the Department of Transportation the
following year, winning a bitter battle with UPS to provide
small package service to Japan in 1987.
UPS and FedEx pulled out the stops to win
political support for their business agendas in 1987 and 1988.
Both companies dramatically increased the size of their PAC
war chests in 1987. UPSPAC raised $567,328 in 1986
from company employees. FedEx took in $334,334. During
the 1988 election cycle, FedEx employees donated $1,139,978
to FEPAC. UPS employees, by contrast, gave $905,482 to
their PAC. To ensure the company was not outspent, UPS
continued to push its employees to contribute to the PAC.
According to the FEC file, the percentage of UPS employees
donating to the PAC increased from 38 percent in 1988 to
61 percent in 1990 and to 69 percent in 1991. UPS
spokesman Segal said the increased employee participation in the
PAC had nothing to do with company pressure, insisting that
the company was rapidly growing during the period in
question and that new employees were interested in helping
the company's political agenda.
The two companies continue to compete in both
the booming package delivery business and in the equally
booming area of campaign contributions. In 1988, UPS was
the 33rd largest contributor to federal lawmakers,
donating $771,769. FedEx ranked 43rd, giving $537,537. In
1996, UPSPAC's $2,957,935 in contributions made it the
15th largest donor to federal candidates. FEPAC ranked 39th,
with $1,594,195 in contributions.
I'm currently considering several follow-up stories,
including comparing lists of contributors to UPSPAC
over several election cycles to try and discern any trends. When
I tackle that story, I'll make use of the Center For
Responsive Politics' Web site (www.crp.org), which offers the most
up-to-date electronic listing of campaign contributions.
For a reporter looking for some fresh story ideas, I'd
suggest using the Center's databases to check who is giving to
your lawmakers. If several employees of a company are giving to
your local congressman, you may want to call and ask why.
Bob Mitchell, an editor at Thomson Newspapers'
Washington Bureau broke the story of how top executives of New
Enterprise Stone and Lime Co. and their spouses were illegally
reimbursed for their political contributions to House Transportation
Committee Chairman Bud Shuster, R-Pa. The company
benefited from the numerous road contracts Shuster won for his
central Pennsylvania district. Mitchell's story sparked an FEC
investigation that resulted in one of the agency's largest ever
fines imposed against company officials in 1995. New Enterprise
is still politically active, but has shifted much of its largesse
to House Surface Transportation Subcommittee Chairman
Tom Petri, R-Wis., who reports to Shuster.
David Barnes can be reached at (202) 661-3371 or by
e-mail at David_Barnes@trafficworld.com.
Slugging It Out the Old Fashioned Way
Suzanne Espinosa Solis
San Francisco Chronicle
It was a tedious and unlikely check of 14 years of
public records that produced this story (available
and the CFIC Library at www.campaignfinance.org/stories/local.html).
A retired fire captain in the city of Richmond (15
miles northeast of San Francisco) led a campaign to defeat a
local ballot measure to build new fire stations and an
earthquake-safe 911-Emergency system. My editor, Trapper
Byrne, asked me to profile the man.
Darrell Reese, the retired fire captain, controlled a
political action committee of the Richmond firefighters union
and used this money to finance many campaigns over the years
to support or oppose ballot measures, city council
candidates and even a county supervisors race far from the city
Rumors suggested Reese was directing donations
from industry and developers through the union fund and
political action committee to business-friendly canidates and
issues. But no one had any evidence. California's Fair
Political Practices Commission (filing schedules and candidate
forms are available at the Commission's site at
http://infra1.dgs.ca.gov/fppc), which investigates campaign
finance fraud, had no records of previous wrongdoing.
It was a good thing I didn't know much about Reese
when I started. I had been covering Richmond for about
four months. This meant I had few sources and a weak sense
of Richmond's political history. The
Chronicle, which had been
covering Richmond for about four months, had few stories
in its archives. I had to start from scratch.
One of the first things I did was to check the
union's campaign disclosure records financial balance sheets
filed with the local elections department, in this case Contra
Costa County, which kept the papers in bulky manila folders.
I began with the oldest form in the file, a 14-year-old
document, and worked my way up to the most current. It
was tedious work but a good way to see the financial history of
the political action committee and any patterns in whom or
what the union supported or opposed.
Back at my desk, I spent days on and off reviewing
the campaign disclosure forms. All the analyzing was done
the old-fashioned way a lot of reading and re-reading
and comparing one year to the next, making note of
different things. Detecting a break in the pattern of who was
contributing was not easy because the amount of information
was overwhelming. The questions popping up in my thoughts
as I looked at the documents kept me going. I used a
pocket calculator and took notes. I broke down the number
of contributors and paid more attention to exactly who
That's how I was able to spot a break in the pattern of
who contributed to the union. That's when the story began
to change from a profile to a gotcha-piece.
After 14 years of reporting contributions from
working firefighters, the union had suddenly in the last few
months begun reporting contributions from retired firefighters.
The inclusion of 94 retirees doubled the contributors list and
also lowered the donation amount for each contributor to
about half of what it had been in previous years. While
most contributions varied in amount from person to
person, the Richmond firefighters union showed a strikingly unusual
thing. Each firefighter, whether retired or active, had contributed the exact same amount
down to the very cent. Unless the contribution is an
automatic deduction from a paycheck or pension check, that's
a pretty incredible feat. Even if the contributions were
deducted automatically, why would a retiree suddenly
start contributing to a union's political action fund, especially
after being long gone and living in another state? I used
telephone books, a 411-information service and our library
researchers to obtain phone numbers for many of the 94 retirees on
the list. After the first several phone calls to the retirees, I
was energized. I called my editor who came over for a few days
to help me analyze the records.
As I called, the retirees' stories began sounding alike;
they didn't donate to the union anymore let alone to a
political fund. They had retired years ago and were living on a
budget. One retiree scoffed when I told him the union claimed
he donated $157.42. "Tell them to send it back to me,'' he said.
Fellow Chronicle reporter Kevin Fagan and I spent a
long morning at Richmond City Hall fingering through more
than 100 payroll deduction records for each and every
unionized firefighter in the city. Those public records showed
how much each employee had agreed to have deducted
automatically each month for the union. That was one way to
double check how the union raised money for its various funds.
Reese admitted he used the retirees' names to bypass
the $250 contribution limit set by a new state law,
Proposition 208. He quickly amended his campaign disclosure forms
to remove the retirees altogether from the contributors list.
But the incident sparked the state's Fair Political Practices
Commission to open a probe of the union's political
Furthermore, Reese's attempt to explain where the
$15,000 came from after admitting that the retirees had not
contributed it was that this money was raised by the
firefighters' annual circus fundraiser, which until then had been
presented as a fundraiser to sponsor events for poor children.
Reese's explanation enraged the public: "As far as I'm concerned,
the use of our money to save the Richmond voters millions
of dollars (in unbuilt fire stations) is a very charitable activity."
Suzanne Espinosa Solis can be reached at
(510) 372-5722 or by e-mail at firstname.lastname@example.org.
Reese admitted he used the retirees' names to bypass the
$250 contribution limit set by a new state law, Proposition 208
Checking the Record Against the Rhetoric
San Francisco Examiner
When a Beverly Hills millionaire began running
for governor of California as a foe of special-interest politics,
the San Francisco Examiner sought to learn how the
political newcomer's rhetoric squared with his actions as a
The result was "High Flying Politics," (available
from www.sfgate.com and
www.campaignfinance.org/stories/federal.html) an investigative profile of
leveraged-buyout specialist Al Checchi, whose willingness to spend down
his $600 million fortune on TV ads has given him a real shot
at winning the 1998 Democratic gubernatorial nomination.
The Examiner's story, published Nov. 30, 1997,
compared candidate Checchi's clean-government campaign
pitch with the record he compiled as co-chairman of the board
at Northwest Airlines, which he and his partners acquired in
a contentious 1988 corporate raid.
Perhaps not surprisingly, the story found a
disconnect between rhetoric and record.
On the stump, Checchi has railed against
big-money lobbies for having undue influence on government. He
has urged a ban on soft-money donations, vowed to "break
with the status quo and challenge the special interests'" and
complained that "access to government continues to be
bought and sold on the auction block."
But as the Examiner put it, "Federal records show that
in the years Checchi was at the helm, Minnesota-based
Northwest emerged as one of the most potent political
money machines in the heavily regulated aviation industry,
spending millions to seek tax breaks, win new air routes and
obtain relief from costly proposed federal regulations."
The story detailed how Northwest under Checchi
had "spent more than $5.6 million lobbying federal
lawmakers and agencies on issues vital to the airline's bottom-line,"
and had made more than $1.5 million in campaign donations.
Its soft money donations were tops among U.S. airlines,
the records showed.
The story also noted Checchi's personal campaign
donations, including an occasion in 1996 in which he
gave $100,000 to a Democratic soft-money account shortly
after Northwest had successfully lobbied the Clinton
administration to obtain a non-stop air route to Beijing.
As the self-financed tycoon-politician is increasingly
common in American politics Ross Perot and erstwhile
California Rep. Michael Huffington also come to mind
IRE members might be interested in learning how
the Examiner went about scrutinizing Checchi's record.
My first task was to document Checchi's campaign
comments on soft money and special interests. This was
easily done via the candidate's press packet and Nexis.
(Transcripts of radio interviews were particularly useful.)
Northwest's political donations were obtained from
the Center for Responsive Politics' Federal Election
Commission information web site (www.tray.com/FECinfo).
For data prior to '93-'94, I used the Federal
Election Commission's Direct Access Program, and downloaded
the campaign finance data for Northwest, Checchi, etc.
The DAP is inexpensive and easy to use. I prefer the FECinfo
site because it is faster.
I put all the campaign finance data into a DBF file
to organize it. In addition to the data I downloaded, I
input committee assignments for congressional recipients of
donations from Northwest that allowed me to document
the trend about donations matching up to aviation-related
legislative committees. To analyze donation trends, you
must know lawmakers' districts and committee assignments;
the Congressional Yellow Book provided that.
It quickly became clear that Northwest targeted its
donations to lawmakers from Minnesota or Michigan,
Northwest's twin hubs, or to those who serve on committees that
review laws vital to the aviation industry's bottom line.
The next step was to learn the airline's legislative
agenda. Northwest's annual report and proxy statement,
obtained from the investor relations department, provided clues, as
did a Nexis search of Detroit and Twin cities' papers. But the
best information was contained in the federal lobbying
reports filed by Northwest with the clerk of the House of
Representatives. The only way I know to obtain these documents is
to send someone to B106 in The Cannon House Office
Building in Washington and have them consult the indexes;
copies are 10 cents per page.
The reports detailed Northwest's lobbying
expenditures; the more recent ones listed specific bills and
regulatory matters on which the airline lobbied as well.
After that, it was some grim telephonic slogging to
learn which issues were most important to Northwest, and
why. Some committee staffers, lobbyists for public-interest
groups, and lawmakers and lobbyists who opposed Northwest
on particular issues were helpful in psyching this outóas
were Checchi's political opponents.
Since the story, Checchi has continued to spend heavily
on TV ads. His campaign caught a lucky break last month
when popular U.S. Sen. Dianne Feinstein declined to run
for governor. That left Lt. Gov. Gray Davis, a weaker
candidate, as Checchi's main opponent.
But there was also bad news for Checchi, as a
court overturned a political reform law that had sharply
limited political fund-raising in California. The law didn't apply
to candidates who could pay for their campaigns out of
their own deep pockets, and it had been thought that
Checchi would be able to outspend his opponents by a wide margin.
But with the limits rescinded, Davis, an accomplished
fund-raiser, is likely to be able to match Checchi dollar for dollar.
The winner is likely to face Dan Lungren, the
Republican attorney general.
Lance Williams can be reached at (415) 777-7878 or
by e-mail at email@example.com.
New at CFIC
What if I told you that 27% of Kansas Gov. Bill
Graves' campaign contributions in the '94 election came from
outside of Kansas? Great tip, if you are a reporter in Kansas. But
what if I could also tell you the percentage of out-state
contributions to every other sitting governor, attorney general,
secretary of state, state senator, or representative? And what if
I could prepare you a list of the big contributors common to
all of them? Better yet, what if I could teach you to do all
this yourself quickly and easily at a single Web site?
Welcome to the thinking behind IRE and NICAR's Campaign Finance Information Center
(www.campaignfinance.org). Our goal is to create a single
repository for contributions and expenditures databases from state
races across the country and build an on-line search engine you
can use to track contributors across state lines.
Thanks to the generosity of citizens action
groups across the country, the site already has of
downloadable data from Illinois, Indiana, Minnesota, Ohio, and
Wisconsin. We also have data directly from state boards
of election in Michigan, Kansas, Florida, Idaho, and
Kentucky. For states with their own on-line search engine,
we have direct links. The CFIC "universal" search
engine that will query the separate databases
simultaneously should be up in the next few weeks.
The biggest challenge with the effort so far is the
diversity of information we receive for different states. While
groups like the Center for Responsive Politics go to great lengths
to identify contributors' occupations and employers, state
boards of election are far less eager to press for disclosure of
contributors' economic interests. In Kansas, for example, the
database has a contributor name field (often blank) and nothing else.
So unless you know the name of every tobacco executive in
the state, tracking contributions from the industry would
Even if you knew all their names, however, you
would still have a problem. Few states go to the effort
of standardizing the names that appear on
contribution forms, so 3M might appear as "3M," "Three M,"
or "Minnesota Mining and Manufacturing."
Accounting for all of these irregularities, and coding the search
engine accordingly, is a real challenge.
One problem many reporters face when asked to write
a campaign-finance story is "Where to begin?" So we've set up
an on-line campaign finance story library. Thanks to the
IRE members and their old clips, we have a pretty good start.
We have two exceptional series from The Indianapolis
Star/News (their data is on our site) and the
Times-Picayune (New Orleans). If you've done a story using campaign finance records, and
we've missed it, please let us know and we'll add it to our library.
In the coming weeks we hope to have our on-line
search engine ready so you can search all of our databases as
though they were one. You will be able to track contributors
across state lines to find out where a given interest is spending
its money. You will also be able to compare campaigns for
the same office in different states to get some perspective on
the size of your local candidate's war chest.
Another feature in its infancy at CFIC is a set of
on-line tutorials to help reporters without much Web or data
experience begin to master the skills required of the modern investigator.
These will include lessons from NICAR's on-the-road
training program, our boot camps and new lessons designed
specifically for learning to handle the data on the CFIC site.
Jack Dolan can be reached at (573) 882-1982 or
by e-mail at firstname.lastname@example.org.
The Campaign Finance Information Center is always adding new resources to its Web site.