The News Journal from Wilmington, Delaware on March 12, 1995 · Page 12
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The News Journal from Wilmington, Delaware · Page 12

Wilmington, Delaware
Issue Date:
Sunday, March 12, 1995
Page 12
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A12 SUNDAY NEWS JOURNAL MARCH 12. 1995 The politics of money MBNA: Memo guided campaign donations FROM PACE A1 Federal Election Commission and selected state election offices, including Delaware's. Of the $1.1 million in contributions that MBNA distributed, $724,908 came from its executives and their spouses and $387,948 from its political action committees. MBNA's involvement had a distinctly Republican flavor in 1994 and included $140,089 to Delaware Sen. William V. Roth Jr. believed to be the largest single fount of campaign donations in Delaware history. Household contributions included $31,000 from Chairman Alfred Lerner and $27,536 from President Charles M. Cawley. Six other executives and their spouses gave more than $20,000 each. MBNA's emergence comes at a time when the rising costs of campaigns the 1994 California Senate race topped $40 million and the way they are financed continue to be a subject of national controversy. In one sense, it's no surprise that MBNA wanted to enter the political arena. The financial ser-1 vices industry traditionally is a big giver and certainly isn't ; slacking off now as banks seek more freedom to operate across state lines and offer an array of ', services. ' In addition to home-state favor-; ites Roth and U.S. Rep. Michael , N. Castle, MBNA heaped big money on Alfonse M. D'Amato, ' the New York senator who is the ' new banking committee chairman. It also donated heavily to candidates in other states where it operates such as U.S. Sen. Olympia J. Snowe in Maine and Gov. George W. Bush in Texas. The memos went to Cawley's executive ranks senior vice J chairmen, vice chairmen, senior " executive vice presidents, execu-' tive vice presidents and senior ,' vice presidents. More than 150 of Z them responded. The memos were from John W. Scheflen, MBNA's general coun-- sel. He kept records of the contri- butions and requested confirmation. Instructions read in boldface: "Please send me a copy of each of your checks." In a follow-up memo, Scheflen wanted to know in writing who wasn't giving: "If you do not plan to make any suggested contributions, I would appreciate it if you would so note." Scheflen said the memos weren t meant to put pressure on anyone. He said he needed records because MBNA had trouble getting information from the campaigns about how much was collected, and he wanted to be sure the contributions conformed to election laws. He said he and he alone knew who gave. "I don't think we coerced employees. Absolutely not," Scheflen said. "We've never told anyone at any level that they were required to make a contribution." Just as coerced contributions are illegal, it is also against the law for companies to reimburse their employees for campaign donations. Chief Administrative Officer Weaver, whose own household parted with $23,923, said robody was. If the executives' pay package wero public, Weaver said, "the question of reimbursement wouldn't be a question anymore." Because it is a publicly traded company, MBNA must reveal the compensation of its top executives. For example, Cawley made $1.82 million in 1993 and exercised stock options to raise it to $4 million. Bruce L. Hammonds, the chief operating officer, received $1.11 million and boosted that to $2 million with stock options. Other top level officials can make $100,000 plus bonuses. The Federal Election Commission enforces campaign finance laws, but commission officials said they won't comment on the MBNA memos because no complaint has been filed. Former Attorney General Charles M. Oberly III said he might file one. Oberly, a Democrat, was the loser in a U.S. Senate race against Roth, MBNA's most-favored candidate. Oberly received only $9,000 in MBNA contributions, and his name didn't appear among the names of candidates on any of the memos seen by The News Journal. Oberly wondered how far a complaint would get. "There's not a chance that any employee who wants to keep his or her job is going to come forward and say they were coerced," he said. "They can give as much as the law allows. The issue is whether or not they put pressure on people," Oberly added. "Delaware is a nice place to live, but no company owns this state." Roth's campaign was aware it was getting sizable contributions from MBNA executives but didn't know about the taemos. Jo Anne '.V 12 Gov. Carper was the rare Democrat supported by MBNA. He got $110,000 toward his election In 1992. Mill IB I 1 MBNA, which has operations in Texas, supported new Gov. George W. Bush, a Republican, with more than $12,000. B. Barnhart, the former campaign manager, wasn't bothered by them. "It doesn't concern me from the standpoint that the Roth campaign did everything we should. I know John Scheflen. I would be surprised if he did anything he thought was improper. I'm not going to second-guess what he put in the memo," she said. Miller, from the Center for Responsive Politics in Washington, said she believes a complaint would get a fair hearing by the Federal Election Commission. "I don't see how they could help but give it serious consideration because of the extraordinarily detailed documentation," she said. The tone of the MBNA memos troubled other campaign experts and political scientists, as well. Gary C. Jacobson, a political science professor at the University of California-San Diego, is a nationally recognized authority on money in politics who wrote "Money in Congressional Elections." He said it was "probably over the edge" for the bank to ask for photocopies of the checks. "If it's not illegal, it's very close to it," Jacobson said. "The law makes it clear this should be voluntary. This makes it look less voluntary." Michael J. Malbin, director of legislative studies at the Rockefeller Institute of Government in Albany, N.Y., is the author of "Money and Politics in the United States" and "Politics, Interest Groups and Campaign Finance Laws." He also questioned the memos. "It is not against the spirit of the law to encourage people to give money. When you get letters this detailed, I wonder about it," he said. "I wonder primarily because amounts were listed next to job titles, a candidate was named and a corporate officer asked to be informed." MBNA employees said they didn't have a problem with the memos. "Does sending the check mean I'm getting a demerit if I don't send the check? I don't feel like that," said John J. Hewes, senior executive vice president of the credit division. His household contributions were "probably a little more" than the $16,608 tracked by The News Journal, he f Z 1 I - ? ,1 1 4 W M -V7 -... V i ii Mm! rr-------"-'---'--- 1 " The breakdown shows how much each candidate received from MBNA executives, their spouses, the corporate PACs and the totals for the 1994 election. Other candidates' contributions include $12,750 for Texas Gov. George W. Bush and $22,000 for Maine Gov. Angus S. King Jr. and $25,000 for New York Gov. George E. Pataki. Name MBNA Spouses PACs Total U.S. Rep. Michael N. Castle, R-Del. 72,000 17,700 10,000 99,700 U.S. Sen. William V. Roth Jr., R-Del. 112,089 18,000 10,000 140,089 U.S. Sen. Olympia J. Snowe, R-Maine 94,350 27,500 10,000 131,850 U.S. Sen. Kay Bailey Hutchison, R-Texas 76,000 17,250 13,716 106,966 Bernadine Healy, Ohio Republican senatorial candidate 81,188 13,496 4,996 99,680 U.S. Sen. Alfonse M. D'Amato, R-N.Y. 116,500 2,000 10,170 128,670 Other Delaware 22,585 1,250 54,347 78,182 Other candidates 46,750 6,250 274,719 327,719 Total 621,462 103,446 387,948 1,112,856 Source: Campaign finance reports , t J i Michael B. Battaglia, elected to a minor New Castle County office, got more than $10,000 from MBNA workers. I f 1 J f HI New Maine Gov. Angus S. King Jr., an independent, was the lone non-Republican endorsed in company memos. said. "The memos from John Scheflen make sure that we support people that we want. There are certain candidates that I would not want to support," said Steven P. Chambers, the bank's personnel director whose household contributions were about $12,400. Executives often "maxed out," giving candidates the maximum under the law, and then used a provision that lets spouses write checks, too. Contributions also came from the bank's PACS. They are political funds, administered by corporate officials and financed by payroll deductions and other donations from the executive ranks and lower management. Scheflen is the chairman and treasurer. Most executives gave both ways writing checks as individuals and also making PAC contributions. MBNA's largess dwarfs the political involvement of the DuPont Co., which put $128,350 into the money stream for the 1994 election. MBNA contributed roughly 10 times as much, even though DuPont has almost six times as many U.S. employees as the bank's 11,000 workers. MBNA finds itself in the same league as Goldman Sachs and Co., a New York investment firm. Its executives and their spouses provided the single greatest source of individual contributions in the 1992 election, according to "Open Secrets: The Encyclopedia of Congressional Money and Politics." No figures are available yet for Goldman Sachs and Co. in 1994. In 1992 its executives and spouses gave $704,237 $20,671 less than what MBNA households gave two years later. Today, Robert E. Rubin, a former co-chairman of Goldman Sachs and Co., sits in President Clinton's Cabinet as the treasury secretary. Does MBNA's Charlie Cawley have similar ambitions? "I don't think he has any political aspirations at all," Weaver said. Larry Makinson, co-author of "Open Secrets," currently is analyzing the 1994 campaign contributions and predicts MBNA will emerge as a leader. "MBNA clearly is one of the most active politically, contributing to cam- rrrrn r'"""'jF 1 ' if XT'; i 1 How much MBNA executives and their spouses contributed to candidates and the bank's federal PAC. Their contributions for the 1994 election are broken down by the individual checks they wrote to federal candidates, to the PAC in 1993, the PAC in 1994 and to candidates at the state and local level. Name Congress PAC PAC State, Total '93 '94 local Alfred Lerner, chairman, 25,000 6 5000 1000 31,000 and Norma Charles M. Cawley, president, 19,246 T200 3,540 3,550 27,536 and Julie P. Bruce L Hammonds, chief operating officer, 14,748 4,050 3,900 3,500 26,198 and Barbara Lance L. Weaver, chief administrative officer, 13,748 2,700 2,975 4,500 23,923 and Karyn D. Ronald W. Davies, chief technology officer, 13,248 4,050 4,475 1,750 23,523 and Santina John R.Cochran, chief marketing officer, 13,248 4,050 3,900 1,450 22,648 and Patricia A. M.Scot Kaufman, chief financial officer, 14,248 2,700 2,950 1,250 21,148 and Patricia D. John W. Scheflen, general counsel, 13,248 1,620 2,535 3,100 20,503 and Marcia W. David W. Nelms, senior operating committee, 10,498 4,050 2,160 1,900 18,608 and Daryl B. Bob B. Hallmark, senior operating committee, 13,498 0 1,500 2,750 17,748 and Vera B. TerranceR. Flynn, senior operating committee, 12,998 1,350 2,050 950 17,348 and Christine R. Kenneth F. Boehl, senior operating committee, 11,748 1,620 2,120 1,200 16,688 and Kathleen G. JohnJ. Hewes, senior operating committee, 10,498 1,500 2,160 2,450 16,608 and Anna B. Richard Struthers, senior operating committee, 10,748 1,870 2,570 950 16,138 and Sharon Salvatore A. DeAngelo, senior operating committee, 11,500 1,080 1,940 950 15,470 and Jackqueline A. Vernon H.C. Wright, senior operating committee, 10,998 945 1,885 950 14,778 and Lucy B. Charles F. Wheatley III, senior operating committee, 9,498 1,620 2,160 950 14,228 i and Kerry M. ; Douglas R. Denton, senior operating committee, 10,748 200 1,500 1,500 13,948! and Christine David W. Spartin, senior operating committee, 11,498 0 1,500 750 13,748' and Lisa A. SunilkumarF. Antani, senior operating committee, 10,748 0 1,400 950 13,098 and Patricia A. Steven P. Chambers, senior operating committee, 9,000 675 1,775 950 12,400 and Mary Z. Gregg Bacchieri, senior operating committee 7,998 1,620 2,160 450 12,228 ; Thomas P. McGinley, senior operating committee, 9,998 0 0 500 10,498 1 and Audrey R. : ; Patrick M. Blewett, senior operating committee, 5,748 1,620 2,120 250 9,738 and Theresa M. Edward G. Plummer Jr., senior operating committee, 6,248 1,620 1,860 0 9,728 and Margaret C. Source: Campaign finance reports paigns in 1994, if not the biggest no question about it," he said. The 1994 election represents MBNA's first significant foray into national politics. It dabbled in 1992 the first election after it was spun off from Maryland National Bank into an independent corporation. It gave $61,300 to U.S. Rep. Michael N. Castle, a Republican, to become the single largest source of campaign funds for any member of the House of Representatives in 1992. It also put $110,000 into the coffers of Thomas R. Carper, the Democratic governor. That was the election the two candidates switched jobs, with Castle leaving the governorship and Carper the House. Also that year, MBNA gave $100,000 to the Republican National Committee and $500 to the Democratic National Committee. Its newly formed federal PAC gave $60,000 to 35 congressional candidates, slightly more than half of them Democrats. MBNA officials say they contribute so much because they do everything with enthusiasm whether it's answering the telephone or donating $1.5 million to various charities like the United Way and the United Negro College Fund. "When you turn those same enthusiastic people loose, and they decide to get involved in the community," Weaver said, "you get action." The financial services industry traditionally is the nation's largest source of political donations. "Open Secrets" called it the "mother lode" and tracked contributions of $71.1 million from the finance, insurance and real estate sectors to congressional candi dates in 1992. Congressional candidates collectively raised $495.4 million for that election, according to the Federal Election Commission. There is an obvious reason why the industry donates so much. "Almost everything that Congress does affects their bottom line, whether it's tax policy or lending policy," said Miller of the Center for Responsive Politics. "One small tax change could cost them a billion. It's a small price to pay." The big money went to Delaware, where MBNA has its headquarters, and to Maine, Texas and Ohio, all states with satellite operations. It also went to D'Amato, the Senate banking committee chairman, and his political ally George E. Pataki, the new governor of New York. D'Amato wasn't even running for re-election in 1994. His term expires in 1998. In addition to Roth, other candidates who received in the $100,000 range or higher were: Snowe of Maine, D'Amato, Sen. Kay Bailey Hutchison of Texas, Castle of Delaware and Bernadine Healy, who lost a GOP senatorial primary in Ohio. There also were five-figure contributions to three new governors: About this report The News Journal surveyed more than a million records in computer data banks and paper records compiled by the Federal Election Commission and state election offices to arrive at the MBNA contribution totals used in this analysis. The records, however, are imperfect and, as a result, the totals are estimates. MBNA officials were shown the numbers and did not dispute them. Campaign finance experts say that, if anything, the MBNA contribution totals are likely to be low. Here are some of the reasons. It is no simple task to identify executives in campaign finance records by the companies that employ them. Federal law requires contributors to list their occupation, but the practice isn't rigorously enforced. Many states including Delaware don't require contributors to reveal their employment. Spouses aren't obliged by either federal or state laws to identify the breadwinners in their households. This means that some MBNA executives' contributions nay not Pataki of New York, Angus S. King Jr. of Maine and Bush of Texas. King, the only non-Republican, is an independent. ; The Delaware Republican Party got $18,000, the Democratic Party $11,750. ; The top local recipient was Michael B. Battaglia, the newly elected New Castle County recorder of deeds and son of the Republican state chairman. The News Journal found $10,025 in contributions from MBNA employees and the bank's PAC in his campaign treasury nearly 15 percent of Battaglia's $68,851 total. v MBNA's donations don't always work out the way the bank would like. The PAC gave $600 to Democrat Thomas B. Sharp, the state Senate's majority leader, who recently dragged Cawley and the bank into a spat over parking signs. The governor, the General Assembly, the Delaware State Chamber of Commerce, the state police and assorted civic leaders got involved before peace was restored which is MBNA's overall aim in pouring all that money into politics. As Scheflen tally we just alone." said, "Fundamen-want to be left have been identified, despite efforts to double-check for them. Misspelled names a frequent ; problem in the records further complicated the search. Not all the records are comput-erized. Federal election records ' generally are, but state records frequently are not. Hundreds of ' pages of campaign finance reports had to be studied entry by entry. Election records in Delaware " and Maine aren't on computer. Texas records are partially com- puterized, but no records were available for contributions received after Oct. 11, 1994. Reporting limits also obscure the contributions. Federal and state election laws don't require ' donations below certain amounts . to be reported individually. For' example, Delaware doesn't require the disclosure of contribu- ' tors who give $100 or less, so someone who went to a $50-3- ", ticket fund raiser wouldn't show ' up on campaign records. Celia Cohen and Jeff Montgomery

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