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Inside Fundraising for the 2008 Party Conventions: Party Surrogates Gather Soft Money While Federal Regulators Turn a Blind Eye

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Inside Fundraising for the 2008 Party Conventions: Party Surrogates Gather Soft Money While Federal Regulators Turn a Blind Eye New CFI Analysis of Convention Fundraising Documents Inside Fundraising for the 2008 Party Conventions: Party Surrogates Gather Soft Money While Federal Regulators Turn a Blind Eye The Democratic and Republican parties have each accepted $16.4 million federal grants to support their upcoming presidential nominating conventions. The money is provided on condition that the parties spend no other funds on these events. This program was enacted in 1974 following a corporate contributions and corruption scandal surrounding the 1972 Republican convention. But outside the public financing system, private support of conventions via convention city “host committees” has exploded in recent years. In 2004, if one leaves aside the $50 million federal grant to each convention city government for security, private financing paid for approximately 80% of each party’s convention. It subsidized the “build out” of the auditorium, construction of a media center, mounting of a lavish TV production, communications and party office space – all components of the biggest and longest political ad of the presidential election. The host committees formally disburse the funds, but the party convention committees elaborate and revise the host committees’ budgets, approve their contract specifications, and even select the contractors.1 Contributions, largely corporate, to host committees soared from $1 million in 1980 and only $8 million as late as 1992, to $56 million in 2000 and $142 million in 2004. Private financing for the 2008 conventions is currently slated to total about $112 million but, based on past history, the final figure could well go higher. (see Appendix D for a tabular history of convention financing). After the enactment of the 2002 Bipartisan Campaign Reform Act -- which banned unlimited corporate, union and individual “soft money” contributions to political parties - - the Federal Election Commission considered whether its longstanding “narrow exemption” for host committee spending had evolved into a gigantic loophole, one that could permit the return of potentially “corrupting” party soft money via conduits. In the end however, the Commission thought it found a reason to uphold the existing system: “[T]he fact that historically members of the opposite party have played key roles in the convention host committees strongly supports the Commission’s conclusion that the host committee activity is motivated by a desire to promote the convention city and not by political considerations.”2 But CFI’s assessment of evidence concerning host committees fundraising for the upcoming Democratic convention in Denver, and the Republican one in Minneapolis- St.Paul (including the results of CFI freedom of information requests to Governors and ©2008 The Campaign Finance Institute www.CFInst.org 1 Mayors in Colorado and Minnesota) leads to a radically different conclusion. When one looks not simply at the formal organization of the host committees (as the FEC did ) but at who is actually raising the money, one sees that the dominant roles are being played by teams of elected officials at all levels of government from the convention party and their associates in the party’s network of financiers and operatives. Basically, Republican elected officials, their financiers and party operatives are asking for money to fund the Republican convention while Democratic ones are doing the same thing for the Democratic convention. Furthermore, when these Colorado Democrats and Minnesota Republicans “make the ask”, their undeniable civic boosterism frequently is accompanied by offers of special access to federal elected officials, national party leaders and other party influentials. Contrary to the FEC’s conclusion, “political considerations” have a lot to do with host committee fundraising activity. All the more so when one considers that about half of the private money for both conventions this year is slated to come from out- of-state companies with relatively little desire to “promote the convention city.” The Denver Host Committee: A Democratic Fundraising Mechanism Steve Farber is a prominent Denver attorney and civic leader, the founding partner of Brownstein, Farber, and Hyatt, which conducts one of the largest lobbying businesses in Washington D.C, and a major state and national Democratic donor. In July 2004, Farber hosted his golfing buddy Bill Clinton at his home where the ex-President plugged his book and raised funds for his presidential library. Farber had “raised millions” for three- time Colorado Democratic Governor Roy Romer’s campaigns.3 According to Opensecrets.org, he and his wife Cindy have contributed $148,000 to federal elections since 2003, $129,000 to Democrats. His partner, Norman Brownstein and wife Helen have donated $170,600 to the Democrats in the same time period. In 2006, Farber became head of fundraising for the host committee bidding for Denver’s first Democratic Convention in 100 years.4 The committee’s, and its supporters’, basic argument to the Democratic National Committee was that its Denver location offered the Party an opening to a changing electorate in the Mountain West.5 Working with Willie Shepherd, another Denver lawyer, civic activist and Democratic contributor ($15,250 to Democrats since 2005 according to Opensecrets.org), Farber helped secure soft promises of $23 million in cash and in-kind services from corporations and wealthy individuals.6 When the committee’s bid was accepted in January 2007, it reorganized to deal with what Farber called its “top priority”: fundraising.7 A new “Executive Committee” brought in four top Democratic elected officials: Governor Bill Ritter, U.S. Senator Ken Salazar, Mayor John Hickenlooper and U.S. Representative Diana DeGette. The Executive also included two holdovers from the previous committee leadership -- Farber and Democratic councilwoman Elbra Wedgeworth who had first proposed bringing the convention to Denver to DNC Chairman Howard Dean.8 (Farber, the head of “Democrats for Business” had uncharacteristically supported Ritter’s Republican opponent in the just-concluded ©2008 The Campaign Finance Institute www.CFInst.org 2 gubernatorial election, but quickly returned to the party fold9). Ritter, Salazar and Hickenlooper personally promised Dean in a conference call that they would raise the required private funding of $55 million in cash and in-kind services. Of this amount, as much as $35 million was expected to come from outside of Colorado.10 Although the entire Executive Committee has been involved in fundraising, it is clear from records released to CFI (under the Colorado Open Records Act) by the Governor’s and Mayor’s office, and from local press reports and interviews, that Ritter, Farber, Hickenlooper and Salazar have been the most important solicitors. Often team members have prospected for funds jointly. (Sources for the following account are the released documents unless otherwise indicated in citations) • April 2007: Mayor Hickenlooper traveled to San Diego for a fundraising breakfast hosted by Murray Galinson, a banker, community leader and major national Democratic donor. He also went to Philadelphia to meet with representatives of Lockheed Martin, Aramark, PNC Bank, Sunoco and Charming Shoppes Inc. (the first is listed as a sponsor, i.e. donor, on the host committee website) among others. • April 2007: Gov. Ritter, Farber and Mayor Hickenlooper went to Las Vegas and met with over 20 potential donors individually and as many as 30 others in groups. (Farber’s firm has a major practice with Las Vegas casinos). Ritter sent personal thank you notes to a number of companies including International Game Technology, David/Hicks Brokerage, The Molasky Companies, Golden Gaming and Insight Holdings.11 • May 2007: Mayor Hickenlooper and Farber journeyed to New York to approach unidentified Wall Street executives.12 • June 2007: Gov. Ritter was in Chicago meeting with such top national Democratic donors as Fred Eychaner of Newsweb and J.B. Pritzker (heir to the Hyatt hotel fortune), both of whom had previously promised to support the convention,13 and investor and prominent Barack Obama supporter James Crown.14 (See Appendix A) • July 2007: Rep. DeGette “helped tout the convention to Democratic activists and lobbyists…. ‘When you have the conventions in a place like Denver or Minneapolis, it’s all hands on deck,’ she urged.”15 • August 2007: Farber told a reporter he was making 10 fundraising calls a day from his Denver office16 • September 2007: Farber forwarded to Mayor Hickenlooper a welcome e-mail he had received from an official of Qwest Communications. Qwest had made the biggest pledge to the host committee in 2006 ($6 million in cash as well as in- kind services), but had not yet delivered due to a dispute about whether it would ©2008 The Campaign Finance Institute www.CFInst.org 3 be appointed the convention’s Official Telecommunications Provider.17 The e- mail read: “We wire transferred 500K this morning…Look forward to finalizing our sponsorship with the host and the DNCC…” • September 2007: Gov. Ritter met with representatives of Safeway and Amgen in Washington, D.C. (both later became sponsors). • December 2007: As a $15 million cash party fundraising deadline approached, Gov. Ritter approached Anna Burger, International Secretary-Treasurer of the Service Employees International Union, about “getting more money by Dec. 14.” SEIU’s Section 527 political organization transferred $250,000 to the host committee on December 14.18 • The host committee met its
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