Revolving-Door Democrats

Unseated by Republican redistricting, five former Texas congressmen cash in.
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Texas' Redistricting Revolvers

In 2006, public relations giant Fleishman-Hillard Inc. announced that it was merging a recently acquired firm-Mercury Public Affairs-into Fleishman’s lobby division under former Texas Congressman Max Sandlin, the company’s newly hired co-chair. The drab press release recounting these facts illustrated that even PR professionals sometimes omit the human-interest angle. They failed to mention that Mercury played a big role in the Republican redistricting scheme that knocked Sandlin, a Democrat from northeast Texas, out of Congress.

In 2002, in the waning days of the GOP empire that Tom DeLay built by harnessing K Street lobbying money and power, DeLay put his weight behind electing a Republican majority in the Texas Legislature that would redraw congressional districts. The new districts would favor Republicans and punish powerful Democrats. One of the targets was Sandlin, the chief deputy whip for then-House Minority Leader Nancy Pelosi of California.

Sandlin’s future colleagues at Mercury played key roles in DeLay’s project. Kirill Goncharenko organized a nursing home trade group that was the top supplier of corporate funds to both DeLay’s Texans for a Republican Majority PAC and the Texas Association of Business. Working together, both groups relied on corporate funds to help elect a GOP majority in the state House. Mercury produced some of the ads that TAB used to elect Republican lawmakers.

The connections don’t stop there. A pending indictment against DeLay and two associates alleges that GOP operative Terry Nelson, who joined Mercury six months before Sandlin, helped TRMPAC “launder” corporate political funds when he was political director of the Republican National Committee. After depositing a $190,000 contribution from TRMPAC on September 20, 2002, the committee contributed $190,000 two weeks later to seven Texas House candidates who were prohibited from using corporate funds. (See “DeLay’s Beautiful Laundrette,” October 21, 2005.) Six of those Republican candidates won House seats a month later, bolstering the GOP mapmakers who subsequently took out six Texas congressmen-including Sandlin. (The GOP also slashed the medical-malpractice liabilities of Goncharenko’s nursing home clients, as the Observer reported in “A Death in McAllen,” September 23, 2005.)

Now Mercury’s Web site lists Goncharenko, Nelson and Sandlin on its 24-member “team.”

Washington is replete with strange bedfellows. Yet viewed from beyond the Beltway, Sandlin’s revolving-door story may sound a bit like Stockholm syndrome, the phenomenon whereby hostages come to sympathize with their abductors. While few revolving-door stories are that weird, an Observer investigation has made a surprising discovery about the Texans whom DeLay gerrymandered out of Congress-with generous assistance from the lobby. Namely, these Democratic victims of redistricting have proven even more likely than the average member of Congress to become lobbyists.

Of the six Texas Democrats who lost their seats, five have since joined the lobby. (The only exception is Nick Lampson, who rebounded from a 2004 defeat to win DeLay’s own seat in 2006, only to lose it to a GOP challenger last fall.) Though the congressional path into the lobby is well trod, DeLay’s redistricting victims have a revolving-door rate of 83 percent. By comparison, of the 40 House members who left office at the end of 2004, 30 percent became federal lobbyists.

Ex-Congressman Martin Frost, who has pulled in more than $2 million in lobbying fees since losing his seat, told the Observer that demographics might have shaped these numbers. While many departing members of Congress are too old to lobby when they leave office, he said, the redistricting victims “were all young enough that we could continue to work.”

Another important explanation: DeLay picked a lucrative time to push these Democrats out of Congress. Thanks in part to Florida Republican Rep. Mark Foley’s interest in congressional pageboys and DeLay’s own ethics woes, Democrats won control of both the U.S. House and Senate in 2006 for the first time in more than a decade. Their stock rose again when Democrat Barack Obama won the White House.

Collectively, the five redistricting revolvers from Texas have reported almost $18 million in lobby billings, an average of more than $3.5 million apiece. The only one who alluded to this obvious occupational allure was former Texas Congressman Chris Bell, who told the Observer, “Given the amount of money that the lobby pays, it’s very attractive.”

A review of the lobby practices of Texas’ redistricting revolvers reveals a variety of partners and clients. Some evoke memories of DeLay’s K Street Project. Others do not. But the tale of DeLay and friends highlights the hazards incurred when a ruling party comes to depend on its lobbyists-and their clients-for the money needed to win campaigns. Public officials can grow more beholden to special interests and become even bolder about selling the public down river. Unable to stomach more, the public eventually throws the bums out. If DeLay’s redistricting revolvers find this implausible, they should consult the man who hurled them out of Congress’ revolving door.

Max Sandlin

Sandlin is registered to represent a client that Tom DeLay has lovingly called “a perfect petri dish of capitalism.” The government of the Northern Mariana Islands is a U.S. commonwealth that produces “Made in USA” garments in sweatshops where Asian immigrant women work like indentured servants. (These immigrants give the islands the highest female-to-male gender ratio on the planet.)

Before his downfall, Jack Abramoff led the Mariana account for the lobby firm Greenberg Traurig (where Sandlin worked before his current gig). Sandlin’s firm now reports that it is helping the Mariana Islands with federal funding, economic development, and “immigration matters.”

The top-billing client that Sandlin registered is NRG Energy Inc., which wants to double the number of nuclear reactors at its twin-reactor South Texas Project. NRG is lobbying the U.S. Department of Energy for loans to expand its power-plant portfolio. Citing time constraints, Sandlin declined to be interviewed for this story.

Martin Frost

By the end of his 26-year congressional stint, Martin Frost was the dean of the Texas Democratic congressional delegation. After redistricting, Frost shifted districts and ran a failed 2004 campaign against Republican incumbent Pete Sessions. College friend James Davidson recruited Frost in late 2006 to lobby for the firm now known as Polsinelli Shughart.

Frost’s top lobby client is Plano-based Perot Systems Government Services Inc. Polsinelli Shughart registered to pursue homeland security and border-technology business for this computer-contracting firm owned by H. Ross Perot Sr. Another top Frost client is Dallas-based Hyperion Resources Inc. Hyperion chief Albert Huddleston married a granddaughter of oil tycoon H.L. Hunt and sank $100,000 into the 2004 Swift-boating of Democratic presidential nominee John Kerry. Hyperion is seeking government permits for what it hopes to be the first new U.S. oil refinery built since 1976. That South Dakota refinery also is slated to include an oil-burning power plant.

A trade group representing privately held investment funds is another major client of Frost’s firm. The Private Equity Council lobbies on tax matters and tries to improve the public image of its members. They include Fort Worth-based TPG Capital and New York’s Kohlberg Kravis Roberts & Co., which jointly orchestrated the $32 billion buyout of Dallas utility giant TXU Corp. in 2007.

About 15 percent of Frost’s $2.2 million in registered lobby contracts is for the Alliance for American Advertising and its members in the junk food and advertising industries. As Congress sought ways to combat the juvenile-obesity epidemic, the alliance was formed in 2005 to defend the First Amendment “right” to market sugar to kids. Its tactics invite comparisons to those pioneered by Big Tobacco. Frost told the Observer that he does not work on the alliance account, which is handled by his friend Davidson. Abramoff earlier blazed these trails as lead lobbyist for Channel One, which advertises junk food and other products to children in schools. (See “Thin Reed,” Jan. 27, 2006.)

Interviewed for this story, Frost emphasized his lobbying for a $130,000 client: the Newspaper Association of America. He said he helped the newspaper group promote reporter-shield bills, which would limit the ability of prosecutors to seize information gathered by reporters. (Frost said he contributed to the Observer when he was a reporter in the 1960s.) Frost also stressed his recent work as head of America Votes, a voter-turnout coalition of labor, environmental and minority groups.

Jim Turner

Texas Republicans’ redistricting set up Army veteran Jim Turner of Crockett to run against incumbent GOP Rep. Joe Barton on Barton’s turf. “It didn’t take a smart man to figure out it would be virtually impossible” to win, Turner told the Observer. Instead, in 2005 Turner joined the lobby practice of Arnold & Porter, which has many education, finance and drug clients. Turner’s top registered clients include specialty drug companies that are developing or marketing treatments for acne, lice and herpes.

Almost a quarter of Turner’s $4.6 million in lobby billings, however, came from the student-loan industry that has been roiled by an investigation by New York State Attorney General Andrew Cuomo. Cuomo exposed the money and gifts that schools receive from the “preferred” lenders whom they promote to their students. In 2007 Cuomo called Turner’s top loan client, Education Finance Partners Inc., “one of the most aggressive and most egregious actors.” Cuomo said the lender, which recently filed for bankruptcy, paid schools such as Baylor University and Texas Christian University a cut of the money that their students borrowed.

Other Turner clients emerged from the student-loan flap with food stains. Lender Access Group Inc. threw happy hours for UT-Austin loan officials at Chuy’s Hula Hut, reported UT’s Daily Texan student paper. UT-Austin’s loan office scoffed at the notion that it could be influenced by such treats-despite the detailed tallies it kept of which lenders delivered what goodies. With the industry’s reputation tattered in 2007, President Bush signed into law a bipartisan bill slashing federal subsidies to private student-loan companies. Turner said Congress was trying to turn a private market into a government-run system, making it impossible for student lenders “to survive in this market with the credit crunch.”

Last year the federal government took over another Turner client: the Federal Home Loan Mortgage Corp., known as Freddie Mac. Freddie and its sister company, known as Fannie Mae, ultimately could cost taxpayers tens of billions of dollars. These giants bought up about half of the nation’s mortgage debt and repackaged it into the kind of investment securities that helped the mortgage crisis beget a systemic financial meltdown. Freddie ran one of Washington’s biggest lobby operations. The Federal Election Commission slapped the company with a record $3.8 million fine in 2006, in part for using its corporate resources to host fundraisers that channeled $1.7 million to federal candidates-led by members of a House committee overseeing Freddie.

The FEC fine also covered Freddie’s illegal contribution of $150,000 in corporate funds to the Republican Governors Association in October 2002, the very month when Terry Nelson and the Republican National Committee allegedly laundered TRMPAC’s $190,000. Asked if Freddie’s lobbying efforts might have contributed to lax regulation, Turner said, “I think that’s very possible.”

Turner said he is proudest of pro bono work he did for a group of stateside military officers whom the U.S. Army tried to ship back to Iraq shortly before the expiration of their active-duty status. “I was able to get the Army to go back to their original policy,” Turner said.

Chris Bell

The redistricting that occurred during Chris Bell’s first congressional term did not turn his Houston district Republican. But it pumped up the district’s minority population, helping former Houston NAACP President Al Green-now Congressman Green-trounce Bell in the 2004 Democratic primary. Bell next made a failed bid for the Governor’s Mansion in 2008, then lost a runoff for a state Senate seat to Republican Joan Huffman last December.

Bell, who didn’t register with the lobby powerhouse Patton Boggs until 2007, is the only redistricted revolver who has yet to clear $2 million in lobby billings. His lead client is Sugar Land-based Hyperdynamics Corp., which signed a 2006 deal with the resource-rich Republic of Guinea to develop “world class” oil reserves off the coast of West Africa. Bell said that Hyperdynamics hired Patton Boggs in 2007 to improve relations with the Texas congressional delegation, after the Guinea deal was done.

Bell’s No. 2 client is a much different oil company. Houston-based Organic Fuels Ltd. produces clean, renewable biodiesel from plant oils. The main biodiesel controversy is that it usually is made from food, which can adversely affect food supplies and prices. Organic Fuels’ Web site says it is researching ways to make biodiesel from sugarcane waste and algae, but seems to duck the issue of what the company now uses. Bell told the Observer it is soybeans. For this client, Patton Boggs has pushed increased subsidies and production quotas for renewable fuels, which President Bush signed into law in December 2007. Bell said Organic Fuels hopes to gain additional aid from the newly enacted $787 billion economic-stimulus package.

Bell said he is proud of free lobbying that Patton Boggs did for the Port of Galveston in the wake of Hurricane Ike. He also told the Observer he is scaling back his lobbying to practice law with Ashish Mahendru, who recently lost a Harris County race for state district judge. Bell said he will do personal-injury and commercial litigation.

Charles Stenholm

After sitting on the House Agriculture Committee throughout his 26 years in Congress, Abilene Democrat Charles Stenholm joined a firm that specializes in lobbying Congress and the U.S. Department of Agriculture on behalf of farm interests. After losing his post-redistricting race to GOP incumbent Randy Neugebauer, Stenholm joined Olsson Frank Weeda Terman Bode Matz.

Stenholm has done his most controversial lobbying on behalf of now-shuttered slaughterhouses that exported U.S. horsemeat to countries that consume it. The last three equine slaughterhouses in the U.S. closed by 2007, when separate appeals courts upheld prohibitions on the practice in Illinois and Texas. Stenholm represented the Dallas Crown Inc. plant in Kaufman, Texas, and the Fort Worth-based Beltex Corp. plant (which lobbied as the Common Sense Horse Coalition). He also represents the Livestock Marketing Association, which wants to revive this industry.

Stenholm told the Observer that the ban has spurred exports of live horses to Mexican slaughterhouses, which are less humane. He said the prohibition on slaughter also increased the number of U.S. horses that are mistreated, abandoned and starved. He said horse activists now are promoting a bill to criminalize the export of horses to slaughterhouses. “Too many people only take the emotional view,” Stenholm said. “I get a lot of hate mail on this one.”

Stenholm said he represents clients seeking to improve the technological capability of the Department of Agriculture, including California-based Environmental Systems Research Institute Inc., a geographical information company processing crop-insurance data. Stenholm’s client Open Ranch Communications Inc. provides Internet service to rural areas and hopes to get a piece of the federal stimulu
package, he said.

Andrew Wheat is research director at Texans for Public Justice, a nonpartisan watchdog group.