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The Financial Dealings of Lamar and Honey Alexander

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Doug Ireland, Joe Conason and William Hartung talk with Amy Goodman about the corrupt financial dealings of Lamar Alexander, former Tennessee governor, former secretary of education, and candidate for the 1996 Republican presidential nomination. The report includes a discussion of Alexander’s privatization schemes in Tennessee that, when coupled with his investments in Corrections Corporation of America, yielded tremendous financial windfalls. Alexander’s purchase and subsequent profit of an option to buy the Knoxville Journal is detailed, as is his $236,000 taxpayer-funded “golden parachute” from Martin Marietta/Lockheed. His advocacy of school privatization as secretary of education is discussed in tandem with his financial entanglements with Chris Whittle’s education company. The extent of Honey Alexander’s involvement is debated.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Now that Pat Buchanan is doing so well in the Republican primaries and caucuses, the Republican establishment is running scared, running, many feel, to candidate Lamar Alexander. We’ll take a look at how this multimillionaire amassed his private wealth while in public office, from Whittle Communications while secretary of education to a golden parachute from the megamerger of two defense companies, Martin Marietta and Lockheed. We’ll also begin to explore his so-called new ideas, from the abolition of welfare to the privatization of prisons.

Then, one of my heroines: We’ll speak with Frances Moore Lappé. She’s gone from Diet for a Small Planet to working with African-American activist Paul Du Bois, whom we’ll also be speaking with, on their new center that supports what they call living democracy and a news wire to feed stories of grassroots solutions to the mainstream and alternative press.

Finally, one of the funniest feminists around, Kate Clinton.

Let’s begin with this: “If repeated White House leaks suggesting that Bill Clinton views Lamar Alexander as his toughest potential Republican opponent next year are true, it may be because it takes one to know one. The two ex-governors are both masters of the permanent campaign. Although he’s currently posturing as a political outsider, Alexander has been on a well-greased inside track to political power ever since he was a pup.”

That’s the first two paragraphs of a piece in The Nation magazine a couple months ago by Doug Ireland, who’s written about politics and media for a wide variety of publications. We’re joined by Doug Ireland on the phone right now. And we’re also joined by Joe Conason, who has written about Lamar Alexander’s finances, as well, and he’s also going to be talking about the rich rise of Lamar Alexander.

But let’s begin with Doug Ireland. Tell us about what you found about Alexander’s finances.

DOUG IRELAND: Well, Alexander has been on a greased inside track to power and wealth ever since he was a young fellow. His father was a prominent Republican and gave Alexander his start by introducing him to Howard Baker Sr., the longtime Republican congressman, whose son, Howard Baker Jr., later became Senate majority leader and chief of staff to Ronald Reagan. Baker Jr. and Lamar have been closely associated ever since Lamar managed Baker’s first senatorial campaign. He took—Baker took Lamar to Washington when he became a senator. And then Lamar went into the Nixon White House.

Now, when Lamar came out of the Nixon White House, he started at the top, by running for governor. And the first time around he ran, he was considered a stiff and snob, and he lost. Second time around, he hired himself a very liberal Washington political consultant, Doug Bailey, who’s now publisher of The Hotline, who was then the—had just been the AA to Ed Brooke of Massachusetts, the liberal black Republican. And Bailey bought him his first closet full of red and plaid shirts. That’s where the shirts come from. And in a highly corrupt state where the Democratic governor had just gone to jail for selling pardons, Lamar won rather easily.

Now, Lamar has always surrounded himself with very rich, wealthy people. Oil interests, real estate interests are some of his favorite cronies. When he was in the governorships, one of his big shticks was privatization. He wanted to privatize the prisons, and he was very interested in entrepreneur Chris Whittle’s attempts to privatize the educational system.

For example, on the prisons, Lamar, as a candidate, proposed something called Class X, which was a scheme to increase mandatory prison sentences for a whole wide variety of felonies, always—but in doing that, he didn’t appropriate any money to build more prisons. So what you had was a Lamar-inspired prison crisis that led to massive prison riots and in-jail murders. Finally, a court ordered him to—Republican judges ordered him to come up with a plan to depopulate the prisons in some way or provide more prisons. And at the same time that he was shoveling all these folks into jail, Lamar was also involved in the startup of a company that would privatize prisons. And for an investment of less than 10 grand, he quickly netted a $140,000 profit.

When he became secretary of education, he got a $600,000 windfall profit from a deal with Chris Whittle, the entrepreneur of education. He had originally invested 10 grand in stock, Whittle stock, he says, before he became secretary of education. However, the check was never cashed until after he became secretary of education. And this led to a considerable investigation of question during Lamar’s confirmation hearings.

AMY GOODMAN: Doug, I want to bring in Joe Conason here, with the New York-based New York Observer. It’s a weekly newspaper in New York. And, Doug—Joe, you’ve also written about Alexander’s finances and his involvement in Whittle and also the Knoxville Journal. Can you talk a little about that?

JOE CONASON: Well, I just want to say that Doug’s description of what happened was pretty good, except he left out the cute parts involving, you know, how they—how the Alexanders kind of put a smokescreen around what really happened. In other words, when the prison privatization plan came through, it was not actually Lamar who bought the stock in the prison privatization company, it was Honey Alexander, the governor’s wife. And they went through various contortions to turn that stock into another type of stock so that it wouldn’t look as if they were profiting from this prison company, which eventually, by the way, failed and had to—they had to turn the institutions that were run by this prison privatizing company, which is called Corrections Corporation of America, back to state control, because it didn’t work.

AMY GOODMAN: Now, is Honey involved in all of this, or are they just using her name?

JOE CONASON: Well, she said the other night on television—she was on TV with Lamar on, I guess it was, Larry King, and she said she was very comfortable with all the business decisions Lamar had—she and Lamar had made. And it was hard to tell whether she was saying that she felt that they were ethical or that she just was living in a very comfortable lifestyle. But either way, she—it’s hard to tell whether she has any real influence over this or not. And, you know, she doesn’t come across as a Hillary Clinton type. So—

DOUG IRELAND: OK, Joe is quite right about the way in which Honey Alexander has been used by Lamar to conceal these windfall profits. I think it’s important to point out, however, that—

JOE CONASON: He transferred the Whittle stock to his wife also.

DOUG IRELAND: I beg your pardon?

JOE CONASON: The Whittle stock was transferred to Honey, too.

DOUG IRELAND: The Whittle stock was also transferred to Honey. But Honey Alexander is no naive housewife baking cookies. She and Lamar met and married when they were both working in the Senate, and Honey Alexander was a top legislative assistant to Senator John Tower of Texas, one of the most conservative members of Congress. She’s considered extremely politically astute and hardly simply a naive pawn of her husband.

JOE CONASON: Yeah, I’m sure that’s quite true. Anyway, I’m sorry, Amy. You had a question.

AMY GOODMAN: Right, talking about the Knoxville Journal first, and then Whittle Communications.

JOE CONASON: Well, the Knoxville Journal is a very interesting case, because here—this is a case where he actually did this while he was governor. He and a few of his friends somehow induced or were given an option to buy the Knoxville Journal newspaper for $15 million, but they only paid a dollar for the option to buy it. They paid a dollar apiece, the option to buy this newspaper. Now, and these were—these were a group of sort of his longtime cronies, very powerful people in Tennessee, who brought him into this deal.

DOUG IRELAND: Howard Baker was the head of that group.

JOE CONASON: Howard Baker was one, and there were a couple of other guys whose names would not be familiar to listeners, but they were important people in the state. And lo and behold, a few years later, again through the manipulation of stocks so that one kind of stock is transformed into another one so somehow it doesn’t look as bad, the $1 investment that Lamar had made in this option to buy the newspaper is turned into $620,000 after Gannett Communications actually does buy the newspaper. Now, what was the reason why he was—A, what was the reason why he was brought into the deal? And, B, why did it become transformed into a deal where someone else bought the newspaper? These are questions that have never really been satisfactorily answered. Lamar claims—remember, he had really just become governor. Lamar claims that he actually wanted to be a newspaper publisher, and that was why he became involved in the deal, and made—make it sound as if somehow there was some benign interest in the running of a local newspaper. And that goes along with the plaid shirt and the rest of the sort of happy, you know, nonsense that the guy purveys all the time. But—

AMY GOODMAN: Are there any laws—are there any laws—

JOE CONASON: He never actually showed any interest in publishing a newspaper. And he—I doubt that he has the capacity to publish a newspaper.

AMY GOODMAN: Are there any laws against a public official buying a newspaper when he’s governor of the state?

JOE CONASON: I doubt that there any laws. I mean, there are sort of—I think it would be considered unseemly in most places, perhaps not in Tennessee. But you have to realize, people didn’t know about this at the time. This was a very quietly done little deal. You know, he handed over a dollar and signed some piece of paper. And then, you know, at some point down the road, after the newspaper was actually sold—they sold their option to buy it to Gannett. That was turned into an enormous profit for him. I mean, you know, the Hillary—

AMY GOODMAN: Did it get much coverage? Did it get much coverage?

JOE CONASON: The Hillary Clinton stock—the Hillary Clinton stock transaction, commodities transaction, where $1,000 became $100,000, another very unseemly affair, is nothing compared to a dollar turned into $620,000. And that was publicized, again, at the time of his confirmation hearings. He almost didn’t make it as secretary of education, because of the whole series of business dealings he had that are very hard to explain.

AMY GOODMAN: Joe, you also talk about, in addition to the Whittle Communications money, the selling of his house at a net of what? $400,000?

JOE CONASON: Oh, that was very interesting.

DOUG IRELAND: That was a juicy one.

JOE CONASON: That happened when he came in as secretary of education, within a couple of—I believe, Doug, right?—a couple of months after he actually was confirmed.

DOUG IRELAND: That’s right.

JOE CONASON: No, I’m sorry, it was actually within days after he was confirmed. He turned around and sold the house to a vice president of Whittle Communications for a very large profit. Now, he claimed that—and by the way, your listeners should know that a lot of this information is gathered, although it was reported elsewhere previously, gathered in a marvelous book called The Buying of the President by the Center for Public Integrity.

AMY GOODMAN: And we’ll be having—

JOE CONASON: And it’s available on paperback.

AMY GOODMAN: We’ll be having Charles Lewis on quite frequently on Democracy Now!

JOE CONASON: I have to—I have to give credit where it is due, because—you know, I’ve gathered other material about Lamar, and I’ve looked at disclosure statements and all that, but for the average reader, this information and similar information about other candidates is in this book, and it’s really worth looking at.

DOUG IRELAND: I agree with Joe 100 percent on that. Chuck Lewis does great work.

JOE CONASON: Now, it was quite interesting that Lamar said at the time of the sale of his house, when this was, again, exposed a little bit later, that, oh, he had made vast improvements to the house, and therefore that was why the price had—I guess it was like doubled in value.

DOUG IRELAND: Well, he bought the house just a year before for $570,000.

JOE CONASON: Right.

DOUG IRELAND: And sold it to one of Whittle’s top execs for $977,000. So it’s over $400,000.

JOE CONASON: That’s right, almost nearly doubling. And he claimed that they had put all these improvements. Well, it turned out that they had built a fence and, I don’t know, put in a swimming pool or something like that. The details are not that impressive. And it turns out that the assessed value of the house had not gone up all that much. So, this Whittle executive had paid him quite a bit in profit to take his house, so that Lamar could go to Washington and get a new home with Honey and proceed to speak out on behalf of what Whittle wanted to do, which was to privatize public schools and put television in public schools that would show commercials to captive audiences of children, etc., etc., etc.

AMY GOODMAN: We’re talking with Joe Conason of The New York Observer and Doug Ireland, who had a piece a couple months ago. And I want to point out—it was a couple months ago—that we should look to the alternative press to bring us this kind of information, before we’re seeing it in the mainstream press now. Doug Ireland’s piece is called “The Rich Rise of Lamar Alexander” in the April 17th edition of The Nation magazine. Doug, you write about how his opponents in Tennessee call him “Lame-ar.”

DOUG IRELAND: Yes.

AMY GOODMAN: As in “Lame-R.”

DOUG IRELAND: That’s right. Yeah, well, in Tennessee, they don’t—if you talk even to conservative Republicans, they don’t think much of him. They find Lamar’s recent conversion to conservatism not credible. In fact, as one of them, one leading Tennessee conservative, told me, you can make a strong case that Lamar’s successor as governor, Democrat Ned McWherter, who’s now an adviser of Clinton, was a more conservative governor than Lamar was, or “Lame-ar” was.

JOE CONASON: Well, Lamar Alexander is a pretty light-weight character. I mean, you only need to watch him on television. I’ve never seen him in person. I’d love to. I’m afraid I won’t get to, because he’s probably not going to come to New York since he couldn’t get on the ballot here. But I’ve never been terribly impressed with the guy’s intellectual capabilities. I mean, I think when he’s compared to Bill Clinton, it seems to me that’s a little unfair to Clinton, because what—regardless of the president’s sort of deviations and his backtracking on promises and all the things that people don’t like about him, this is somebody who has a real grasp of policy. And I don’t think anybody has ever said that he’s intellectually a lightweight. I think Lamar Alexander is about as light as they come. And I think that will—that will come out if Alexander becomes the nominee.

I think the reason the White House is concerned about him, if they really are, is because he’s a moderate Republican. In other words, someone like Pat Buchanan, someone who’s sort of off the deep end and fairly unattractive to the mainstream or independent voters, is somebody that a Democratic president really doesn’t have to worry about very much. A Lamar Alexander has shown some capacity for appealing to a broader group of voters. And I think, to that extent, he may be considered dangerous. But you have to consider the possibility, as well, that the White House is putting out information to prop up a candidate who they really aren’t very much worried about at all.

AMY GOODMAN: In a couple of shows, we’re going to be talking about his plans for abolishing welfare. Do you take this seriously, Joe?

JOE CONASON: Well, I have to say, I think it’s pretty hard to take seriously a plan to abolish public assistance from somebody who puts in a dollar and gets $620,000, or who has his friends constantly giving him sweetheart deals. I mean, I welcome an attack on welfare from a conservative politician who has gotten so much of what we could call ethical welfare, or unethical welfare, from his stints in public office. I mean, this is someone who has been fortunate enough to invest $20,0000 and make $2 million. It’s someone whose net worth increased from the moment he entered politics from $150,000 to somewhere between $2 million and $3 million, which is 10 to 20 times increase in his personal net worth. I think someone like that is not in a good position to attack the welfare system.

And as for the details of his welfare plan, it’s pretty crazy. I mean, he wants to set up little councils in each community to which he would just give the money and let them do pretty much whatever they wanted to in terms of caring for the poor.

AMY GOODMAN: He calls them charities.

JOE CONASON: Yeah. This is a formula for a terrible waste of money and disaster. I mean, it reminds me a little bit of the S&L crisis, basically, where these thrift institutions were completely deregulated by the government, no one was looking over their shoulder, and the next thing you knew, we had, you know, billions that had to be bailed out by the taxpayers. This is a case where it’s easy to foresee friends of Lamar Alexander and the Republican Party setting up little welfare or charity councils in communities and getting hundreds of millions or billions of dollars and then stealing it, if there are no federal regulators or regulations or state regulators or regulations making sure that the money that’s supposed to go to public assistance of children, poor children in this country, do it. You know?

AMY GOODMAN: Joe Conason, on that note, we’re going to have to wrap up. We want to thank Joe Conason of The New York Observer and Doug Ireland. We encourage you to read both their pieces, in The Nation and The New York Observer. Coming up, we’ll be speaking with Bill Hartung about the Martin Marietta-Lockheed deal and how Lamar Alexander benefited. You’re listening to Democracy Now! Stay with us.

[break]

AMY GOODMAN: And you’re listening to Democracy Now!, Pacifica Radio’s new daily election-year show. And we’d like to welcome WMNF of Tampa to Pacifica’s Democracy Now! We welcome you and encourage other community radio stations around the country to start tuning in.

For those of you who have just joined the program, I want to let you know about some of the regular features on Democracy Now! Every Monday, it’s “Money Talks.” We’ll look at campaign finance reform efforts and how wealthy interests are influencing American politics. On Tuesday, we’ll be looking at “Right-Wing Watch.” We’ll cover everything from how the Christian Coalition is organizing on the grassroots level to the rise of militias, anti-abortion violence and hate group activity throughout the United States. Wednesday, it’s members of Congress who will be joining us to talk about what’s hot on Capitol Hill. We’ll especially get to hear from members of the Progressive Caucus, now 50 members strong, believe it or not, founded by the only independent in Congress, Bernie Sanders from Vermont. On Thursdays, our segment “Living Democracy” will focus on what citizens are doing in communities around the United States to hold public officials accountable, revitalize neighborhoods and promote social justice. And coming up in just a few minutes, we’ll be joined by Frances Moore Lappé and Paul Du Bois, who head the Center for Living Democracy in Vermont. And on Fridays, some of the country’s leading progressive journalists will join us for a roundtable reviewing the events of the past week and looking ahead. Tomorrow it’s Laura Flanders and Juan González, as well as Salim Muwakkil in Chicago.

But right now we’re joined by Bill Hartung. William Hartung is a senior research fellow at the World Policy Institute at The New School for Social Research in New York, and he’s written a book called And Weapons for All.

Bill, a couple months ago, you wrote a piece in The Nation magazine called “Welfare Kings” about Lamar Alexander and his golden parachute from the merger of Martin Marietta and Lockheed. Tell us about these companies and how Lamar Alexander was involved.

WILLIAM HARTUNG: Well, it’s a great little story. I couldn’t believe that this guy was, you know, announcing his campaign in a plaid shirt and telling us what a simple country boy he was. And then, shortly thereafter, we learn that he was getting $236,000 in the sort of golden handshake from Martin Marietta, because he stepped down from their board when Lockheed and Martin Marietta merged. And to add insult to injury, the company had maneuvered to get about a third of that bonus paid directly by the taxpayers, new money paid out to cover about 80,000 bucks out of that $236,000. And, of course, the rest of it came out of the company profits, and since the company is about 80 percent funded by Pentagon contracts, essentially the whole thing was taxpayer money. So, here’s this guy who’s saying, “Oh, let’s get rid of the Department of Education,” which is the only department he ever ran in the federal government, “Let’s streamline government. Let’s give power back to the states,” and he’s getting this huge welfare payment based on a corrupt bargain between the nation’s largest defense contractor and the Clinton administration. So, if there’s any change that Alexander is going to bring about, I think it would be that the scale of corruption and insider dealing would be even larger than under Clinton. You know, the stuff he did in Tennessee, which you probably talked about a bit, makes Whitewater look like a Sunday school picnic in comparison.

AMY GOODMAN: You think we’re going to see—you think we’re going to see New York Senator Alfonse D’Amato going after him in the same way?

WILLIAM HARTUNG: No. I think if you steal above a certain amount, D’Amato gives you an exemption. You know, it’s like if you’re up in the millions, it doesn’t seem to fit on his radar screen. But if you screw up and lose money like the Clintons did, then he can make a big deal about it.

AMY GOODMAN: Now, how did Lamar Alexander get involved with these defense contractors, to begin with?

WILLIAM HARTUNG: Well, my guess is that because—Martin Marietta has significant facilities in Tennessee. Among other things, they run the Oak Ridge facility, which enriches uranium for the nuclear weapons program. And there’s a tendency of these companies to get prominent political figures, that either have national clout or are based in areas where they have facilities, to be on their board to help them, you know, kind of smoothe the waters politically. And I think, essentially, Martin Marietta was making an investment in Lamar Alexander. You know, he was a Southern governor on the rise. They put him on the board. A lot of the times when he went to the board meetings, he would use it as the opportunity to do campaign fundraisers, you know, basically let the company fly him around the country to do his political work. And when he was questioned about that, he said, “Well, you know, I sit in on the board meeting. I do my work.” I mean, he was getting pretty fat checks from them to do very little other than be kind of a political connection for them. And it looks like that investment could pay off, if he ends up being the, you know, anybody-but-Buchanan-Clinton-or-Dole candidate of this election year. But certainly he’s not going to be looking too carefully at some of the sweet deals they have, if he’s got this long-standing business relationship with them.

AMY GOODMAN: Bill Hartung, I was looking at The Commercial Appeal of Memphis, the newspaper there, and at the time that Alexander got this windfall, this golden parachute, it says that the Progressive Caucus gave its first-ever Golden Lily Award for Corporate Welfare to Alexander and to the other former executives of the Lockheed and Martin Marietta companies. And it also says that they called on Lamar Alexander to return to the taxpayers $162,000 of the $236,000 settlement he received, because that is taxpayer money.

WILLIAM HARTUNG: And as far as I know, he has not rushed to do that. However, the Progressive Caucus won a small victory at the end of last year. They got a bill through—they basically embarrassed the other members of the House to say, “Well, you know, if we’re cutting everything else to the bone, it’s kind of hard to justify spending taxpayer money on bonuses for defense executives. So, Bernie Sanders got language into legislation saying that the direct payments to cover these bonuses, which added up to about $31 million, could not be paid out. And now that’s being debated. The Pentagon is saying, “Well, they’re not really bonuses; they’re severance payments.” You know, they’re trying to sort of use legal maneuvers to release the money. But it appears that the Progressive Caucus may at least eliminate the direct subsidy that goes to these bonuses. Of course, given that these companies are public creations and that they get all of their profits virtually from defense contracts, it’s still an indirect subsidy to Alexander. But they were able at least to win their point, and much to the chagrin of the Lockheed Martin executives. Apparently, Norman Augustine, the president of the company, was personally going around to members of Congress telling them how important it was that this bonus be subsidized by the taxpayers. And he was meeting with Henry Hatfield and a representative from Florida who’s on the Conference Committee. It was one of the most bald-faced examples of corporate lobbying I’d ever seen. I mean, the guy didn’t even have the decency to hire somebody to go do it for him. He was there in person.

AMY GOODMAN: Bill Hartung, we only have 30 seconds, but I wanted to ask you one more general question about the elections. And that is, we haven’t seen much foreign policy issues being raised in any of these primaries or even by the press, not to mention, since we’re talking—hearing a lot about a balance budget, the amount of money that’s going into arms sales, which is your specialty.

WILLIAM HARTUNG: Well, there hasn’t been much discussion because Bill Clinton has been pretty much the industry’s guy. So there’s not a lot of difference between the parties. The Republicans tacked on $7 billion to the defense budget beyond what the Pentagon asked for last year, but that’s less than 3 percent of the total. On arms sales, Clinton has personally gone to bat for industry. He’s created a whole new stream of subsidies and guaranteed loans. And so, there’s even some—I heard a top stock analyst who covers the defense industry, who thinks that the defense industry might be better off with four more years of Bill Clinton and Bill Perry than they would under a Republican. So, I think what’s going to happen, unless there’s, you know, strong public pressure to put these issues on the table, is that defense policy issues will be determined by people like Norm Augustine of Lockheed Martin in the background, and the public officials who are supposed to be writing defense policy will just take a pass and will not really go on the record about what they’re going to do with these bidders.

AMY GOODMAN: Bill Hartung, we want to thank you very much for joining us this morning. Again, Bill Hartung, senior research fellow at the World Policy Institute at The New School for Social Research in New York and author of And Weapons for All.

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