Kerry Blocked Law, Drew Cash
story.news.yahoo.com
By JOHN SOLOMON, Associated Press Writer
WASHINGTON - A Senate colleague was trying to close a loophole
that allowed a major insurer to divert millions of federal dollars from the
nation's most expensive construction project. John Kerry stepped in and blocked the legislation.
Over the next two years, the insurer,
American International Group, paid Kerry's
way on a trip to Vermont and donated at
least $30,000 to a tax-exempt group Kerry
used to set up his presidential campaign.
Company executives donated $18,000 to his
Senate and presidential campaigns.
Were the two connected? Kerry says not.
But to some government watchdogs, the
tale of the Massachusetts senator's 2000
intervention, detailed in documents obtained
by The Associated Press, is a textbook
case of the special interest politicking that
Kerry rails against on the presidential trail.
"The idea that Kerry has not helped or
benefited from a specific special interest,
which he has said, is utterly absurd," said
Charles Lewis, head of the Center for Public
Integrity that just published a book on
political donations to the presidential
candidates.
"Anyone who gets millions of dollars over
time, and thousands of dollars from specific
donors, knows there's a symbiotic
relationship. He needs the donors' money.
The donors need favors. Welcome to
Washington. That is how it works."
The documents obtained by AP provide a
window into Kerry's involvement in a
two-decade-old highway and tunnel
construction project in his home state of
Massachusetts. Known as the "Big Dig," it
had become infamous for its multibillion
dollar cost overruns.
Kerry's office confirmed Wednesday that as
member of the Senate Commerce
Committee he persuaded committee
chairman John McCain, R-Ariz., to drop a
provision that would have stripped $150
million from the project and ended the
insurance funding loophole.
The Massachusetts Democrat actually was
angered by the loophole but didn't want
money stripped from the project because it
would hurt his constituents who needed the
Boston project finished, spokeswoman
Stephanie Cutter said.
When the "AIG investment scheme (came) to light, John Kerry called for
public hearings to investigate the parties involved and the legality of the
investment practices. However, he firmly believed cutting funding for the
Big Dig was not the answer," Cutter said.
Instead of McCain's bluntly worded legislation, Kerry asked for a
committee hearing in May 2000. Kerry thanked McCain at the start of
the hearing for dropping his legislation and an AIG executive was
permitted to testify that he believed the company's work for the Big Dig
was a good thing even though it was criticized by federal auditors.
"From the perspective of public and worker safety and cost control, AIG's
insurance program has been a success," AIG executive Richard Thomas
testified.
Asked why Kerry would subsequently accept a trip and money from AIG
in 2001 and 2002 if he was angered by the investment scheme, Cutter
replied: "Any contributions AIG made to the senator's campaign came
years after the investigation. Throughout his career, John Kerry has
stood up to special interests on behalf of average Americans. This case
is no different."
The New York-based insurer, one of the world's largest, declined to
comment on its donations to Kerry, simply stating, "AIG never requested
any assistance from Senator Kerry concerning the insurance we
provided the Big Dig."
The project has become a symbol of government contracting gone awry,
known for its huge cost overruns that now total several billion dollars, and
its admissions of mismanagement.
During the 1990s, Sens. Kerry and Edward Kennedy, D-Mass., helped
win new federal funding for the project as its costs skyrocketed and
threatened to burden the state's government. In 1998, Kerry was credited
with winning $100 million in new federal funding.
But in 1999, the Transportation Department uncovered a financing
scheme in which the project had overpaid $129.8 million to AIG for
worker compensation and liability insurance that wasn't needed, then
had allowed the insurer to keep the money in a trust and invest it in the
market. The government alleged AIG kept about half of the profits it
made from the investments, providing the other half to the project.
Outraged by the revelations, McCain submitted
legislation that would have stripped $150 million from
the Big Dig and banned the practice of allowing an
insurer to invest and profit from excessive premiums
paid with government money.
"Any refunds of insurance premiums or reserve
amounts, including interest, that exceed a project's
liabilities shall be immediately returned to the federal
government," McCain's legislation declared.
But Kerry and Kennedy intervened, and McCain
withdrew the legislation in 2000 in favor of the
hearing.
At that hearing, the Transportation's Department
inspector general made a renewed plea for a
permanent federal policy banning the overpayment of
insurance premiums and subsequent investment for
profit - what McCain had proposed and Kerry helped
kill.
"The policy is needed to ensure that projects do not
attempt to draw down federal funds for investment
purposes under the guise that they are needed to pay
insurance claims. It is that simple," the inspector
general told senators.
In September 2001, Kerry disclosed to the Senate
ethics office that AIG had paid an estimated $540 in
travel expenses to cover his costs for a speech in
Burlington, Vt.
A few months later in December 2001, several AIG
executives gave maximum $1,000 donations to Kerry's
Senate campaign on the same day. The donations
totaled $9,700 and were followed by several thousand
dollars more over the next two years.
The next spring, AIG donated $10,000 to a new
tax-exempt group Kerry formed, the Citizen Soldier
Fund, to lay groundwork for his presidential campaign.
Later in 2002, AIG gave two more donations of $10,000
each to the same group, making it one of the largest
corporate donors to Kerry's group.
The insurer wasn't the only company connected to the
Big Dig to donate to Kerry's new group. Two
construction companies on the project - Modern
Continental Group and Jay Cashman Construction -
each donated $25,000, IRS records show.
Rep. James McGovern, D-Mass., a Boston area
lawmaker, credited Kerry for getting McCain's
legislation blocked in favor of a hearing, saying
Massachusetts lawmakers "were on the side of good
government here but also concerned the language
might go too far and put more of a burden on a
Massachusetts project." |
