Monday, February 13, 2006

Bayhs' Wealth Building Through Public Service Questioned

The Indianapolis Star and other mainstream media in Indiana have pretty much turned a blind eye to the questionable manner in which Sen. Evan Bayh (D-IN) has managed to parlay a small fortune worth several million dollars during the past 20 years he has been on the public dole as an elected official. Now that he is a candidate for president, Bayh's business affairs seem to be getting a little more scrutiny.

Star business reporter Daniel Lee takes a look at the cool $796,000 Sen. Bayh's wife Susan pocketed from cashing in stock options granted to her by health care giant Wellpoint where she serves as a member of its board of directors. Commenting on the transaction, Lee reports:

While big stock trades are commonplace in corporate America, some watchdog groups see an awkward mix of business and politics when it comes to a U.S. legislator having a spouse so closely involved with a major corporation. Sen. Bayh is considering a run for the presidency in 2008.

"Given that she has a high-profile role with the company and that this is a company that could benefit from the legislative actions of her husband, there is definitely a potential for a conflict of interest," said Alex Knott, political editor for the Center for Public Integrity, a nonpartisan group in Washington.

Watchdog organizations Public Citizen and the Foundation for Taxpayer and Consumer Rights echoed those concerns.

Sen. Bayh and Susan Bayh each declined to comment on the stock trade. But Sen. Bayh's communications director, Dan Pfeiffer, said that the Bayhs are strict in keeping their careers separate.

Pfeiffer said that Sen. Bayh forbids any company affiliated with Susan Bayh from lobbying him or his office.

"Senator Bayh always votes in what he believes is in the best interest of Hoosiers and the country, and the interest of companies that his family members may be affiliated with are completely irrelevant," Pfeiffer said.

He added that Bayh's votes are often in direct opposition to the interests of those companies. Pfeiffer cited the senator's 2003 vote against Medicare reform legislation, which was lobbied for by the health-care industry.

The huge windfall Susan Bayh made on the sale of the option shares makes Hillary Clinton's $100,000 questionable windfall from cattle futures trading look like peanuts. Bayh was able to purchase 20,000 option shares for a price varying from $35.93 to $44.18 per share and sell them the very same day for a quick pre-tax profit of $796,000. She also gets paid $52,040 to serve on Wellpoint's board, a part-time service netting her more than most Hoosiers earn in a year's time from their full-time jobs.

Last year, in an analysis of the Bayh's personal wealth the Star described the cash cow Susan Bayh has become for the couple:

Susan Bayh, a lawyer who worked for Eli Lilly and Co. while her husband was governor, was paid for work on 10 corporate boards last year. The other pharmaceutical and health-related companies she worked for were Novovax,
Dendreon Corp., Dyax Corp., Curis, and Cubist Pharmaceuticals. Susan Bayh also
worked for Emmis Broadcasting, an Indianapolis-based media company; Golden State Foods, a California-based food processor and distributor; and E Trade Bank, a
Virginia-based financial-services company.

For his part, Sen. Bayh reportedly earned close to $1 million as a partner at the law firm of Baker & Daniels during the two-year period between the time he left the Governor's office in 1996 and was elected to the Senate in 1998. Bayh earned more than many full-time partners in the law firm earned at the time, even though he worked only part-time, devoting much of his time to running for the Senate and helping other Democratic candidates. The law firm lobbies Congress through its D.C. affiliate, Sagamore & Associates. Bayh also earned hundreds of thousands more serving on corporate boards during his two years in the private sector, including many businesses with a big interest in matters before Congress.

At least one former Bayh staffer, Rashid Hallowell, went to work as a lobbyist for B&D's Sagamore & Associates after leaving Bayh's staff where he worked on appropriation matters. He now works for Evansville-based AmeriQual as a Vice President of Government Relations, and he recently registered to lobby Congress on behalf of company according to Indiana Legislative Insight. Congress appropriated money in the Defense Department's budget to fund a multi-million dollar contract with AmeriQual to provide pre-packaged meals for military personnel. Hallowel is the step-son of Bill Moreau, who served as Bayh's first chief of staff when he was governor, and who is one of the top fundraisers for Bayh's presidential campaign.

An interesting comparison can be made between the wealth Indiana's two senators have accumulated while in public office. Sen. Lugar, who was already a millionaire before becoming a U.S. senator in 1976, has seen the size of his holdings remain stagnant, actually losing value when factoring in inflation according to his financial disclosure statements. A Star analysis from June 15, 2005, of his statement showed him to be worth about $1.9 million, including a suburban Virginia home worth more than $900,000.

Sen. Bayh's financial disclosure form paints quite a different picture. When Bayh was first elected to public office as Indiana's Secretary of State in 1986, his principle assets were a very modest condominium in downtown Indianapolis and a used BMW. According to his most recent financial disclosure statement, he and his wife are worth between $3.1 million and $5.1 million according to last year's Star analysis. That includes a $1.8 million dollar beach-front home the Bayh's own in Bethany Beach, Delaware. The Bayh's other home in D.C. is valued at $1.65 million.

1 comment:

Anonymous said...

"According to public property records, the Bayhs' 2 1/2-story Washington home has an assessed value of $1.65 million. But its proposed assessed value for 2006 in Washington's supercharged housing market is $2.15 million -- more than double what the Bayhs paid for the house in 1998."
- Courier Journal - June 20, 2005