Culture of Corruption: Obama and His Team of Tax Cheats, Crooks, and Cronies (26 page)

MR. GIBBS: Well, I think—I don’t have a whole lot to add from what was in—has been in the papers and what Mr. Carrion has said about this.

Question: But are you concerned that he has not, or will not, pay this alleged $32,000 for this porch and balcony? I mean, is that—is that all he needs to do? What does he need to do to clear up this controversy in the White House’s opinion?

MR. GIBBS: Well, I think—again, I think the quote says, that when the work is complete, that the bill will be paid, and certainly that would be the expectation.
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Fortunately, the Obama administration’s apathy did not infect the Bronx District Attorney’s office. “The facts, as reported, raised questions that we are looking to get answers to,” Steven Reed, a spokesman for the Bronx DA, told the Associated Press. Citizens for Responsibility and Ethics in Washington (CREW), generally a left-leaning government watchdog group, pressed Attorney General Eric Holder to investigate Carrión. “If the era of pay-to-play politics is over, Adolfo Carrión did not get the message,” Melanie Sloan, executive director of CREW, said in a statement. And Dick Dadey, executive director of another watchdog group, Citizens Union, challenged Carrión’s judgment: “It is irresponsible for an elected official not to conduct his personal affairs above board and avoid any perceived conflict....He should have paid the architect before now, given his role as borough president and the architect’s involvement with development projects.”

Compensating the architect, however, would not allay doubts and concerns about Carrión’s ethics and fiscal responsibility. City records showed that in his last two years as Borough President, he squandered nearly $20,000 on a Teleprompter, stage equipment, and lights to conduct lavish “State of the Borough Tours”; spent $24,000 on overnight travel and conferences, including $5,295 at a four-star San Juan Resort and Casino; charged a satellite radio subscription to taxpayers because it was important to keep him “mobile”; $8,000-plus for picture frames and mats; and was the only borough president in New York City to stick the public with his $13,000 bill for membership to a county executive organization .
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Lucas Herbert, a community urban planner who had dared to oppose Carrión’s aggressive push for the city’s taxpayer-funded Yankee Stadium development, summed up Carrión’s appointment most succinctly: “I thought when people voted for Obama they were voting for change, but Carrión is just more of the same.”
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In May 2010, hoping to leverage his federal stint into a triumphant return to local politics, Carrion stepped down from his czarship to take up a lower-profile, but more politically lucrative post as head of HUD’s Region II, which covers New York and New Jersey. Once again, his shady deals with developers were no obstacle to an Obama appointment that will give him even greater power over taxpayer pursestrings to dole out the boodle.
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NANCY DEPARLE: HEALTH CZAR WITH DEEP CORPORATE TIES

In early March 2009, following the humiliating debacle involving corruption-plagued nominee Tom Daschle, President Obama announced the appointment of Kansas Democrat Governor Kathleen Sebelius as Health and Human Services Secretary. But Sebelius couldn’t have been completely thrilled. Along with her nomination requiring Senate confirmation, the White House unveiled a new health czar to direct the “White House Office for Health Reform.” No hearings necessary, no questions asked. The position went to Nancy-Ann Min DeParle, a Clinton-era official who ran Medicare and Medicaid as head of the Health Care Financing Administration (now known as the Centers for Medicare and Medicaid Services). DeParle oversaw $600 billion in annual federal spending on health care to 74 million Americans. She then parlayed her government experience into a lucrative private-sector stint. In 2007, she and husband Jason DeParle, a
New York Times
reporter, spent nearly $3 million for a six-bedroom, six-bath Colonial in exclusive Chevy Chase, Maryland.
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Despite President Obama’s loud denunciations of the revolving-door lobbyist culture in Washington, DeParle’s industry ties didn’t bother the White House in the least. DeParle served as an investment advisor at JP Morgan Partners, LLC, a private equity division of JP Morgan Chase & Co; sat on the board of directors at Boston Scientific Corporation and Cerner Corporation; and held directorships at Accredo Health Group Inc. (now owned by Medco Health Solutions Inc.), Triad Hospitals (now part of Community Health Systems), Guidant Corporation (now part of Boston Scientific), and DaVita Corporation, among others. In all, she sat on at least ten boards while advising JP Morgan and working as managing director at a private equity firm, CCMP Capital. From 2002 to 2008, while holding all those titles, DeParle also served as a member of the government-chartered Medicare Payment Advisory Committee (MedPAC), an influential panel that advises Congress on what Medicare should cover and at what price.
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In 2006 and 2007 alone, DeParle collected at least $3.5 million from fees and the sale and awards of stock from health-care businesses whose businesses will likely fall under her jurisdiction, according to the
Chicago Tribune
. That amount probably represents a small portion of DeParle’s corporate earnings since 2001.
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Philip Klein of
The American Spectator
concluded: “[DeParle’s] journey from the public sector to the private sector and back again would seem to represent the type of revolving-door relationship between Washington and corporate America that President Obama pledged to put an end to during the campaign and in an executive order.”
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The point is not that administration officials should be barred if they have any ties to business or any past lobbying experience that might raise conflict-of-interest questions. Indeed, DeParle’s significant private-sector experience could be a strength. The point is that the Obama administration has taken a self-aggrandizing stand against hiring such players . . . while hiring them left and right.

As with previous czar questions, White House press secretary Robert Gibbs shrugged off concerns about DeParle’s industry ties:

Question: Robert, I just wanted to ask about Nancy DeParle and the fact that she sits on corporate boards that have health and medical-related interests. Is that—does the administration view that as any potential conflict of interest? Are there any potential problems there?

MR. GIBBS: No. I mean, obviously, the White House has confidence in her and her abilities as part of the health care reform effort here.
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DeParle, the White House announced, would not need a waiver to the president’s famous executive order requiring appointees to pledge not to participate “in any particular matter involving specific parties that is directly and substantially related to any former employer or former clients, including regulations and contracts” for a period of two years from the date of his or her appointment. The health czar will simply resign from all her corporate boards and directorships and recuse herself from any issue that “would directly impact in a significant way any of the companies for which she was a director,” according to an anonymous administration official quoted by
Politico
.
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White House spokesman Tommy Vietor stated that “Nancy will recuse from each and every particular matter involving a specific company on whose board she served.”
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Unfortunately, it’s not so simple. It’s hard to imagine any health care reform-related issue that won’t involve one of DeParle’s vast array of former employers, clients, and corporate boards in the health care industry.

She earned at least $376,000 from Cerner Corporation, for example, which specializes in health information technology. As health czar, DeParle will have unmeasured clout in directing $19 billion of federal stimulus money earmarked for, yes, health information technology. GOP Congressman Darrell Issa of California stated the obvious: “There’s no question that there will be a large presidential earmark for integrating a data system to try to reduce costs to try to put people’s health records all into a single data base. A lot of these efficiencies, although merited, are going to lead to picking very large multibillion dollar winners, and she’s going to be at the center of it all.”
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Financial writer Richard Gibbons notes that Cerner’s annual revenues are about $1.7 billion, “so even a fraction of the $19 billion can make a huge difference to Cerner’s bottom line.”
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Keep DeParle’s background in mind as you read White House spokesman Robert Gibbs’s comments about Rick Scott, chairman of Conservatives for Patients Rights and former Columbia/HCA executive: “I think you’ve got somebody who’s very involved, a leader of that group that’s very involved in the status quo, a CEO that used to run a health care company that was fined by the federal government $1.7 billion for fraud. I think that’s a lot of what you need to know about the motives of that group”

Just to make the Gibbs’s moral equation clear:

1. Ties to the health care industry = suspect motives.

2. Ties to health care companies involved in government settlements = suspect motives.

Did any of the companies DeParle worked for ever pay fines to the government? Why yes. Yes, they did:

• In November 2009, JP Morgan Chase & Co. agreed to pay $75 million in fines and forfeit $647 million in fees to settle Securities and Exchange Commission charges that it had made unlawful payments to friends of public officials in order to win municipal bond business in Jefferson County, Alabama.

• In December 2009, Boston Scientific settled a U.S. Department of Justice Investigation by paying a fee of $22 million. The DOJ was investigating Boston Scientific’s subsidiary, Guidant Corp, for trying to boost sales by paying physicians between $1,000 and $1,500 to implant Guidant-branded pacemakers and defibrillators in patients.

• In a previous settlement, Boston Scientific agreed to pay a $296 million fine resulting from a criminal investigation relating to faulty reports to the U.S. Food and Drug Administration filed by Guidant.

For some reason, none of this seems to bother Gibbs. Nor does it bother the Obama Administration’s liberal Beltway supporters. An article in
The Hill
, quoting various ethics experts giving the health czar a pass, declared “DeParle’s industry ties a non-issue.”
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Would these ethics experts have been so sanguine if the Bush Administration had appointed a drug industry official to head up the Food and Drug Administration or an oil executive to head up the Department of Energy?

Jonathan Cohn at
The New Republic
wrote that he “found no examples of worrisome behavior. And one assumes the White House checked her private sector career a lot more carefully than I did. If their vetting had turned up anything even remotely disqualifying, it seems unlikely that they would be tapping her.”
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Because, you know, all of Obama’s other appointees were vetted with such meticulous care.

“It is our view, and the view of counsel here, that the incidence of that will be very low,” an Obama administration official reassured the
New York Times
when asked how frequently DeParle might have to recuse herself.
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The
Times
, which employs DeParle’s husband, neglected to point out the obvious: If she were, in fact, to recuse herself from such issues—if she were to abide not just by the letter, but by the spirit of Obama’s conflict-of-interest policy—Nancy DeParle would not have very much left to do.

STEVE “ CHOOCH ” RATTNER: THE AUTO CZAR’S SHADY TINSELTOWN TRADE

Before heading up the Obama Administration’s auto bailout task force, Steven Rattner was a money manager at the Quadrangle Group, a high-octane Wall Street investment fund. In October 2004, Rattner paid a visit to then deputy comptroller of New York, David Loglisci, to solicit an investment for Quadrangle from the New York State Retirement Fund, according to an April 2009 Securities and Exchange Commission complaint and the
Wall Street Journal
.
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In January 2005, Loglisci arranged a meeting between one of his brothers and Rattner to discuss acquiring the DVD distribution rights to a low-budget comedy called
Chooch
for $88,841. Of course, it’s neither unethical nor illegal to finance a movie, even a really bad one. But
Chooch
wasn’t produced by just anyone. It was produced by David Loglisci and his brothers: the same David Loglisci who at the time was the deputy comptroller of New York; the same David Loglisci whom Rattner had solicited for a pension fund investment just three months earlier.

A few weeks after the DVD deal was completed, David Loglisci personally informed Rattner that the New York Retirement Fund would be making a $100 million investment in the Quadrangle Fund.
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According to the SEC complaint, Loglisci never disclosed the
Chooch
deal to either the Retirement Fund’s Investment Advisory Committee or to other members of the comptroller’s staff.
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Loglisci is now under indictment, but neither Quadrangle nor Rattner has been accused of wrongdoing. The investigation by Securities and Exchange Commission (SEC) officials and the New York Attorney General, however, is not over. According to the
Journal
, the next phase of the investigation will focus on Quadrangle and other investment firms that received state retirement money.
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