Sunday, December 16, 2007

Journal-Gazette Breaks Media Silence On Bayhs' Cash Machine

I've talked about it on several occasions in the past, but finally the mainstream media is taking up the issue of how Sen. Evan Bayh and his wife, Susan, have raked in millions from corporate America during his political career through her questionable service as a corporate director for as many as eight companies at one time. The Fort Wayne Journal-Gazette's Sylvia Smith takes an in depth look at how the woefully unqualified Ms. Bayh has become a professional board member for so many companies:

Since leaving Indiana as a first lady, Susan Bayh has become a professional board member, earning more than $1 million a year in director fees for advice she gives to companies that make pharmaceuticals, operate radio stations, sell health insurance policies, offer online banking and distribute ingredients to fast-food restaurants.

In the past four years, Bayh collected more than $1.7 million in pre-tax income when she exercised stock options from two of the corporations. Her actual income from exercising stock options is higher, but the details of one transaction were not publicly reported.

During the same time, her husband, Sen. Evan Bayh, D-Ind., cast more than 3,000 votes, including some on issues of keen interest to the pharmaceutical, broadcast, insurance, food-distribution and finance industries.

Bayh said his wife’s business interests never influence how he votes, the bills he introduces or the positions he takes.

“I can honestly tell you that if my wife did not have a job, none, I can’t think of a single decision I’ve made that would be any different. I look at what’s best for our state and our country and my own conscience,” he said. “My integrity matters more to me than anything, so I always do what’s right for the people who put their trust in me.”

Susan Bayh declined to be interviewed for this story.

Since 2003, Bayh has barred his staff from meeting with representatives of the companies which employ his wife. But is that enough? Ethics experts say no. "Banning lobbyists from Susan Bayh’s companies 'is a very narrow restriction that doesn’t really deal with the problem,' said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington." "The senator might refuse to meet with the four pharmaceutical companies his wife helps direct, Sloan said, but 'he’s not going to say I’m not going to see any pharmaceutical company or someone from PhRMA'."

Sen Bayh's basic defense is that he never discusses business with his wife. Smith writes, "Bayh said he and his wife don’t discuss her business interests, and he rarely talks about legislation the Senate is considering." “The reality is I don’t even know the people who run the vast majority of her companies. I’ve never even spoken to them,” Bayh said. “The reality is, we don’t talk about stuff that she’s involved with.” "Sloan said it’s not plausible to think a lawmaker-board director couple never discuss their jobs, and it’s unrealistic to think Sen. Bayh could recuse himself from any vote that affected the bottom line of businesses in industries his wife receives payment from." Smith cites a number of key votes Bayh has cast which specifically benefited companies which employ Ms. Bayh, including Emmis Communications and Curis Inc., which performs stem cell research.

Smith also questions Ms. Bayh's role essentially as a "professional board member." Smith writes:

For her work attending meetings and serving on board committees of six of the businesses in 2006, Bayh received $94,591 in cash payments and $816,436 in stock or stock options, the companies reported. A conscientious board member would have spent at least 32 weeks of full-time work on the business of serving on six publicly traded boards, according to an organization that trains directors and advocates for responsible boards.

Publicly traded companies must file annual reports with the Securities and Exchange Commission that disclose the compensation paid to board members. Privately held companies file no such publicly available reports.

Senators are required to file annual reports that list – in broad ranges – the financial holdings of themselves and their spouses. According to Sen. Bayh’s report for 2006, his wife’s stock and stock options in the eight companies were valued at $1.3 million to $2.7 million.

Susan Bayh’s income and assets from the boards are a major portion of the Bayh family’s net worth, according to her husband’s report. He said he and his wife have assets worth between $4.3 million and $15.1 million, not counting the couple’s $1 million Washington home, which is in Susan Bayh’s name.

Senators are paid $165,200 a year.

Susan Bayh’s position as a director for eight businesses puts her in the league of “professional directors,” a term used to refer to people who sit on multiple corporate boards and are not otherwise employed.

Whether professional directors benefit shareholders is debated among academics and others who study corporate boards.

“My view,” said Nell Minnow, president of The Corporate Library, which rates board performance, “is you can have just as many conflicts of interest. If you’re a professional director, the last thing you want to do is rock the boat.”

That’s a dangerous quality for a director, she said, because good directors are not reluctant to challenge the company’s CEO.

My reaction to any of the companies which put Bayh on their board of directors is more blunt. It's a joke. As Smith's article notes, the only real job Ms. Bayh has ever had in her professional career was that as an attorney at Eli Lilly for five years. Few question that had she not been married to then-Gov. Bayh's wife, she would have never been hired as an attorney at Eli Lilly because of her scant legal experience.

My only disappointment in Smith's article is her failure to list the work Sen. Bayh performed during the brief two years between being governor and elected as senator. Bayh basically put himself on the auction block to the highest bidder. He quickly got appointed to multiple corporate boards and became a partner at Baker & Daniels, allowing him to earn more than a million dollars during a period of time he was primarily fundraising and campaigning for the Senate seat he now holds. Not bad for a guy who entered politics in Indiana with little more than a used BMW with an out-of-state license plate and a $50,000 condominium.

Evan's father, Birch, represented Indiana in the U.S. Senate for 18 years. At the time of his election, he was one of the youngest members of the U.S. Senate. Prior to that, he was elected a state representive while still in law school at IU and served briefly as Speaker of the Indiana House of Representatives. I recall a long-time lobbyist and political observer telling me that when Birch Bayh and Vance Hartke were Indiana's two senators, the two were often derisively referred to as "Buy and Bought." Birch Bayh was linked to Korean businessman Tongsun Park, who the FBI had determined bribed a number of members of Congress during the 1970s, some of whom went to prison in the scandal referred to as Koreagate. The Senate Ethics Committee found Birch Bayh in neglect of duty for failing to report offers of money from Park, although Bayh always maintained he never actually received any money from Park. It looks like the younger Evan has mastered the art of accepting legalized bribes.


Anonymous said...

I have commented for years that Evan Bayh is really a republican. His votes and his business connections prove that I am right. Time to elect a Democrat in his seat.

Anonymous said...

An old Spencer Tracy movie has him saying in parphrase: "The only difference between a Republican and a Democrat is that one is in office and the other is out!" It amazes me that so many politicians (MOST?) are elected relatively poor and with their investments in blind trusts come out MANY times richer. And we keep buying the idea that we are NOT being governed by a rich oligarchy. I guess PT Barnum was correct 160 years ago. "There is a sucker born every minute!" Tell me why ALL the top tier candidates in both parties support our staying in oil rich Iraq. When in doubt about why something is happening, always ask: "Who profits?" We can not afford our current policies. What do we think is going to happen to our economy if we stay in Iraq and keep spending more than we take in-WAY WAY more? Do you really think Social Security and Medicare will survive as something worthwhile for when you retire. The rich will NOT be hurt but the rest of us will. If we do not elect either Kucinich or Ron Paul in 2008, we are frigging doomed. But I know that is too extreme, but I will say I told you so later.

Anonymous said...

How long before we see mention of this on Blue Indiana or Taking Down Words?

Oh, that's right, forever.

Unless they decide to cast aspersions on the reporter.

Anonymous said...

When you're right, Gary, I'm with ya. But all I can say about this post is: "wow. I hope I never get on your bad side."

You bashed Mayor Peterson ad naseum. To your credit, you haven't gloated. But it was, by any measure, way over the top.

I've known the Bayhs for a long time. Anyone who underestimates Susan as a dizzy blonde, does so at their own peril. She's sharp--ask anyone who worked with her at Lilly.

When she began her work at Lilly, Evan was Sec. of State. As such, he oversaw annual filings and securities enforcement, for all Indiana corporations. Her legal speciality is business law. What was she supposed to do?

I know for a fact they don't discuss her corporate board work. Except to arrange the boys' busy schedules when she's gone to meetings.

Political spouses have a difficult row to hoe. Sometimes, they go over the line. Sometimes, they don't.

Where's your selective indignation for Dick Lugar? Smart guy, but on multiple occasions he voted for tax breaks for Thomas L. Green Co., his family's business, before they sold it.

And, their DC home was valued at about half that, modest by many DC standards, before it tragically burned a few years ago. They decided to do what many of us might have done in similar circumstances---they took insurance proceeds, paid off a mortgage, upgraded, and took advantage of the only real tax break left to us--a large mortgage.

I could be wrong, but the only Park connection I recall was between Hartke and the Korean businessman. Hartke, God rest his soul, was for sale to the highest bidder. Although he was not alone in that category at the time, it was a scant defense.

Birch is also known as the author of more Constitutional amendments than any human.

Not a bad legacy.

Evan's policies as governor often irritated me, even though we are friends. He's more conservative asleep than his father ever will be awake. Yeah, it's frustrating, but he always listens. And, unlike his father, he's not slipped ionto that tragic DC mist. He's still a Hoosier.

Lighten up, huh, Gary? Your fangs are showing. A mere recitation of the FWJG story (which is excellent) might have sufficed, and then let the posters log in however they wish.

Anonymous said...

Birch Bayh who was a real Democrat must be so embarrassed and disappointed in what his son has done.

Gary R. Welsh said...

I'm sure Birch is quite proud of Evan, anon 10:32. He's been making bucco bucks as a D.C. lobbyist since he was defeated by Dan Quayle. Anon 10:01, I'm quite right about the Tongsun Park connection. The Senate Ethics Committee delivered a famous brown envelope on Bayh and Park to the Carter Justice Department rather than look into the allegations seriously. Many people forget that the Committee fingered two dead senators for accepting money from Park--Hubert Humphrey and John McClellan. From the American Spectator: "The House and Senate investigations into the so-called Koreagate scandal ended on an eerie note when it was discovered that the only two solons whom the legislators definitely judged guilty of actionable offenses—Senator Hubert Humphrey and Senator John McClellan—had died months before...
......On October 16 the Senate Committee on Ethics gingerly transported Senator Bayh's Koreagate testimony to the Justice Department in a plain brown envelope"

Anonymous said...

Now I recall, Gary...under then-Atty. Gen. Griffin Bell, I believe, the infamous "brown envelope" was transported among top prosecutors, and no one wanted to take it over.

Perhaps because the charges were just not strong enough?

And I also remember the Quayle loss. I was working on Cap Hill at the time. Lobbyists, staffers, and those close to the process--on both sides of the aisle--were stunned, and embarrassed, that a man of Quayle's limited intellect had defeated Birch Bayh.

Quayle was greatly aided by his uncle's newspaper empire. And they were all aided by the Moses family--of Indpls. Water Co. fame. Because Bayh had lobbied hard against the provisions that allowed ratepayers of the water company, to foot the entire bill for Geist and Morse, whilst the Moses kin and friends reaped huge real estate windfalls from the Geist/Morse projects. Those profits should've gone to ratepayers.

Bayh's payback for bucking the Quayle-Moses nonsense? A lightweight Congressman was heavily-funded by the hard right and beat Birch in the Reagan landslide.

A sorry day in national and Indianapolitics, to be sure.

Gary R. Welsh said...

Many of the Senate's most-esteemed liberal senators went down to defeat in the Reagan landslide election of 1980 and Indiana was no exception. Quayle's election had very little to do with the Geist heist, although your recitation of the facts pertaining thereto are pretty much accurate as I recall. Also, at that time, Indiana never had re-elected a senator to a fourth term. Lugar is the first senator in Indiana history to serve more than 18 years.

Anonymous said...

The shame for Birch Bayh is not that he lost but that he lost to such an brainless idiot as Dan Quayle. Quayle later became the favorite target for comedians for lack of I.Q. points.

Anonymous said...

ms. bayh has a long history of this behavior but now with increasing stakes.

when he was still governor, i enrolled in a class she was to teach as adjunct faculty at butler. she did not show for a single session nor did she ever make an appearance. a replacement was found for every session. we never even saw her in the flesh.

it's probably still on her cv that she taught college course. ba ha ha.