In his inquiry into the Democratic Party's now-legendary fund-raising scandal, Senate Governmental Affairs Committee chair Fred Thompson has gleefully subpoenaed 200 people. The list of witnesses has included venerable Clinton aide Harold Ickes, a CIA operative named "Bob," some Buddhist monks, and more than 40 staffers from the Democratic National Committee (DNC). But among the parade of witnesses who have made cameo appearances on C-SPAN, the engine behind the infamous Clinton money machine is nowhere to be found. Terence McAuliffe, the DNC finance chair in 1994and the man credited with the idea of using Lincoln Bedroom stays to "energize" big donorshas yet to make an appearance before the committee.
McAuliffe raised a record $42 million to help re-elect Clinton, a feat that so far has earned him only praise and plum job offers. First, he landed the job of chairman of the Clinton inaugural committee, where he helped raise another $31 million for this year's presidential fete. And after the last of the confetti was swept off Washington's ballroom floors, McAuliffe's name was floated as potential commerce secretary or DNC chairman. In spite of his being courted by a sitting president, though, McAuliffe put the brakes on his rising star. He pulled his name from consideration for an administration job and turned down the DNC, saying his wife had requested that he spend more time with his family.
Party insiders speculated that McAuliffe shunned the administration job because he feared Senate scrutiny of his role in the DNC and the Clinton fund-raising machine during the confirmation process. It's a logical conclusion to draw in view of Thompson's hearings, but McAuliffe has maintained all along that his fund-raising was completely legal, and so far no one has been able to prove otherwise. However, information uncovered by Washington City Paper suggests that the full patdown of the confirmation process might have revealed troubling details about McAuliffe's private businessnot campaignfinances.
Had Senate investigators peeled back the many layers of "McAuliffe Inc.," they would have discovered an intricate portfolio of business deals that have been financed by some of the Democratic Party's biggest donorsparticularly organized labor. McAuliffe has had a long and cozy relationship with the nation's unions. It's well documented that when the DNC needed to raise $1 million for a 1995 advertising blitz supporting Clinton, McAuliffe turned to the unions. What is less well known is that when McAuliffe needed millions of dollars to finance speculative real estate acquisitions in Florida, he also turned to the unions, specifically the International Brotherhood of Electrical Workers (IBEW).
While labor's influence on American shop floors may have waned over the past decade, union pension funds are the largest pools of private capital in the world. Their ready cash flow has made the unions a magnet not just for politicians but for cagey, politically connected businessmen like the president's chief fund-raiser. "It's like a pot of honey: It attracts bears," says one D.C. real estate attorney.
Since 1990, IBEW's $5-billion National Electrical Benefit Fund (NEBF) has contributed $48 million to McAuliffe's risky personal real estate ventures. McAuliffe received extremely generous terms from the pension fund, including a 50 percent interest in a real estate partnership for which he put up none of his own money. The union didn't make out so well. Seven years after going into business with McAuliffe, the pension fund has realized meager returns on its investments, and one of McAuliffe's companies defaulted on a $7-million pension-fund construction loan.